Collective Self-Control†

Collective Self-Control† AbstractBehavioral economics presents a “paternalistic” rationale for a benevolent government's intervention. We consider an economy where the only “distortion” is agents' time-inconsistency. We study the desirability of various forms of collective action, ones pertaining to costly commitment and ones pertaining to the timing of consumption, when government decisions respond to voters' preferences via the political process. Three messages emerge. First, welfare is highest under either full centralization or laissez-faire. Second, introducing collective action only on consumption decisions yields no commitment. Last, individuals' relative preferences for commitment may reverse depending on whether future consumption decisions are centralized or not. (JEL D03, D11, D61, D72, D91) http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png American Economic Journal: Microeconomics American Economic Association
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Publisher
American Economic Association
Copyright
Copyright © 2017 © American Economic Association
ISSN
1945-7685
D.O.I.
10.1257/mic.20150325
Publisher site
See Article on Publisher Site

Abstract

AbstractBehavioral economics presents a “paternalistic” rationale for a benevolent government's intervention. We consider an economy where the only “distortion” is agents' time-inconsistency. We study the desirability of various forms of collective action, ones pertaining to costly commitment and ones pertaining to the timing of consumption, when government decisions respond to voters' preferences via the political process. Three messages emerge. First, welfare is highest under either full centralization or laissez-faire. Second, introducing collective action only on consumption decisions yields no commitment. Last, individuals' relative preferences for commitment may reverse depending on whether future consumption decisions are centralized or not. (JEL D03, D11, D61, D72, D91)

Journal

American Economic Journal: MicroeconomicsAmerican Economic Association

Published: Aug 1, 2017

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