Abstract
This paper studies the self-control problem caused by time inconsistent preference and investigates the existence of the incentive scheme that would achieve the efficient outcome for present-biased agents. For naive agents who have misbelief about their future preference, they intend to procrastinate current effort into the future to enjoy immediate gratification. For sophisticated agents who are aware of future time inconsistency, self-control problem is mitigated but not eliminated. In view of such problems, I find there exist optimal incentive schemes to induce best performance of such agents. What's more, the optimal scheme need not vary between naive agents and sophisticated agents who share the same degree of present bias and time consistent impatience, which could be an important implication for policy makers to create incentives for better performance.
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