Template-Type: ReDIF-Paper 1.0

Author-Name: Jawwad Noor
Author-X-Name-First: Jawwad 
Author-X-Name-Last: Noor
Author-Email: jnoor@bu.edu
Author-Workplace-Name: Department of Economics, Boston University

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Title: Temptation, Welfare and Revealed Preference

Abstract: Choice may be determined both by a consideration of one?s welfare (normative
preference) and by desires (temptation preference). To provide foundations for
such a theory, Gul and Pesendorfer [7, 8] adopt a preference over choice problems
as a primitive and hypothesize that temptation creates a preference for commit-
ment. This paper argues that temptation may in fact create the absence of a
preference for commitment, and that the primitive may not be empirically mean-
ingful since it requires us to observe behavior in the absence of temptation. An
alternative approach to providing foundations is introduced. Motivated by the
evidence on preference reversals, it is hypothesized that delayed temptations are
easier to resist than immediate temptations. Normative preference is derived via
choices between sufficiently delayed alternatives, and temptation preference is in-
ferred from discrepancies between normative preference and choice. With a choice
correspondence as the primitive, agents who are ?tempted not to commit?are mod-
eled. The foundations of the model are used to identify evidence supporting such
temptation.

Length:  60pages
Creation-Date: 2006-04
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File-URL: http://people.bu.edu/jnoor/research/temptationandrevealedpreference.pdf
File-Format: Application/pdf
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Number: WP2006-025
Classification-JEL: D11, D60.
Keywords: Self-Control, Temptation, Commitment, Preference Reversals, Re-
vealed Preference.
Handle: RePEc:bos:wpaper:WP2006-025