The conflict between naive and sophisticated choice as a form of the ‘liberal paradox’
Tóm tắt
Pareto-inefficient perfect equilibria can be represented by the liberal paradox approach of Sen, appropriately reconfigured to model intertemporal decision-making by an individual. We show that the preference profile used by Grout (1982) to construct a case in which naive choice Pareto-dominates sophisticated choice can be so represented, if tastes change and if the individual can make decisions at time t, which restrict or determine opportunities available in period t + 1 and beyond. This ability to make a decision that binds oneself in the future is a form of ‘rights assignment’. We also show how two resolutions of the liberal paradox work out in the individual decision framework.
Tài liệu tham khảo
Austen-Smith, D.: 1982, ‘Restricted Pareto and rights’, Journal of Economic Theory 26, 89–99.
Blau, J. H.: 1975, ‘Liberal values and independence’, Review of Economic Studies 42, 395–402.
Farrell, M. J.: 1976, ‘Liberalismin the theory of social choice’, Review of Economic Studies 43, 3–10.
Gibbard, A.: 1974, ‘A Pareto-consistent libertarian claim’, Journal of Economic Theory 7, 388–410.
Grout, P.: 1982, ‘Welfare economics of decision making with changing preferences’, Review of Economic Studies 49, 83–90.
Hammond, P.: 1976, ‘Changing tastes and coherent dynamic choice’, Review of Economic Studies 43, 159–173.
May, K. O.: 1954, ‘Intransitivity, utility, and the aggregation of preference patterns’, Econometrica 22, 1–13.
Sen, A. K.: 1970, ‘The impossibility of a Paretian liberal’, Journal of Political Economy 78, 152–157.
Sen, A. K.: 1976, ‘Liberty, unanimity, and rights’, Econometrica 43, 217–245.