Behavioral 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...

We present a dynamic model of sequential information acquisition by a heterogeneous committee. At each date agents decide whether to vote to adopt one of two alternatives or continue to collect more information. The process stops when a qualified majority vote for an alternative. Three main...

We quantitatively investigate the allocative and welfare effects of secondary markets for cars. Gains from trade in these markets arise because of heterogeneity in the willingness to pay for higher-quality (i.e., newer) goods, but transaction costs are an impediment to instantaneous trade. We...

This paper explores the extent to which markets constrain intertemporal preferences. First, we show that without transaction costs, agents are immune to exploitation in competitive markets. In particular, a sequence of trades leaving any market participant strictly worse off (termed a money...

This paper uses a new data set on domestic child adoption to document the preferences of potential adoptive parents over born and unborn babies relinquished for adoption by their birth mothers. We show that adoptive parents exhibit significant biases in favor of girls and against...

We then consider the group of peers (or friends) as an object of choice. We characterize the peer group's optimal composition for each individual in the population. We show that, for each individual, there is a large equivalence class of optimal groups, potentially with maximal variance of...

Time inconsistency provides a motivation for linear Ramsey taxation in a Mirrleesian economy. Moreover, such a motivation overturns some classic results from the Ramsey taxation literature; specifically, indirect taxation may neither be useless (i.e., redundant) nor uniform.

A vast empirical evidence in experimental psychology on time discounting has documented various behavioral anomalies which cast doubts on the empirical support for exponential discounting, to date the most widely used assumption on time preference in economic theory. The most important of such...