Mood-driven choices and self-regulation
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We model a decision maker who can exert costly effort to regulate herself, thereby reducing internal conflicts between her normative objectives and mood-driven choices. We provide an axiomatic characterization of the model, and show how costs of self-regulation can be elicited and compared across individuals. In a consumption-saving problem we show that self-regulation can generate unintended income effects, which have important implications for public policies on saving behavior. We also provide several examples to illustrate how self-regulation can rationalize many well-known choice anomalies. These behavioral implications follow from a key feature of the model that self-regulation decisions can respond to changes in incentives.
Mihm , M & Ozbek , K 2018 , ' Mood-driven choices and self-regulation ' , Journal of Economic Theory , vol. 176 , pp. 727-760 . https://doi.org/10.1016/j.jet.2018.05.006
Journal of Economic Theory
Copyright © 2018, Elsevier Inc. This work is made available online in accordance with the publisher’s policies. This is the author created, accepted version manuscript following peer review and may differ slightly from the final published version. The final published version of this work is available at https://doi.org/10.1016/j.jet.2018.05.006
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