This paper develops a simple, incentive compatible, allocation mechanism by means of which both polluters and pollutees will reveal their preferences so that the government can determine the Pareto optimal pollution level. The mechanism involves a combination of the Pigou tax and the Clarke tax....

A widely recognized article by Smith suggests that harvesting leading to species extinction may be socially optimal, provided that the species growth-potential is sufficiently low. It is shown that this conclusion hinges on special assumptions about harvest technology which, despite a...

An impending demographic crisis in Germany calls for fundamental reforms of the pension system. In a democracy, however, reforms require the support of the majority of the electorate. To determine whether the majority is in favour of reforms of the pension system, we calculate for each year the...

It is shown that two of the axioms necessary for the expected utility rule imply the Principle of Insufficient Reason. Whenever a decision maker knows the possible states of the world, but completely lacks information about the plausibility of each single state, he has to behave as if all states...