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 create self-control problems. We show how goals permit self …

(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 they serve as reference points that make substandard performance … partially insures against the risk of falling short of ones' goal(s), but creates incentives to shirk in one of the tasks …