Time-inconsistent preferences and social security: Revisited in continuous time |
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Authors: | Frank N Caliendo |
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Institution: | Jon M. Huntsman School of Business, Utah State University, Logan, UT 84322-3565, United States |
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Abstract: | ?mrohoro?lu et al. (2003) prove that it is impossible in a three period partial equilibrium model for social security to improve the welfare of a naive quasi-hyperbolic agent if the program has a negative net present value. This paper first generalizes their impossibility theorem to a continuous time setting and then proves analytically that no discount function exists that can rationalize a social security program with a negative net present value. |
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Keywords: | Time inconsistency Social security |
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