Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/59885
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dc.contributor.authorAronsson, Thomasen_US
dc.contributor.authorSchöb, Ronnieen_US
dc.date.accessioned2012-07-11en_US
dc.date.accessioned2012-07-20T09:49:49Z-
dc.date.available2012-07-20T09:49:49Z-
dc.date.issued2012en_US
dc.identifier.urihttp://hdl.handle.net/10419/59885-
dc.description.abstractAdaptation is omnipresent but people systematically fail to correctly anticipate the degree to which they adapt. This leads individuals to make inefficient intertemporal decisions. This paper concerns optimal income taxation to correct for such anticipation-biases in a framework where consumers adapt to earlier consumption levels through a habit-formation process. The analysis is based on a general equilibrium OLG model with endogenous labor supply and savings where each consumer lives for three periods. Our results show how a paternalistic government may correct for the effects of anticipation-bias through a combination of time-variant marginal labor income taxes and savings subsidies. Furthermore, the optimal policy mix remains the same, irrespective of whether consumers commit to their original life-time plan for work hours and savings decided upon in the first period of life or re-optimize later on when realizing the failure to adapt.en_US
dc.language.isoengen_US
dc.publisher|aFreie Univ., Fachbereich Wirtschaftswiss. |cBerlinen_US
dc.relation.ispartofseries|aSchool of Business & Economics, Discussion Paper: Economics |x2012/13en_US
dc.subject.jelD03en_US
dc.subject.jelD61en_US
dc.subject.jelD91en_US
dc.subject.jelH21en_US
dc.subject.ddc330en_US
dc.subject.keywordoptimal taxationen_US
dc.subject.keywordadaptationen_US
dc.subject.keywordhabit-formationen_US
dc.subject.keywordanticipation-biasen_US
dc.subject.keywordpaternalismen_US
dc.titleAdaptation, Anticipation-bias and optimal income taxationen_US
dc.typeWorking Paperen_US
dc.identifier.ppn719254590en_US
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungenen_US
dc.identifier.repecRePEc:zbw:fubsbe:201213-

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