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Articles 211 - 240 of 2768
Full-Text Articles in Social and Behavioral Sciences
Optimal Control Of An Epidemic Through Social Distancing, Thomas Kruse, Philipp Strack
Optimal Control Of An Epidemic Through Social Distancing, Thomas Kruse, Philipp Strack
Cowles Foundation Discussion Papers
We analyze how to optimally engage in social distancing in order to minimize the spread of an infectious disease. We identify conditions under which any optimal policy is single-peaked, i.e., first engages in increasingly more social distancing and subsequently decreases its intensity. We show that an optimal policy might delay measures that decrease the transmission rate substantially to create herd-immunity and that engaging in social distancing sub-optimally early can increase the number of fatalities. Finally, we find that optimal social distancing can be an effective measure and can substantially reduce the death rate of a disease.
The Evolving Impacts Of Covid-19 On Small Businesses Since The Cares Act, John Eric Humphries, Christopher Neilson, Gabriel Ulyssea
The Evolving Impacts Of Covid-19 On Small Businesses Since The Cares Act, John Eric Humphries, Christopher Neilson, Gabriel Ulyssea
Cowles Foundation Discussion Papers
This note provides new evidence on how small business owners have been impacted by COVID-19, and how these effects have evolved since the passage of the CARES Act. As part of a broader and ongoing project, we collected survey data from more than 8,000 small business owners in the U.S. from March 28th, one day after the CARES Act was passed, through April 20th. The data include information on firm size, layoffs, beliefs about the future prospects of their businesses, as well as awareness of existing government relief programs. We provide three main findings. First, by the time the CARES …
It Takes A Village: The Economics Of Parenting With Neighborhood And Peer Effects, Francesco Agostinelli, Matthias Doepke, Giuseppe Sorrenti, Fabrizio Zilibotti
It Takes A Village: The Economics Of Parenting With Neighborhood And Peer Effects, Francesco Agostinelli, Matthias Doepke, Giuseppe Sorrenti, Fabrizio Zilibotti
Cowles Foundation Discussion Papers
As children reach adolescence, peer interactions become increasingly central to their development, whereas the direct influence of parents wanes. Nevertheless, parents may continue to exert leverage by shaping their children’s peer groups. We study interactions of parenting style and peer effects in a model where children’s skill accumulation depends on both parental inputs and peers, and where parents can affect the peer group by restricting who their children can interact with. We estimate the model and show that it can capture empirical patterns regarding the interaction of peer characteristics, parental behavior, and skill accumulation among US high school students. We …
Adaptive Rationality In Strategic Interaction: Do Emotions Regulate Thinking About Others?, Timo Ehrig, Jaison Manjaly, Aditya Singh, Shyam Sunder
Adaptive Rationality In Strategic Interaction: Do Emotions Regulate Thinking About Others?, Timo Ehrig, Jaison Manjaly, Aditya Singh, Shyam Sunder
Cowles Foundation Discussion Papers
Forming beliefs or expectations about others’ behavior is fundamental to strategy, as it co-determines the outcomes of interactions in and across organizations. In the game theoretic conception of rationality, agents reason iteratively about each other to form expectations about behavior. According to prior scholarship, actual strategists fall short of this ideal, and attempts to understand the underlying cognitive processes of forming expectations about others are in their infancy. We propose that emotions help regulate iterative reasoning, that is, their tendency to not only reflect on what others think, but also on what others think about their thinking. Drawing on a …
Search, Information, And Prices, Dirk Bergemann, Benjamin Brooks, Stephen Morris
