Journal of Economic Theory 41, 112-132, 1987.
Summary. The paper develops a concept of equilibrium behaviour in a model of nonpaternalistic intergenerational altruism. When each generation’s utility depends on that of at least two successors, equilibria may be inefficient.
(with Carlo Andreatta), October 2026.
Summary. We study the welfare consequences of social planning for citizens who display hedonistic altruism towards the next generation. A social planner must effectively be more patient than its citizens, even if every citizen has the same discount factor, but the planner also exhibits time inconsistency and has systematic future bias. We presume that successive generations of planners cannot bind one another to a course of action. Our main result states that every equilibrium policy with positive consumption that is nondecreasing in initial output must be either fully Pareto optimal, or “consumption inefficient” in the sense of Malinvaud (1953) and Phelps (1962, 1965). Moreover, we provide sufficient conditions for either outcome to occur.
(with Rajiv Vohra) Econometrica 87(5), 1763–1779 Online Appendix.
Summary. The stable set of von Neumann and Morgenstern can be extended to cover farsighted coalitional deviations, as proposed by Harsanyi (1974), and more recently reformulated by Ray and Vohra (2015). However, while coalitional deviations improve on existing outcomes, coalitions might do even better by moving elsewhere. Or other coalitions might intervene to impose their favored moves. We show that every farsighted stable set satisfying some reasonable, and easily verifiable, properties is unaffected by the imposition of this stringent maximality requirement.