Insurance aspects of tax policies are studied in a simple intertemporal general equilibrium model in which agents are uncertain about both the future wage rates and the rate of return on capital. Taxation and lump-sum subsidy policies generally reduce employment, output, and the capital stock...

This paper is concerned with the need for, and the implications of, $-optimality in learning problems. The authors consider a control problem in which a Bayesian decisionmaker faces a trade-off between expected current reward and accumulation of information. An example showing the need for the...