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Articles 721 - 750 of 2930
Full-Text Articles in Social and Behavioral Sciences
Overidentification In Regular Models, Xiaohong Chen, Andres Santos
Overidentification In Regular Models, Xiaohong Chen, Andres Santos
Cowles Foundation Discussion Papers
In the unconditional moment restriction model of Hansen (1982), specification tests and more efficient estimators are both available whenever the number of moment restrictions exceeds the number of parameters of interest. We show a similar relationship between potential refutability of a model and existence of more efficient estimators is present in much broader settings. Specifically, a condition we name local overidentification is shown to be equivalent to both the existence of specification tests with nontrivial local power and the existence of more efficient estimators of some “smooth” parameters in general semi/nonparametric models. Under our notion of local overidentification, various locally …
Optimal Design For Social Learning, Yeon-Koo Che, Johannes Hörner
Optimal Design For Social Learning, Yeon-Koo Che, Johannes Hörner
Cowles Foundation Discussion Papers
This paper studies the design of a recommender system for organizing social learning on a product. To improve incentives for early experimentation, the optimal design trades off fully transparent social learning by over-recommending a product (or “spamming”) to a fraction of agents in the early phase of the product cycle. Under the optimal scheme, the designer spams very little about a product right after its release but gradually increases the frequency of spamming and stops it altogether when the product is deemed sufficiently unworthy of recommendation. The optimal recommender system involves randomly triggered spamming when recommendations are public — as …
Innovation Adoption By Forward-Looking Social Learners, Mira Frick, Yuhta Ishii
Innovation Adoption By Forward-Looking Social Learners, Mira Frick, Yuhta Ishii
Cowles Foundation Discussion Papers
We build a model studying the effect of an economy’s potential for social learning on the adoption of innovations of uncertain quality. Provided consumers are forward-looking (i.e., recognize the value of waiting for information), we show how quantitative and qualitative features of the learning environment affect observed adoption dynamics, welfare, and the speed of learning. Our analysis has two main implications. First, we identify environments that are subject to a “saturation effect,” whereby increased opportunities for social learning can slow down adoption and learning and do not increase consumer welfare, possibly even being harmful. Second, we show how differences in …
The Implementation Duality, Georg Nöldeke, Larry Samuelson
The Implementation Duality, Georg Nöldeke, Larry Samuelson
Cowles Foundation Discussion Papers
We use the theory of abstract convexity to study adverse-selection principal-agent problems and two-sided matching problems, departing from much of the literature by not requiring quasilinear utility. We formulate and characterize a basic underlying implementation duality. We show how this duality can be used to obtain a sharpening of the taxation principle, to obtain a general existence result for solutions to the principal-agent problem, to show that (just as in the quasilinear case) all increasing decision functions are implementable under a single crossing condition, and to obtain an existence result for stable outcomes featuring positive assortative matching in a matching …
Insurance In Extended Family Networks, Orazio P. Attanasio, Costas Meghir, Corina Mommaerts
Insurance In Extended Family Networks, Orazio P. Attanasio, Costas Meghir, Corina Mommaerts
Cowles Foundation Discussion Papers
We investigate partial insurance and group risk sharing in extended family networks. Our approach is based on decomposing income shocks into group aggregate and idiosyncratic components, allowing us to measure the extent to which each is insured, having accounted for public insurance programs. We apply our framework to extended family networks in the United States by exploiting the unique intergenerational structure of the PSID. We find that over 60% of shocks to household income are potentially insurable within family networks. However, we find little evidence that the extended family provides insurance for such idiosyncratic shocks.
Pundits And Quacks, Jesper Rudiger, Adrien Vigier
Pundits And Quacks, Jesper Rudiger, Adrien Vigier
Cowles Foundation Discussion Papers
Do asset prices aggregate investors’ private information about the ability of financial analysts? We show that as financial analysts become reputable, the market can get trapped: Investors optimally choose to ignore their private information, and blindly follow analyst recommendations. As time goes by and recommendations accumulate, arbitrage based on the inferred ability of analysts may become profitable again. The market can thus be trapped at times and yet be able, in the long run, to sort the pundits from the quacks. However, this process is impaired when asset fundamentals are volatile: in this case, the market might be trapped indefinitely.
