Abstract
Viewed through the lens of the prominent two-system model of decision making, behavioral economics is seen as studying the tension between impulses (System 1) and rationality (System 2). In this context, two strategies, de-biasing informing agents of their biases and using nudges to activate biases to positively influence choice, have improved the welfare of behavioral agents. We advance the notion of counter-biasing by demonstrating that one bias (present bias) can be pit against another (choking at high stakes) to counteract the ill effects of the second. Our results demonstrate the potential of counter-biasing as an effective policy tool.
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