Temptation–Driven Preferences

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  • 1 January 2005
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      • Published in RePEc
Abstract
“My own behavior baffles me. For I find myself not doing what I really want to do but doing what I really loathe.” Saint Paul What behavior can be explained using the hypothesis that the agent faces temptation but is otherwise a “standard rational agent”? In earlier work, Gul–Pesendorfer [2001] use a set betweenness axiom to restrict the set of preferences considered by Dekel, Lipman, and Rustichini [2001] to those explainable via temptation. We argue that set betweenness rules out plausible and interesting forms of temptation. We propose a pair of alternative axioms called DFC, desire for commitment, and AIT, approximate improvements are tempting. DFC characterizes temptation as situations where given any set of alternatives, the agent prefers committing herself to some particular item from the set rather than leaving herself the flexibility of choosing later. AIT says that if adding an option to a menu improves the menu, it is because that option is chosen under some circumstances, not because its presence reduces the extent to which other options are tempting. We show that these axioms characterize a natural generalization of the Gul–Pesendorfer representation.

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