Escaping Paternalism: Rationality, Behavioral Economics, and Public Policy (Cambridge Studies in Economics, Choice, and Society)

by Mario J. Rizzo

Standard economics is particularly ill-equipped to deal with the process of automatic counteractive self-control. Most choice problems are conceived as the agent maximizing an objective function. In the more recent extended versions, designed to accommodate behavioral insights, an extra constraint is added: self-control. This is costly impulse control – the deliberate application of cognitive effort to resist temptations. But the modeled agent’s perception of the problem, and thus the framework of decision, is itself static.58 The agent takes the parameters of the problem, including the costs and benefits assigned to outcomes, as given. By contrast, a central idea of counteractive self-control is that the individual spontaneously revalues the costs and benefits of resisting temptation. Rather than drawing on his limited supply of willpower, the agent reconceptualizes the problem he faces.