Taste-independence: an escape route from the opportunity paradox

We provide an escape route from the opportunity paradox, which is described as a conflict between the ex ante and ex post perspectives on compensation by restricting the preference domain. Taste-independence is introduced as a property of preferences such that individuals’ maximized utility levels are the same regardless of their tastes for work. Using the optimal income taxation model, we obtain a compatibility theorem when individuals’ utilities are taste-independent and quasilinear in consumption.