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Taste-independence: an escape route from the opportunity paradox

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  • Jun Matsui

    (Waseda University
    Kagawa University)

Abstract

We provide an escape route from the opportunity paradox, which is described as a conflict between the ex ante and ex post perspectives on compensation by restricting the preference domain. Taste-independence is introduced as a property of preferences such that individuals’ maximized utility levels are the same regardless of their tastes for work. Using the optimal income taxation model, we obtain a compatibility theorem when individuals’ utilities are taste-independent and quasilinear in consumption.

Suggested Citation

  • Jun Matsui, 2025. "Taste-independence: an escape route from the opportunity paradox," Theory and Decision, Springer, vol. 98(2), pages 299-320, March.
    • Handle: RePEc:kap:theord:v:98:y:2025:i:2:d:10.1007_s11238-024-10007-x
    DOI: 10.1007/s11238-024-10007-x
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    References listed on IDEAS

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