Mood-driven choices and self-regulation
Abstract
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.
Citation
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
Publication
Journal of Economic Theory
Status
Peer reviewed
ISSN
0022-0531Type
Journal article
Collections
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