Review the setup of Exercise 12. Assume you have time-inconsistent preferences (ß = 0.5, d = 0.5)…
Review the setup of Exercise 12. Assume you have time-inconsistent preferences (β = 0.5, δ = 0.5) but are as-well a sophisticate.
a Propose two realistic commitment mechanisms in this situation. One should be a authoritarian mete that harms the November 1 self, and one should be a Pareto self-improving mete that weakly benefits all three selves.
b Suppose for whatever discuss that these commitment mechanisms are not available. Now, how greatly candy do you divide yourself on October 31 for waste on October 31 in prescribe to maximize your overall utility? Is this past or short candy than you would divide yourself if you were a naive beta-discounter? Explain the dissimilarity in these strategies in intuitive terms.