Renegotiation of Social Contracts by Majority Rule
We consider renegotiation of social earnings insurance arrangements by majority voting in an economy where ex-ante identical individuals make unobservable private investments in education. We show that voting-based renegotiation can result in a higher expected level of investment in comparison to the case where social insurance is determined by an appointed social planner. We also find that, with voting-based renegotiation, the availability of costly ex-post information about private investment can help overcome commitment problems. These findings call into question the practice of using a representative-consumer approach when modelling dynamic policy problems in large economies.
|Date of creation:|
|Contact details of provider:|| Postal: Øster Farimagsgade 5, Building 26, DK-1353 Copenhagen K., Denmark|
Phone: (+45) 3532 4411
Fax: +45 35 32 30 00
Web page: http://www.econ.ku.dk/epru/
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Joseph E. Stiglitz, 1977. "Monopoly, Non-linear Pricing and Imperfect Information: The Insurance Market," Review of Economic Studies, Oxford University Press, vol. 44(3), pages 407-430.
- Mathias Dewatripont & Eric Maskin, 1990.
"Contract renegotiation in models of asymmetric information,"
ULB Institutional Repository
2013/9579, ULB -- Universite Libre de Bruxelles.
- Dewatripont, M. & Maskin, E., 1990. "Contract renegotiation in models of asymmetric information," European Economic Review, Elsevier, vol. 34(2-3), pages 311-321, May.
- Hans-Werner Sinn, 1995.
"Social Insurance, Incentives, and Risk Taking,"
NBER Working Papers
5335, National Bureau of Economic Research, Inc.
- Konrad, Kai A., 1999.
"Privacy, time consistent optimal labor income taxation and education policy,"
IZA Discussion Papers
82, Institute for the Study of Labor (IZA).
- Konrad, Kai A., 1999. "Privacy, Time Consistent Optimal Labour Income Taxation and Education Policy," CEPR Discussion Papers 2326, C.E.P.R. Discussion Papers.
- Boadway, R. & Marceau, N. & Marchand, M., "undated".
"Investment in education and the time inconsistency of redistributive tax policy,"
CORE Discussion Papers RP
1219, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Boadway, Robin & Marceau, Nicolas & Marchand, Maurice, 1996. "Investment in Education and the Time Inconsistency of Redistributive Tax Policy," Economica, London School of Economics and Political Science, vol. 63(250), pages 171-189, May.
- Robin Boadway & Nicolas Marceau & Maurice Marchand, 1992. "Investment in Education and the Time Inconsistency of Redistributive Tax Policy," Working Papers 860, Queen's University, Department of Economics.
- George A. Akerlof, 1980. "A Theory of Social Custom, of which Unemployment may be One Consequence," The Quarterly Journal of Economics, Oxford University Press, vol. 94(4), pages 749-775.
- Andersson, Frederik & Konrad, Kai A., 2001.
"Globalization and human capital formation
[Globalisierung und Humankapitalinvestitionen]," Discussion Papers, Research Unit: Market Processes and Governance FS IV 01-01, Social Science Research Center Berlin (WZB).
- Kydland, Finn E & Prescott, Edward C, 1977. "Rules Rather Than Discretion: The Inconsistency of Optimal Plans," Journal of Political Economy, University of Chicago Press, vol. 85(3), pages 473-491, June.
- Drew Fudenberg & Jean Tirole, 1988.
"Moral Hazard and Renegotiation in Agency Contracts,"
494, Massachusetts Institute of Technology (MIT), Department of Economics.
- Fudenberg, Drew & Tirole, Jean, 1990. "Moral Hazard and Renegotiation in Agency Contracts," Econometrica, Econometric Society, vol. 58(6), pages 1279-1319, November.
- Pearce, David & Stacchetti, Ennio, 1997. "Time Consistent Taxation by a Government with Redistributive Goals," Journal of Economic Theory, Elsevier, vol. 72(2), pages 282-305, February.
- Robin W. Boadway & Michael Keen, 1993.
"Evasion and Time Consistency in the Taxation of Capital Income,"
890, Queen's University, Department of Economics.
- Boadway, Robin & Keen, Michael, 1998. "Evasion and Time Consistency in the Taxation of Capital Income," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 39(2), pages 461-476, May.
- Robin Boadway & Michael Keen, 1993. "Evasion and time consistency in the taxation of capital income," IFS Working Papers W93/20, Institute for Fiscal Studies.
- Sanford J Grossman & Oliver D Hart, 2001.
"An Analysis of the Principal-Agent Problem,"
Levine's Working Paper Archive
391749000000000339, David K. Levine.
- Sanford Grossman & Oliver Hart, "undated". "An Analysis of the Principal-Agent Problem," Rodney L. White Center for Financial Research Working Papers 15-80, Wharton School Rodney L. White Center for Financial Research.
- Grossman, Sanford J & Stiglitz, Joseph E, 1980.
"On the Impossibility of Informationally Efficient Markets,"
American Economic Review,
American Economic Association, vol. 70(3), pages 393-408, June.
- Sanford J Grossman & Joseph E Stiglitz, 1997. "On the Impossibility of Informationally Efficient Markets," Levine's Working Paper Archive 1908, David K. Levine.
- Poutvaara, Panu, 2003.
"Investment in Education and Redistributive Taxation without Precommitment,"
Munich Reprints in Economics
19299, University of Munich, Department of Economics.
- Panu Poutvaara, 2002. "Investment in Education and Redistributive Taxation without Precommitment," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 59(2), pages 177-177, May.
When requesting a correction, please mention this item's handle: RePEc:kud:epruwp:00-15. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Thomas Hoffmann)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.