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2016

Economics

SelectedWorks

Articles 1 - 30 of 32

Full-Text Articles in Social and Behavioral Sciences

Information, Competition, And The Quality Of Charities, Silvana Krasteva, Huseyin Yildirim Dec 2016

Information, Competition, And The Quality Of Charities, Silvana Krasteva, Huseyin Yildirim

Huseyin Yildirim

Drawing upon the all-pay auction literature, we propose a model of charity competition in which informed giving alone can account for the significant quality heterogeneity across similar charities. Our analysis identifies a negative effect of competition and a positive effect of informed giving on the equilibrium quality of charity. In particular, we show that as the number of charities grows, so does the percentage of charity scams, approaching one in the limit. In light of this and other results, we discuss the need for regulating nonprofit entry and conduct as well as promoting informed giving.

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Finance And Export Survival: The Case Of Mena Region And Sub-Saharan Africa, Melise Jaud, Madina Kukenova, Martin Strieborny Sep 2016

Finance And Export Survival: The Case Of Mena Region And Sub-Saharan Africa, Melise Jaud, Madina Kukenova, Martin Strieborny

Martin Strieborny

The paper looks at unique firm-product-destination export data collected by custom authoritiesin four countries from the Middle East and North Africa (MENA) - Jordan,Kuwait, Morocco, Yemen as well as in six countries of Sub-Saharan Africa(SSA) - Ghana, Mali, Malawi, Senegal, Tanzania, Uganda. We use these data toexamine to impact of financial development on the long-term success ofexports from developing countries. We find that those agricultural exportsthat face particularly costly implementation of Sanitary and PhytosanitaryStandards (SPS) are also the ones that disproportionately benefit from ahigher level of domestic financial development. This result confirms theprevious findings from a smaller SSA sample (Jaudetal. …

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Finance, Comparative Advantage, And Resource Allocation, Melise Jaud, Madina Kukenova, Martin Strieborny Sep 2016

Finance, Comparative Advantage, And Resource Allocation, Melise Jaud, Madina Kukenova, Martin Strieborny

Martin Strieborny

Can financial institutions and markets enhance the discipline imposed by competitive product markets and thus improve resource allocation in the real economy? We address this question in the context of international trade, using disaggregated product-level data from 71 countries exporting to the USA. We show that exported products exit the US market sooner if they stand far away from the exporting country's comparative advantage. This pattern is stronger when the exporting country has a well-developed banking system, but it is unaffected by the depth of stock markets. These results are in accordance with theories stressing the disciplining role of debt.

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Estimating The Income Loss Of Disabled Individuals: The Case Of Spain, Maria Cervini-Plá, José I. Silva, Judit Vall Sep 2016

Estimating The Income Loss Of Disabled Individuals: The Case Of Spain, Maria Cervini-Plá, José I. Silva, Judit Vall

José Ignacio Silva

In this paper we present a theoretical model along with an empirical model to identify the effects of disability on wages. From the theoretical model we derive the hypothesis that only the temporary component of the wage gap, which is due to assimilation costs, will diminish over time, whereas the permanent element, which is due to the productivity loss after the disabling condition, will in fact persist. We test this theoretical hypothesis using an exogenous disability shock (accident) and combine propensity score matching with a difference-in-differences method to account for observed and unobserved time-constant differences. In all our specifications we …

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Contract Structure For Joint Production: Risk And Ambiguity Under Compensatory Damages, Michael D. Ryall, Rachelle C. Sampson Jul 2016

Contract Structure For Joint Production: Risk And Ambiguity Under Compensatory Damages, Michael D. Ryall, Rachelle C. Sampson

Michael D Ryall

We develop a model in which the parties to a joint production project have a choice of specifying contractual performance in terms of actions or deliverables. Penalties for noncompliance are not specified; rather, they are left to the courts under the legal doctrine of compensatory damages. We analyze three scenarios of increasing uncertainty: Full Knowledge - where implications of partner actions are known; Risk - where implications can be probabilistically quantified; and, Ambiguity - where implications cannot be so quantified. Under Full Knowledge, action requirements dominate: they always induce the maximum economic value. This dominance vanishes in the Risk scenario. …

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Optimal Task Assignments, Felipe Balmaceda Assoc Prof. Jul 2016

Optimal Task Assignments, Felipe Balmaceda Assoc Prof.

