Abstract

This paper examines how the belief of decision maker regarding his ability to keep a resolution and his belief regarding what others think of him affect his actions. Higher self-reputation increases future payoff but higher perception of reputation can either increase or decrease it for an individual who has a strong ability to keep a resolution. However, both higher self-reputation and higher perception of reputation may not help increase future payoff for a decision maker who has a weak ability to resist temptation if he makes a resolution relatively easily in the second period. These results help to explain why some people ask for help or do not ask for help from friends to keep a resolution and why some people can or cannot sustain the resolution in the short run.