Buying Locally, George J. Mailath, Andrew Postlewaite, Larry Samuelson
Buying Locally, George J. Mailath, Andrew Postlewaite, Larry Samuelson
Cowles Foundation Discussion Papers
“Buy local” arrangements encourage members of a community or group to patronize one another rather than the external economy. They range from formal mechanisms such as local currencies to informal “I’ll buy from you if you buy from me” arrangements, and are often championed on social or environmental grounds. We show that in a monopolistically competitive economy, buy local arrangements can have salutary effects even for selfish agents immune to social or environmental considerations. Buy local arrangements effectively allow firms to exploit the equilibrium price-cost gap to profitably expand their sales at the going price.
Learning To Disagree In A Game Of Experimentation, Alessandro Bonatti, Johannes Hörner
Learning To Disagree In A Game Of Experimentation, Alessandro Bonatti, Johannes Hörner
Cowles Foundation Discussion Papers
We analyse strategic experimentation in which information arrives through fully revealing, publicly observable “breakdowns.” With hidden actions, there exists a unique equilibrium that involves randomization over stopping times. This randomization induces belief disagreement on the equilibrium path. When actions are observable, the equilibrium is pure, and welfare improves. We analyse the role of policy interventions such as subsidies for experimentation and risk-sharing agreements. We show that the optimal risk-sharing agreement restores the first-best outcome, independent of the monitoring structure.
The Marriage Market, Labor Supply And Education Choice, Pierre-André Chiappori, Monica Costa Dias, Costas Meghir
The Marriage Market, Labor Supply And Education Choice, Pierre-André Chiappori, Monica Costa Dias, Costas Meghir
Cowles Foundation Discussion Papers
We develop an equilibrium lifecycle model of education, marriage and labor supply and consumption in a transferable utility context. Individuals start by choosing their investments in education anticipating returns in the marriage market and the labor market. They then match based on the economic value of marriage and on preferences. Equilibrium in the marriage market determines intrahousehold allocation of resources. Following marriage households (married or single) save, supply labor and consume private and public under uncertainty. Marriage thus has the dual role of providing public goods and offering risk sharing. The model is estimated using the British HPS.
The Marriage Market, Labor Supply And Education Choice, Pierre-André Chiappori, Monica Costa Dias, Costas Meghir
The Marriage Market, Labor Supply And Education Choice, Pierre-André Chiappori, Monica Costa Dias, Costas Meghir
Cowles Foundation Discussion Papers
We develop an equilibrium life cycle model of education, marriage and labor supply and consumption in a transferable utility context. Individuals start by choosing their investments in education anticipating returns in the marriage market and the labor market. They then match based on the economic value of marriage and on preferences. Equilibrium in the marriage market determines intrahousehold allocation of resources. Following marriage households (married or single) save, supply labor and consume private and public commodities under uncertainty. Marriage thus has the dual role of providing public goods and offering risk sharing. The model is estimated using the British HPS.
Relational Contracts With Subjective Peer Evaluations, Joyee Deb, Jin Li, Arijit Mukherjee
Relational Contracts With Subjective Peer Evaluations, Joyee Deb, Jin Li, Arijit Mukherjee
Cowles Foundation Discussion Papers
We study optimal contracting in a setting where a firm repeatedly interacts with multiple workers, and can compensate them based on publicly available performance signals as well as privately reported peer evaluations. If the evaluation and the effort provision are done by different workers (as in a supervisor/agent hierarchy), we show that, using both the private and public signals, the first best can be achieved even in a static setting. However, if each worker is required to both exert effort and report on his co-worker’s performance (as in a team setting), the worker’s effort incentives cannot be decoupled from his …
Insurance In Extended Family Networks, Orazio P. Attanasio, Costas Meghir, Corina Mommaerts
Insurance In Extended Family Networks, Orazio P. Attanasio, Costas Meghir, Corina Mommaerts
Cowles Foundation Discussion Papers
We investigate partial insurance and group risk sharing in extended family networks. Our approach is based on decomposing income shocks into group aggregate and idiosyncratic components, allowing us to measure the extent to which each component is insured. We apply our framework to extended family networks in the United States by exploiting the unique intergenerational structure of the Panel Study of Income Dynamics. We find that over 60% of shocks to household income are potentially insurable within extended family networks. However, we find little evidence that the extended family provides insurance for such idiosyncratic shocks.
The Implementation Duality, Georg Nöldeke, Larry Samuelson
The Implementation Duality, Georg Nöldeke, Larry Samuelson
Cowles Foundation Discussion Papers
Conjugate duality relationships are pervasive in matching and implementation problems and provide much of the structure essential for characterizing stable matches and implementable allocations in models with quasilinear (or transferable) utility. In the absence of quasilinearity, a more abstract duality relationship, known as a Galois connection, takes the role of (generalized) conjugate duality. While much weaker, this duality relationship still induces substantial structure. We show that this structure can be used to extend existing results for, and gain new insights into, adverse-selection principal-agent problems and two-sided matching problems without quasilinearity.
