Will albert use the commitment device


Question: Albert's friend Bill offers to act as a commitment device. On any of these four days, Albert can ask Bill to force him to clean on a particular day. But by doing so, Albert pays an additional utility cost of 8 on the day that he is forced to clean. For example, if on Day 3 Albert asks Bill to force him to clean on Day 4, then Albert incurs an additional cost of 8 on Day 4. Suppose Albert is a sophisticated hyperbolic discounter with β = 0.5 and δ = 1. Will Albert use the commitment device? On which day will Albert clean his room

 

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