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Articles 31 - 60 of 2930
Full-Text Articles in Social and Behavioral Sciences
Learning Through Imitation: An Experiment, Marina Agranov, Gabriel Lopez-Moctezuma, Philipp Strack, Omer Tamuz
Learning Through Imitation: An Experiment, Marina Agranov, Gabriel Lopez-Moctezuma, Philipp Strack, Omer Tamuz
Cowles Foundation Discussion Papers
We compare how well agents aggregate information in two repeated social learning environments. In the first setting agents have access to a public data set. In the second they have access to the same data, and also to the past actions of others. Despite the fact that actions contain no additional payoff-relevant information, and despite potential herd behavior, free riding and information overload issues, observing and imitating the actions of others leads agents to take the optimal action more often in the second setting. We also investigate the effect of group size, as well as a setting in which agents …
Wage Gap Disclosure In The Tropics, Pablo Castro, Mayara Felix, Ieda Matavelli, Bobak Pakzad-Hurson
Wage Gap Disclosure In The Tropics, Pablo Castro, Mayara Felix, Ieda Matavelli, Bobak Pakzad-Hurson
Cowles Foundation Discussion Papers
We evaluate the effects of mandatory disclosures of firm-specific gender wage gaps in Brazil—the first developing country to enact a large-scale pay transparency law. The mandate took effect in 2023, automatically releasing to the public government-curated reports showing firm-specific gender wage gaps, separately by major occupational groups, for formal sector firms with 100 employees or more. Regression discontinuity estimates on outcomes one year after the release show that the mandated disclosures had no effects on the gender wage ratio, average wages for men or women, or the number of occupations within firms. We document that gender wage gaps persist in …
How Wasteful Is Signaling?, Alex Frankel, Navin Kartik
How Wasteful Is Signaling?, Alex Frankel, Navin Kartik
Cowles Foundation Discussion Papers
Signaling is wasteful. But how wasteful? We study the fraction of surplus dissipated in a separating equilibrium. For isoelastic environments, this waste ratio has a simple formula: β/(β + σ), where β is the benefit elasticity (reward to higher perception) and σ is the elasticity of higher types’ relative cost advantage. The ratio is constant across types and is independent of other parameters, including convexity of cost in the signal. We show that the directional effects of β and σ on waste extend to non-isoelastic environments.
From Conversations To Mechanisms: Aligning Advertiser Incentives In Ai-Powered Product Recommendations, Dirk Bergemann, Marek Bojko, Paul Dütting, Renato Paes Leme, Haifeng Xu, Song Zuo
From Conversations To Mechanisms: Aligning Advertiser Incentives In Ai-Powered Product Recommendations, Dirk Bergemann, Marek Bojko, Paul Dütting, Renato Paes Leme, Haifeng Xu, Song Zuo
Cowles Foundation Discussion Papers
We study the design of efficient dynamic recommendation systems, such as AI shopping assistants, in which a platform interacts with a user over multiple rounds to identify the most suitable product among those offered by advertisers. Advertisers have multi-dimensional private information: their private value from a purchase and private information about the user’s preferences. In each round, the platform displays recommendations; the user learns product characteristics of the shown items and then chooses whether to purchase, exit without purchasing, or submit a new query. These actions generate a stream of feedback—purchase, exit, and follow-up queries—that is informative about the user’s …
Cross-Border Product Adoption: Individual Imports, Migrant Networks, And Domestic Retailers, David Argente, Esteban Méndez, Diana Van Patten
Cross-Border Product Adoption: Individual Imports, Migrant Networks, And Domestic Retailers, David Argente, Esteban Méndez, Diana Van Patten
Cowles Foundation Discussion Papers
This paper studies how new varieties enter markets and become locally available. We provide causal evidence of demand externalities that operate in two steps. First, information about new varieties diffuses directly through real-world social ties among consumers. Second, early purchases generate an indirect spillover to firms: local retailers learn from 'pioneer' consumers which new varieties are most likely to succeed and adjust their product offerings accordingly. We study this process in the context of direct-to-consumer imports. Using customs records on individuals' purchases matched to population-wide social networks, international migrant links, and retailer catchment areas, we document economically meaningful demand externalities. …
Pay-Per-Crawl Pricing For Ai: The Lm-Tree Agent, Richard Archer, Soheil Ghili, Nima Haghpanah
Pay-Per-Crawl Pricing For Ai: The Lm-Tree Agent, Richard Archer, Soheil Ghili, Nima Haghpanah
Cowles Foundation Discussion Papers
No abstract provided.
