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Unformatted text preview: Econ 119: Psychology and Economics Section 8 TOPIC III: Behavioral Economics and Public Policy March 17, 2010 1 Big Picture Huge potential role of Behavioral Economics in designing consumer policies: models acknowl- edge agents can fail to maximize their welfare. One big area is the taxation of harmful products which provide immediate pleasure and delayed rewards such as smoking. When consumers are hyperbolic discounters, the optimal sin-tax is much greater than actually taxes. Another good example is savings for retirement. 2 Key Terms My hunch is that you have a good working knowledge of Anticipatory utility and Utility from Beliefs (lectures 15 and 16) if you can explain the following concepts:- Consumer policies- Revenue-Neutral Optimal Tax- Libertarian paternalism- Asymmetric paternalism- Robust paternalism- SMarT Plan 1 3 Discussion: Taxation To Unhealthy Food (FIRST: Read the attached article at http://www.npr.org/templates/story/story.php?storyId=124610428) 1. Under which circumstances would a classical economist (Gary) have financed the experiment?1....
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- Spring '08