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Three Essays on Information Economics

Three Essays on Information Economics

Motivated by the question of how opposing political candidates who are policy experts can communicate to voters in a way that helps them win the election, I study a delegation problem with two informed, self-interested agents. Agents make proposals before the decision maker decides to whom to delegate a task. The innovation is that there are multiple issues that the principal and agents care about, and the agents can be vague about any issue in their proposals. Intuition says that agents should be specific about the issues that they are trusted on and vague about other issues. I find the opposite: an agent is disadvantaged by revealing information about certain issues to the decision maker, those on which he is trusted by the principal on. The reason is that doing so enables his opponent to take advantage of this revealed information and undercut him. Essentially, when the principal is on an agent’s side for some issue, that agent does not want to be specific, because it creates a visible target for his opponent to react to. He wants to be vague, because that allows the principal’s ignorance about the optimal action create an insurmountable obstacle for his opponent. As a result, it is to an agent’s advantage to be vague about the issue that he is trusted on.
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Three Essays on Information Economics

Three Essays on Information Economics

w = 2 if = 2. In other words, given quadratic utilities, truth-telling is possible only if there is no budget constraint on feasible actions. 2.5 PARTIAL INFORMATION REVELATION We show that a truthfully revealing equilibrium exists under a limited circumstance in Sec- tion 2.4 . However, it is still possible to transmit information in a coarse informational struc- ture even under circumstances where a truthfully revealing equilibrium does not exist. At first, the receiver’s two-dimensional decision making is regarded as two separate unidimen- sional decision problems. Crawford and Sobel ( 1982 ) show that for an uninformed receiver with a single biased sender in a unidimensional state space, the state space is partitioned into a finite number of intervals and messages transmit information about which interval the state lies in. In the same vein, if the i-th dimension of the state space is partitioned into intervals and sender i reports in which interval ✓ i is located, the receiver can notice which
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Three Essays on Economics and Information Shocks

Three Essays on Economics and Information Shocks

The substantial effects on the distribution of points but modest effect on the overall propensity to punish or reward gives away the fact that attention is the main mechanism. The social effects on rewarding behavior appear to result almost entirely from the attention-manipulating algorithm used to dynamically construct the web page. Punishing behavior has some social influence that goes beyond the algorithm, but these effects appear to relate largely to helping potential punishers seek out unpopular organizations. The social condition also had no significant effect on the average degree of self-reported anger. It is—at least in this setting—much easier to manipulate people’s attention and where they direct their efforts than to persuade them to do more or less of some action. Attention-related choices, to the extent that they can be called choices, are made under weak incentives. The value of any potential object of attention cannot even be determined until some attention has been directed to it. Without any information to distinguish the various objects on a screen, attention will be determined by very weak influences, for example, small differences in effort costs related to manipulating the window. Since potentially important choices follow from where attention is directed, the ultimate consequences of small influences on attention may
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Three essays in economics

Three essays in economics

Abstract This is a study of market organization in very different settings. In the first chapter, I study how the choices by students to “rush” fraternities, and those of fraternities of whom to admit, interact with the signals that firms receive about student productivities to determine labor market outcomes. Students understand that fraternities value both academic ability and “socializing values”, and will screen out students with lesser academic abilities unless they have especially high socializing values. Students also understand that firms will see whether or not they are in a fraternity, and will use that information in their hiring decisions. I characterize possible equilibrium outcomes and then estimate the model. I identify sufficient conditions for highly-able students to perceive participation in a fraternity as tainting, so that students of intermediate abilities are over-represented in fraternity membership. That is, in equilibrium most less able students apply to fraternities, but are rejected unless they have high socializing values, while most able students do not apply to avoid being tainted in labor market outcomes from being mixed in with less able fraternity members. I show that my theory can reconcile the data on cumulative GPAs of fraternity and non-fraternity members at the University of Illinois. I structurally estimate a three signal version of the model and show the welfare and wage impacts of the fraternity for different types of students.
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Three Essays in Economics.

Three Essays in Economics.

