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Behavioral Economics
A field of study that analyzes the effects of psychological, cognitive, emotional, cultural, and social factors on the economic decisions of individuals and institutions, and the consequences for market prices, returns, and resource allocation.
Time Inconsistency
The tendency of individuals to change their plans about future actions due to a preference for immediate gratification over future benefit, often leading to inconsistency over time.
Precommitment
A strategy or decision made in advance to lock oneself into a set of actions or behaviors, often to avoid temptation or to ensure future goals are met.
Precommitment Device
A strategy or mechanism used by individuals or firms to constrain their future actions in order to achieve a desired outcome.
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