Amador, Manuel; Angeletos, George-Marios; Werning, Ivan - Society for Economic Dynamics - SED - 2004
This paper studies the optimal trade-off between commitment and flexibility in an intertemporal consumption … value for flexibility - but also expect to suffer from temptations - generating a value for commitment. The model combines … the representations of preferences for flexibility introduced by Kreps (1979) with its recent antithesis for commitment …