Umeå Economic Studies, Department of Economics, Umeå University
No 811:
Public Goods and Optimal Paternalism under Present-Biased Preferences
Thomas Aronsson ()
and David Granlund ()
Abstract: This paper deals with the optimal provision of a
state-variable public good in a two-type model, when the consumers have
present-biased preferences due to quasi-hyperbolic discounting. The results
show that the preference for immediate gratification facing the (mimicking)
high-ability type weakens the incentive to adjust the public provision in
response to the self-selection constraint.
Keywords: Public Goods; Quasi-Hyperbolic Discounting; Redistribution; Asymmetric Information; (follow links to similar papers)
JEL-Codes: D03; D61; H41; (follow links to similar papers)
7 pages, June 21, 2010
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