Unfinished Business: A Multicommodity Intertemporal Planner-Doer Framework

Review of Behavioral Finance, Forthcoming

59 Pages Posted: 8 Nov 2019

See all articles by Hersh Shefrin

Hersh Shefrin

Santa Clara University - Leavey School of Business

Date Written: October 25, 2019

Abstract

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

Shefrin, Hersh, Unfinished Business: A Multicommodity Intertemporal Planner-Doer Framework (October 25, 2019). Review of Behavioral Finance, Forthcoming. Available at SSRN: https://ssrn.com/abstract=3475290

Hersh Shefrin (Contact Author)

Santa Clara University - Leavey School of Business ( email )

Dept. of Finance
Santa Clara, CA 95053
United States
408-554-6893 (Phone)
408-554-4029 (Fax)

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