Motivational Goal Bracketing - School of Economics and ...

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To satisfy both incentive constraints, ab ≥ max{âb, ă} = âb. So âsim b (9), and the results from the no-information scenario carry over. = âb from Equation To gain some intuition for why the the “prevent-shirking-in-one-task” incentive constraint is the binding one, consider first the effort cost side (net of the present-bias discounted expected benefit from the task outcome). If, instead of working hard in both tasks, self 1 were to shirk in one task he would gain c − β p ¯y; and if he were to shirk in both tasks he would gain twice that amount, 2 (c − β p ¯y). But shirking exposes him to the risk of falling short of the goal. Consider this side now. Intuitively, by not working at all, the individual would definitely fall short of the goal and suffer a loss. In contrast, putting in effort in one of the two tasks already goes some way toward avoiding this: with probability p the task outcome is high, and this is enough to satisfy the easy broad goal. So the difference from working hard in both tasks is not that big anymore. More specifically, shirking only in one task would increase the probability of a loss by Pr(loss|e, ē) − Pr(loss|ē, ē) = p (1 − p), whereas shirking in both tasks would increase by more than twice that amount the probability of a loss: Pr(loss|e, e) − Pr(loss|ē, ē) = p (2 − p) > 2 p (1 − p). Putting both sides together, we thus see that the risk of falling short of the goal is propor- tionately larger relative to the net cost of effort in the case of shirking in both tasks. As a result, the “prevent-shirking-in-one-task” incentive constraint is the binding one. 26
References Abeler, J., A. Falk, L. Götte, and D. Huffman (2009): “Reference Points and Effort Provision,” IZA Discussion Paper no. 3939. Ainslie, G., and N. Haslam (1992): “Hyperbolic Discounting,” in Choice over Time, ed. by G. Loewenstein, and J. Elster, pp. 57–92. Russell Sage Foundation, New York. Bandura, A. (1989): “Human Agency in Social Cognitive Theory,” American Psychologist, 44(9), 1175–1184. Barberis, N. (2001): “Mental Accounting, Loss Aversion, and Individual Stock Returns,” Journal of Finance, 56(4), 1247–1292. Bargh, J. A. (1990): “Auto-motives: Preconscious Determinants of Social Interaction,” in Handbook of Motivation and Cognition: Foundations of Social Behavior, ed. by E. T. Higgins, and R. M. Sorrentino, vol. 2, pp. 93–130. Guilford Press, New York. Bénabou, R., and J. Tirole (2004): “Willpower and Personal Rules,” Journal of Political Economy, 112(4), 848–886. Benartzi, S., and R. H. Thaler (1995): “Myopic Loss Aversion and the Equity Premium Puzzle,” Quarterly Journal of Economics, 110(1), 73–92. Benhabib, J., and A. Bisin (2005): “Modeling Internal Commitment Mechanisms and Self-Control: A Neuroeconomics Approach to Consumption-Saving Decisions,” Games and Economic Behavior, 52(2), 460–492. Brocas, I., J. D. Carrillo, and M. Dewatripont (2004): “Commitment Devices under Self-control Problems: An Overview,” in Reasons and Choices, ed. by I. Brocas, and J. D. Carrillo, vol. 2 of The Psychology of Economic Decisions, chap. 4, pp. 49–66. Oxford University Press, Oxford. Camerer, C., L. Babcock, G. Loewenstein, and R. Thaler (1997): “Labor Supply of New York City Cabdrivers: One Day at a Time,” Quarterly Journal of Economics, 112(2), 407–41. Carver, C. S., and M. F. Scheier (1999): “Themes and Issues in the Self-regulation of Behavior,” in Advances in Social Cognition, ed. by R. S. Wyer, vol. 12, pp. 1–105. Erlbaum, Mahwah, NJ. Cicchetti, C. J., and J. A. Dubin (1994): “A Microeconometric Analysis of Risk Aver- sion and the Decision to Self-Insure,” Journal of Political Economy, 102(1), 169–86. 27
Page 1 and 2: Motivational Goal Bracketing Alexan
Page 3 and 4: Bandura, for example, writes that
Page 5 and 6: introduces our model of goal settin
Page 7 and 8: outcome of the first task before wo
Page 9 and 10: In the absence of a goal, simply se
Page 11 and 12: The more severe the present bias (i
Page 13 and 14: Now consider what it takes to get b
Page 15 and 16: 4.3.2 The leaning-back effect Yet t
Page 17 and 18: task. So the fear of a loss - which
Page 19 and 20: 6 Conclusion An important reason wh
Page 21 and 22: single-task incentive constraint (5
Page 23 and 24: So the expected utility of self 0 u
Page 25: where κ ≡ 2 p−p2 +(1−p) 2 µ
Page 29 and 30: Herweg, F., and D. Müller (2008):

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