Growth With New And Old Technologies, Bernardo Ribeiro
Growth With New And Old Technologies, Bernardo Ribeiro
Cowles Foundation Discussion Papers
This paper proposes a semi-endogenous growth theory that incorporates technology vintages and the endogenous evolution of multiple technological paradigms through innovation. It provides a characterization of both balanced growth equilibrium and transitional dynamics in an environment where new technologies continuously emerge. From a positive perspective, the model rationalizes two distinct empirical patterns. Using two centuries of US patent data, I first document that the age profile of patents has a pronounced hump shape: most contemporary patents build upon technologies that are between 50 and 100 years old. Second, this age profile has remained stable throughout the past century. From a …
Soft-Floor Auctions: Harnessing Regret To Improve Efficiency And Revenue, Dirk Bergemann, Kevin Breuer, Peter Crampton, Jack Hirsch, Yero S. Ndiaye, Axel Ockenfels
Soft-Floor Auctions: Harnessing Regret To Improve Efficiency And Revenue, Dirk Bergemann, Kevin Breuer, Peter Crampton, Jack Hirsch, Yero S. Ndiaye, Axel Ockenfels
Cowles Foundation Discussion Papers
A soft-floor auction asks bidders to accept an opening price to participate in a second-price auction. If no bidder accepts, lower bids are considered using first-price rules. Soft floors are common despite being irrelevant with standard assumptions. When bidders regret losing, soft-floor auctions are more efficient and profitable than standard optimal auctions. Revenue increases as bidders are inclined to accept the opening price to compete in a regret-free second-price auction. Efficiency improves because a soft floor allows for a lower hard reserve, reducing the frequency of no sale. Theory and experiment confirm these motivations from practice.
Early Childcare Attendance And Cognitive Skills In Adolescence, Ingvild Almas, Nina Drange, Costas Meghir, Henrik Daae Zachrisson
Early Childcare Attendance And Cognitive Skills In Adolescence, Ingvild Almas, Nina Drange, Costas Meghir, Henrik Daae Zachrisson
Cowles Foundation Discussion Papers
This paper examines the impact of early childcare on academic achievement for children in grade 5 and grade 9, based on a 2003 policy expansion that created quasi-random variation in slot availability for children aged 1–2. Starting childcare one year earlier increases math scores by 9.7% of a standard deviation (SD) in grade 9. Children whose mothers do not hold a high school diploma benefit by a significant 0.28% of a SD at grade 9, reducing the math achievement gap from children of higher-educated mothers by about one third. We also present evidence of strong improvements for children of immigrants.
Capital Flows And The Global Collateral Cycle, Ana Fostel, John Geanakoplos, Gregory Phelan
Capital Flows And The Global Collateral Cycle, Ana Fostel, John Geanakoplos, Gregory Phelan
Cowles Foundation Discussion Papers
Cross-country disparities in collateral technologies alone can account for large capital flows among mature economies, and allow the most advanced country to run a permanent trade deficit. When the collateral technology advantage is in creating negative beta (super safe) financial assets backed by positive beta assets, a Global Collateral Cycle emerges, with pro-cyclical gross and net flows and increased global asset price volatility. The supply of super safe assets is necessarily curtailed in downturns, providing a complementary (supply) channel to the flight to safety (demand) channel for explaining why US safe asset prices rise during crises.
