The ability to share intentions and adjust one's choices in collaboration with others is a fundamental aspect of human nature. We discuss the forces that would have acted for and against the evolution of this ability for a large class of dilemmas and coordination problems that would have been...

In this paper we document rise in wage inequality in Australia over the last decade. A key driver of this inequality is unobservable or residual inequality. We decompose residual wage inequality into permanent and transitory components. The estimates of the permanent shock from the first...

Robust rankings of poverty are ones that do not rely on a single poverty measure with a single poverty line. Mathematically, such robust rankings of two populations specifies a continuum of unconditional moment inequality constraints. If these constraints could be imposed in estimation then a...

Presence of peers is often identified as the main source of welfare-decreasing decision-making in young adulthood and adolescence. The mechanism through which peers exert this influence is not fully understood. In this paper, using an incentive compatible experiment, we investigate whether young...

Prospect Theory (Kahneman and Tversky 1979), one of the most prominent models for valuation of goods and money, presumes that people have convex utility over gains and concave utility over losses; a discontinuity at something like the current wealth level or reference point. This reflects a...

This paper studies optimal monetary policy under precommitment in a state-dependent pricing (SDP) environment, in contrast to the standard assumption of time-dependent pricing(TDP). I show that the endogenous timing of price adjustment under SDP importantly alters the policy tradeoffs faced by...

In both standard and behavioral theory, as well as experimental procedures to elicit time preference,it is commonly assumed that a single utility function is used to evaluate payoffs both under risk and overtime. I introduce a novel experimental design to examine this assumption, by transposing...

A soft budget constraint arises when a government is unable to commit to not `bailout' a public hospital if the public hospital exhausts its budget before the end of the budget period. It is shown that if the political costs of a `bailout' are relatively small, then the public hospital exhausts...

In this paper we study whether central banks should react to financial sector variables in their policy rules. We find that responding to asset prices has no impact and does not increase the likelihood of equilibrium indeterminacy. However, a response to entrepreneurial net worth increases the...

We use longitudinal data on stock prices of cross-listed firms to investigate abnormal systematic changes in the price disparity of cross-listed stocks between the Hong Kong and Shanghai exchanges from 2002 to 2014. We identify a liberalization policy that generated an unprecedented abrupt...