Search, Information, And Prices, Dirk Bergemann, Benjamin Brooks, Stephen Morris
Cowles Foundation Discussion Papers
Consider a market with identical firms offering a homogeneous good. A consumer obtains price quotes from a subset of firms and buys from the firm offering the lowest price. The “price count” is the number of firms from which the consumer obtains a quote. For any given ex ante distribution of the price count, we derive a tight upper bound (under first-order stochastic dominance) on the equilibrium distribution of sales prices. The bound holds across all models of firms’ common-prior higher-order beliefs about the price count, including the extreme cases of full information (firms know the price count) and no …
Search, Information, And Prices, Dirk Bergemann, Benjamin Brooks, Stephen Morris
Search, Information, And Prices, Dirk Bergemann, Benjamin Brooks, Stephen Morris
Cowles Foundation Discussion Papers
Consider a market with many identical firms offering a homogeneous good. A consumer obtains price quotes from a subset of firms and buys from the firm offering the lowest price. The “price count” is the number of firms from which the consumer obtains a quote. For any given ex ante distribution of the price count, we obtain a tight upper bound (under first-order stochastic dominance) on the equilibrium distribution of sale prices. The bound holds across all models of firms’ common-prior higher-order beliefs about the price count, including the extreme cases of complete information ( firms know the price count …
Changes In Assortative Matching: Theory And Evidence For The Us, Pierre-André Chiappori, Monica Costa-Dias, Costas Meghir
Changes In Assortative Matching: Theory And Evidence For The Us, Pierre-André Chiappori, Monica Costa-Dias, Costas Meghir
Cowles Foundation Discussion Papers
The extent to which like-with like marry is particularly important for inequality as well as for the outcomes of children that result from the union. In this paper we discuss approaches to the measurement of changes in assortative mating. We derive two key conditions that a well-defined measure should satisfy. We argue that changes in assortativeness should be interpreted through a structural model of the marriage market; in particular, a crucial issue is how they relate to variations in the economic surplus generated by marriage. We propose a very general criterion of increase in assortativeness, and show that almost all …
Search, Information, And Prices, Dirk Bergemann, Benjamin Brooks, Stephen Morris
Search, Information, And Prices, Dirk Bergemann, Benjamin Brooks, Stephen Morris
Cowles Foundation Discussion Papers
Consider a market with identical firms offering a homogeneous good. A consumer obtains price quotes from a subset of firms and buys from the firm offering the lowest price. The “price count” is the number of firms from which the consumer obtains a quote. For any given ex ante distribution of the price count, we obtain a tight upper bound (under first-order stochastic dominance) on the equilibrium distribution of sale prices. The bound holds across all models of firms’ common-prior higher-order beliefs about the price count, including the extreme cases of full information ( firms know the price count) and …
Popular Economic Narratives Advancing The Longest U.S. Economic Expansion 2009-2019, Robert J. Shiller
Popular Economic Narratives Advancing The Longest U.S. Economic Expansion 2009-2019, Robert J. Shiller
Cowles Foundation Discussion Papers
The U.S. economic expansion since 2009 is the longest on record since 1854, according to the National Bureau of Economic Research Business Cycle Dating Committee. This paper seeks to understand this phenomenon better by looking at the time paths of popular narratives over this interval, of stories that people have been telling that offer clues into their economic behavior. Six constellations of narratives are studied, identified by keywords “Great Depression,” “secular stagnation,” “sustainability,” “housing bubble,” “strong economy,” and “save more.”
