Public Goods and Optimal Paternalism under Present-Biased Preferences

Thomas Aronsson () and David Granlund ()
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Thomas Aronsson: Department of Economics, Umeå University, Postal: S 901 87 Umeå, Sweden
David Granlund: Department of Economics, Umeå University, Postal: S 901 87 Umeå, Sweden

No 811, Umeå Economic Studies from Umeå University, Department of Economics

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.

Keywords: Public Goods; Quasi-Hyperbolic Discounting; Redistribution; Asymmetric Information (search for similar items in EconPapers)
JEL-codes: D03 D61 H41 (search for similar items in EconPapers)
Pages: 7 pages
Date: 2010-06-21
New Economics Papers: this item is included in nep-cta and nep-pbe
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