Organizational Targets In General Equilibrium, Joel P. Flynn, George Nikolakoudis, Karthik Sastry
Organizational Targets In General Equilibrium, Joel P. Flynn, George Nikolakoudis, Karthik Sastry
Cowles Foundation Discussion Papers
We build a general equilibrium model in which firms endogenously choose whether to target prices or quantities. We characterize how these choices of organizational targets depend on firms' uncertainty about microeconomic and macroeconomic factors. In equilibrium, the transmission of both nominal and real shocks hinges on firms' organizational targets. For example, under otherwise identical microfoundations, money is neutral under quantity targets and non-neutral under price targets. We further characterize how targets shape firms' strategic interactions and prove that the macroeconomic uncertainty that arises from each choice of targets reinforces incentives to choose that target. That is, choices of organizational targets …
Training Language Models For Bilateral Trade With Private Information, Dirk Bergemann, Soheil Ghili, Xinyang Hu, Chuanhao Li, Zhuoran Yang
Training Language Models For Bilateral Trade With Private Information, Dirk Bergemann, Soheil Ghili, Xinyang Hu, Chuanhao Li, Zhuoran Yang
Cowles Foundation Discussion Papers
Bilateral bargaining under incomplete information provides a controlled testbed for evaluating large language model (LLM) agent capabilities. Bilateral trade demands individual rationality, strategic surplus maximization, and cooperation to realize gains from trade. We develop a structured bargaining environment in which LLMs negotiate via tool calls within an event-driven simulator, separating binding offers from natural-language messages to enable automated evaluation. The environment serves two purposes: as a benchmark for frontier models and as a training environment for open-weight models via reinforcement learning. In benchmark experiments, a round-robin tournament among five frontier models (15,000 negotiations) reveals that effective strategies implement price discrimination …
Delegation And Verification Under Ai, Lingxiao Huang, Wenyang Xiao, Nisheeth K. Vishnoi
Delegation And Verification Under Ai, Lingxiao Huang, Wenyang Xiao, Nisheeth K. Vishnoi
Cowles Foundation Discussion Papers
As AI systems enter institutional workflows, workers must decide whether to delegate task execution to AI and how much effort to invest in verifying AI outputs, while institutions evaluate workers using outcome-based standards that may misalign with workers’ private costs. We model delegation and verification as the solution to a rational worker’s optimization problem, and define worker quality by evaluating an institution-centered utility (distinct from the worker’s objective) at the resulting optimal action. We formally characterize optimal worker workflows and show that AI induces phase transitions, where arbitrarily small differences in verification ability lead to sharply different behaviors. As a …
On Local Overidentification And Efficiency Gains In Modern Causal Inference And Data Combination, Xiaohong Chen, Haitian Xie
On Local Overidentification And Efficiency Gains In Modern Causal Inference And Data Combination, Xiaohong Chen, Haitian Xie
Cowles Foundation Discussion Papers
This paper studies nonparametric local (over-)identification and the semiparametric efficiency in modern causal frameworks. We develop a unified approach that begins by translating structural models with latent variables into their induced statistical models of observables and then analyzes local overidentification through conditional moment restrictions. We apply this approach to three popular classes of causal models: (1) the general treatment model under unconfoundedness; (2) the negative control model, and (3) the long-term causal inference model under unobserved confounding. The first model yields a locally just-identified statistical model, implying that all regular asymptotically linear estimators of the treatment effect have the same …
Triple/Double-Debiased Lasso, Denis Chetverikov, Joseph R.V. Sørensen, Aleh Tsyvinski
Triple/Double-Debiased Lasso, Denis Chetverikov, Joseph R.V. Sørensen, Aleh Tsyvinski
Cowles Foundation Discussion Papers
In this paper, we propose a triple (or double-debiased) Lasso estimator for inference on a low-dimensional parameter in high-dimensional linear regression models. The estimator is based on a moment function that satisfies not only first- but also second-order Neyman orthogonality conditions, thereby eliminating both the leading bias and the second-order bias induced by regularization. We derive an asymptotic linear representation for the proposed estimator and show that its remainder terms are never larger and are often smaller in order than those in the corresponding asymptotic linear representation for the standard double Lasso estimator. Because of this improvement, the triple Lasso …
First Proof Solutions And Comments, Mohammed Abouzaid, Andrew J. Blumberg, Martin Hairer, Joe Kileel, Tamara G. Kolda, Paul D. Nelson, Daniel Spielman, Nikhil Srivastava, Rachel Ward, Shmuel Weinberger, Lauren Williams
First Proof Solutions And Comments, Mohammed Abouzaid, Andrew J. Blumberg, Martin Hairer, Joe Kileel, Tamara G. Kolda, Paul D. Nelson, Daniel Spielman, Nikhil Srivastava, Rachel Ward, Shmuel Weinberger, Lauren Williams
Cowles Foundation Discussion Papers
Here we provide our solutions to the First Proof questions. We also discuss the best responses from publicly available AI systems that we were able to obtain in our experiments prior to the release of the problems on February 5, 2025. We hope this discussion will help readers with the relevant domain expertise to assess such responses.
