TY - JOUR
T1 - Collective self-control
AU - Lizzeri, Alessandro
AU - Yariv, Leeat
N1 - Funding Information:
We thank Wolfgang Pesendorfer, Alessandro Riboni, Nikita Roketskiy, and Michael Ting for very helpful conversations and feedback, Euncheol Shin for superb research assistance, and three anonymous referees for very useful suggestions. We gratefully acknowledge financial support from the National Science Foundation and the Gordon and Betty Moore Foundation (through grant 1158).
PY - 2017
Y1 - 2017
N2 - 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.
AB - 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.
UR - http://www.scopus.com/inward/record.url?scp=85026466879&partnerID=8YFLogxK
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U2 - 10.1257/mic.20150325
DO - 10.1257/mic.20150325
M3 - Article
AN - SCOPUS:85026466879
SN - 1945-7669
VL - 9
SP - 213
EP - 244
JO - American Economic Journal: Microeconomics
JF - American Economic Journal: Microeconomics
IS - 3
ER -