Behavioral Decisions and Policy

P.S. Dalton, S. Ghosal

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Abstract

We study the public policy implications of a model in which agents do not fully internalize all the conscequences of their actions. Such a model uni es seemingly disconected models with behavioral agents. We evaluate the scope of paternalistic and libertarian-parternalistic policies in the light of our model, and propose an alternative type of approach, called soft-libertarian, which guides the decision makers in the internalization of all the conscequences of their ac- tions. Psychotherapy is one example of a soft-libertarian policy. Moreover, we show that in our behavioral framework, policies that increase the set of oppor- tunities or provide more information to the agent may not longer be individual welfare improving.
Original languageEnglish
Place of PublicationTilburg
PublisherEconomics
Number of pages27
Volume2010-125
Publication statusPublished - 2010

Publication series

NameCentER Discussion Paper
Volume2010-125

Keywords

  • Behavioral Decisions
  • Revealed Preferences
  • Normative Preferences
  • Paternalism
  • Soft-Libertarian
  • Autonomy
  • Psychotherapy

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    Dalton, P. S., & Ghosal, S. (2010). Behavioral Decisions and Policy. (CentER Discussion Paper; Vol. 2010-125). Economics.