Felipe Balmaceda

This paper studies optimal task assignments in a risk neutral principal-agent model in which agents are compensated according to an aggregated performance measure. The main trade-off involved is one in which specialization allows the implementation of any possible effort profile, while multitasking constraint the set of implementable effort profiles. Yet, the implementation of any effort profile in this set is less expensive than that under specialization. The principal prefers multitasking to specialization except when tasks are complements and the output after success is small enough so that it is not second-best optimal to implement high effort in each task. This …

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A Theory Of Political Entrenchment, Gilles Saint-Paul, Davide Ticchi, Andrea Vindigni Jun 2016

A Theory Of Political Entrenchment, Gilles Saint-Paul, Davide Ticchi, Andrea Vindigni

Davide Ticchi

We develop a theory of endogenous political entrenchment in a simple two-party dynamic model of income redistribution with probabilistic voting. A partially self-interested left-wing party may implement (entrenchment) policies reducing the income of its own constituency, the lower class, in order to consolidate its future political power. Such policies increase the net gain that low-skill agents obtain from income redistribution, which only the Left (but not the Right) can credibly commit to provide, and therefore may help offsetting a potential future aggregate ideological shock averse to the left-wing party. We demonstrate that political entrenchment by the Left occurs only if …

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Single-Firm Event Studies, Securities Fraud, And Financial Crisis: Problems Of Inference, Andrew Baker May 2016

Single-Firm Event Studies, Securities Fraud, And Financial Crisis: Problems Of Inference, Andrew Baker

Andrew Baker

Lawsuits brought pursuant to section 10(b) of the Securities and Exchange Actdepend on the reliability of a statistical tool called an event study to adjudicate issues ofreliance, materiality, loss causation, and damages. Although judicial acceptance of theevent study technique is pervasive, there has been little empirical analysis of the ability ofevent studies to produce reliable results when applied to a single company’s security.
Using data from the recent financial crisis, this Note demonstrates that the standardmodelevent study used in most court proceedings can lead to biased inferences sanctionedthrough the Daubert standard of admissibility for expert testimony. In particular, in thepresence …

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3d Printing And Healthcare: Will Laws, Lawyers, And Companies Stand In The Way Of Patient Care?, Evan R. Youngstrom Apr 2016

3d Printing And Healthcare: Will Laws, Lawyers, And Companies Stand In The Way Of Patient Care?, Evan R. Youngstrom

Evan R. Youngstrom

Today, our society is on a precipice of significant advancement in healthcare because 3D printing will usher in the next generation of medicine. The next generation will be driven by customization, which will allow doctors to replace limbs and individualize drugs. However, the next generation will be without large pharmaceutical companies and their justifications for strong intellectual property rights. However, the current patent system (which is underpinned by a social tradeoff made from property incentives) is not flexible enough to cope with 3D printing’s rapid development. Very soon, the social tradeoff will no longer benefit society, so it must be …

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The Bidder's Curse: Comment, Henry S. Schneider Apr 2016

The Bidder's Curse: Comment, Henry S. Schneider

Henry S Schneider

The prices of auctions on eBay often exceed eBay’s fixed-price “Buy-It-Now” prices. I investigate the causes of this overbidding, focusing on the interpretation in Malmendier and Lee (2011) that the observed overbidding cannot be explained “without allowing for nonstandard preferences or beliefs” and that the “strongest direct evidence points to limited attention.” Using data from their study and new data from eBay, I provide evidence that a key condition for identifying nonstandard behavior may not have been met, and that the observed overbidding is not inconsistent with standard behavior once we allow for the likely presence of search costs.

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A Unified Model Of Adaptive Learning In Normal Form Games, Naoki Funai Feb 2016

A Unified Model Of Adaptive Learning In Normal Form Games, Naoki Funai

Naoki Funai

We investigate an adaptive learning model which nests several existing learning models such as payoff assessment learning, valuation learning, stochastic fictitious play learning, experience-weighted attraction learning and delta learning with indirect payoff information in normal form games. In this paper, we consider adaptive players each of whom (i) assigns payoff assessments to his own actions, (ii) chooses an action which has the highest assessment with some perturbations, and (iii) updates the assessments using observed payoffs, which may include payoffs from unchosen actions, in each period. Utilising the asynchronous stochastic approximation method introduced by Tsitsiklis (1994), we provide conditions under which …

