Do more correlated signals lead to greater commonality of beliefs? In a standard common learning model, we identify when the opposite is true. Even conditionally independent signals may lead to greater commonality of beliefs than correlated ones

Verification is never perfect. Here’s a new framework for probabilistic verification in mechanism design. The principal chooses which test to give the agent. We reduce this to simpler problem, and we solve it using the first-order approach

Theoretical Economics Volume 20, Issue 1 (January 2025) is now online

Extending the 2-country tax competition framework with cross-border shopping to 3 countries and a general spatial population distribution, the population distribution within countries matters for the order of tax rates in equilibrium. @DavidRAgrawal

In many-to-one matching markets without transfers, cutoff scores play a similar role as prices. What happens in decentralized markets when schools update cutoffs on basis of demand-supply imbalances?

How to explore alternatives when their utilities are correlated? The paper shows that optimal experimentation follows a threshold structure, and exploration accelerates in response to poor outcomes in prior experimentation

How can priority services balance efficiency, revenue, and congestion in frictional markets? This article explores the welfare impact of the priority search programs, revealing their potential to achieve optimal market participation

What contracts should a principal offer when there are multiple agents? This paper shows that a relatively pessimistic principal should offer “weight-ranked divide-and-conquer contracts.”

Stop in to see our session at the ASSA meeting: Data, Privacy and AI at 10:15 AM - 12:15 PM (PST),

Anticomonotonicity, the natural counterpart to comonotonicity, provides a useful multi-faceted tool. It generalizes classical results on risk aversion, bookmaking, arbitrage, Anscombe-Aumann SEU, and Cauchy’s equation, and gives new ambiguity models

This paper derives the subdifferential theorem – any conservative monotone correspondence (e.g. demand) is the subdifferential of a convex potential (e.g. indirect utility) – and uses it to characterize demand in economies with indivisible goods

We introduce a notion of substitutability for correspondences and establish a monotone comparative static result, unifying results concerning inverse isotonicity, the identification of demand, monotone comparatives statics, matching, and hedonics

RT @econometricsoc: Don't miss the 2025 Econometric Society World Congress in Seoul, South Korea! Submissions open Nov. 15. #EconSky #Econ…

What is the meaning of Pareto optimality when all we know about agents is their past consumption decisions? The paper provides an answer in the form of an empirical analogue of the Pareto relation

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Theoretical Economics Volume 19, Issue 4 (November 2024) is now online

Macro and Finance research highlights the importance of separating intertemporal substitution from risk aversion. Stochastic Impatience limits this separation, ruling out all commonly used parameters in Epstein-Zin & Hansen-Sargent models

Exploring optimal tax problems in public finance, we compare Mechanism Design and Tax Perturbation approaches. We develop a numerical algorithm to solve the multidimensional tax problem, applied to couple taxation

How to design a queue to serve long-lived agents who learn their valuation when served, and can renege? It is efficient to offer a simple binary menu: a FCFS queue, to attract low-value agents, and a SIRO queue, to attract high-value agents

The literature on search models of money has struggled to analyze heterogeneity in money holdings. This paper constructs an analytical and tractable model based only on the search and bargaining market and studies redistributive policies