In this paper we develop a theoretical model to clarify the underlying mechanisms that drive individual decision making and responses to behavioral interventions, such as nudges. The contribution of the paper is threefold: First, the model provides a theoretical framework that comprehensively...

The Swedish tax system of 1991 and its effects on growth and welfare are examined within three commonly used growth models. The results tend to be very sensitive to the choice of model. Compared with a benchmark of first-best taxation, a model with an endogenous labor-leisure choice suggests...