## Abstract

"My own behaviour baffles me. For I find myself not doing what I really want to do but doing what I really loathe." Saint Paul: What behaviour can be explained using the hypothesis that the agent faces temptation but is otherwise a "standard rational agent"? In earlier work, Gul and 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 including some which may be important in applications. We propose a pair of alternative axioms called DFC, desire for commitment, and AIC, approximate improvements are chosen. DFC characterizes temptation as situations in which 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. AIC is based on the idea that if adding an option to a menu improves the menu, it is because that option is chosen under some circumstances. From this interpretation, the axiom concludes that if an improvement is worse (as a commitment) than some commitment from the menu, then the best commitment from the improved menu is strictly preferred to facing that menu. We show that these axioms characterize a natural generalization of the Gul-Pesendorfer representation.

Original language | English (US) |
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Pages (from-to) | 937-971 |

Number of pages | 35 |

Journal | Review of Economic Studies |

Volume | 76 |

Issue number | 3 |

DOIs | |

State | Published - 2009 |

### Bibliographical note

Funding Information:Given that ai > 0 for all i, let qi = ai and let γi = bi/ai. With this change of notation, V can be rewritten in the form of VUS. ‖ Acknowledgements. We thank Drew Fudenberg, Fabio Maccheroni, Massimo Marinacci, Jawwad Noor, Ben Polak, Phil Reny, numerous seminar audiences and Juuso Valimaki and two anonymous referees for helpful comments. We also thank the NSF for financial support for this research. We particularly thank Todd Sarver for comments and for agreeing to the move of Theorem 6, originally contained in our joint paper (Dekel et al., 2007) to this paper.