Changes In Assortative Matching And Inequality In Income: Evidence For The Uk, Pierre-André Chiappori, Monica Costa-Dias, Sam Crossman, Costas Meghir
Changes In Assortative Matching And Inequality In Income: Evidence For The Uk, Pierre-André Chiappori, Monica Costa-Dias, Sam Crossman, Costas Meghir
Cowles Foundation Discussion Papers
The extent to which like-with like marry is important for inequality as well as for the outcomes of children that result from the union. In this paper we present evidence on changes in assortative mating and its implications for household inequality in the UK. Our approach contrasts with others in the literature in that it is consistent with an underlying model of the marriage market. We argue that a key advantage of this approach is that it creates a direct connection between changes in assortativeness in marriage and changes in the value of marriage for the various possible matches by …
Partial Identification And Inference For Dynamic Models And Counterfactuals, Myrto Kalouptsidi, Yuichi Kitamura, Lucas Lima, Eduardo Souza-Rodrigues
Partial Identification And Inference For Dynamic Models And Counterfactuals, Myrto Kalouptsidi, Yuichi Kitamura, Lucas Lima, Eduardo Souza-Rodrigues
Cowles Foundation Discussion Papers
We provide a general framework for investigating partial identification of structural dynamic discrete choice models and their counterfactuals, along with uniformly valid inference procedures. In doing so, we derive sharp bounds for the model parameters, counterfactual behavior, and low-dimensional outcomes of interest, such as the average welfare effects of hypothetical policy interventions. We characterize the properties of the sets analytically and show that when the target outcome of interest is a scalar, its identified set is an interval whose endpoints can be calculated by solving well-behaved constrained optimization problems via standard algorithms. We obtain a uniformly valid inference procedure by …
Spatial Distribution Of Supply And The Role Of Market Thickness: Theory And Evidence From Ride Sharing, Soheil Ghili, Vineet Kumar
Spatial Distribution Of Supply And The Role Of Market Thickness: Theory And Evidence From Ride Sharing, Soheil Ghili, Vineet Kumar
Cowles Foundation Discussion Papers
This paper studies the e ects of economies of density in transportation markets, focusing on ridesharing. Our theoretical model predicts that (i) economies of density skew the supply of drivers away from less dense regions, (ii) the skew will be more pronounced for smaller platforms, and (iii) rideshare platforms do not nd this skew ecient and thus use prices and wages to mitigate (but not eliminate) it. We then develop a general empirical strategy with simple implementation and limited data requirements to test for spatial skew of supply from demand. Applying our method to ride-level, multi-platform data from New York …
Optimal Long-Term Health Insurance Contracts: Characterization, Computation, And Welfare Effects, Soheil Ghili, Ben Handel, Igal Hendel, Michael D. Whinston
Optimal Long-Term Health Insurance Contracts: Characterization, Computation, And Welfare Effects, Soheil Ghili, Ben Handel, Igal Hendel, Michael D. Whinston
Cowles Foundation Discussion Papers
Reclassification risk is a major concern in health insurance where contracts are typically one year in length but health shocks often persist for much longer. We theoretically characterize optimal long-term insurance contracts with one-sided commitment, and use our characterization to provide a simple computation algorithm for computing optimal contracts from primitives. We apply this method to derive empirically-based optimal long-term health insurance contracts using all-payers claims data from Utah, and then evaluate the potential welfare performance of these contracts. We find that optimal long-term health insurance contracts that start at age 25 can eliminate over 94% of the welfare loss …
Optimal Long-Term Health Insurance Contracts: Characterization, Computation, And Welfare Effects, Soheil Ghili, Ben Handel, Igal Hendel, Michael D. Whinston
Optimal Long-Term Health Insurance Contracts: Characterization, Computation, And Welfare Effects, Soheil Ghili, Ben Handel, Igal Hendel, Michael D. Whinston
Cowles Foundation Discussion Papers
Reclassification risk is a major concern in health insurance where contracts are typically one year in length but health shocks often persist for much longer. While most health systems with private insurers emphasize short-run contracts paired with substantial pricing regulations to reduce reclassification risk, long-term contracts with one-sided insurer commitment have significant potential to reduce reclassification risk without the negative side effects of price regulation, such as adverse selection. In this paper, we theoretically characterize optimal long-term insurance contracts with one-sided commitment, extending prior models of this form in several key directions that are important for studying health insurance markets. …
What Is Socialism Today? Conceptions Of A Cooperative Economy, John E. Roemer
What Is Socialism Today? Conceptions Of A Cooperative Economy, John E. Roemer
Cowles Foundation Discussion Papers
