Models of limited self-control: Comparison and implications for bargaining

Shih En Lu

Economics Letters, 2016, vol. 145, issue C, 186-191

Abstract: This paper compares two models of limited intertemporal self-control: the linear-cost version of Fudenberg and Levine’s dual-self model (2006) and the quasi-hyperbolic discounting model. The main distinction between the two frameworks can be formulated as whether agents care about future self-control costs: dual selves do, while quasi-hyperbolic discounters do not. The dual-self model is applied to a bargaining game with alternating proposals where players negotiate over an infinite stream of payoffs, and it is shown that, in subgame-perfect equilibrium, the first proposer’s payoff is unique and agreement is immediate. By contrast, Lu (2016) shows that with quasi-hyperbolic discounters, a multiplicity of payoffs and delay can arise in equilibrium.

Keywords: Self-control; Bargaining; Time inconsistency; Dual self; Quasi-hyperbolic discounting (search for similar items in EconPapers)
JEL-codes: C78 D90 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:145:y:2016:i:c:p:186-191

DOI: 10.1016/j.econlet.2016.06.012

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