This paper, titled "An Economic Theory of Self-Control," by H. M. Shefrin and Richard Thaler, addresses the problem of self-control in economic decision-making. The authors argue that traditional economic theories, particularly those by Strotz, fail to capture the essence of self-control, which involves the conflict between short-term and long-term preferences. They propose a model where individuals are seen as organizations with multiple energy systems, each with its own preferences, referred to as the "planner" and the "doer." This model allows for a more nuanced understanding of how individuals manage their intertemporal choices. The paper begins by critiquing existing theories, highlighting that they often overlook the importance of self-control in consumer behavior, such as savings and consumption patterns. It then introduces the concept of incoherent purpose, where individuals are influenced by multiple preference systems, leading to conflicts between short-term and long-term goals. The authors use this framework to develop a formal model that incorporates these elements, showing how individuals can use rules and discretion to manage their self-control problems. The paper also draws an analogy between individuals facing self-control issues and organizations dealing with principal-agent problems, suggesting that the strategies used by individuals to control their behavior are similar to those used by organizations to minimize agency costs. Examples of these strategies include setting rules, using external and internal incentives, and combining different approaches. Finally, the authors discuss the practical implications of their model, explaining why people often use precommitment devices like pension plans and why some behaviors, such as excessive borrowing, may seem irrational from a self-control perspective. They conclude by emphasizing the importance of recognizing the costs of self-control and how economic analysis can provide insights into this psychological phenomenon.This paper, titled "An Economic Theory of Self-Control," by H. M. Shefrin and Richard Thaler, addresses the problem of self-control in economic decision-making. The authors argue that traditional economic theories, particularly those by Strotz, fail to capture the essence of self-control, which involves the conflict between short-term and long-term preferences. They propose a model where individuals are seen as organizations with multiple energy systems, each with its own preferences, referred to as the "planner" and the "doer." This model allows for a more nuanced understanding of how individuals manage their intertemporal choices. The paper begins by critiquing existing theories, highlighting that they often overlook the importance of self-control in consumer behavior, such as savings and consumption patterns. It then introduces the concept of incoherent purpose, where individuals are influenced by multiple preference systems, leading to conflicts between short-term and long-term goals. The authors use this framework to develop a formal model that incorporates these elements, showing how individuals can use rules and discretion to manage their self-control problems. The paper also draws an analogy between individuals facing self-control issues and organizations dealing with principal-agent problems, suggesting that the strategies used by individuals to control their behavior are similar to those used by organizations to minimize agency costs. Examples of these strategies include setting rules, using external and internal incentives, and combining different approaches. Finally, the authors discuss the practical implications of their model, explaining why people often use precommitment devices like pension plans and why some behaviors, such as excessive borrowing, may seem irrational from a self-control perspective. They conclude by emphasizing the importance of recognizing the costs of self-control and how economic analysis can provide insights into this psychological phenomenon.