Collective self-control

Alessandro Lizzeri, Leeat Yariv

    Research output: Contribution to journalArticlepeer-review

    Abstract

    Behavioral 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.

    Original languageEnglish (US)
    Pages (from-to)213-244
    Number of pages32
    JournalAmerican Economic Journal: Microeconomics
    Volume9
    Issue number3
    DOIs
    StatePublished - 2017

    ASJC Scopus subject areas

    • Economics, Econometrics and Finance(all)

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