Discussion Paper Details

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Title: Collective Self Control

Author(s): Alessandro Lizzeri and Leeat Yariv

Publication Date: March 2015

Keyword(s): behavioral political economy, hyperbolic discounting and time inconsistency

Programme Area(s): Public Economics

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.

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Bibliographic Reference

Lizzeri, A and Yariv, L. 2015. 'Collective Self Control'. London, Centre for Economic Policy Research.