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Research at St Andrews

Mood-driven choices and self-regulation

Research output: Contribution to journalArticle

Open Access Status

  • Embargoed (until 9/11/19)

Author(s)

Max Mihm, Kemal Ozbek

School/Research organisations

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.
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Details

Original languageEnglish
Pages (from-to)727-760
Number of pages53
JournalJournal of Economic Theory
Volume176
Early online date9 May 2018
DOIs
Publication statusPublished - Jul 2018

    Research areas

  • Choice anomalies, Consumption-saving, Desire for commitment, Internal conflict, Random Strotz, Self-regulation

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