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A Reformulation of Libertarian Paternalism

  • Guilhem Lecouteux

    (Department of Economics, Ecole Polytechnique - CNRS : UMR7176 - Polytechnique - X)

Conventional normative economics is built on the assumption that people act as if seeking to satisfy coherent and a priori preferences. This model has however been challenged by many empirical works highlighting the existence of systematic deviations from the behaviour predicted by the neoclassical theory. The development of behavioural economics therefore questions the validity of the results developed by normative economists. Reconciling behavioural and normative economics needs in particular a clarification of the normative content of economic prescriptions, since it appears that the assumption of rational preferences enabled economists to overstep this question, the different interpretations of the current normative criterion of preference-satisfaction leading in fine to the same prescriptions. In this paper, we want to highlight that libertarian paternalism is probably the most natural solution to the reconciliation problem for neoclassical economists, since its current formulation relies on the existence of a rational homo oeconomicus trapped within each individual. We can however find within the current formulation of libertarian paternalism the same difficulties than the ones of Pareto's theory of the homo oeconomicus. We therefore suggest a reformulation of libertarian paternalism based on a normative criterion of individual autonomy rather than preference-satisfaction, and defend its relevance in the specific context of common-pool resources, by showing that the normative prescriptions generated by our principle of individual autonomy present strong similarities with the institutional design principles of Ostrom (1990) enabling a sustainable management of common-pool resources.

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Date of creation: 07 Aug 2013
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Handle: RePEc:hal:wpaper:hal-00850533
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  1. Kahneman, Daniel & Tversky, Amos, 1979. "Prospect Theory: An Analysis of Decision under Risk," Econometrica, Econometric Society, vol. 47(2), pages 263-91, March.
  2. Ben McQuillin & Robert Sugden, 2012. "Reconciling normative and behavioural economics: the problems to be solved," Social Choice and Welfare, Springer, vol. 38(4), pages 553-567, April.
  3. Samuelson, William & Zeckhauser, Richard, 1988. " Status Quo Bias in Decision Making," Journal of Risk and Uncertainty, Springer, vol. 1(1), pages 7-59, March.
  4. Robert Sugden, 2004. "The Opportunity Criterion: Consumer Sovereignty Without the Assumption of Coherent Preferences," American Economic Review, American Economic Association, vol. 94(4), pages 1014-1033, September.
  5. Robert Sugden, 2007. "The value of opportunities over time when preferences are unstable," Social Choice and Welfare, Springer, vol. 29(4), pages 665-682, December.
  6. Sunstein, Cass R, 1998. "Selective Fatalism," The Journal of Legal Studies, University of Chicago Press, vol. 27(2), pages 799-823, June.
  7. Kahneman, Daniel & Wakker, Peter P & Sarin, Rakesh, 1997. "Back to Bentham? Explorations of Experienced Utility," The Quarterly Journal of Economics, MIT Press, vol. 112(2), pages 375-405, May.
  8. Cass R. Sunstein & Richard H. Thaler, 2003. "Libertarian paternalism is not an oxymoron," Conference Series ; [Proceedings], Federal Reserve Bank of Boston, vol. 48(Jun).
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