Unfinished Business: A Multicommodity Intertemporal Planner-Doer Framework
Review of Behavioral Finance, Forthcoming
59 Pages Posted: 8 Nov 2019
Date Written: October 25, 2019
There was unfinished business to address in the version of the planner-doer model developed in Thaler and Shefrin (1981). The unfinished business involved identifying and modeling the crucial roles played by temptation and mental accounting in pensions and savings behavior. The present paper has two objectives. The first objective is to describe the key lessons learned in transitioning from the model in Thaler and Shefrin (1981) to the model in Shefrin and Thaler (1988), a transition which addressed some of the unfinished business. The second objective is to describe as yet unfinished business associated with developing a multicommodity, intertemporal version of the planner-doer framework, incorporating the concepts of temptation and mental accounting, to replace the neoclassical theory of the consumer. Doing so will provide a theoretical foundation for nudges related to household budgeting, spending, saving, borrowing, and investing.
Keywords: self-control, planner, doer, temptation, rules, mental accounting, hedonic editing
JEL Classification: A10, B3, D14, D9, G4
Suggested Citation: Suggested Citation