Value computation and value modulation: a dual-process theory of self-control

Abstract

We develop a theory of self-control based on the dual process approach of Hare, Camerer and Rangel (2009). One brain system computes the goal value of consumption and another brain system can modulate this value by transmitting information regarding the high-order considerations (e.g., healthiness or long term payoffs). We determine the optimal modu-lation and consumption strategy of the individual as a function of the cost of information transmission. The model has testable implications that depart form traditional analyses of temptation, self-control, hyperbolic discounting and cue triggered behavior. First, choices can be affected by distractors or other tasks orthogonal to the decision. Second, the like-lihood of consuming a tempting good endogenously depends on environmental cues and, in particular, on how tempting the good is expected to be. And third, costly modulation can cause under-regulation (self-indulgence) but also over-regulation (self-restraint). The model can also shed light on some documented behavioral anomalies in the context of eating disorders, present-biased preferences and habit formation.

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