Goals are an important source of motivation. But little is known about why and how people set them. We address these questions in a model based on two stylized facts from psychology and behavioral economics: i) Goals serve as reference points for performance. ii) Present-biased preferences...

It is a puzzle why people often evaluate consequences of choices separately (narrow bracketing) rather than jointly (broad bracketing). We study the hypothesis that a present-biased individual, who faces two tasks, may bracket his goals narrowly for motivational reasons. Goals motivate because...

Young professionals typically do not enter into life-long employment relations with a single firm. Therefore, future employers can learn about individuals' abilities from the observable facts regarding earlier work relations. We show that these informational spill-overs have profound...