Goal Bracketing and Self-Control

Abstract

This paper studies the role of goal bracketing to attenuate time inconsistency. When setting non-binding goals in multi-stage project, an agent must also decide how and when to evaluate himself against such goals. In particular, he can bracket broadly by setting an aggregate goal for the entire project, or narrowly by setting incremental goals for individual stages. In the presence of loss aversion and uncertainty over outcomes, this decision involves a trade-off between motivation and comparative disutility due to ex-ante uncertainty. Narrow goal bracketing can be used as an instrument to counteract the self-control problem, while broad goal bracketing can itself generate apparently erroneous behavior such as the sunk cost fallacy. The sequential nature of decision-making introduces a differential reaction to outcome uncertainty based on its timing, which determines the optimal bracketing choice.

The Dark Side of Monetary Bonuses: Theory and Experimental Evidence

“…Second, our paper contributes to the emerging literature on goal setting in economics (Wu et al, 2008;Gómez-Miñambres, 2012;Corgnet et al, 2015;Dalton et al 2016a, Kaur et al 2015, Brookins et al, 2017, Hsiaw, 2018Koch & Nafziger, 2011, 2019. We propose a model of self-chosen goals in which workers have reference-dependent preferences with the goal as the reference point, as is common in the literature.…”

“…We depart from the existing literature in two fundamental ways. First, we do not assume dynamic inconsistency as in Hsiaw (2013), Kaur et al (2015), Hsiaw (2018) and Koch & Nafziger (2011;2019). Second, we relax the assumption of certainty about reaching the goal as assumed by Wu et al (2008), Corgnet et al (2015), and Dalton et al (2016aDalton et al ( , 2016b.…”

Correlates of Narrow Bracketing

“…Heath and Soll () document how people control their expenditures in mental accounts for narrowly defined categories, such as entertainment, clothing, or food. Koch and Nafziger () and Hsiaw () theoretically investigate under which circumstances narrowly bracketed goals are better than broadly bracketed goals. Koch and Nafziger () exogenously assign the goal bracket (daily goals or a weekly goal) in an experiment.…”

Feedback Design and Preference Elicitation: Field Experiments in Digital Economics

“…The typical behavioral pattern that is observed is that of bunching of effort just before the deadline. To counteract such behavior, recent studies propose goal bracketing as a commitment mechanism, whereby students endogenously set subgoals and adopt mental accounts to evaluate their performance in a broad (e.g., weekly) or narrow (e.g., daily) account (Koch and Nafziger 2017, Koch and Nafziger 2016, Hsiaw 2015. Narrow goals can be particularly motivating for students with self-control problems because Introduction due to time and cost considerations, complexity, and infrastructure needs.…”

“…Recent studies propose goal bracketing, an internal commitment device, to address the issue of study effort being postponed. With goal bracketing, individuals endogenously set subgoals and adopt mental accounts to evaluate their performance in a broad or narrow performance account (Koch and Nafziger 2016, Koch and Nafziger 2017, Hsiaw 2015. In theory, narrow goals (e.g., daily instead of weekly study goals) can be particularly effective for procrastinating students because they rule out behavior in which lack of effort today can be compensated for with more effort in the future.…”