In this paper, we use the forecast errors of professional forecasters to estimate fiscal shocks and to estimate the dynamic effects of fiscal policy on output, private sector output, and prices. By doing so, we implicitly gain the information set of the forecaster without the need to add more control variables to our estimation. Professional forecasts contain more information than any viable VAR, including information about future expected changes to policy levers. As a result, forecast errors are “clean” of the kind of information that is readily predictable to economic actors but which is not foreseen by, and may even be mis-attributed in, backwards-looking VARs. We obtain a government spending multiplier between 1 and 1.6, with a slightly lower value using defense spending shocks. The multiplier appears to be larger in more recent years, including the Great Recession. This is consistent with the observation that crowding-out of private investment is less likely when interest rates are at or near the zero lower bound.
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Three essays in economics

Three essays in economics

Introduction 37 experts even believe that doping has increased in particular sports due to the ongoing commercialization and the development of more effective drugs. Asymmetric information can occur at several levels. The existing doping literature has primarily focused on asymmetric information between athletes and the regulator, leaving aside considerations about asymmetric information between athletes. Muehlheusser (2006) emphasizes the relevance of informa- tional asymmetries in sports and recommends taking them into account when designing contests. Each athlete has private information about his actual physical ability, but can only guess the abilities of his rivals. The behavior of athletes in camouflaging and even misrepresenting their actual ability indi- cates that this informational advantage is important. 2 An athlete’s decision to use performance-enhancing drugs will hence not only depend on regulations, but also on private information concerning his ability. So far, this issue has been neglected by the doping literature. The aim of this paper is to investi- gate the rationale of doping in a heterogeneous n-player game under private information.
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Three Essays In Finance Economics

Three Essays In Finance Economics

tiles contains different proportional distributional information, which is determined by the shape of its density function 10 . Table 2.1 presents the Monte Carlo Simulation results for the in-sample forecast performance of coefficient estimation ˆ β, which is estimated using a variety of quantile combination approaches discussed above. The simulated data are generated to mimic a wide range of distributions which are characterized by heavy tails, skewness or any other features deviating from normality assumption. In the benchmark nor- mal distribution, OLS estimation has a MLE interpretation and give rise to estimates closest to MLE. With the departure from normality assumption, the slope coefficient estimation ˆ β significantly improved after aggregating distributional information via multiple quantiles combination. In some distributions such as Hansen (1994) Skew-t distribution, the optimal weight quantile combination estimation achieves an efficien- cy gain even close to MLE estimation. Furthermore, the number of quantiles to be combined seems to have a trivial effect on the estimation efficiency gain. Increasing the number of uniform spaced quantile from 9 to 19 does not result in a significant im- provement of estimation efficiency. Lastly, kernel based estimation of density perform quite well in the quantile combination estimation. There are not many differences in the efficiency gain of quantile combination even if the density is estimated by the non-parametric kernel instead of theoretic simulated distribution.
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Three essays on the economics of nutrition

Three essays on the economics of nutrition

I further restrict the sample to households with children who are up to one year old at the time of the survey. This is because medical research indicates to that prenatal and early postnatal time periods are particularly sensitive for overall iodine intake (Zoeller & Rovet 2004). However, it should be noted that there is no consensus regarding the role of thyroid hormones for growth in utero compared to postnatally or for various early postnatal time periods, see Farebrother et al. (2018). As we cannot assume that a household which was found to consume iodised salt during the interview also did so previously, restricting the analysis to very young children is more likely to capture the effect of iodised salt during a larger proportion of their lives compared to selecting older children for the analysis. 9 The analytical sample consists of children up to 12 months with non-missing information on HAZ in households who consume either adequately iodised salt or salt with no iodine. As the source of exogenous variation is determined by the state of residence, I further restrict the sample to households where the mother reports to have been living in the same area for at least one year. 10
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Three essays in development economics

Three essays in development economics

individuals. Returns based on the population of youth rather than the population of firms will provide less selected information. Sri Lanka affords us a unique opportunity to examine whether the findings from Latin American and East and Central Asian countries generalize to the South Asian region. As such, this study makes the following four contributions. First, the rich nature of the data available to us allows us to follow survey respondents for a period of up to three years after the completion of formal schooling, enabling us to trace out the medium term impact of training on employment and wage outcomes. Second, since we have data on training that is privately undertaken, we are able to avoid the sort of selection problems that arise under firm based training. Third, by focusing on wages, we are able to pin down the productivity enhancing effects of training programs. And fourth, the use of the non-parametric bounding procedure we adopt in this paper allows for a more robust characterization of training program effects on productivity.
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Three essays on financial economics

Three essays on financial economics

listing outside the initial host market seeking further growth internationally 6 . On the other hand, some firms decided to cross-list their stocks on their own home market stock exchanges. For the most part, cross-listing abroad on foreign stock exchanges is interpreted by investors as a trial by firms to further grow and expand their operations in other markets. The literature shows that the majority of cross-listings on other stock exchanges are associated with positive pre-listing returns, reflecting the favorable view of local investors to the firm’s plans of growth and international expansion. The post-listing returns, on the other hand, experience a decline due to the post-listing risk-adjustment that is expected to be lower, and as a result decreases the expected returns. These results support the market segmentation theory. This theory implies that due to the elimination of any pre-existing investment barriers between two capital markets, the expected returns and, hence, the equilibrium prices of cross-listed stocks are likely to be different after cross-listing. The theory of market segmentation is proven to hold for local stocks cross-listing on a foreign market, where the movement of international capital flow between the two markets is limited 7 . However, cross-listing in the home market after going public abroad does not offer any valuable information about further growth or expansion in the firm’s operations outside the host market, especially since these firms are already established on the home market in which they are trying to cross-list their stocks. In addition, the initial listing of the foreign IPOs abroad is expected to reduce the investment barriers between the home and host markets, and to function as a mechanism to increase the integration between the two markets over time.
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Three essays in behavioral economics

