We consider the decision of an agent with time inconsistent preferences to undertake an irreversible investment that yields an uncertain current benefit and a delayed cost. We show that, if the flow of information revealed between periods when the investment is postponed is sufficiently high,...

We analyze the decision of individuals with time inconsistent preferences who undertake irreversible activities yielding either a current cost and a future benefit or a current benefit and a future cost. We first show that, when benefits come earlier than costs, the individual faces a...

We study the dynamics of optimal trade policy in a model with costly inter-sectoral adjustment of labour, where migrants pay less than the marginal social cost of migration. If workers have rational expectations, a future tariff has an announcement effect on the current migration decision. If...

In this Paper we argue that the objectives given to the European Central Bank in the Maastricht Treaty are not well represented by the widely used weighted sum of squared deviations of inflation and output from target (plus possibly terms in squared changes in interest rates to pick up interest...

We analyze the investment decision of a population of time inconsistent entrepreneurs who overweight current payoffs relative to future returns. We show that, in order to avoid inefficient procrastination, agents may find it optimal to keep optimistic priors about their chances of success and...

This paper sets a framework for analysing how memoryless voters may come to elect and re-elect a committed policy-maker. Policy-makers, we assume, are trusted to implement the policy that they announce ex ante (and do implement it, if elected and re-elected). Voters, however, are never bound by...

Following Kydland and Prescott's (1977) seminal paper on time-inconsistency, a large literature has explored possible frameworks within which monetary policy could overcome this problem -- neatly illustrated in Barro and Gordon's (1983) model. In a stochastic world there appears to be a...