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[Curriculum Vitae] [Research] [Teaching] Professor
of Economics Harvey Kapnick
Professor of Business Institutions Department
of Economics Office number: 3225 TEACHING Economics 335 (Political
Economics) Syllabus Economics 412 (Dynamic
Methods for Economics) Syllabus Economics 414 (Frontiers of
Applied Theory) Syllabus upon request. RECENT
PAPERS
Early-Career Discrimination: Spiraling or
Self-Correcting? with Arjada Bardhi and Yingni Guo, R&R, Review of
Economic Studies. ·
How does early-career discrimination affect workers’
long-term prospects? Does discrimination amplify, or does it subside over
time? ·
We show that the answer critically depends on how workers ability is revealed over time: when failures are
more informative about successes about workers’ ability, even a small amount
of early discrimination can have a large impact on long-term prospects, while
the opposite is true of jobs for which skills are mainly revealed through
successes. ·
We first establish the result in a small market model
with fixed wages, and then show that it holds in a
large labor market model with flexible wages, the modeling of which is
another contribution of the paper.
Existence, Uniqueness, and Regularity of
Solutions to Nonlinear and Non-Smooth Parabolic Obstacle Problems
with
Théo Durandard, R&R, Mathematics of Operations Research. ·
We prove the existence of a unique regular solution for a
large class of time-heterogeneous, second-order nonlinear partial
differential equations with a multidimensional state, an irregular obstacle,
and a Lipschitz domain. ·
Lipschitz domains include non-smooth domains common in
economics such as orthants and budget sets. ·
Irregular obstacles capture non-smooth stopping payoffs,
which generically arise when the decision maker must make a final decision
upon stopping, such as whether or not to invest in a
project or to acquit or convict a defendant after an
information acquisition stage. When to Convict
Defendants Facing Multiple Accusations? A Strategic Analysis with Harry Pei,
R&R, RAND Journal of Economics. ·
When a defendant is accused of multiple crimes, one may
consider punishing him if the overall probability that he has committed at
least one crime is high, instead of treating each possible accusation
independently. ·
We show that this aggregation rule, which has been
advocated by prominent legal scholars, can severely reduce the
informativeness of witnesses’ reports and increase the proportion of
offenders once agents’ strategic interactions are taken
into account. Persistent Private Information Revisited with Alex Bloedel and Vijay Krishna, R&R in Econometrica ·
We revisit Williams’ (Econometrica, 2011) model of
optimal insurance with persistent private information and continuous time. ·
The contract characterized as optimal in that paper
belongs to a class of contracts that can be implemented by self-insurance
contracts and is generically suboptimal within this class. ·
The claim that immiserisation disappears with persistent
private information and the effects attributed to persistent private
information and to continuous time by that paper are not supported by our
analysis. We elucidate some sources of these discrepancies. Robust Implementation with Costly Information with Harry Pei, Review of Economic Studies, 2024 ·
We consider robust implementation for a concept of
robustness that builds on Kajii and Morris (1997)
when agents must incur a cost to learn the state. ·
Agents’ preferences are uncertain, as are their beliefs
and higher-order beliefs about one another’s preferences. ·
We propose a mechanism that implements any desired social
choice function when perturbations concerning agents' payoffs have small ex
ante probability. ·
We also demonstrate that full implementation is
impossible unless agents have a direct of interest
in the state of the world as it relates to the social choice being
implemented.
Judicial Mechanism Design with Ron Siegel, American Economic Journal: Microeconomics, 2023 ·
When a suspect is arrested for a crime, they enter a
judicial process or mechanism that produces evidence in the case and a
sentence. ·
We study the optimal design of judicial mechanisms for
several notions of welfare, which differ in their treatment of deterrence. ·
The optimal mechanism presents several features
reminiscent of the US criminal justice system, such as plea bargaining, a
trial with a binary verdict of either acquittal or conviction, and a
conviction threshold based on the likelihood of the defendant’s guilt. ·
The assumption of commitment required for our mechanism
design analysis is reflected in several aspects of the U.S. criminal justice
system. Can Society Function Without Ethical Agents? An Informational Perspective ·
This paper proposes a model of societal learning, where
information must be discovered by individuals with specific expertise or
unique access to the fact to be learned. ·
If these individuals lack an intrinsic motive to seek and
reveal the truth, the feasibility of societal learning relies on statistical
conditions related to the availability of evidence about the fact. ·
The model’s applications are discussed in the contexts of
institutional enforcement, social cohesion, scientific progress, and
historical revisionism. ·
Listen to the AI podcast here.
Learning and Corruption on Monitoring Chains, American Economic Review, Papers and Proceedings, 2021
Renegotiation-Proof Contracts with Persistent States ·
This paper defines a concept of renegotiation-proof contracts
for dynamic contracts in which the state is either (i)
publicly observed or (ii) driven by a diffusion process. ·
The concept uses the algebraic notion of left-action group to compare contracts across distinct states. It
subsumes the notion of internal consistency used in repeated games. ·
The concept is applied to a principal-agent insurance
model in which the agent has persistent private endowment shocks.