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Allotment In First-Price Auctions: An Experimental Investigation, Luca Corazzini, Stefano Galavotti, Paola Valbonesi, Rupert Sausgruber Jan 2016

Allotment In First-Price Auctions: An Experimental Investigation, Luca Corazzini, Stefano Galavotti, Paola Valbonesi, Rupert Sausgruber

Paola Valbonesi

We experimentally study the effects of allotment - the division of an item into homogeneousunits - in independent private value auctions. We compare a bundling first-priceauction with two equivalent treatments where allotment is implemented: a two-unit discriminatoryauction and two simultaneous single-unit first-price auctions. We find thatallotment in the form of a discriminatory auction generates a loss of efficiency with respectto bundling. In the allotment treatments, we observe large and persistent bid spread, andthe discriminatory auction is less efficient than simultaneous auctions. We provide a unified interpretation of our results that is based on both a non-equilibrium response to thecoordination problem …

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Quantile Regression With Nonadditive Fixed Effects, David Powell Jan 2016

Quantile Regression With Nonadditive Fixed Effects, David Powell

David Powell

This paper introduces a quantile regression estimator for panel data (QRPD) with nonadditive fixed effects, maintaining the nonseparable disturbance term commonly associated with quantile estimation. QRPD estimates the impact of exogenous or endogenous treatment variables on the outcome distribution using ``within" variation in the treatment variables or instruments for identification purposes. Most quantile panel data estimators include additive fixed effects which separates the disturbance term and assumes the parameters vary based only on the time-varying components of the disturbance term. QRPD is consistent for small T and straightforward to implement. The nonadditive fixed effects are never estimated or even specified. …

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Optimal Health Insurance And The Distortionary Effects Of The Tax Subsidy, David Powell Jan 2016

Optimal Health Insurance And The Distortionary Effects Of The Tax Subsidy, David Powell

David Powell

The tax exclusion of health insurance premiums represents the largest source of tax expenditures in the United States while reducing the after-tax price of insurance for the majority of households. This paper develops a model of optimal health insurance in the presence of a tax-deductible premium as well as considering the implications of the Affordable Care Act's ``Cadillac tax." While there is a long literature discussing the possible consequences of subsidizing health insurance through the tax code, we have little evidence about how the tax subsidy distorts the optimal cost-sharing schedule for a household. This paper provides theoretical and empirical …

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Debt Dilution And Sovereign Default Risk, Juan Carlos Hatchondo, Leonardo Martinez, Cesar Sosa Padilla Jan 2016

Debt Dilution And Sovereign Default Risk, Juan Carlos Hatchondo, Leonardo Martinez, Cesar Sosa Padilla

Leonardo Martinez

No abstract provided.

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Fiscal Rules And The Sovereign Default Premium, Juan Carlos Hatchondo, Leonardo Martinez, Francisco Roch Jan 2016

Fiscal Rules And The Sovereign Default Premium, Juan Carlos Hatchondo, Leonardo Martinez, Francisco Roch

Leonardo Martinez

No abstract provided.

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Intellectual Property Protection And The Industrial Composition Of Multinational Activity, Olena Ivus, Walter Park, Kamal Saggi Jan 2016

Intellectual Property Protection And The Industrial Composition Of Multinational Activity, Olena Ivus, Walter Park, Kamal Saggi

Olena Ivus

In a North-South model with endogenous FDI, we examine the impact of Southern IPR protection on the mode and industry composition of international technology transfer. A novel feature of the model is that, due to technological reasons, industries differ with respect to their susceptibility to imitation. In equilibrium, licensing occurs in industries where the risk of imitation is low and FDI where it is of intermediate magnitude. Stronger IPRs in the South (i) alter the industrial composition of multinational activity towards licensing at the expense of FDI, (ii) reduce local imitation, (iii) increase licensing and, to a lesser extent, FDI.

