An economic theory of self—control

Abstract

Although many economists, most notably Strotz, have discussed dynamic inconsistency and precommitment, none have dealt directly with the essence of the problem: self—control. This paper attempts to fill that gap by modeling man as an organization. The Strotz model is recast to include the control features missing in his formulation. The organi-zational analogy permits us to draw on the theory of agency. We thus relate the individual's control problems with those that exist in agency relationships.