Matching Items (8)
Filtering by
- All Subjects: Economics
Description
This dissertation focuses on democracies governed by a Parliament. In such democracies, the executive branch consists of a subset of parties in the Parliament, called the Government. A key feature is that the Government is only indirectly determined by the voters' electoral decisions. This dissertation address how parliamentary characteristics and institutions influence the composition of the Government and government outcomes. The composition of the Government reflects the size and ideological make-up of the Government. Government outcomes reflect the length the Government survives and the policy consequences of the Government. The literature focuses on the former criterion. The view is that, in parliamentary democracies, longer Government duration should be associated with stability and better policies. The latter is important from the perspective of directly evaluating whether Governments make good or bad decisions from the perspective of voters. The first chapter of this dissertation develop a model of the government formation process, where parties care about and bargain over both policy and office benefits. The model generate predictions that matches important features of the data. The second chapter uses data from western European parliamentary democracies to estimate the parameters of the model in chapter one. The estimation results suggest that coalitions care about both ideology and office benefits, but more about office benefits. The third chapter studies which (existing) institutional environments lead to `good' government outcomes. The results have a number of important implications for constitutional design.
ContributorsHu, Lin, Ph.D (Author) / Hu, Lin (Thesis advisor) / Friedenberg, Amanda (Committee member) / Manelli, Alejandro (Committee member) / Chade, Hector (Committee member) / Silverman, Dan (Committee member) / Arizona State University (Publisher)
Created2014
Description
This paper discusses the matching between CEOs of different talent and firms of different size, by considering boards' costly monitoring of CEOs who have private information about firm output. By incorporating a costly state verification model into a matching model, we have a number of novel findings. First, positive assortative matching (PAM) breaks down as larger firms match with less talented CEOs when monitoring is sufficiently costly despite of complementarity in firms' production technology. More importantly, PAM can be the equilibrium sorting pattern for large firms and high talent CEOs even it fails for small firms and low talent CEOs, which implies that empirical applications relying on PAM are more robust by using samples of large firms. Second, under positive assortative matching, CEO compensation can be decomposed into frictionless competitive market pay and information rent. More talented CEOs extract more rent, which makes their wage even higher. Third, firm-level corporate governance depends on aggregate market characteristics such as the scarcity and allocation of CEO talent. Weak corporate governance can be optimal when CEO talent is sufficiently scarce. My analysis yields a number of empirical predictions on equilibrium sorting pattern, CEO compensation, and corporate governance.
ContributorsLi, Zhan, Ph.D (Author) / Chade, Hector (Thesis advisor) / Kovrijnykh, Natalia (Committee member) / Manelli, Alejandro (Committee member) / Arizona State University (Publisher)
Created2015
Description
Economists, political philosophers, and others have often characterized social preferences regarding inequality by imagining a hypothetical choice of distributions behind "a veil of ignorance". Recent behavioral economics work has shown that subjects care about equality of outcomes, and are willing to sacrifice, in experimental contexts, some amount of personal gain in order to achieve greater equality. We review some of this literature and then conduct an experiment of our own, comparing subjects' choices in two risky situations, one being a choice for a purely individualized lottery for themselves, and the other a choice among possible distributions to members of a randomly selected group. We find that choosing in the group situation makes subjects significantly more risk averse than when choosing an individual lottery. This supports the hypothesis that an additional preference for equality exists alongside ordinary risk aversion, and that in a hypothetical "veil of ignorance" scenario, such preferences may make subjects significantly more averse to unequal distributions of rewards than can be explained by risk aversion alone.
ContributorsTheisen, Alexander Scott (Co-author) / McMullin, Caitlin (Co-author) / Li, Marilyn (Co-author) / DeSerpa, Allan (Thesis director) / Schlee, Edward (Committee member) / Baldwin, Marjorie (Committee member) / Barrett, The Honors College (Contributor) / Department of Economics (Contributor) / School of Mathematical and Statistical Sciences (Contributor) / Economics Program in CLAS (Contributor) / School of Historical, Philosophical and Religious Studies (Contributor)
Created2014-05
Description
One decision procedure dominates a given one if it performs well on the entire class of problems the given decision procedure performs well on, and then goes on to perform well on other problems that the given decision procedure does badly on. Performing well will be defined as generating higher expected utility before entering a problem. In this paper it will be argued that the timeless decision procedure dominates the causal
and evidential decision procedures. It will also be argued in turn that the updateless decision procedure dominates the timeless decision procedure. The difficulties of formalizing a modern variant of the ”smoking gene” problem will then be briefly examined.
and evidential decision procedures. It will also be argued in turn that the updateless decision procedure dominates the timeless decision procedure. The difficulties of formalizing a modern variant of the ”smoking gene” problem will then be briefly examined.
