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Full-Text Articles in Economic Theory
Contracting Over Prices, Shurojit Chatterji, Sayantan Ghosal
Contracting Over Prices, Shurojit Chatterji, Sayantan Ghosal
Research Collection School Of Economics
We define a solution concept, perfectly contracted equilibrium, for an intertemporal exchange economy where agents are simultaneously price takers in spot commodity markets while engaging inefficient, non-Walrasian contracting over future prices. Without requiring that agents have perfect foresight, we show that perfectly contracted equilibrium outcomes are a subset of Pareto optimal allocations. It is a robust possibility for perfectly contracted equilibrium outcomes to differ from Arrow-Debreu equilibrium outcomes. We show that both centralized banking and retrading with bilateral contracting can lead to perfectly contracted equilibria.
The Social Value Of Mortality Risk Reduction: Vsl Vs. The Social Welfare Function Approach, Matthew D. Adler, James K. Hammitt, Nicholas Treich
The Social Value Of Mortality Risk Reduction: Vsl Vs. The Social Welfare Function Approach, Matthew D. Adler, James K. Hammitt, Nicholas Treich
All Faculty Scholarship
We examine how different welfarist frameworks evaluate the social value of mortality risk-reduction. These frameworks include classical, distributively unweighted cost-benefit analysis—i.e., the “value per statistical life” (VSL) approach—and three benchmark social welfare functions (SWF): a utilitarian SWF, an ex ante prioritarian SWF, and an ex post prioritarian SWF. We examine the conditions on individual utility and on the SWF under which these frameworks display the following five properties: i) wealth sensitivity, ii) sensitivity to baseline risk, iii) equal value of risk reduction, iv) preference for risk equity, and v) catastrophe aversion. We show that the particular manner in which VSL …