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Renegotiation of Social Contracts by Majority Rule

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  • Anderberg, D.
  • Perroni, C.

Abstract

We consider renegotiation of social earnings insurance arrangements by majority voting in an economy where ex-ante identical individuals make unobservable private investments in education. We show that voting-based renegotiation can result in a higher expected level of investment in comparison to the case where social insurance is determined by an appointed social planner.

Suggested Citation

  • Anderberg, D. & Perroni, C., 2000. "Renegotiation of Social Contracts by Majority Rule," The Warwick Economics Research Paper Series (TWERPS) 566, University of Warwick, Department of Economics.
    • Handle: RePEc:wrk:warwec:566
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    INSURANCE ; EDUCATION ; INCOME ; VOTING;
    All these keywords.

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor
    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty

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