Nations and households seem to find simple, practical ways to cope with a wide variety of potential dynamic inconsistencies - ways that bear little resemblance to the solutions suggested by theorists. Some common examples are dealing with flood plains, avoiding capital levies, punishing your children when they misbehave, and giving final examinations in courses. In each case, governments, parents, or teachers cope with a potential time-inconsistency problem, by creating, and then usually following -norms of behavior, by building reputations, and by remembering that there are many tomorrows. Rarely does society solve a time-inconsistency problem by rigid precommitment or by creating incentive-compatible compensation schemes for decisionmakers. Enlightened discretion is the rule.
[BLINDER, Alan (1999). Central Banking in Theory and in Practice. Cambridge & London, MIT Press]
