We model worker heterogeneity in the rents from being employed in a Diamond-Mortensen-Pissarides model of matching and unemployment. We show that heterogeneity, reflecting differences in match quality and worker assets, reduces the extent of fluctuations in separations and unemployment. We find...

We characterize the structure of optimal assignment rules when both allocative ineffciency and expenditure ineffciency are present. We find that the optimal structure critically depends on how the hazard rate of the value distribution behaves, and that it is often optimal to use probabilistic...

We examine the degree of regional vs. global financial integration of East Asian countries in three ways; (1) comparing the size of cross-border assets such as securities and bank claims (2) estimating the gravity model of bilateral financial asset holdings (3) estimating consumption risk...

A typical horizontal innovation model has three sequentially connected sectors. I argue that this structure of the model necessitates the compounding of interest on an input that goes through multiple production periods before the final good is produced. This aspect is missed (or deliberately...

This paper shows that the quality scores in sponsored search auctions can be optimally chosen to extract all the advertisers' surplus. The reason for the full extraction result is that the quality scores may effectively set all the bidders' valuations equal to the highest valuation, which...

In the problem of locating multiple public facilities studied by Barbera and Bevia [2, 3], we offer simple necessary and sufficient conditions for efficiency, decentralizability of efficient decisions in a game of community division and local public goods provision, and a constructive algorithm...

This paper provides a first microeconomic foundation for the institution of marriage. Based on a model of reproduction, mating, and parental investment in children, we argue that marriage serves the purpose of attenuating the risk of mating market failure that arises from incomplete information...