Willpower and Compromise Effect

Emre Ozdenoren, Yusufcan Masatlioglu and Daisuke Nakajima ()

No 12354, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: This paper provides a behavioral foundation for the willpower as limited cognitive resource model which bridges the standard utility maximization and the Strotz models. Using the agent’s ex ante preferences and ex post choices, we derive a representation that captures key behavioral traits of willpower constrained decision making. We use the model to study the pricing problem of a profit maximizing monopolist who faces consumers with limited willpower. We show that the optimal contract often consists of three alternatives and the consumer’s choices reflect a form of the “compromise effect†which is induced endogenously.

Date: 2017-10
New Economics Papers: this item is included in nep-mic, nep-neu and nep-upt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://cepr.org/publications/DP12354 (application/pdf)

Related works:
Journal Article: Willpower and compromise effect (2020)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:12354

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP12354

Access Statistics for this paper

More papers in CEPR Discussion Papers from Centre for Economic Policy Research 33 Great Sutton Street, London EC1V 0DX, UK.
Bibliographic data for series maintained by CEPR ().