Tying With Your Hands

Economists have long recognized the potential value of artificially restricting one’s choices. Tying your hands can be useful in strategic situations. The old idea of burning bridges behind an army so they can’t retreat is a classic example.

Strategic situations usually involve you and some adversary, like an opposing army, a competing bidder, or maybe the goalkeeper when you are a shooter trying to make a penalty kick in soccer.

The first economist I know of to apply that same logic to strategic interactions between a person and their future self is Thomas Schelling, although there may have been others. Schelling wrote about various strategies for achieving self-control, like throwing out all the ice cream in the freezer when you go on a diet, or writing a check to make a large donation to a group you despise like the KKK, which you only mail if you break your pledge to stop smoking.

Jim Holt writes an interesting piece in today’s New York Times Magazine about state-run lists that compulsive gamblers can sign up for that restrict their future ability to gamble at state casinos. If you gamble anyway, they can arrest you and keep all your winnings.

Not surprisingly, the evidence suggests it seems to work pretty well, although that is not what the story is about.