Stochastic Optimization And Coupling, Frank Yang, Kai Hao Yang
Stochastic Optimization And Coupling, Frank Yang, Kai Hao Yang
Cowles Foundation Discussion Papers
We study optimization problems in which a linear functional is maximized over probability measures that are dominated by a given measure according to an integral stochastic order in an arbitrary dimension. We show that the following four properties are equivalent for any such order: (i) the test function cone is closed under pointwise minimum, (ii) the value function is affine, (iii) the solution correspondence has a convex graph with decomposable extreme points, and (iv) every ordered pair of measures admits an order-preserving coupling. As corollaries, we derive the extreme and exposed point properties involving integral stochastic orders such as multidimensional …
The Changing Landscape Of International Development: An Introduction, Pascaline Dupas, Pinelopi Goldberg, Rohini Pande
The Changing Landscape Of International Development: An Introduction, Pascaline Dupas, Pinelopi Goldberg, Rohini Pande
Cowles Foundation Discussion Papers
Since the late 1980s, extreme poverty has declined sharply, life expectancy and schooling have increased, and electoral democracy has expanded. However poverty reduction has slowed in recent years, particularly following the COVID-19 pandemic, amid intensifying conflict, fragility, climate risks, democratic backsliding, and the erosion of global trends—including trade integration and geopolitical stability—that once supported growth. These dynamics raise three interrelated questions: what barriers impede further progress; where will future growth in lower-income countries come from; and how can growth be broadly shared. Taking stock of 15 chapters forthcoming in Volume 6 of the Handbook of Development Economics, we discuss how …
The Geometry Of Learning Under Ai Delegation, Lingxiao Huang, Nisheeth K. Vishnoi
The Geometry Of Learning Under Ai Delegation, Lingxiao Huang, Nisheeth K. Vishnoi
Cowles Foundation Discussion Papers
As AI systems shift from tools to collaborators, a central question is how the skills of humans relying on them change over time. We study this question mathematically by modeling the joint evolution of human skill and AI delegation as a coupled dynamical system. In our model, delegation adapts to relative performance, while skill improves through use and decays under non-use; crucially, both updates arise from optimizing a single performance metric measuring expected task error. Despite this local alignment, adaptive AI use fundamentally alters the global stability structure of human skill acquisition. Beyond the high-skill equilibrium of human-only learning, the …
Thin Sets Are Not Equally Thin: Minimax Learning Of Submanifold Integrals, Xiaohong Chen, Wayne Yuan Gao
Thin Sets Are Not Equally Thin: Minimax Learning Of Submanifold Integrals, Xiaohong Chen, Wayne Yuan Gao
Cowles Foundation Discussion Papers
Many economic parameters are identified by “thin sets” (submanifolds with Lebesgue measure zero) and hence difficult to recover from data in an ambient space. This paper provides a unified theory for estimation and inference of such “thin-set” identified functionals. We show that thin sets are not equally thin: their intrinsic dimensionality m matters in a precise manner. For a nonparametric regression h0 with Hölder smoothness s and d-dimensional covariates in the ambient space, we show that n^{-s/(2s+d−m)} is the minimax optimal rate of estimating linear and nonlinear (e.g., quadratic, upper contour) integrals of h0 on an m-dimensional submanifold (0 ≤ …
Screening And Segmenting: A Consumer Surplus Perspective, Dirk Bergemann, Tibor Heumann, Michael C. Wang
Screening And Segmenting: A Consumer Surplus Perspective, Dirk Bergemann, Tibor Heumann, Michael C. Wang
Cowles Foundation Discussion Papers
We analyze consumer surplus when a monopolist can adjust both prices and prod-uct qualities across segments, engaging in second- and third-degree price discrimination simultaneously. We characterize the consumer-optimal segmentation and show that it has a striking structure: consumers with the same value receive the same quality in every segment, though prices differ. Under mild conditions, any segmentation harms consumers if and only if demand is sufficiently more elastic than supply. Hence, po-tential benefits for consumers depend critically on demand and supply elasticities. These findings have implications for regulatory policy regarding price discrimination and market segmentation.
