Department of Economics
Office number: 3221
Economics 335 (Political Economics) Syllabus
Economics 412 (Dynamic Methods for Economics) Syllabus
with Ron Siegel
· Adding a third verdict increases welfare without increasing the risk of punishing the innocent, and may be implemented simply
· Plea bargaining with two verdicts has more informational value than any multi-verdict system, and is in fact the optimal mechanism
· Adding a third verdict can increase incentives to acquire information
with Umberto Garfagnini, conditionally accepted in the Review of Economic Studies
· Experimentation with correlated bandits is well-known to be intractable, and yet it captures many real-life technological environments
· We analyze experimentation by overlapping generations. Payoffs are determined by the path of a Brownian motion and, hence, correlated
· “Radical” experimentation means going beyond the farthest known technology and incurs a specific “expansion” cost. It is eventually abandoned with probability 1 for all parameters of our model, leading to stagnation and convergence to a single technological standard
with Simone Galperti
· Intergenerational altruism drives any assessment for the long-term consequences of our actions, but what principles underlie such altruism?
· We axiomatize altruistic preferences such that a generation directly cares about all future generations, and cares about their whole well-being rather than how much they consume
· This yields a tractable class of altruistic preferences which includes the beta-delta discounting model as particular case, but also models in which the discount factor between two periods depends on consumption at other periods
· Although these preferences always exhibit present bias, we find that a social planner aggregating the altruistic preferences of all generations may be time consistent
· Actual negotiations contain a puzzle: parties try to withhold private information until striking a deal, but the timing and nature of the agreement can reveal some of this private information and, hence, reveal further gains from negotiations
· This paper provides a dynamic resolution of the puzzle, which delivers a strategic foundation for renegotiation-proof contracts and extends the analysis of the Coase conjecture (but not the conjecture itself) to richer contractual environments
· All equilibria converge to the same contracts as negotiation frictions vanish, which are straightforward to characterize graphically
with Christian Roessler and Sandro Shelegia, R&R, Journal of Political Economy
· Dynamic political equilibria are often inefficient. Can agents collectively commit at the outset to a better policy?
· We provide a negative answer: the equilibrium policy is dominated by another long-term policy if and only if there exists a preference cycle among long-term policies which includes both the equilibrium and the dominating policy
· This impossibility theorem holds for the majority rule as well as for all collective decision rules satisfying a power consistency condition, linking the power structure in the dynamic collective decisions with the power structure used to compare long-term policies at the commitment stage.
· Power consistency is necessary and sufficient for the impossibility theorem to hold. It holds for all supermajority rules, but is violated in settings involving time-inconsistent agents
with Mikhail Safronov
· Cooperation in repeated games relies on the threat of a punishment phase. Is cooperation still feasible when this punishment can be renegotiated?
· We introduce an explicit protocol of renegotiation. Players may propose new plans, which specify future actions, future proposals, and players’ reactions to these proposals. A player who rejects a proposal may be rewarded for “enforcing the social norm”
· The set of renegotiation-proof equilibria has a simple graphical characterization
Beyond Correlation: Measuring Interdependence through Complementarities with Margaret Meyer
· Correlation is not an economically-grounded measure of interdependence of random variables, just as variance fails to capture risk except in quadratic or Gaussian cases
· Interdependence often matters to economists because of complementarities (i.e., supermodularity) in the objective functions they analyze
· We study this supermodular ordering of interdependence, providing characterizations and concrete methods for comparing distributions, including those distributions generated by common and idiosyncratic shocks
with Carlo Prato
· Direct democracy is often compared to representative democracy. But in modern regimes, these two types of democracies coexist. How do citizen initiatives and referendums affect regimes which are otherwise governed by elected representatives?
· We identify several equilibrium effects, showing that direct democracy institutions can reduce the quality of selection and incentives of elected officials, sometimes reducing welfare even when these institutions do not entail any administrative or other exogenous cost
RESEARCH (BY TOPIC)
For a list that includes research abstracts, click here
Beyond Correlation: Measuring Interdependence through Complementarities with Margaret Meyer (New/Updated)
Discounting, Values, and Decisions with John Quah, Journal of Political Economy, October 2013
Aggregating the Single Crossing Property with John Quah, Econometrica, September 2012.
Increasing Interdependence of Multivariate Distributions with Meg Meyer, Journal of Economic Theory, Symposium on Inequality and Risk, July 2012.
Generalized Monotonicity Analysis with Thomas Weber, Economic Theory, June 2010
Comparative Statics, Informativeness, and the Interval Dominance Order with John Quah, Econometrica, November 2009.
with Simone Galperti (New/Updated)
On the Smoothness of Value Functions and the Existence of Optimal Strategies with Martin Szydlowski, forthcoming in the Journal of Economic Theory, Symposium on Dynamic Contracts and Mechanism Design (New/Updated)
Capital Mobility and Asset Pricing with Darrell Duffie, Econometrica, November 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), May 2010.
LAW AND ECONOMICS
with Ron Siegel (New/Updated)
with Christian Roessler and Sandro Shelegia, Revise and Resubmit, Journal of Political Economy (New/Updated)
with Carlo Prato (New/Updated)
While Voting: Determinants of Collective Experimentation Econometrica, May 2010.
Working paper version (Oxford, 2007): Voting and Experimentation
This version includes the “Singaporean Restaurant” example
RENEGOTIATION AND BARGAINING
with Mikhail Safronov (New/Updated)
Revise and Resubmit, Econometrica (New/Updated)
Contracts, Information Persistence, and Renegotiation, November 2011
SOCIAL LEARNING AND EXPERIMENTATION
with Umberto Garfagnini, conditionally accepted, Review of Economic Studies (New/Updated)
Learning While Voting:
Determinants of Collective Experimentation Econometrica, May 2010.
AUCTIONS AND CONSUMER THEORY
Substitute Goods, Auctions, and Equilibrium
with Paul Milgrom, Journal of Economic Theory, January 2009.
PUBLICATIONS IN OPERATIONS RESEARCH
Envelopes of Continuous Functions with Thomas Weber, Operations
Research Letters, May 2010.
Monotone Comparative Statics: A Geometric Approach with Thomas Weber, Journal of Optimization Theory and Applications, June 2008.
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