Konrad, Kai A.; Spadaro, Amedeo
Selection Filters, Redistributive Taxation and Overconfidence.
DELTA Working Papers
Full text not available from 'Open Access LMU'.
Education can be a filter that solves an assignment problem. We consider what this implies for redistributive taxation in the political process. First we assume that all individuals have undistorted expectations about their abilities. Then we analyse populations in which some group of workers is overly confident. The overconfident are more successful, but enjoy lower utility. Just confident workers benefit from overly confident workers. Also, the preferences of just confident workers for redistribution do not necessarily exceed those of overconfident workers.