A Model of Multiple Selves

Abstract

We propose a model of individual decision making that separates a central executive system (“Ego”) from a sub-self with long-term preferences (“Cold”) and an impulsive sub-self (“Hot”). Ego cares only about the payoffs of the other two subselves and allocates available resources between them. For standard neoclassical preferences over joint consumption, we show that in subgame perfect Nash equilibrium, Ego will choose a resource allocation that enables neither Hot nor Cold to consume their most preferred affordable bundle. Instead, they each choose a more extreme and specialized bundle than they would choose if they unilaterally controlled all available resources.

Keywords: C72, D11, D16