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Media type:
E-Article
Title:
Libertarian Paternalism, Information Production, and Financial Decision Making
Contributor:
Carlin, Bruce Ian;
Gervais, Simon;
Manso, Gustavo
imprint:
Oxford University Press, 2013
Published in:The Review of Financial Studies
Language:
English
DOI:
10.1093/rfs/hht025
ISSN:
1465-7368;
0893-9454
Origination:
Footnote:
Description:
<p>We develop a theoretical model to analyze the effects of libertarian paternalism on information production and financial decision making. Individuals in our model appreciate the information content of the recommendations made by a social planner. This affects their incentive to gather information, and in turn the speed at which information spreads across market participants, via social learning or formal advice channels. We characterize situations in which libertarian paternalism improves welfare and contrast them with scenarios in which this policy is suboptimal because of its negative impact on the production and propagation of information.</p>