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Title:The undesirability of randomized income taxation under decreasing risk aversion PDF Logo
Authors:Hellwig, Martin
Issue Date:2005
Series/Report no.:Preprints of the Max Planck Institute for Research on Collective Goods 2005,27
Abstract:For the standard specification of the utilitarian optimal income tax problem with hidden characteristics, the paper shows that randomized tax schemes are undesirable if preferences exhibit a property of weakly decreasing risk aversion according to the multidimensional risk aversion concept of Hellwig (2004). The property of decreasing risk aversion also implies uniqueness of the optimal income tax schedule and continuity in cases where the type distribution has a continuous density.
Subjects:Optimal Income Taxation
Randomized Incentive Schemes
Nonincreasing Risk Aversion
JEL:H21
Document Type:Working Paper
Appears in Collections:Preprints of the Max Planck Institute for Research on Collective Goods

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