AbstractBehavioral economics presents a "paternalistic" rationale for a benevolent government's intervention. We consider an economy where the only "distortion" is agents' time-inconsistency. We study the desirability of various forms of collective action, ones pertaining to costly commitment and ones pertaining to the timing of consumption, when government decisions respond to voters' preferences via the political process. Three messages emerge. First, welfare is highest under either full centralization or laissez-faire. Second, introducing collective action only on consumption decisions yields no commitment. Last, individuals' relative preferences for commitment may reverse depending on whether future consumption decisions are centralized or not.
CitationLizzeri, Alessandro, and Leeat Yariv. 2017. "Collective Self-Control." American Economic Journal: Microeconomics, 9 (3): 213-44. DOI: 10.1257/mic.20150325
- D11 Consumer Economics: Theory
- D15 Intertemporal Household Choice; Life Cycle Models and Saving
- D61 Allocative Efficiency; Cost-Benefit Analysis
- D72 Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
- D91 Micro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making