Socialism is back on the political agenda in the United States. Politicians and some economists who identify as socialists, however, do not discuss property relations, a topic that was central in the intellectual history of socialism, but rather limit themselves to advocacy of economic reforms, funded through taxation, that would tilt the income distribution in favor of the disadvantaged in society. In the absence of a more precise discussion of property relations, the presumption must be that ownership of firms would remain private or corporate with privately owned shares. This formula is identified with the Nordic and other western European …
Household Portfolios And Financial Preparedness For Retirement, Rowena Crawford, Cormac O'Dea
Household Portfolios And Financial Preparedness For Retirement, Rowena Crawford, Cormac O'Dea
Cowles Foundation Discussion Papers
Using a lifecycle model of consumption, saving and portfolio choice combined with linked survey and administrative data on wealth and lifetime earnings we evaluate measures of retirement preparedness. We estimate heterogeneous discount factors for households and compare the estimates of their patience to their replacement rates { the simple measure of- ten used to evaluate the adequacy of retirement savings. We find first that the specification of the model’s asset structure matters quantitatively for preference parameter estimates { households appear to be much more patient when they are assumed to have access only to a risk-free asset compared to when …
The Welfare Effects Of Long-Term Health Insurance Contracts, Soheil Ghili, Ben Handel, Igal Hendel, Michael D. Whinston
The Welfare Effects Of Long-Term Health Insurance Contracts, Soheil Ghili, Ben Handel, Igal Hendel, Michael D. Whinston
Cowles Foundation Discussion Papers
Reclassification risk is a major concern in health insurance where contracts are typically one year in length but health shocks often persist for much longer. We use rich individual-level medical information from the Utah all-payer claims database to empirically study one possible solution: long-term insurance contracts. We characterize optimal long-term contracts with one-sided commitment theoretically, derive the contracts that are optimal for consumers in Utah, and assess the welfare level that a full implementation of these contracts could achieve relative to several key benchmarks. We find that dynamic contracts perform very well for the majority of the population, for example, …
Quick Or Cheap? Breaking Points In Dynamic Markets, Panayotis Mertikopoulos, Heinrich H. Nax, Bary S.R. Pradelski
Quick Or Cheap? Breaking Points In Dynamic Markets, Panayotis Mertikopoulos, Heinrich H. Nax, Bary S.R. Pradelski
Cowles Foundation Discussion Papers
We examine two-sided markets where players arrive stochastically over time and are drawn from a continuum of types. The cost of matching a client and provider varies, so a social planner is faced with two contending objectives: a) to reduce players’ waiting time before getting matched; and b) to form efficient pairs in order to reduce matching costs. We show that such markets are characterized by a quick or cheap dilemma: Under a large class of distributional assumptions, there is no `free lunch’, i.e., there exists no clearing schedule that is simultaneously optimal along both objectives. We further identify a …
Spatial Distribution Of Supply And The Role Of Market Thickness: Theory And Evidence From Ride Sharing, Soheil Ghili, Vineet Kumar
Spatial Distribution Of Supply And The Role Of Market Thickness: Theory And Evidence From Ride Sharing, Soheil Ghili, Vineet Kumar
Cowles Foundation Discussion Papers
This paper develops a strategy with simple implementation and limited data requirements to identify spatial distortion of supply from demand -or, equivalently, unequal access to supply among regions- in transportation markets. We apply our method to ride-level, multi-platform data from New York City (NYC) and show that for smaller rideshare platforms, supply tends to be disproportionately concentrated in more densely populated areas. We also develop a theoretical model to argue that a smaller platform size, all else being equal, distorts the supply of drivers toward more densely populated areas due to network effects. Motivated by this, we estimate a minimum …
Third-Degree Price Discrimination Versus Uniform Pricing, Dirk Bergemann, Francisco Castro, Gabriel Weintraub
Third-Degree Price Discrimination Versus Uniform Pricing, Dirk Bergemann, Francisco Castro, Gabriel Weintraub
Cowles Foundation Discussion Papers
We compare the revenue of the optimal third-degree price discrimination policy against a uniform pricing policy. A uniform pricing policy offers the same price to all segments of the market. Our main result establishes that for a broad class of third-degree price discrimination problems with concave revenue functions and common support, a uniform price is guaranteed to achieve one half of the optimal monopoly profits. This revenue bound obtains for any arbitrary number of segments and prices that the seller would use in case he would engage in third-degree price discrimination. We further establish that these conditions are tight, and …
Fully Modified Least Squares For Multicointegrated Systems, Igor Kheifets, Peter C.B. Phillips
