TY - JOUR AU - Beshears,John AU - Choi,James J. AU - Laibson,David AU - Madrian,Brigitte TI - Early Decisions: A Regulatory Framework JF - National Bureau of Economic Research Working Paper Series VL - No. 11920 PY - 2006 Y2 - January 2006 UR - http://www.nber.org/papers/w11920 L1 - http://www.nber.org/papers/w11920.pdf N1 - Author contact info: John Beshears Stanford Graduate School of Business 655 Knight Way Stanford, CA 94305-7298 Tel: 650/723-6792 E-Mail: beshears@nber.org James J. Choi Yale School of Management 135 Prospect Street P.O. Box 208200 New Haven, CT 06520-8200 E-Mail: james.choi@yale.edu David Laibson Department of Economics Littauer M-12 Harvard University Cambridge, MA 02138 Tel: 617/496-3402 Fax: 617/495-8570 E-Mail: dlaibson@gmail.com Brigitte C. Madrian John F. Kennedy School of Government Harvard University 79 JFK Street Cambridge, MA 02138 Tel: 617-495-8917 Fax: 617-496-5960 E-Mail: Brigitte_Madrian@Harvard.edu AB - We describe a regulatory framework that helps consumers who have difficulty sticking to their own long-run plans. Early Decision regulations help long-run preferences prevail by allowing consumers to partially commit to their long-run goals, making it harder for a momentary impulse to reverse past decisions. In the cigarette market, examples of Early Decision regulations include restricting the locations or times at which cigarettes are sold, delaying the receipt of cigarettes following purchase, and allowing a consumer to choose in advance the legal restrictions on her own cigarette purchases. A formal model of Early Decision regulations demonstrates that Early Decisions are optimal when consumer preferences are heterogeneous. Intuitively, each consumer knows his own preferences, so self-rationing - which is what Early Decisions enable - is better than a one-size-fits-all regulation like a sin tax. Of course, Early Decision regulations incur social costs and therefore require empirical evaluation to determine their net social value. ER -