Optimal Provision of Public Goods with Rank Dependent Expected Utility
AbstractIn this paper the theory of rank-dependent expected utility (RDEU) is substituted for the theory of expected utility (EU) in a model of optimal provision of public goods. The substitution generalizes the Samuelson rule, previously modified to include deadweight loss and tax evasion loss. Under given assumptions it is demonstrated that the marginal cost of public funds is higher in a RDEU model than in a corresponding EU model.
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Bibliographic InfoArticle provided by in its journal Public Finance = Finances publiques.
Volume (Year): 53 (1998)
Issue (Month): 3-4 ()
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Other versions of this item:
- Eide, Erling, 2002. "Optimal Provision of Public Goods with Rank Dependent Expected Utility," Memorandum 03/2003, Oslo University, Department of Economics.
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
- H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
- H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion
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