ContributorsHintze, Daniel Edward (Author) / Armendt, Brad (Thesis director) / Schlee, Edward (Committee member) / DeSerpa, Allan (Committee member) / Barrett, The Honors College (Contributor) / Economics Program in CLAS (Contributor)
Created2014-05
Description
I began this thesis because I was confused about economics. I wondered why there were so many different models. I didn't understand how they fit together. I was also confused by the assumptions being made. For instance, the assumption that humans are rational utility-maximizers did not seem to agree with my own experiences. With my director Dr. Edward Schlee's help, my thesis has become an inquiry into the state of economic methodology, both in theory and in practice. The questions that drive this paper are: How do economists choose between theories? What is the purpose of economic theory? What is the role of empirical data in assessing models? What role do assumptions play in theory evaluation, and should assumptions make sense? Part I: Methodology is the theoretical portion of the paper. I summarize the essential arguments of the two main schools of thought in economic methodology, and argue for an updated methodology. In Part II: A case study: The expected utility hypothesis, I examine methodology in practice by assessing a handful of studies that seek to test the expected utility hypothesis. Interestingly, I find that there is a different between what economists say they are doing, and what they actually seem to be doing. Throughout this paper, I restrict my analysis to microeconomic theory, simply because this is the area with which I am more familiar. I intend this paper to be a guide for my fellow students and rising economists, as well as for already practicing economists. I hope it helps the reader better understand methodology and improve her own practice.
ContributorsKang, Dominique (Author) / Schlee, Edward (Thesis director) / Schoellman, Todd (Committee member) / Boerner, Rochus (Committee member) / Barrett, The Honors College (Contributor)
Created2013-05
Description
I study the design of two different institutions to evaluate the welfare implications
of counterfactual policies. In particular, I analyze (i) the problem of assigning
students to colleges (majors) in a centralized admission system; and (ii) an auction
where the seller can use securities to determine winner’s payment, and bidders
suffer negative externalities. In the former, I provide a novel methodology to
evaluate counterfactual policies when the admission mechanism is manipulable.
In the latter, I determine which instrument yields the highest expected revenue
from the class of instruments that combines cash and equity payments.
of counterfactual policies. In particular, I analyze (i) the problem of assigning
students to colleges (majors) in a centralized admission system; and (ii) an auction
where the seller can use securities to determine winner’s payment, and bidders
suffer negative externalities. In the former, I provide a novel methodology to
evaluate counterfactual policies when the admission mechanism is manipulable.
In the latter, I determine which instrument yields the highest expected revenue
from the class of instruments that combines cash and equity payments.
ContributorsHernandez Chanto, Allan Roberto (Author) / Manelli, Alejandro (Thesis advisor) / Friedenberg, Amanda (Committee member) / Chade, Hector (Committee member) / Arizona State University (Publisher)
Created2017
Description
I study split-pie bargaining problems between two agents. In chapter two, the types of both agents determine the value of outside options -- I refer to these as interdependent outside options. Since a direct mechanism stipulates outcomes as functions of agents' types, a player can update beliefs about another player’s type upon receiving a recommended outcome. I term this phenomenon as information leakage. I discuss binding arbitration, where players must stay with a recommended outcome, and non-binding arbitration, where players are not obliged to stay with an allocation. The total pie is reduced if the outcome is an outside option. With respect to efficiency, I derive a necessary and sufficient condition for first best mechanisms. These are mechanisms that assign zero probability to outside options for every report received. The condition describes balanced forces in conflict (outside options) and is the same in the cases of binding and non-binding arbitration. I also show a strong link between conflict and information: when conflict exists, information leakage occurs. Hence, non-binding arbitration may seem more restrictive than binding arbitration. To analyze why this is the case, I solve for second best mechanisms with binding arbitration and find a condition under which they can be implemented under non-binding arbitration. Thus, I show that non-binding arbitration can be as effective as binding arbitration in terms of efficiency. I also examine whether the equivalence between binding and non-binding arbitration can cease to hold, and provide analysis of why this happens. In chapter three, the bargaining problem entails no uncertainty but rather envy. Players can feel envy about the allocation of the other player. The Nash Bargaining solution is obtained in this context and some comparative statics are shown. The introduction of envy makes the more envious party a tougher negotiator.
ContributorsGonzalez Sanchez, Eric Patricio (Author) / Manelli, Alejandro (Thesis advisor) / Chade, Hector (Committee member) / Schlee, Edward (Committee member) / Arizona State University (Publisher)
Created2020
Description
Prior research on consumer behavior in health insurance markets has primarily focused on individual decision making while relying on strong parametric assumptions about preferences. The aim of this dissertation is to improve the traditional approach in both dimensions. First, I consider the importance of joint decision-making in individual insurance markets by studying how married couples coordinate their choices in these markets. Second, I investigate the robustness of prior studies by developing a non-parametric method to assess decision-making in health insurance markets. To study how married couples make choices in individual insurance markets I estimate a stochastic choice model of household demand that takes into account spouses' risk aversion, spouses' expenditure risk, risk sharing, and switching costs. I use the model estimates to study how coordination within couples and interaction between couples and singles affects the way that markets adjust to policies designed to nudge consumers toward choosing higher value plans, particularly with respect to adverse selection.
Finally, to assess consumer decision-making beyond standard parametric assumptions about preferences, I use second--order stochastic dominance rankings. Moreover, I show how to extend this method to construct bounds on the welfare implications of choosing dominated plans.
Finally, to assess consumer decision-making beyond standard parametric assumptions about preferences, I use second--order stochastic dominance rankings. Moreover, I show how to extend this method to construct bounds on the welfare implications of choosing dominated plans.
ContributorsSanguinetti, Tomas (Author) / Kuminoff, Nicolai V. (Thesis advisor) / Schlee, Edward (Committee member) / Ketcham, Jonathan (Committee member) / Silverman, Daniel (Committee member) / Arizona State University (Publisher)
Created2020