Allocation among multiple selves

We propose a model of individual decision making that separates a central executive system (“Ego”) from a sub-self with its own preferences (“Cold”) and an impulsive sub-self with different preferences (“Hot”). Ego cares only about the payoffs of the other two sub-selves and allocates available resources between them. For standard neoclassical preferences over joint consumption, we show that in subgame perfect Nash equilibrium, Ego will choose a resource allocation that enables neither Hot nor Cold to attain their most preferred affordable bundle. Moreover, the two sub-selves each choose a more extreme and specialized bundle than they would choose if they unilaterally controlled all available resources.