Fully Modified Least Squares For Multicointegrated Systems, Igor Kheifets, Peter C.B. Phillips
Cowles Foundation Discussion Papers
Multicointegration is traditionally defined as a particular long run relationship among variables in a parametric vector autoregressive model that introduces links between these variables and partial sums of the equilibrium errors. This paper departs from the parametric model, using a semiparametric formulation that reveals the explicit role that singularity of the long run conditional covariance matrix plays in determining multicointegration. The semiparametric framework has the advantage that short run dynamics do not need to be modeled and estimation by standard techniques such as fully modified least squares (FM-OLS) on the original I(1) system is straightforward. The paper derives FM-OLS limit …
Uniform Pricing Versus Third-Degree Price Discrimination, Dirk Bergemann, Francisco Castro, Gabriel Weintraub
Uniform Pricing Versus Third-Degree Price Discrimination, Dirk Bergemann, Francisco Castro, Gabriel Weintraub
Cowles Foundation Discussion Papers
We compare the revenue of the optimal third-degree price discrimination policy against a uniform pricing policy. A uniform pricing policy offers the same price to all segments of the market. Our main result establishes that for a broad class of third-degree price discrimination problems with concave revenue functions and common support, a uniform price is guaranteed to achieve one-half of the optimal monopoly profits. This revenue bound holds for any arbitrary number of segments and prices that the seller would use in case he would engage in third-degree price discrimination. We further establish that these conditions are tight and that …
Trade Models And Macroeconomics, Ray C. Fair
Trade Models And Macroeconomics, Ray C. Fair
Cowles Foundation Discussion Papers
This paper discusses some macro links that are missing from trade models. A multicountry macroeconometric model is used to analyze the effects on the United States of increased import competition from China, an experiment that is common in the recent trade literature. In the macro story a fall in Chinese export prices is stimulative. Domestic prices fall, which increases real wage rates and real wealth, which increases household expenditures. In addition, the Fed may lower the interest rate because of the lower prices, which is stimulative. Trade models do not have these channels, and they likely overestimate the negative effects …
Nonlinear Cointegrating Power Function Regression With Endogeneity, Zhishui Hu, Peter C.B. Phillips, Qiying Wang
Nonlinear Cointegrating Power Function Regression With Endogeneity, Zhishui Hu, Peter C.B. Phillips, Qiying Wang
Cowles Foundation Discussion Papers
This paper develops an asymptotic theory for nonlinear cointegrating power function regression. The framework extends earlier work on the deterministic trend case and allows for both endogeneity and heteroskedasticity, which makes the models and inferential methods relevant to many empirical economic and financial applications, including predictive regression. Accompanying the asymptotic theory of nonlinear regression, the paper establishes some new results on weak convergence to stochastic integrals that go beyond the usual semi-martingale structure and considerably extend existing limit theory, complementing other recent findings on stochastic integral asymptotics. The paper also provides a general framework for extremum estimation limit theory that …
Continuously Updated Indirect Inference In Heteroskedastic Spatial Models, Maria Kyriacou, Peter C.B. Phillips, Francesca Rossi
Continuously Updated Indirect Inference In Heteroskedastic Spatial Models, Maria Kyriacou, Peter C.B. Phillips, Francesca Rossi
Cowles Foundation Discussion Papers
Spatial units typically vary over many of their characteristics, introducing potential unobserved heterogeneity which invalidates commonly used homoskedasticity conditions. In the presence of unobserved heteroskedasticity, standard methods based on the (quasi-)likelihood function generally produce inconsistent estimates of both the spatial parameter and the coefficients of the exogenous regressors. A robust generalized method of moments estimator as well as a modified likelihood method have been proposed in the literature to address this issue. The present paper constructs an alternative indirect inference approach which relies on a simple ordinary least squares procedure as its starting point. Heteroskedasticity is accommodated by utilizing a …
Intuitive Beliefs, Jawwad Noor
Intuitive Beliefs, Jawwad Noor
Cowles Foundation Discussion Papers
Beliefs are intuitive if they rely on associative memory, which can be described as a network of associations between events. A belief-theoretic characterization of the model is provided, its uniqueness properties are established, and the intersection with the Bayesian model is characterized. The formation of intuitive beliefs is modelled after machine learning, whereby the network is shaped by past experience via minimization of the difference from an objective probability distribution. The model is shown to accommodate correlation misperception, the conjunction fallacy, base-rate neglect/conservatism, etc.
