A theory of self-control and naïveté: The blights of willpower and blessings of temptation

We model self-control conflict as an agent’s stochastic struggle against a visceral influence that impels the agent to act sub-optimally. The agent holds costly pre-commitment technology to avoid the conflict altogether and may decide whether to procure pre-commitment or to confront the visceral influence. We examine naïve expectations for the strength of the visceral influence; naïve expectations lead the agent to exaggerate the expected utility of resisting temptation and so mistakenly forego pre-commitment. Contrary to accepted wisdom, our analysis reveals conditions under which higher willpower—and lower visceral influence—reduces welfare. Our analysis, therefore, calls into question policy measures that influence willpower and visceral influences.

► Higher willpower can lead to welfare loss when agents underestimate temptation.
► Lower temptation can lead to welfare loss when agents underestimate temptation.
► Well intended policies have adverse effects and raise distributional concerns.
► We suggest which variables to focus on in order to avoid distributional concerns.