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An Estimated Open-Economy Dsge Model With Search-And-Matching Frictions: The Case Of Hungary, Istvan Konya, Zoltán Jakab Jan 2016

An Estimated Open-Economy Dsge Model With Search-And-Matching Frictions: The Case Of Hungary, Istvan Konya, Zoltán Jakab

Istvan Konya

This paper builds and estimates a mediumscale, small open economy DSGE model augmented with search-and-matching frictions in the labor market, and different wage setting behavior in new and existing jobs. The model is estimated using Hungarian data between 2001-2008. We find that: (i) the inclusion of matching frictions significantly improves the model’s empirical fit; (ii) the extent of new hires wage rigidity is quantitatively important for keymacro variables; (iii) labor market shocks do not play an important role in inflation dynamics, but the structure of the labor market influences the monetary transmission mechanism.

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Uniform Service, Uniform Productivity? Regional Efficiency Of The Imperial German Postal, Telegraph, And Telephone Service., Florian Ploeckl Jan 2016

Uniform Service, Uniform Productivity? Regional Efficiency Of The Imperial German Postal, Telegraph, And Telephone Service., Florian Ploeckl

Florian Ploeckl

Using the regional productivity of the Reichspost, the postal service of the German Empire, I investigate whether a public monopolist operates with uniform regional productivity. Using data envelopment analysis efficiency scores, we derive the relative productivity of the post,telegraph,andtelephonesectorsfrom1891to1908.Resultsshow a fairly stable system with substantial raw productivity differences between postal districts, and that the expansion of the service offset technological productivity increases for the mail service.

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Holes In The Dike: The Global Savings Glut, U.S. House Prices And The Long Shadow Of Banking Deregulation, Mathias Hoffmann, Iryna Stewen Jan 2016

Holes In The Dike: The Global Savings Glut, U.S. House Prices And The Long Shadow Of Banking Deregulation, Mathias Hoffmann, Iryna Stewen

Mathias Hoffmann

We show how capital inflows into and financial deregulation within the United States interacted in driving the recent boom and bust in U.S. housing prices. Interstate banking deregulation during the 1980s cast a long shadow: in states that opened their banking markets to out-of-state banks earlier, house prices were more sensitive to aggregate U.S. capital inflows during 1990-2012. Capital inflows relaxed the value-at-risk constraints of geographically diversified (‘integrated’) U.S. banks more than those of local banks. Therefore, integrated banks absorbed a larger share of capital inflows and expanded mortgage lending more. This drove up housing prices.

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Eco 112 - Economia Brasileira, Eloi Martins Senhoras Jan 2016

Eco 112 - Economia Brasileira, Eloi Martins Senhoras

Elói Martins Senhoras

No abstract provided.

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The Economics Of Retail Markets For New And Used Cars, Charles Murry, Henry S. Schneider Jan 2016

The Economics Of Retail Markets For New And Used Cars, Charles Murry, Henry S. Schneider

Henry S Schneider

In this chapter we describe the institutions and economics of new- and used-car retailing. Our aim is to provide a resource for researchers interested in the automobile market. We focus on three categories of economic concepts relevant to car retailing: dealership location choice, including agglomeration, entry, and exit; determinants of car pricing; and information, which is central to the used-car market but also affects the new-car market. We also provide a primer on the institutions of car retailing and a reference on data sources for researchers interested in empirical work involving cars.

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Limited Rationality And Convergence To Equilibrium Play, Kristen Cooper, Henry S. Schneider, Michael Waldman Jan 2016

Limited Rationality And Convergence To Equilibrium Play, Kristen Cooper, Henry S. Schneider, Michael Waldman

Henry S Schneider

The psychology and behavioral economics literatures show that real world decision making at the individual level is frequently inconsistent with the rational actor model. An important question is therefore the extent to which a proportion of agents who make mistakes affects market level outcomes. Previous theoretical and experimental research showed that market level outcomes are less likely to match the rational actor model in settings characterized by strategic complementarity and more likely in settings characterized by strategic substitutability. We extend this research both theoretically and experimentally by introducing important real world complications – specifically, periodic shocks to the payoff structure …

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Beautiful Lemons: Adverse Selection In Durable-Goods Markets With Sorting, Jonathan R. Peterson, Henry S. Schneider Jan 2016

Beautiful Lemons: Adverse Selection In Durable-Goods Markets With Sorting, Jonathan R. Peterson, Henry S. Schneider

Henry S Schneider

We document a basic characteristic of adverse selection in secondhand markets for durable goods: goods with higher observed quality may have more adverse selection and hence lower unobserved quality. We provide a simple theoretical model to demonstrate this result, which is a consequence of the interaction of sorting between drivers over observed quality and adverse selection over unobserved quality. We then offer empirical support using data on secondhand prices and repair rates of used cars from the Consumer Expenditure Survey, and discuss a number of implications for everyday advertising and consumer questions.

