This paper considers the existence of bad equilibria in a random auditing tax model with limits on the number of households which can be audited. Specifically, we present sufficient conditions for a tax-audit mechanism which has truth telling as one equilibrium to have other equilibiria in which...

In this paper, we measure the potential welfare gains from counter-cyclical policy in an economy with incomplete markets. In the course of conducting this measurement, we focus on two questions as central to the determination of those potential gains: (1) what is the likely effect of...

A fundamental non-stationarity of infinitely repeated games as usually studied is that the length of the history of play gets longer each period. With private actions (and mixed strategies) or private signals, this introduces a particular difficulty with common solution concepts such as...

This paper presents a full characterization of the equilibrium value set of a Ramsey tax model. More generally, it develops a dynamic programming method for a class of policy games between the government and a continuum of households. By selectively incorporating Euler conditions into a...

This paper provides an empirical analysis of how the U.S. Social Security and Medicare system affects the labor supply of older males in the presence of incomplete markets. The authors estimate a dynamic programming model of the joint labor supply and Social Security acceptance decision. The...

This paper provides an empirical analysis of how the U.S. Social Security and Medicare insurance system affect the labor supply of older males in the presence of incomplete markets for loans, annuities, and health insurance. Using data from the Retirement History Survey, we estimate a detailed...