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Social Insurance, Information Revelation, and Lack of Commitment

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  • Luigi Iovino

    (Bocconi)

  • Mikhail Golosov

    (Princeton University)

Abstract

We study the problem of optimal social insurance when agents are privately informed and the government cannot commit to a particular allocation. Contrary to the previous literature, we assume that agents' types have some persistence. We show that under some conditions it is optimal for the agents to partly misreport their types to the government. By revealing only part of their information, the agents lower the incentive for the government to deviate on its past promises.

Suggested Citation

  • Luigi Iovino & Mikhail Golosov, 2013. "Social Insurance, Information Revelation, and Lack of Commitment," 2013 Meeting Papers 1020, Society for Economic Dynamics.
    • Handle: RePEc:red:sed013:1020
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    References listed on IDEAS

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    3. Golosov, M. & Tsyvinski, A. & Werquin, N., 2016. "Recursive Contracts and Endogenously Incomplete Markets," Handbook of Macroeconomics, in: J. B. Taylor & Harald Uhlig (ed.), Handbook of Macroeconomics, edition 1, volume 2, chapter 0, pages 725-841, Elsevier.
    4. Brendon, Charles & Ellison, Martin, 2018. "Time-consistently undominated policies," LSE Research Online Documents on Economics 87176, London School of Economics and Political Science, LSE Library.
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    More about this item

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents

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