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Public Goods and Optimal Paternalism under Present-Biased Preferences

Author

Listed:
  • Aronsson, Thomas

    () (Department of Economics, Umeå University)

  • Granlund, David

    () (Department of Economics, Umeå University)

Abstract

This paper deals with the optimal provision of a state-variable public good in a two-type model, when the consumers have present-biased preferences due to quasi-hyperbolic discounting. The results show that the preference for immediate gratification facing the (mimicking) high-ability type weakens the incentive to adjust the public provision in response to the self-selection constraint.

Suggested Citation

  • Aronsson, Thomas & Granlund, David, 2010. "Public Goods and Optimal Paternalism under Present-Biased Preferences," Umeå Economic Studies 811, Umeå University, Department of Economics.
  • Handle: RePEc:hhs:umnees:0811
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    Keywords

    Public Goods; Quasi-Hyperbolic Discounting; Redistribution; Asymmetric Information;

    JEL classification:

    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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