Boosting: Why You Can Use The Hp Filter, Peter C.B. Phillips, Zhentao Shi
Boosting: Why You Can Use The Hp Filter, Peter C.B. Phillips, Zhentao Shi
Cowles Foundation Discussion Papers
The Hodrick-Prescott (HP) filter is one of the most widely used econometric methods in applied macroeconomic research. The technique is nonparametric and seeks to decompose a time series into a trend and a cyclical component unaided by economic theory or prior trend specification. Like all nonparametric methods, the HP filter depends critically on a tuning parameter that controls the degree of smoothing. Yet in contrast to modern nonparametric methods and applied work with these procedures, empirical practice with the HP filter almost universally relies on standard settings for the tuning parameter that have been suggested largely by experimentation with macroeconomic …
Inference And Specification Testing In Threshold Regression With Endogeneity, Ping Yu, Qin Liao, Peter C.B. Phillips
Inference And Specification Testing In Threshold Regression With Endogeneity, Ping Yu, Qin Liao, Peter C.B. Phillips
Cowles Foundation Discussion Papers
We propose three new methods of inference for the threshold point in endogenous threshold regression and two specification tests designed to assess the presence of endogeneity and threshold effects without necessarily relying on instrumentation of the covariates. The first inferential method is a parametric two-stage least squares method and is suitable when instruments are available. The second and third methods are based on smoothing the objective function of the integrated difference kernel estimator in different ways and these methods do not require instrumentation. All three methods are applicable irrespective of endogeneity of the threshold variable. The two specification tests are …
The Cowles Commission And Foundation For Research In Economics, Robert W. Dimand
The Cowles Commission And Foundation For Research In Economics, Robert W. Dimand
Cowles Foundation Discussion Papers
Founded in 1932 by a newspaper heir disillusioned by the failure of forecasters to predict the Great Crash, the Cowles Commission promoted the use of formal mathematical and statistical methods in economics, initially through summer research conferences in Colorado and through support of the Econometric Society (of which Alfred Cowles was secretary-treasurer for decades). After moving to the University of Chicago in 1939, the Cowles Commission sponsored works, many later honored with Nobel Prizes but at the time out of the mainstream of economics, by Haavelmo, Hurwicz and Koopmans on econometrics, Arrow and Debreu on general equilibrium, Yntema and Mosak …
Léon Walras, Irving Fisher And The Cowles Approach To General Equilibrium Analysis, Robert W. Dimand
Léon Walras, Irving Fisher And The Cowles Approach To General Equilibrium Analysis, Robert W. Dimand
Cowles Foundation Discussion Papers
This paper explores the relationship of Walras’s work to a particularly influential tradition of general equilibrium, that associated with the Cowles Commission for Research in Economics in Colorado in the 1930s and at the University of Chicago from 1939 to 1955, and its successor, the Cowles Foundation, at Yale University from 1955. Irving Fisher introduced general equilibrium analysis into North America with his 1891 Yale dissertation Mathematical Investigations in the Theory of Value and Prices (published 1892) and was responsible in 1892 for the first English translation of a monograph by Walras. Fisher was only able to obtain copies of …