Renegotiation-proof contracts have a closed-form and are characterized by a
single number, the contract sensitivity to the agent s reports. The Economic Case for Probability-Based Sentencing with Ron Siegel ·
Criminal trials do not formally allow sentences to
reflect the strength of evidence. ·
A growing number of legal scholars have criticized this
restriction. ·
This paper proposes an economic model that formalizes and
unifies the arguments put forward in the law literature and addresses three
of the remaining objections to the use of evidence-based sentencing: i) political legitimacy (the impact on the coercive power
of the state), ii) robustness to details of the environment, and iii)
incentives to acquire evidence. Contestable Norms
with Mikhail Safronov ·
To be sustainable without external enforcement, social
norms, contracts, and other agreements must include provisions not only to
deter violations but also to address challenges to move to other norms,
contracts, or agreements. ·
We introduce contestable norms, which achieve both
objectives, analyze their conceptual foundation, efficiency, stability,
design, and evolution, and characterize their payoffs. ·
Contestable norms may be inefficient, no matter how
frequent agents interactions and proposals, to an
extent determined by the amount of conflict inherent in agents
strategic environment. ·
The analysis sheds new light on the efficient institution
hypothesis and the renegotiation paradox. RESEARCH
(BY TOPIC) AUCTIONS AND CONSUMER THEORY Substitute Goods, Auctions, and Equilibrium with Paul Milgrom, Journal of Economic Theory, 2009. COMPARATIVE STATICS Beyond Correlation: Measuring Interdependence
through Complementarities with Margaret Meyer Discounting, Values, and Decisions with John Quah, Journal of Political Economy, 2013 Aggregating the Single Crossing Property
with John Quah, Econometrica,
2012. Increasing Interdependence of Multivariate Distributions
with Meg Meyer, Journal of Economic Theory, Symposium on Inequality
and Risk, 2012. Generalized Monotonicity Analysis with Thomas Weber, Economic
Theory, 2010 Comparative
Statics, Informativeness, and the Interval Dominance Order with John
Quah, Econometrica, 2009. DECISION THEORY A Theory of Intergenerational Altruism with Simone Galperti, Econometrica, 2017 DYNAMIC METHODS Existence, Uniqueness, and Regularity of
Solutions to Nonlinear and Non-Smooth Parabolic Obstacle Problems
with Théo
Durandard, submitted. On the Smoothness of Value Functions and the Existence
of Optimal Strategies in Diffusion Models with Martin
Szydlowski, Journal of Economic Theory,
Symposium on Dynamic Contracts and Mechanism Design, 2015 FINANCE Capital Mobility and Asset Pricing with Darrell
Duffie, Econometrica, 2012. Supplement
to "Capital Mobility and Asset Pricing" Performance Sensitive Debt with Gustavo
Manso and Alexei Tchistyi, Review of Financial Studies (winner of the Society for Financial
Studies Young Researcher Award, 2009), 2010. LABOR ECONOMICS Early-Career Discrimination: Spiraling or
Self-Correcting? with Arjada Bardhi and Yingni Guo, R&R, Review of Economic Studies. LAW AND ECONOMICS When to Convict
Defendants Facing Multiple Accusations? A Strategic Analysis with Harry Pei,
R&R, RAND Journal of Economics.
Judicial Mechanism Design with Ron Siegel, American Economic Journal: Microeconomics, 2023. The Economic Case for Probability-Based Sentencing with Ron Siegel POLITICAL ECONOMY Can Society Function Without Ethical Agents? An Informational Perspective Listen to the AI
podcast here. Collective Commitment with Christian Roessler and Sandro Shelegia, Journal of Political Economy, 2018 The Hidden Cost of Direct Democracy: How Ballot Initiatives Affect Politicians Selection and Incentives with Carlo Prato, Journal of Theoretical Politics, 2017 Learning While Voting: Determinants of Collective Experimentation Econometrica, 2010. Extension: Voting and Experimentation with Correlated Types Working paper version (Oxford, 2007): Voting and Experimentation This version includes the Singaporean Restaurant example RENEGOTIATION, CONTRACT THEORY, AND BARGAINING
Persistent Private Information Revisited
with Alex
Bloedel and Vijay Krishna,
R&R
in Econometrica Contestable Norms with Mikhail Safronov Contract Negotiation and the Coase Conjecture, Econometrica, 2017 Contract Negotiation and Screening with Persistent Information Renegotiation-Proof Contracts with Persistent Private Information For the 2011 version with moral hazard, click here. SOCIAL LEARNING, IMPLEMENTATION, AND EXPERIMENTATION
Early-Career Discrimination: Spiraling or
Self-Correcting? with Arjada Bardhi and Yingni Guo, R&R, Review of Economic Studies. (cross-listed with Labor Economics) Robust Implementation with Costly Information
with
Harry Pei, Review of Economic Studies, 2024 Can Society Function Without Ethical Agents? An Informational Perspective (cross-listed with Political Economy)
Social Experimentation with Interdependent and Expanding Technologies with Umberto Garfagnini, Review of Economic Studies, 2016
Learning While
Voting: Determinants of Collective Experimentation Econometrica,
2010.
PUBLICATIONS IN OPERATIONS RESEARCH Additive
Envelopes of Continuous Functions with Thomas Weber, Operations
Research Letters, 2010. Monotone Comparative Statics: A
Geometric Approach with Thomas Weber, Journal
of Optimization Theory and Applications, 2008. |
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