Identifying Common Trend Determinants In Panel Data, Yoonseok Lee, Peter C.B. Phillips, Suyong Song, Donggyu Sul
Identifying Common Trend Determinants In Panel Data, Yoonseok Lee, Peter C.B. Phillips, Suyong Song, Donggyu Sul
Cowles Foundation Discussion Papers
This paper develops a novel method for identifying observable determinants of latent common trends in nonstationary panel data, which are typically removed or controlled in two-way fixed effects regressions. By examining cross sectional dispersion processes, we assess whether panel series exhibit distributional convergence toward specific observed time series, revealing them as long run determinants of the underlying latent trend. The approach also offers a new perspective on cointegration between time series and panel data, focusing on the relative variation of the panel data with respect to the cointegration error. Applying this method to U.S. state-level crime rates demonstrates that the …
The Skill Premium In Times Of Rapid Technological Change, Tarek Hassan, Aakash Kalyani, Pascual Restrepo
The Skill Premium In Times Of Rapid Technological Change, Tarek Hassan, Aakash Kalyani, Pascual Restrepo
Cowles Foundation Discussion Papers
No abstract provided.
Trade, Labor Market Concentration, And Wages, Mayara Felix
Trade, Labor Market Concentration, And Wages, Mayara Felix
Cowles Foundation Discussion Papers
I estimate the effect of trade on local labor market concentration and its implications for wages using employer-employee linked data and tariff shocks from Brazil’s trade liberalization. Trade increased concentration by 7%, an effect driven by firm exit and worker flows to surviving import-competing firms. Increased concentration reduced wage take-home shares—estimated at 50 cents on the dollar pre-shock—enough to offset small wage gains from reallocation, but did not meaningfully reduce wages on net. Most of the wage declines attributed to Brazil’s trade liberalization resulted instead from reductions in the marginal revenue product of labor. Incorporating informality reveals substantial regional heterogeneity.
