2017

Design of Reforms with Time-Inconsistent Voters

Reprint No. 2017:73

Author(s): Jisoo Hwang and Johanna MöllerströmYear: 2017 Title: Journal of Public Economic Theory Volume (No.): 19 (3) Pages: 748–761
Online article (restrictions may apply)


Widespread agreement that a political reform is necessary is no guarantee that it is actually undertaken in a timely manner. There is often a delay before action is taken and reform packages that would be most efficient to implement all at once are often done only gradually. We propose a theoretical model explaining this behavior and show that when voters have present-biased, time-inconsistent preferences, gradualism can arise in equilibrium and be welfare-enhancing. This is because without the possibility for gradualism, time-inconsistent voters would delay implementing the reform even more. Using a citizen candidate model, we allow the agenda setter, who decides which reform schedule to put to vote, to be endogenously determined. We show that voters who are aware of their own time inconsistency can use the election of the agenda setter as a commitment device and appoint an agent who is more patient than the median voter in order to avoid full procrastination and to achieve efficiency-maximizing gradualism.


Reference:
Hwang, Jisoo and Johanna Möllerström (2017), "Design of Reforms with Time-Inconsistent Voters". Journal of Public Economic Theory 19(3), 748–761.

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Martin Ljunge, IFN, is the author of a chapter, "Trust promotes health: addressing reverse causality by studying children of immigrants", in a new book edited by Sherman Folland and Eric Nauenberg. The cutting edge of research is presented, covering the ever-expanding social capital field.

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