Equality of opportunity and optimal effort decision under uncertainty
We 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.
|Date of creation:||Jan 2009|
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- Arnaud Lefranc & Nicolas Pistolesi & Alain Trannoy, 2006.
"Equality of opportunity: Definitions and testable conditions, with an application to income in France,"
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.
- 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.
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- Roemer, J.E., 1992. "A Pragmatic Theory of Responsibility for the Egalitarian Planner," Papers 391, California Davis - Institute of Governmental Affairs.
- Villar Notario Antonio & Calo-Blanco Aitor, 2009. "Education, Utilitarianism, and Equality of Opportunity," Working Papers 201051, Fundacion BBVA / BBVA Foundation.
- Calo-Blanco, Aitor & Villar, Antonio, 2009. "Education, Utilitarianism, and Equality of Opportunity," MPRA Paper 18720, University Library of Munich, Germany.
- Bengt Holmstrom, 1979. "Moral Hazard and Observability," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 74-91, Spring.
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