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Temptation and social security in a dynastic framework

Kumru, Cagri; Tran, Chung


We investigate welfare and aggregate implications of a pay-as-you-go (PAYG) social security system in a dynastic framework in which individuals have self-control problems. The presence of self-control problems induces individuals to save less because of their urge for temptation towards current consumption. Individuals' efforts to balance between the short-term urge for temptation and the long-term commitment for consumption smoothing result in self-control costs. In this environment PAYG...[Show more]

CollectionsANU Research Publications
Date published: 2012
Type: Journal article
Source: European Economic Review
DOI: 10.1016/j.euroecorev.2012.07.006


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