Economics
The public economics of self control
Document Type
Conference Paper
Abstract
This paper analyzes self-control problems in intertemporal consumption of a sin good where current consumption imposes a negative externality on one's future selves due to the existence of present-biased preferences. We introduce the negative externality dubbed 'internality', which is augmented by the cumulative distribution function of the sum of previous consumption. We show that the shot-run self with self-control problem over consumes the sin good compared to that of the long-run self without present-biased preferences. Further, we investigate the effectiveness of self-bargaining with the presence of an external control devise as possible punishment. The short-run self faces three possible options: do nothing, accept the long-run self's offer, or reject the offer. In the latter case an external control devices is implemented. It is shown that successful self-bargaining depends on the efficiency of the control device. © Springer Science + Business Media, LLC 2008.
Publication Title
Journal of Economics and Finance
Publication Date
10-2008
Volume
32
Issue
4
First Page
356
Last Page
367
ISSN
1055-0925
DOI
10.1007/s12197-008-9047-1
Keywords
merit want, self-control
Repository Citation
Bae, Sang Hoo and Ott, Attiat F., "The public economics of self control" (2008). Economics. 66.
https://commons.clarku.edu/faculty_economics/66