Publications
A common practice in many auctions is to offer bidders an opportunity to improve their bids, known as a best and final offer stage. This improved bid can depend on new information either about the asset or about the competitors. This paper examines the effects of new information regarding competitors, seeking to determine what information the auctioneer should provide assuming the set of allowable bids is discrete. The rational strategy profile that maximizes the revenue of the auctioneer is the one where each bidder makes the highest possible bid that is lower than his valuation of the item. This strategy profile is an equilibrium for a large enough number of bidders, regardless of the information released. We compare the number of bidders needed for this profile to be an equilibrium under different information structures. We find that it becomes an equilibrium with fewer bidders when less additional information is made available to the bidders regarding the competition. It follows that when the number of bidders is a priori unknown, there are some advantages to the auctioneer not revealing information and conducting a one-stage auction instead.
We study a class of location games where players want to attract as many resources as possible and pay a cost when deviating from an exogenous reference location. This class of games includes political competitions between policy-interested parties and firms' costly horizontal differentiation. We find that the introduction of reference locations simplifies the set of pure-strategy equilibrium to a unique candidate which has a strong property: at most four players, the two most-left and two most-right, deviate from their reference locations. We provide necessary and sufficient conditions for the candidate to be an equilibrium. We illustrate our results in particular cases including the duopoly competition where we moderate the principle of minimal differentiation.
Many people obtain job information from friends and acquaintances. However, one factor influencing labor-market outcomes that is ignored in the literature is the presence of overlapping friendship circles in social networks. We find that overlapping friendship networks produce correlated information flows, resulting in an increased probability of two events: either receiving redundant job offers or receiving no job offers at all. Consequently, people with common contact networks exhibit worse employment prospects even if they have the same number of information providers and compete with the same number of people for vacancies. In quantitative terms, the impact of overlapping friendship circles rivals that of the number of direct contacts and contacts' contacts. This implies that the results in Calvo-Armengol (2004) only apply for networks where people's friends are neither connected nor have common contacts. Because overlapping friendship circles are a crucial aspect of strong relationships, our findings uncover an alternative mechanism behind "The Strength of Weak Ties"(Granovetter, 1973): their ability to maintain independence in job information flows. We further show that people with common job contacts earn lower incomes on average. However, conditional on being employed, their expected wage is higher because they can take advantage of the multiple job offers received by selecting the one with the highest pay.
Household surveys do not capture incomes at the top of the distribution well. This yields biased inequality measures. We compare the performance of the reweighting and replacing methods to address top incomes underreporting in surveys using information from tax records. The biggest challenge is that the true threshold above which underreporting occurs is unknown. Relying on simulation, we construct a hypothetical true distribution and a “distorted” distribution that mimics an underreporting pattern found in a novel linked data for Uruguay. Our simulations show that if one chooses a threshold that is not close to the true one, corrected inequality measures may be significantly biased. Interestingly, the bias using the replacing method is less sensitive to the choice of threshold. We approach the threshold selection challenge in practice using the Uruguayan linked data. Our findings are analogous to the simulation exercise. These results, however, should not be considered a general assessment of the two methods.
We revisit the question of colonial legacies in education by focusing on quality rather than quantity. We study Cameroon, a country where a Francophone education system with French colonial origins coexists with an Anglophone system with British colonial origins. This allows us to investigate the impact of different teaching practices on students’ test scores. We find that pupils schooled in the Francophone system perform better in mathematics in Grade 5, with test scores higher by two thirds of a standard deviation. Thanks to detailed school survey data, we are able to account for a wide array of inputs of the education production function, such as the economic and social conditions of students, the material conditions of the schools and classrooms, as well as some information on the teachers’ practices and pedagogical culture. We find that Francophone schools have better classroom equipment and that Francophone teachers use more vertical teaching methods, but that these differences cannot explain why Francophone students perform better in mathematics. In the end, we cannot pin down the exact mechanism behind our result.
The increase in employment polarization observed in several high-income economies has coincided with a reduction in inter-generational mobility. This paper argues that the disappearance of middling jobs can drive changes in mobility, notably by removing a stepping stone towards high-paying occupations for those from less well-off family backgrounds. Using data from two British cohorts who entered the labour market at two points in time with very different degrees of employment polarization, we examine how parental income affects both entry occupations and occupational upgrading over careers. We find that transitions across occupations are key to mobility and that the impact of parental income has grown over time. At regional level, using a shift-share IV-strategy, we show that the impact of parental income has increased the most in regions experiencing the greatest increase in polarisation. This indicates that the disappearance of middling jobs played a role in the observed decline in mobility.
The expansion of digital financial services leads to severe consumer protection issues such as fraud and scams. As these potentially decrease trust in digital services, especially in developing countries, avoiding victimization has become an important policy objective. In an online experiment, we first investigate how well individuals in Kenya identify phone scams using a novel measure of scam identification ability. We then test the effectiveness of scam education, a commonly used approach by organizations for fraud prevention. We find that common tips on how to spot scams do not significantly improve individuals’ scam identification ability, i.e., the distinction between scams and genuine messages. This null effect is driven by an increase in correctly identified scams and a decrease in correctly identified genuine messages, indicating overcaution. Additionally, we find suggestive evidence that genuine messages with scam-like features are misclassified more often, highlighting the importance of a careful design of official communication.
We surveyed economists’ attitudes toward adjusting discount rates to the risk profile of public programs. Three-quarters of respondents recommend to use project-specific discount rates. For example, on average, respondents discount railway infrastructures more than hospitals and climate mitigation. But the degree of discount discrimination between distinct risk profiles of different projects is fairly limited in our sample given the differences in risk profiles for these projects. Economic experts thus penalize risky public projects far less than financial markets penalize private investments. We call this the ”discount premium puzzle”. Finally, among experts in favor of a single discount rate, there is no consensus on whether it should be based on the average cost of capital in the economy, the sovereign borrowing cost, or the Ramsey rule, which gives rise to disagreement over the level of the recommended discount rate.
This paper studies differences across genders in the re-contesting decisions of politicians following electoral wins or defeats. Using close races in mixed-gender French local elections, we show that women are less likely to persist in competition when they lose compared to male runners-up, but are equally or more prone than male winners to re-contest when they win. Differences in observable characteristics or in the expected electoral returns of running again cannot fully account for these gender gaps in persistence. In contrast, evidence suggests that results are driven by behavioural explanations such as cross-gender differences in candidates’ attitudes toward competition, or by political parties behaving differently toward female and male candidates for a given electoral outcome. Additionally, we provide evidence that a woman’s victory encourages former female challengers to re-contest but does not trigger the entry of new female candidates.