Three essays in behavioral economics

The design is tightly connected to a simple structural model à la DellaVigna, List, Malmendier, and Rao (2016), in which workers have race-dependent social preferences towards their employer and maximize utility from the provision of costly effort. Inspired by Doleac and Stein (2013b), we take the approach of revealing race indirectly via the revelation of skin color and voice: employer-subjects are videotaped while they read off a script explaining and demonstrating the task for the workers. The camera placement only captures the hand of the employer along with the movement of the fingers alternating ‘a’ and ‘b’ button presses. Other identifiers, such as the face, are not revealed. This allows us to reveal or conceal race without sacrificing either privacy or anonymity. In the neutral treatments, gloves and other clothing hide the skin entirely. The worker is aware of being matched to an employer but is unaware of any identity clues. We make every effort to check that race, when revealed, is correctly perceived. In the experiment, we introduce a total of ten treatment variations. In the first three, we vary the piece rate with an aim to identify and estimate the cost-of-effort function. Here, the worker is not given any information about the existence of (non-existent) employer; any earnings from his/her effort choices go entirely to the worker. The next set of three treatments aim to a) detect the baseline level of altruism towards the hidden race of the employer (altruism neutral) and b) estimate race-specific altruism towards the revealed race of the employer (altruism black and altruism white). The final treatments are designed to a) detect the baseline level of reciprocity towards the hidden race of the employer (reciprocity neutral) and b) estimate the race-specific variations in
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Three Essays in Family Economics

Three Essays in Family Economics

affect older children and adolescents. Most of the children and adolescents may have gone through divorce and remarriage of the biological parents. For children born to unmarried parents, the presence of social fathers may occur very early in the children’s life. It is also less common for those children to experience the divorce of biological parents. According to Bzostek (2008), younger children may show less resistance towards social fathers because they may not be mature enough to understand the difference between biological fathers and social fathers. In contrast, older children and adolescents are mature enough to know the difference. They may show larger resistance towards the existence of social fathers. Because of the different degree of resistance, younger children and older children could show quite different response to the existence of social fathers. It would be interesting to examine whether social fathers have any beneficial or detrimental effect on the well-being of young children. This study examines whether the presence of social fathers has any negative effect on young out-of-wedlock children’s well-being. I used data from the Fragile Families and Child Wellbeing Study (FFCWS), a representative sample of non-marital births in 20 U.S. cities. The FFCWS provides detailed information on marriage, fertility, socioeconomic status of the biological mothers of the children. I focus on the effect of social father on the cognitive ability of the out-of-wedlock children. Cognitive ability is measured at age 3 using the score from the Peabody Picture Vocabulary Test(PPVT) (Dunn and Dunn, 1997). The PPVT is widely used to measure verbal ability and receptive hearing in children and adults. It is a very good assessment of children’s language development. Researchers also found significant correlation between PPVT score and scores from other achievement test and intelligence test 4 . Apart from the
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Three Essays in Health Economics

Three Essays in Health Economics

1.4 Theoretical framework Under the traditional and fragmented public reporting system, nursing homes may exploit the complexity and obscurity of the information presented in earlier versions of the report cards. For example, they might only make improvement on selected measures that are relatively easier to observe and readily understood by consumers (Werner et al., 2009a, 2009b; Mukamel et al., 2010). However, with the release of the new five-star rating system, the graphical and more straightforward information has the potential for consumers to better differentiate nursing homes based on their star ratings. Although detailed information on the specific underlying measures may have been available even before the new five-star rating system was implemented, the addition of a simplified summary rating in the form of stars could increase consumer awareness and understanding of the report card, leading to a more elastic demand for nursing home services with respect to the reported quality.
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Three Essays in Financial Economics.

Three Essays in Financial Economics.

