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Minwook Kang and Lei Wang
''Pareto criterion and long-term perspective criterion under myopic discounting''
( 2019, Vol. 39 No.1 )
Under myopic discounting, which encompasses the famous psychological and economics model, hyperbolic discounting preferences, this paper shows that efficiency by the Pareto criterion is a sufficient condition for efficiency by the long-term perspective criterion. This result provides additional justification for Pareto-improving policies under myopic discounting by showing that such policies improve normative preferences as well. As an application of our result, we provide an example of Laibson's Pareto-improving consumption tax.
Keywords: Pareto criterion, long-term perspective criterion, hyperbolic discounting, present-bias
JEL: D6 - Welfare Economics: General
H2 - Taxation, Subsidies, and Revenue: General
Manuscript Received : Oct 03 2018 Manuscript Accepted : Jan 10 2019

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