How individuals resolve a fixed choice problem often depends on when the decision is made. This project studies this phenomenon called dynamic inconsistency. The main innovation is the introduction of self-control as a distinct feature of preferences. Self-control creates a wedge between choice behavior and preferences at the time of consumption. The first step is to derive a simple representation of preferences that captures dynamic inconsistency. The representation facilitates the quantification of self-control as a utility penalty that applies whenever the ultimate choice is not optimal for the ex post self. The model distinguishes between self-control which occurs at time of consumption and commitment which takes place earlier. A measure of dynamic inconsistency and a measure of self-control can be developed. The current model of dynamic inconsistency will be extended to allow for intermediate consumption and temporal resolution of uncertainty. This will permit the analysis of the standard models of consumption and saving used in macroeconomics and financial economics. By using the tools developed in this project, formal analysis of related psychological mechanism, rationalization, will be undertaken.
