Rationalizations and mistakes: optimal policy with normative ambiguity

Jacob Goldin and Daniel Reck

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: Behavior that appears to violate neoclassical assumptions can often be rationalized by incorporating an optimization cost into decision-makers' utility functions. Depending on the setting, these costs may reflect either an actual welfare loss for the decision-maker who incurs them or a convenient (but welfare irrelevant) modeling device. We consider how the resolution of this normative ambiguity shapes optimal policy in a number of contexts, including default options, inertia in health plan selection, take-up of social programs, programs that encourage moving to a new neighborhood, and tax salience.

JEL-codes: J1 (search for similar items in EconPapers)
Date: 2018-05-01
New Economics Papers: this item is included in nep-exp, nep-hea and nep-upt
References: Add references at CitEc
Citations:

Published in AEA Papers and Proceedings, 1, May, 2018, 108, pp. 98-102. ISSN: 2574-0768

Downloads: (external link)
http://eprints.lse.ac.uk/89237/ Open access version. (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:89237

Access Statistics for this paper

More papers in LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library LSE Library Portugal Street London, WC2A 2HD, U.K.. Contact information at EDIRC.
Bibliographic data for series maintained by LSERO Manager ().