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

  • Juan Carlos Chavez-Martin del Campo


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

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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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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  1. Ted O'Donoghue & Matthew Rabin, 2001. "Choice And Procrastination," The Quarterly Journal of Economics, MIT Press, vol. 116(1), pages 121-160, February.
  2. Brito, D.L. & Hamilton, J.H. & Slutsky, S.H. & Stiglitz, J.E., 1989. "Dynamic Optimal Income Taxation With Government Commitment," Papers 89-8, Florida - College of Business Administration.
  3. Ravi Kanbur & Jukka Pirttilä & Matti Tuomala, 2004. "Non-Welfarist Optimal Taxation and Behavioral Public Economics," CESifo Working Paper Series 1291, CESifo Group Munich.
  4. Dean Karlan & Nava Ashaf & Wesley Yin, 2004. "Tying odysseus to the mast: Evidence from a commitment savings product in the philippines," Natural Field Experiments 00206, The Field Experiments Website.
  5. Hopenhayn, H. & Nicolini, P.J., 1996. "Optimal Unemployment Insurance," RCER Working Papers 421, University of Rochester - Center for Economic Research (RCER).
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  7. Shane Frederick & George Loewenstein & Ted O'Donoghue, 2002. "Time Discounting and Time Preference: A Critical Review," Journal of Economic Literature, American Economic Association, vol. 40(2), pages 351-401, June.
  8. Goldman, Steven M, 1980. "Consistent Plans," Review of Economic Studies, Wiley Blackwell, vol. 47(3), pages 533-37, April.
  9. Melvin Stephens Jr., 2003. ""3rd of tha Month": Do Social Security Recipients Smooth Consumption Between Checks?," American Economic Review, American Economic Association, vol. 93(1), pages 406-422, March.
  10. Melvin Stephens Jr., 2002. "Paycheck Receipt and the Timing of Consumption," NBER Working Papers 9356, National Bureau of Economic Research, Inc.
  11. Laibson, David, 1998. "Life-cycle consumption and hyperbolic discount functions," European Economic Review, Elsevier, vol. 42(3-5), pages 861-871, May.
  12. Thomas, Jonathan & Worrall, Tim, 1990. "Income fluctuation and asymmetric information: An example of a repeated principal-agent problem," Journal of Economic Theory, Elsevier, vol. 51(2), pages 367-390, August.
  13. Shapiro, Jesse M., 2005. "Is there a daily discount rate? Evidence from the food stamp nutrition cycle," Journal of Public Economics, Elsevier, vol. 89(2-3), pages 303-325, February.
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