Equality of opportunity and optimal effort decision under uncertainty
AbstractWe analyze a society that cares about inequality of opportunity. We propose adynamic setting in which effort is a decision variable that individuals adopt as asolution of an explicit utility maximization program. Effort determines themonetary outcome and it depends on the individual¿s preferences andcircumstances. The planner designs an incentive scheme so as to foster higherincomes, reducing the opportunity cost of effort and productivity for the lessfavoured agents. Income is assumed to be random, and contrary to the generalneutral assumption, we obtain that luck does have a biased and persistent effect onincome distribution that may be regarded as unfair. We also study the planner¿soptimal policy when she cannot infer perfectly the individuals¿ responsibilityfeature.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie) in its series Working Papers. Serie AD with number 2009-12.
Length: 34 pages
Date of creation: Jan 2009
Date of revision:
Publication status: Published by Ivie
Equality of opportunity; effort decision; policy design; luck;
Find related papers by JEL classification:
- D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
- D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
This paper has been announced in the following NEP Reports:
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Arnaud Lefranc & Nicolas Pistolesi & Alain Trannoy, 2006.
"Equality of Opportunity: Definitions and testable conditions, with an application to income in France,"
THEMA Working Papers
2006-13, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
- Arnaud Lefranc & Nicolas Pistolesi & Alain Trannoy, 2006. "Equality of opportunity: Definitions and testable conditions, with an application to income in France," Working Papers 53, ECINEQ, Society for the Study of Economic Inequality.
- Arnaud Lefranc & Nicolas Pistolesi & Alain Trannoy, 2006. "Equality of Opportunity: Definitions and Testable Conditions with an Application to Income in France," IDEP Working Papers 0609, Institut d'economie publique (IDEP), Marseille, France, revised 27 Sep 2006.
- Calo-Blanco, Aitor & Villar, Antonio, 2009.
"Education, Utilitarianism, and Equality of Opportunity,"
18720, University Library of Munich, Germany.
- Villar Notario Antonio & Calo-Blanco Aitor, 2009. "Education, Utilitarianism, and Equality of Opportunity," Working Papers 201051, Fundacion BBVA / BBVA Foundation.
- HOLMSTROM, Bengt, .
"Moral hazard and observability,"
CORE Discussion Papers RP
-379, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Roemer, J.E., 1992. "A Pragmatic Theory of Responsibility for the Egalitarian Planner," Papers 391, California Davis - Institute of Governmental Affairs.
- Peragine, Vitorocco, 2002. "Opportunity egalitarianism and income inequality," Mathematical Social Sciences, Elsevier, vol. 44(1), pages 45-64, September.
- Laura Serlenga & Vito Peragine, 2007.
"Higher education and equality of opportunity in Italy,"
79, ECINEQ, Society for the Study of Economic Inequality.
- Vito Peragine & Laura Serlenga, 2007. "Higher education and equality of opportunity in Italy," CHILD Working Papers wp01_08, CHILD - Centre for Household, Income, Labour and Demographic economics - ITALY.
- Peragine, Vito & Serlenga, Laura, 2007. "Higher Education and Equality of Opportunity in Italy," IZA Discussion Papers 3163, Institute for the Study of Labor (IZA).
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Departamento de Edición).
If references are entirely missing, you can add them using this form.