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Government Policy with Time Inconsistent Voters

  • Leeat Yariv

    (California Institute of Technology)

  • Alessandro Lizzeri

    (New York University)

  • Alberto Bisin

    (New York University)

Behavioral economics presents a "paternalistic" rationale for government intervention. Current literature focuses on benevolent government. This paper introduces politicians who may indulge/exploit these behavioral biases. We present an analysis of the novel features that arise when the political process is populated by voters who may be time inconsistent, a' la Phelps and Polak (1968) and Laibson (1997). Time inconsistent voters exhibit demand for commitment. We show that electorally accountable politicians may choose policies that interfere with individuals' desire to commit, and that government may not be very effective in satisfying the demand for commitment.

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File URL: https://economicdynamics.org/meetpapers/2012/paper_92.pdf
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Paper provided by Society for Economic Dynamics in its series 2012 Meeting Papers with number 92.

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Date of creation: 2012
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Handle: RePEc:red:sed012:92
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Society for Economic Dynamics Marina Azzimonti Department of Economics Stonybrook University 10 Nicolls Road Stonybrook NY 11790 USA

Web page: http://www.EconomicDynamics.org/
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