We develop a quantitative dynamic general-equilibrium model where agents have preferences featuring temptation and self-control problems, and we apply it in order to understand to what extent standard investment/savings subsidies can improve welfare. The dynamic model of preferences builds on...

We consider a representative-agent equilibrium model where the consumer has quasi-geometric discounting and cannot commit to future actions. We restrict attention to a parametric class for preferences and technology and solve for time-consistent competitive equilibria globally and explicitly. We...

We study optimal taxation when consumers have temptation and self-control problems. Embedding the class of preferences developed by Gul and Pesendorfer into a standard macroeconomic setting, we first prove, in a two-period model, that the optimal policy is to subsidize savings when consumers...