Intertemporal conflicts occur when a group of agents with heterogeneous time
\npreferences must make a collective decision about how to manage a common asset.
\nHow should this be done? We examine two methods – an `Economics’ approach that
\nseeks to implement efficient allocations, and a `Politics’ approach in which agents vote
\nover consumption plans. We compare these methods by varying two characteristics of
\nthe problem: are agents’ preferences known or are they hidden information, and can
\nthey commit to intertemporal collective plans or not? We show that if commitment
\nis possible the Economics approach always Pareto dominates the Politics approach,
\nin both full and hidden information scenarios. By contrast, without commitment
\nthe group may be better off if the Politics approach is adopted. We investigate
\nwhen Politics trumps Economics analytically, and then apply our model to a survey
\nof economists’ views on the appropriate pure rate of time preference for project
\nappraisal. For a wide range of model parameters, and under both full and hidden
\ninformation, the Politics approach is supported by a majority of agents, and leads to
\nhigher group welfare.<\/p>\n\n","protected":false},"excerpt":{"rendered":"\n
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