The Implementation Duality, Georg Nöldeke, Larry Samuelson
The Implementation Duality, Georg Nöldeke, Larry Samuelson
Cowles Foundation Discussion Papers
Conjugate duality relationships are pervasive in matching and implementation problems and provide much of the structure essential for characterizing stable matches and implementable allocations in models with quasilinear (or transferable) utility. In the absence of quasilinearity, a more abstract duality relationship, known as a Galois connection, takes the role of (generalized) conjugate duality. While weaker, this duality relationship still induces substantial structure. We show that this structure can be used to extend existing results for, and gain new insights into, adverse-selection principal-agent problems and two-sided matching problems without quasilinearity.
Unbiased Instrumental Variables Estimation Under Known First-Stage Sign, Isaiah Andrews, Timothy B. Armstrong
Unbiased Instrumental Variables Estimation Under Known First-Stage Sign, Isaiah Andrews, Timothy B. Armstrong
Cowles Foundation Discussion Papers
We derive mean-unbiased estimators for the structural parameter in instrumental variables models with a single endogenous regressor where the sign of one or more first stage coefficients is known. In the case with a single instrument, the unbiased estimator is unique. For cases with multiple instruments we propose a class of unbiased estimators and show that an estimator within this class is efficient when the instruments are strong. We show numerically that unbiasedness does not come at a cost of increased dispersion in models with a single instrument: in this case the unbiased estimator is less dispersed than the 2SLS …
Unbiased Instrumental Variables Estimation Under Known First-Stage Sign, Isaiah Andrews, Timothy B. Armstrong
Unbiased Instrumental Variables Estimation Under Known First-Stage Sign, Isaiah Andrews, Timothy B. Armstrong
Cowles Foundation Discussion Papers
We derive mean-unbiased estimators for the structural parameter in instrumental variables models with a single endogenous regressor where the sign of one or more first stage coefficients is known. In the case with a single instrument, there is a unique non-randomized unbiased estimator based on the reduced-form and first-stage regression estimates. For cases with multiple instruments we propose a class of unbiased estimators and show that an estimator within this class is efficient when the instruments are strong. We show numerically that unbiasedness does not come at a cost of increased dispersion in models with a single instrument: in this …
Transparency And Distressed Sales Under Asymmetric Information, William Fuchs, Andrzej Skrzypacz
Transparency And Distressed Sales Under Asymmetric Information, William Fuchs, Andrzej Skrzypacz
Cowles Foundation Discussion Papers
We analyze price transparency in a dynamic market with private information and correlated values. Uninformed buyers compete inter- and intra-temporarily for a good sold by an informed seller suffering a liquidity shock. We contrast public versus private price offers. In a two-period case all equilibria with private offers have more trade than any equilibrium with public offers; under some additional conditions we show Pareto-dominance of the private-offers equilibria. If a failure to trade by the deadline results in an efficiency loss, public offers can induce a market breakdown before the deadline, while trade never stops with private offers.