Subjective Earnings And Employment Dynamics, Manual Arellano, Orazio Attanasio, Margherita Borella, Mariacristina De Nardi, Gonzalo Paz-Pardo
Subjective Earnings And Employment Dynamics, Manual Arellano, Orazio Attanasio, Margherita Borella, Mariacristina De Nardi, Gonzalo Paz-Pardo
Cowles Foundation Discussion Papers
We develop a new approach to estimating earnings, job, and employment dynamics using subjective expectations data from the NY Fed Survey of Consumer Expectations. These data provide beliefs about future earnings offers and acceptance probabilities, offering direct information on counterfactual outcomes and enabling identification under weaker assumptions. Our framework avoids biases from selection and unobserved heterogeneity that affect models using realized outcomes. First-step fixed-effects regressions identify risk, persistence, and transition effects; second-step GMM recovers the covariance structure of unobserved heterogeneities such as ability, mobility, and match quality. We find lower risk and persistence of the individual productivity component than in …
Pricing And Production Without The Invisible Hand, Joel P. Flynn, George Nikolakoudis, Karthik A. Sastry
Pricing And Production Without The Invisible Hand, Joel P. Flynn, George Nikolakoudis, Karthik A. Sastry
Cowles Foundation Discussion Papers
Modern theories of the business cycle do not allow for the simultaneous rational choice of both prices and quantities, instead assuming that an “invisible hand” determines one of these variables to clear markets. In this paper, we develop a macroeconomic framework in which both prices and quantities are chosen directly by firms, and exchange is both voluntary and efficient. Because of uncertainty about demand and productivity, individual product markets can be in excess supply or rationed. The absence of market-clearing changes pricing and production in qualitatively important ways: markups are no longer determined solely by the elasticity of demand, and …
Digital Ecosystems And Data Regulation, Andrew Rhodes, Jidong Zhou, Junjie Zhou
Digital Ecosystems And Data Regulation, Andrew Rhodes, Jidong Zhou, Junjie Zhou
Cowles Foundation Discussion Papers
This paper develops a framework in which a multiproduct ecosystem competes with multiple single-product firms in both price and innovation. The ecosystem can use data from one product to improve the quality of its other products. We use the framework to study three regulatory policies aimed at leveling the playing field. Restricting the ecosystem’s cross-product data usage, or forcing it to share data with single-product firms, benefits those firms and induces them to innovate more. However, these policies also dampen the ecosystem’s incentive to collect data and innovate, potentially raising prices. Consumers are better off only when single-product firms are …
Initial-Condition-Robust Inference In Autoregressive Models, Donald W. K. Andrews, Ming Li, Yapeng Zheng
Initial-Condition-Robust Inference In Autoregressive Models, Donald W. K. Andrews, Ming Li, Yapeng Zheng
Cowles Foundation Discussion Papers
This paper considers confidence intervals (CIs) for the autoregressive (AR) parameter in an AR model with an AR parameter that may be close or equal to one. Existing CIs rely on the assumption of a stationary or fixed initial condition to obtain correct asymptotic coverage and good finite sample coverage. When this assumption fails, their coverage can be quite poor. In this paper, we introduce a new CI for the AR parameter whose coverage probability is completely robust to the initial condition, both asymptotically and in finite samples. This CI pays only a small price in terms of its length …
Willingness To Travel With Endogenous Distance: Evidence From The Changing Retail Landscape, Yue Cao, Judith Chevalier, Jessie Handbury, Hayden Parsley, Kevin Williams
Willingness To Travel With Endogenous Distance: Evidence From The Changing Retail Landscape, Yue Cao, Judith Chevalier, Jessie Handbury, Hayden Parsley, Kevin Williams
Cowles Foundation Discussion Papers
Economists often use variation in consumers’ distance from services as a source of demand variation. This approach typically treats consumer-supplier distance as exogenous, despite suppliers strategically choosing locations. We develop a novel class of instruments to address this endogeneity. These instruments exploit the spatial distribution of consumer demographics and can be constructed from standard cross-sectional data, making them useful in a variety of spatial applications. Our preferred instruments use the income composition of concentric discs centered on the Central Business District. Applying these instruments to smartphone geolocation data for millions of devices across 18 metropolitan areas, we estimate consumer preferences …
Affective Interdependence And Welfare, Aviad Heifetz, Enrico Minelli, Heracles M. Polemarchakis
Affective Interdependence And Welfare, Aviad Heifetz, Enrico Minelli, Heracles M. Polemarchakis
Cowles Foundation Discussion Papers
Purely affective interaction allows the welfare of an individual to depend only the individual’s own action and on the profile of welfare levels of others. Under an assumption on the structure of mutual affection that we interpret as non-reinforcing mutual affection, we show that equilibria of affective interaction are Pareto optimal. Moreover, if purely affective interaction induces a standard game, then an equilibrium profile of actions is a Nash equilibrium of the induced game, and this Nash equilibrium and Pareto optimal profile of strategies is locally dominant.