Collective Self Control

48 Pages Posted: 2 Mar 2015

See all articles by Alessandro Lizzeri

Alessandro Lizzeri

Princeton University - Department of Economics

Leeat Yariv

Princeton University

Multiple version iconThere are 2 versions of this paper

Date Written: March 2015

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. If only commitment decisions are centralized, commitment investment is more moderate than if all decisions are centralized. Commitment investment is minimal when only consumption is centralized. First-period welfare is highest under either full centralization or laissez faire, depending on the populations’ time-inconsistency distribution.

Keywords: behavioral political economy, hyperbolic discounting, time inconsistency

JEL Classification: D04, D70, H1

Suggested Citation

Lizzeri, Alessandro and Yariv, Leeat, Collective Self Control (March 2015). CEPR Discussion Paper No. DP10458, Available at SSRN: https://ssrn.com/abstract=2572456

Alessandro Lizzeri (Contact Author)

Princeton University - Department of Economics ( email )

Princeton, NJ 08544-1021
United States
08544 (Fax)

Leeat Yariv

Princeton University ( email )

Princeton, NJ 08544-1021
United States

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