Unbiased Instrumental Variables Estimation Under Known First-Stage Sign, Isaiah Andrews, Timothy B. Armstrong
Unbiased Instrumental Variables Estimation Under Known First-Stage Sign, Isaiah Andrews, Timothy B. Armstrong
Cowles Foundation Discussion Papers
We derive mean-unbiased estimators for the structural parameter in instrumental variables models where the sign of one or more first stage coefficients is known. In the case with a single instrument, the unbiased estimator is unique. For cases with multiple instruments we propose a class of unbiased estimators and show that an estimator within this class is efficient when the instruments are strong while retaining unbiasedness in finite samples. We show numerically that unbiasedness does not come at a cost of increased dispersion: in the single instrument case, the unbiased estimator is less dispersed than the 2SLS estimator. Our finite-sample …
Unbiased Instrumental Variables Estimation Under Known First-Stage Sign, Isaiah Andrews, Timothy B. Armstrong
Unbiased Instrumental Variables Estimation Under Known First-Stage Sign, Isaiah Andrews, Timothy B. Armstrong
Cowles Foundation Discussion Papers
We derive mean-unbiased estimators for the structural parameter in instrumental variables models with a single endogenous regressor where the sign of one or more first stage coefficients is known. In the case with a single instrument, there is a unique non-randomized unbiased estimator based on the reduced-form and first-stage regression estimates. For cases with multiple instruments we propose a class of unbiased estimators and show that an estimator within this class is efficient when the instruments are strong. We show numerically that unbiasedness does not come at a cost of increased dispersion in models with a single instrument: in this …
Unbiased Instrumental Variables Estimation Under Known First-Stage Sign, Isaiah Andrews, Timothy B. Armstrong
Unbiased Instrumental Variables Estimation Under Known First-Stage Sign, Isaiah Andrews, Timothy B. Armstrong
Cowles Foundation Discussion Papers
We derive mean-unbiased estimators for the structural parameter in instrumental variables models with a single endogenous regressor where the sign of one or more first stage coefficients is known. In the case with a single instrument, the unbiased estimator is unique. For cases with multiple instruments we propose a class of unbiased estimators and show that an estimator within this class is efficient when the instruments are strong. We show numerically that unbiasedness does not come at a cost of increased dispersion in models with a single instrument: in this case the unbiased estimator is less dispersed than the 2SLS …
Dynamic Mechanisms Without Money, Yingni Guo, Johannes Hörner
Dynamic Mechanisms Without Money, Yingni Guo, Johannes Hörner
Cowles Foundation Discussion Papers
We analyze the optimal design of dynamic mechanisms in the absence of transfers. The designer uses future allocation decisions as a way of eliciting private information. Values evolve according to a two-state Markov chain. We solve for the optimal allocation rule, which admits a simple implementation. Unlike with transfers, efficiency decreases over time, and both immiseration and its polar opposite are possible long-run outcomes. Considering the limiting environment in which time is continuous, we show that persistence hurts.
Estimating The Production Function For Human Capital: Results From A Randomized Control Trial In Colombia, Sarah Cattan, Emla Fitzsimons, Costas Meghir, Marta Rubio-Codina
Estimating The Production Function For Human Capital: Results From A Randomized Control Trial In Colombia, Sarah Cattan, Emla Fitzsimons, Costas Meghir, Marta Rubio-Codina
Cowles Foundation Discussion Papers
We examine the channels through which a randomized early childhood intervention in Colombia led to significant gains in cognitive and socio-emotional skills among a sample of disadvantaged children. We estimate production functions for cognitive and socio-emotional skills as a function of maternal skills and child’s past skills, as well as material and time investments that are treated as endogenous. The effects of the program can be fully explained by increases in parental investments, which have strong effects on outcomes and are complementary to both maternal skills and child’s past skills.
Estimating The Production Function For Human Capital: Results From A Randomized Control Trial In Colombia, Orazio P. Attanasio, Sarah Cattan, Emla Fitzsimons, Costas Meghir, Marta Rubio-Codina
Estimating The Production Function For Human Capital: Results From A Randomized Control Trial In Colombia, Orazio P. Attanasio, Sarah Cattan, Emla Fitzsimons, Costas Meghir, Marta Rubio-Codina
Cowles Foundation Discussion Papers
We examine the channels through which a randomized early childhood intervention in Colombia led to significant gains in cognitive and socio-emotional skills among a sample of disadvantaged children aged 12 to 24 months at baseline. We estimate the determinants of material and time investments in these children and evaluate the impact of the treatment on such investments. We then estimate the production functions for cognitive and socio-emotional skills. The effects of the program can be explained by increases in parental investments, which have strong effects on outcomes and are complementary to both maternal skills and child’s baseline skills.
Estimating The Production Function For Human Capital: Results From A Randomized Control Trial In Colombia, Orazio P. Attanasio, Sarah Cattan, Emla Fitzsimons, Costas Meghir, Marta Rubio-Codina
Estimating The Production Function For Human Capital: Results From A Randomized Control Trial In Colombia, Orazio P. Attanasio, Sarah Cattan, Emla Fitzsimons, Costas Meghir, Marta Rubio-Codina
Cowles Foundation Discussion Papers
We examine the channels through which a randomized early childhood intervention in Colombia led to significant gains in cognitive and socio-emotional skills among a sample of disadvantaged children aged 12 to 24 months at baseline. We estimate the determinants of parents’ material and time investments in these children and evaluate the impact of the treatment on such investments. We then estimate the production functions for cognitive and socio-emotional skills. The effects of the program can be explained by increases in parental investments, emphasizing the importance of parenting interventions at an early age.
