I advise you to read ¡­

I advise you to read sections 1-3 of the Edwards/Keen/Tuomala- article and 15.1-15.6.1 of the textbook before the lecture on January 26. For understanding the model in the article it may be helpful to have a look at the presentation of basically the same model in Stiglitz (1982): Self-selection and Pareto efficient taxation, Journal of Public Economics 17, 213-240.