Government Policy with Time Inconsistent Voters

Leeat Yariv, Alessandro Lizzeri and Alberto Bisin
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Leeat Yariv: California Institute of Technology

No 92, 2012 Meeting Papers from Society for Economic Dynamics

Abstract: 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.

Date: 2012
New Economics Papers: this item is included in nep-cdm and nep-pol
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Journal Article: Government Policy with Time Inconsistent Voters (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:red:sed012:92

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