Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/107337
Authors: 
Anderberg, Dan
Cerrone, Claudia
Year of Publication: 
2014
Series/Report no.: 
CESifo Working Paper 5141
Abstract: 
Justification for policies to encourage investments in education, particularly for individuals at the lower end of the ability distribution, may be provided by behavioural economics. We present a prototypical model where individuals who are potentially loss averse around their expected outcome make risky investments in education and we draw on optimal tax theory to explore the design of policy. The model highlights the critical roles played by (i) the relationship between behavioural risk preferences, standard risk aversion and labour supply behaviour, (ii) the risk properties of education, and (iii) the degree of observability of individual academic ability.
Subjects: 
education
risk
disappointment
optimal taxation
JEL: 
D81
H21
I21
Document Type: 
Working Paper

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