Abstract

http://ssrn.com/abstract=298448
 
 

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Self Control in Peer Groups


Marco Battaglini


Princeton University - Department of Economics; Centre for Economic Policy Research (CEPR)

Roland Bénabou


Princeton University - Department of Economics; Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER); Institute for the Study of Labor (IZA)

Jean Tirole


University of Toulouse 1 - Industrial Economic Institute (IDEI); University of Toulouse 1 - Groupe de Recherche en Economie Mathématique et Quantitative (GREMAQ); Centre for Economic Policy Research (CEPR)

January 2002

CEPR Discussion Paper No. 3149

Abstract:     
People with a self-control problem often seek relief through social interactions rather than binding commitments. Thus, in self-help groups like Alcoholics Anonymous, Narcotics Anonymous etc, members are said to achieve better personal outcomes by mainly sharing their experiences. In other settings, however, peer influences can severely aggravate individual tendencies towards immediate gratification, as is often the case with interactions among schoolmates or neighborhood youths. Bringing together the issues of self-control and peer effects, we study how observing the behaviour of others affects individuals' ability to resist their own impulses towards short-run gratification. We show how these purely informational spillovers can give rise to multiple equilibria, where agents' choices of self-restraint or self-indulgence are mutually reinforcing. More generally, we identify conditions on agents' initial self-confidence, confidence in others, and degree of correlation that uniquely lead to either a 'good news' equilibrium where social interactions improve self-discipline, a 'bad news equilibrium' where they damage it, or to both. We also conduct a welfare analysis to determine when group membership is preferable to, or worse than, isolation. Individuals will generally find groups useful for self-control only if they have at least a minimal level of confidence in their own and their peers' ability to resist temptation. At the same time, having a partner who is 'too perfect' is no better than being alone, and therefore often less desirable than being matched to someone more like oneself. Our Paper thus provides a psychologically grounded theory of endogenous peer effects, as well as of the importance of group morale.

Number of Pages in PDF File: 47

Keywords: Peer effects, social interactions, clubs, self-control, willpower, addiction, time-inconsistency, memory, psychology

JEL Classification: C72, D71, D82, D91, J24

working papers series





Date posted: February 7, 2002  

Suggested Citation

Battaglini, Marco and Bénabou, Roland and Tirole, Jean, Self Control in Peer Groups (January 2002). CEPR Discussion Paper No. 3149. Available at SSRN: http://ssrn.com/abstract=298448

Contact Information

Marco Battaglini (Contact Author)
Princeton University - Department of Economics ( email )
213 Fisher Hall
Princeton, NJ 08544
United States
609-258-4002 (Phone)
609-258-6419 (Fax)

Centre for Economic Policy Research (CEPR)
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
Roland Bénabou
Princeton University - Department of Economics ( email )
Robertson Hall, 440
Princeton, NJ 08544
United States
609-258-3672 (Phone)
609-258-5533 (Fax)

Centre for Economic Policy Research (CEPR)
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
National Bureau of Economic Research (NBER) ( email )
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
212-998-8939 (Phone)
212-995-4186 (Fax)
Institute for the Study of Labor (IZA)
P.O. Box 7240
Bonn, D-53072
Germany
Jean Tirole
University of Toulouse 1 - Industrial Economic Institute (IDEI) ( email )
Place Anatole France
21 Allees de Brienne
F-31042 Toulouse Cedex
France
+33 5 61 12 8642 (Phone)
+33 5 61 12 8637 (Fax)
University of Toulouse 1 - Groupe de Recherche en Economie Mathématique et Quantitative (GREMAQ) ( email )
Manufacture des Tabacs
21 Allees de Brienne
Toulouse, 31000
France
Centre for Economic Policy Research (CEPR)
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
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