Estimating The Production Function For Human Capital: Results From A Randomized Control Trial In Colombia, Orazio P. Attanasio, Sarah Cattan, Emla Fitzsimons, Costas Meghir, Marta Rubio-Codina
Estimating The Production Function For Human Capital: Results From A Randomized Control Trial In Colombia, Orazio P. Attanasio, Sarah Cattan, Emla Fitzsimons, Costas Meghir, Marta Rubio-Codina
Cowles Foundation Discussion Papers
We examine the channels through which a randomized early childhood intervention in Colombia led to significant gains in cognitive and socio-emotional skills among a sample of disadvantaged children aged 12 to 24 months at baseline. We estimate the determinants of parents’ material and time investments in these children and evaluate the impact of the treatment on such investments. We then estimate the production functions for cognitive and socio-emotional skills. The effects of the program can be explained by increases in parental investments, emphasizing the importance of parenting interventions at an early age.
Innovation Adoption By Forward-Looking Social Learners, Mira Frick, Yuhta Ishii
Innovation Adoption By Forward-Looking Social Learners, Mira Frick, Yuhta Ishii
Cowles Foundation Discussion Papers
Motivated by the rise of social media, we build a model studying the effect of an economy’s potential for social learning on the adoption of innovations of uncertain quality. Provided consumers are forward-looking (i.e., recognize the value of waiting for information), equilibrium dynamics depend non-trivially on qualitative and quantitative features of the informational environment. We identify informational environments that are subject to a saturation effect, whereby increased opportunities for social learning can slow down adoption and learning and do not increase consumer welfare. We also suggest a novel, purely informational explanation for different commonly observed adoption curves (S-shaped vs. concave).
Money As Minimal Complexity, Pradeep Dubey, Siddhartha Sahi, Martin Shubik
Money As Minimal Complexity, Pradeep Dubey, Siddhartha Sahi, Martin Shubik
Cowles Foundation Discussion Papers
We consider mechanisms that provide traders the opportunity to exchange commodity i for commodity j , for certain ordered pairs ij . Given any connected graph G of opportunities, we show that there is a unique mechanism M G that satisfies some natural conditions of “fairness” and “convenience.” Let M ( m ) denote the class of mechanisms M G obtained by varying G on the commodity set {1, …, m }. We define the complexity of a mechanism M in M (m) to be a pair of integers τ( M ), π( M ) which represent the “time” required …
Dynamic Moral Hazard Without Commitment, Johannes Hörner, Larry Samuelson
Dynamic Moral Hazard Without Commitment, Johannes Hörner, Larry Samuelson
Cowles Foundation Discussion Papers
We study a discrete-time model of repeated moral hazard without commitment. In every period, a principal finances a project, choosing the scale of the project and a contingent payment plan for an agent, who has the opportunity to appropriate the returns of a successful project unbeknownst the principal. The absence of commitment is reflected both in the solution concept (perfect Bayesian equilibrium) and in the ability of the principal to freely revise the project’s scale from one period to the next. We show that removing commitment from the equilibrium concept is relatively innocuous — if the players are sufficiently patient, …
Unbiased Instrumental Variables Estimation Under Known First-Stage Sign, Isaiah Andrews, Timothy B. Armstrong
Unbiased Instrumental Variables Estimation Under Known First-Stage Sign, Isaiah Andrews, Timothy B. Armstrong
Cowles Foundation Discussion Papers
We derive mean-unbiased estimators for the structural parameter in instrumental variables models with a single endogenous regressor where the sign of one or more first stage coefficients is known. In the case with a single instrument, the unbiased estimator is unique. For cases with multiple instruments we propose a class of unbiased estimators and show that an estimator within this class is efficient when the instruments are strong. We show numerically that unbiasedness does not come at a cost of increased dispersion in models with a single instrument: in this case the unbiased estimator is less dispersed than the 2SLS …
What Do Longitudinal Data On Millions Of Hospital Visits Tell Us About The Value Of Public Health Insurance As A Safety Net For The Young And Privately Insured?, Amanda E. Kowalski
What Do Longitudinal Data On Millions Of Hospital Visits Tell Us About The Value Of Public Health Insurance As A Safety Net For The Young And Privately Insured?, Amanda E. Kowalski
Cowles Foundation Discussion Papers
Young people with private health insurance sometimes transition to the public health insurance safety net after they get sick, but popular sources of cross-sectional data obscure how frequently these transitions occur. We use longitudinal data on almost all hospital visits in New York from 1995 to 2011. We show that young privately insured individuals with diagnoses that require more hospital visits in subsequent years are more likely to transition to public insurance. If we ignore the longitudinal transitions in our data, we obscure over 80% of the value of public health insurance to the young and privately insured.