Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/81963
Authors: 
Anderberg, Dan
Perroni, Carlo
Year of Publication: 
2000
Series/Report no.: 
EPRU Working Paper Series 2000-15
Abstract: 
We consider renegotiation of social earnings insurance arrangements by majority voting in an economy where ex-ante identical individuals make unobservable private investments in education. We show that voting-based renegotiation can result in a higher expected level of investment in comparison to the case where social insurance is determined by an appointed social planner. We also find that, with voting-based renegotiation, the availability of costly ex-post information about private investment can help overcome commitment problems. These findings call into question the practice of using a representative-consumer approach when modelling dynamic policy problems in large economies.
Document Type: 
Working Paper

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