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On the design of an optimal transfer schedule with time inconsistent preferences

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  • Juan Carlos Chavez-Martin del Campo

    ()
    (Universidad de Guanajuato and Centro de Estudios de las Finanzas Publicas)

Abstract

This paper incorporates the phenomenon of time inconsistency into the problem of designing an optimal transfer schedule under income shocks and asymmetric information. The optimal solution reflects the dilemma that a principal has to face when playing the roles of self-control enforcer and consumption smoother simultaneously.

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Bibliographic Info

Article provided by AccessEcon in its journal Economics Bulletin.

Volume (Year): 8 (2008)
Issue (Month): 5 ()
Pages: 1-7

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Handle: RePEc:ebl:ecbull:eb-08h00003

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Keywords: Time Inconsistency;

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  2. O'Donoghue, Ted & Rabin, Matthew, 2000. "Choice and Procrastination," Department of Economics, Working Paper Series, Department of Economics, Institute for Business and Economic Research, UC Berkeley qt5r26k54p, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
  3. Goldman, Steven M, 1980. "Consistent Plans," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 47(3), pages 533-37, April.
  4. Melvin Stephens Jr., 2002. "'3rd of tha Month': Do Social Security Recipients Smooth Consumption Between Checks?," NBER Working Papers 9135, National Bureau of Economic Research, Inc.
  5. Thomas, Jonathan & Worrall, Tim, 1990. "Income fluctuation and asymmetric information: An example of a repeated principal-agent problem," Journal of Economic Theory, Elsevier, Elsevier, vol. 51(2), pages 367-390, August.
  6. Ravi Kanbur & Jukka Pirttilä & Matti Tuomala, 2004. "Non-Welfarist Optimal Taxation and Behavioral Public Economics," CESifo Working Paper Series 1291, CESifo Group Munich.
  7. Peleg, Bezalel & Yaari, Menahem E, 1973. "On the Existence of a Consistent Course of Action when Tastes are Changing," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 40(3), pages 391-401, July.
  8. Jesse M. Shapiro, 2003. "Is there a Daily Discount Rate? Evidence from the Food Stamp Nutrition Cycle," Microeconomics, EconWPA 0304005, EconWPA, revised 21 Apr 2003.
  9. Brito, D.L. & Hamilton, J.H. & Slutsky, S.H. & Stiglitz, J.E., 1989. "Dynamic Optimal Income Taxation With Government Commitment," Papers, Florida - College of Business Administration 89-8, Florida - College of Business Administration.
  10. Laibson, David, 1998. "Life-cycle consumption and hyperbolic discount functions," European Economic Review, Elsevier, Elsevier, vol. 42(3-5), pages 861-871, May.
  11. Shane Frederick & George Loewenstein & Ted O'Donoghue, 2002. "Time Discounting and Time Preference: A Critical Review," Journal of Economic Literature, American Economic Association, American Economic Association, vol. 40(2), pages 351-401, June.
  12. Hopenhayn, H. & Nicolini, P.J., 1996. "Optimal Unemployment Insurance," RCER Working Papers, University of Rochester - Center for Economic Research (RCER) 421, University of Rochester - Center for Economic Research (RCER).
  13. Melvin Stephens Jr., 2002. "Paycheck Receipt and the Timing of Consumption," NBER Working Papers 9356, National Bureau of Economic Research, Inc.
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