Abstract
We model a decision maker who anticipates her preference to change in the future, and optimistically evaluates each menu according to the best choice that could possibly be made by her future self. We characterize this menu preference by axioms weak order, independence, semi-continuity, extremity and concavity. We prove the uniqueness of our representation and introduce comparative measures of optimism. We illustrate how our model connects optimism with the naive quasi-hyperbolic discounting model introduced by O’Donoghue and Rabin (1999, 2001). Our model generates novel predictions on decision makers’ procrastination behavior. In particular, we show that uncertainty about future payoffs can inhibit procrastination.
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