DP10458 Collective Self Control
|Author(s):||Alessandro Lizzeri, Leeat Yariv|
|Publication Date:||March 2015|
|Keyword(s):||behavioral political economy, hyperbolic discounting, time inconsistency|
|JEL(s):||D04, D70, H1|
|Programme Areas:||Public Economics|
|Link to this Page:||cepr.org/active/publications/discussion_papers/dp.php?dpno=10458|
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.