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Nonstandard Bidder Behavior In Real-World Auctions, Joseph U. Podwol, Henry S. Schneider Jan 2016

Nonstandard Bidder Behavior In Real-World Auctions, Joseph U. Podwol, Henry S. Schneider

Henry S Schneider

Empirical work on auctions has found that bidders deviate from standard behavior in important ways. We investigate a range of these behaviors, including nonrational herding, auction fever, quasi-endowment effect, and escalation of commitment. Our innovations are to more completely control for unobservables by using new data from a field experiment on eBay, and by accounting for censoring of bids below the starting price. Consistent with standard auction theory and in contrast to the predictions of the nonstandard behaviors, we find that auction starting price has no effect on bidder willingness to pay in a private-values setting. We conclude that there …

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The Price Of Unobservability: Moral Hazard And Limited Liability, Felipe Balmaceda Assoc Prof. Jan 2016

The Price Of Unobservability: Moral Hazard And Limited Liability, Felipe Balmaceda Assoc Prof.

Felipe Balmaceda

This article studies a principal-agent problem with discrete outcome and effort space. The principal and the agent are risk neutral and the latter is subject to limited liability. For a given monitoring technology, we consider the maximum possible ratio between the first best social welfare to the social welfare arising from the principal's optimal pay-for-performance contract (the price of unobservability). Our main results provide tight bounds for this price. Key parameters to these bounds are number of possible efforts, the likelihood ratio evaluated at the highest outcome, and the ratio between costs of the highest and the lowest efforts. The …

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"Giving" In To Social Pressure, Alvaro J. Name-Correa, Huseyin Yildirim Jan 2016

"Giving" In To Social Pressure, Alvaro J. Name-Correa, Huseyin Yildirim

Huseyin Yildirim

We develop a theory of charitable giving in which donors feel social pressure from adirect solicitation. We show that equilibrium donations are concentrated around a socialnorm. Despite a higher level of the public good, relatively poor and/or low altruism giversfare worse under social pressure and would avoid the solicitor at a cost. Aggregate donorwelfare improves to the extent that the added social motive alleviates the underprovision ofthe public good; however, overprovision may result. Our theory therefore predicts a lighthandedregulation for charitable solicitations, which is consistent with their exemption fromthe popular Do Not Call list in the U.S. We further show …

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Household Income Uncertainties Over Three Decades, James Feigenbaum, Geng Li Jan 2016

Household Income Uncertainties Over Three Decades, James Feigenbaum, Geng Li

Geng Li

No abstract provided.

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The Effects Of Immigration On Household Services, Labour Supply And Fertility, Agnese Romiti Jan 2016

The Effects Of Immigration On Household Services, Labour Supply And Fertility, Agnese Romiti

Agnese Romiti

Fertility and female labour force participation are no longer negatively correlated in developed countries. Recently, the role of immigration has been put forward as a driving factor among others. Increased immigration affects supply and prices of household services, which are relevant for fertility and employment decisions. This paper analyses the effect of immigration on labour supply and fertility of native women in the UK, with a focus on the role of immigration on household services. Adopting an instrumental variable approach based on the country-specific past distribution of immigrants at regional level, I find that immigration increases female labour supply, without …

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The Effect Of The U.S. Biofuels Mandate On Poverty In India, Ujjayant N. Chakravorty, Marie-Helene Hubert, Beyza Ural Marchand Jan 2016

The Effect Of The U.S. Biofuels Mandate On Poverty In India, Ujjayant N. Chakravorty, Marie-Helene Hubert, Beyza Ural Marchand

Ujjayant Chakravorty

More than 40% of US grain is now used for energy and this share is expected to rise under the current Renewable Fuels Mandate (RFS). There are no studies of the global distributional consequences of this purely domestic policy. Using micro-level survey data, we trace the effect of the RFS on world food prices and their impact on household level consumption and wage impacts in India. We first develop a partial equilibrium model to estimate the effect of the RFS on the price of selected food commodities - rice, wheat, corn, sugar and meat and dairy, which together provide almost …

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