Koch, Alexander Karl5; Nafziger, Julia5; Suvorov, Anton3; van den Ven, Jeroen4
1 Department of Economics and Business Economics, Aarhus BSS, Aarhus University2 Department of Economics and Business Economics - TrygFonden's Centre for Child Research, Department of Economics and Business Economics, Aarhus BSS, Aarhus University3 National research university higher school of economics4 University of Amsterdam5 Department of Economics and Business Economics, Aarhus BSS, Aarhus University
Self-administered rewards are ubiquitous. They serve as incentives for personal accomplishments and are widely recommended to increase personal motivation. We show that in a model with time-inconsistent and reference-dependent preferences, self-rewards can be a credible and effective tool to overcome self-control problems. We also discuss the different types of self-rewards the individual can use, such as vice goods and virtue goods, and analyze which types of goods the individual prefers.
European Economic Review, 2014, Vol 68, p. 151-167