A basic assumption of economics is that consumers choose what they want. However, many
consumers find it difficult to stop overeating, overspending, smoking, procrastinating, etc,
even though they want to. In reality, consumers have temptation and it is psychologically
costly to exercise self-control. To clarify the implications of the existence of temptation and
self-control costs, this paper studies a firm's optimal selling strategy exploiting the behavioral
features of consumers. We characterize optimal nonlinear pricing schemes for a monopoly …