ABSTRACT
In Chapter 4 on the subject of the paradox of choice we saw how the assumptions of economic theory with regard to the desirability of a large number of options for choice are not always valid. Sometimes increasing the number of options can have a negative effect for the decider while certain types of constraint can be beneficial. There is another category of situations where limiting the number of choices available leads to an advantage for the decider. These are ones where problems of self-control are involved. A rational consumer, according to economic theory, assesses the options available in the light of his preferences, which are supposed to be consistent over time. As a result of a positive discount function, a positive pay-off generally has a higher value today than it would tomorrow. However, whether or not a given option A today is preferable to an alternative option B tomorrow depends on the absolute difference in values between the two options as well naturally as on the extent of the decider’s preference for the present compared to the future. This preference once decided is supposed to remain stable over time and thus to determine the choices which are then in fact made. On the basis of this logic, if I prefer €200 in a month and a day to €100 in a month exactly, then I should prefer €200 tomorrow to €100 today. The basic assumption is that the discount function will remain stable over time and will not vary with the time-lag preceding the pay-off.
