nep-neu 2019-01-14 papers

on Neuroeconomics

Issue of 2019‒01‒14
two papers chosen by

Costly Self-Control and Limited Willpower By Simon Grant; Meng-Yu Liang; Sung-Lin Hsieh
Optimal Dynamic Allocation of Attention By Yeon-Koo Che; Konrad Mierendorff

Costly Self-Control and Limited Willpower

By:	Simon Grant (Australian National University); Meng-Yu Liang (Institute of Economics, Academia Sinica, Taipei, Taiwan); Sung-Lin Hsieh (Department of Economics, University of Michigan)
Abstract:	In Gul and Pesendorfer (2001), a decision-maker, when facing a choice among menus, evaluates each menu in terms of the maximum value of its normative utility net of self-control costs. This paper extends the model such that this maximum is constrained by the condition that the cost of self-control cannot exceed the decision-makerís stock of willpower w. In our characterization, choices within menus that satisfy the weak axiom of revealed preferences (WARP) reveal a constant trade-off between normative and temptation utilities. However, it is the discontinuity of preferences over menus (along with violations of WARP for choices within menus) that reveals w (measured in units of temptation utility), allowing for a behaviorally meaningful comparative measure of self-control across individuals.
Keywords:	: temptation, self-control, willpower
JEL:	D81 D91 D11
Date:	2018–12
URL:	http://d.repec.org/n?u=RePEc:sin:wpaper:18-a009&r=all

Optimal Dynamic Allocation of Attention

By:	Yeon-Koo Che; Konrad Mierendorff
Abstract:	We consider a decision maker (DM) who, before taking an action, seeks information by allocating her limited attention dynamically over different news sources that are biased toward alternative actions. Endogenous choice of information generates rich dynamics: The chosen news source either reinforces or weakens the prior, shaping subsequent attention choices, belief updating, and the final action. The DM adopts a learning strategy biased toward the current belief when the belief is extreme and against that belief when it is moderate. Applied to consumption of news media, observed behavior exhibits an `echo-chamber' effect for partisan voters and a novel `anti echo-chamber' effect for moderates.
Date:	2018–12
URL:	http://d.repec.org/n?u=RePEc:arx:papers:1812.06967&r=all

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