We examine a generic three-stage game for two players with alternating moves, where the first player can choose the level of adjustment cost to be paid in the last period to modify the action she announced in the first period. In the resulting continuum of commitment options, convexifying the...

This paper uses high quality register-data to study the spillover effects on firstborns from having a younger sibling suffering from ADHD. Using OLS and cousin fixed effects analyses it is found that the educational outcomes of healthy firstborn children are significantly reduced by the presence...

Empirical studies of the link between finance and inequality document that across countries financial development is associated with lower and decreasing income inequality. This article uses an indicator of economic literacy as a proxy for the ability to reap the benefits of financial investment...

Determining the social cost of carbon emissions (SCC) is a crucial step in the economic analysis of climate change policy as the US government’s recent decision to use a range of estimates of the SCC centered at $77/tC (or, equivalently, $21/tCO2) in cost-benefit analyses of proposed...

In the problem of allocating workers to different projects, where each project needs a minimum number of workers assigned to it, the serial dictatorship mechanism is neither strategy proof nor Pareto efficient. We therefore propose a strategy-proof and Pareto-efficient mechanism.

We extend Bergstrom and Cornes (1983) to show that for strong independence of efficient allocations from distribution in a public goods economy, the utility functions of all consumers must identically be of the form: A(Y)Xi, where Y and Xi are respectively the quantities of public good and...

Many economists are aware that the conditions for the efficiency and monopolization in a partial equilibrium framework are the extremes of the Ramsey–Boiteux formula when the Lagrange multiplier for the budget varies. We formalize the duality existing between the welfarist and monopolist...

We experimentally compare two partnership dissolution mechanisms, the widely-used buy–sell clause and the winner’s bid auction. While standard theory does well in organizing many laboratory patterns, it does not easily capture that many subjects bid valuations, especially in the buy–sell...

Credit default swaps (CDSs) are thought to ease borrowing by protecting lenders against default. This paper develops a model of the demand for CDS when borrowers choose the riskiness of investment and verification is imperfect. The model shows that CDSs may lead to risk-shifting, increasing the...

We re-examine the link between absolute prudence and self-protection activities. We show that the level of effort chosen by an agent with decreasing absolute prudence is larger than the optimal effort chosen by a risk-neutral agent if the degree of absolute prudence is less than a threshold that...