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Regulating Altruistic Agents

Anthony Heyes () and Sandeep Kapur

No 1010, Birkbeck Working Papers in Economics and Finance from Birkbeck, Department of Economics, Mathematics & Statistics

Abstract: Altruism or `regard for others' can encourage self-restraint among generators of negative externalities, thereby mitigating the externality problem. We explore how introducing impure altruism into standard regulatory settings alters regulatory prescriptions. We show that the optimal calibration of both quantitative controls and externality taxes are affected. It also leads to surprising results on the comparative performance of instruments. Under quantity-based regulation welfare is increasing in the propensity for altruism in the population; under price-based regulation the relationship is non-monotonic. Price-based regulation is preferred when the population is either predominantly altruistic or predominantly selfish, quantity-based regulation for cases in between.

Date: 2010-05
New Economics Papers: this item is included in nep-cbe, nep-mic and nep-reg
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https://eprints.bbk.ac.uk/id/eprint/7544 First version, 2010 (application/pdf)

Related works:
Journal Article: Regulating altruistic agents (2011) Downloads
Journal Article: Regulating altruistic agents (2011) Downloads
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