To summarize, our findings and interpretation primarily contribute to our un- derstanding of the tradeoffs inherent in the design of managerial incentives. Given the importance of this topic to managers, investors, and regulators, our goal is to engage these parties in continuing the discussion on incentive pay and the integrity of capital markets. 8 To this end, we provide a novel test of shareholder objectives with implications for corporate governance and public policy. We find that both costs and benefits of overstatements are reflected in CEO contracts through pay for performance. Our results challenge the majority view that overstatements are an undesired side-effect of inducing productive effort. The important implication for corporate governance is that overstatements are not necessarily a symptom of poor oversight. In an effort to improve the quality of financial reporting, recent corporate governance reforms have put great emphasis on board and committee independence to improve directors’ ability to act independently from management, and possibly to the detriment of directors’ access to information. We emphasize that directors must also want to act as monitors. If the shareholders they represent benefit from
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Three Essays on Development Economics

Three Essays on Development Economics

Given that bullying is measured with error, if this measurement error is random, then the estimates in Table 2.4 underestimate the causal effect and thus are lower bounds of bullying on dropping out of school. However, it is also possible that es- timates of the impact of bullying is affected by omitted variable bias. One way to assess this problem is to add controls and analyze the stability of the parameter of interest. Table 2.4, column 4 reproduces the analysis of column 3, but includes more controls. The controls consist of information about girls pregnancies and boys im- pregnating girls, the feeling of being insecure within their neighborhoods (existence of gangs, people selling drugs, and prostitution), information about self-esteem and health problems (i.e. whether the adolescent has experienced a disease that interferes with his or her activities), and characteristics of the adolescents parents: having au- thoritative parents, family support, and the alcohol consumption of the mothers and fathers. 12 Bullying continue to be statistically significant. Comparing column 3 with column 4 of Table 2.4, the coefficient associated with bullying decreased from 4.9 to 3.8 percentage points.
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Three essays in applied economics

Three essays in applied economics

I follow this strategy in order to have a model that is coherent with the actual Swiss institutional setting. In Switzerland, as in many other countries, task assignment is dened in federal and sub-federal constitutions as well as in special laws. However, Swiss citizens are called to vote in favour or against any change decided to existent constitutions, which means that task assign- ment is essentially decided solely through direct legislation. In other words, task assignment in Switzerland does not boil down to a representative versus direct democracy issue. Hence, I move towards the eect that direct democracy might have on governments' electoral incentives. To do so, I follow Joanis (2014) where substantial attention is given to vertical interaction between governments. Theoretically, direct democratic institutions are expected to foster more ecient policies (e.g., reduction of wasteful public expenditure) because they strengthen citizens aware- ness of government's behaviour thanks to an increased availability of information. Thus, in this model direct democracy is viewed as an instrument able to aect positively citizens' information about politicians. However, in a federal country this positive eect might be reduced because public goods are often provided jointly by more than one level of government which might avail of dierent degrees of citizen participation. Additionally, if these two governments share the responsibility of public good provision they will have common electoral incentives. Given this environment, both governments will nd it convenient to move expenditure to the government less exposed to citizen scrutiny, eventually aecting the actual level of decentralization.
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Three Essays on the Economics of Education

Three Essays on the Economics of Education

half, 57% of absences are for medical reasons. The attendance data are augmented by student demographic and achieve- ment data. Demographic data comes from LUSD’s student entrance file. The entrance file includes all students who enter into a traditional public high school between the years 2005 and 2009. Dropout and transfer outcomes are from the student exit file, which contains detailed administrative exit information gener- ally unavailable in survey datasets. It distinguishes between types of transfers (in distinct, public in state, private in state, out of state, out of country) and types of diplomas that students earned. Diploma types include a high school diploma from a traditional school, a high school diploma from an alternative school, an adult education diploma, a GED, or no diploma. Alternative schools are high schools within LUSD that waive some of the requirements of traditional high schools. They can have non-standard school days, online learning components, lower credit requirements for graduation, and may waive some higher level classes, especially in math, that are otherwise required for graduation. Alter- native schools do not include other schools of choice within the district such as magnet, gifted, or area specialty schools which have the same requirements as traditional neighborhood public schools. Diplomas from alternative schools are likely to have lower value than those from traditional public high schools due to their reduced requirements. Furthermore, nearly half of students in the sample who transfer to an alternative high school eventually drop out.
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Three essays on financial economics

Three essays on financial economics

With the abundant data source nowadays, one consensus the scholars have just reached is that inequality- return relationship should be negative. Campbell, Delikouras, Jiang, and Korniotis (2016) argue that the top 1% earners’ income growth is one priced risk factor and would compensate part of the value premium. Toda and Walsh (2019) argue that when rich get richer, their increasing demand for the risky asset would lead overpricing, which means a negative subsequent return. Both two works mentioned above focus on the aggregate market. However, still water runs deep. At the cross-sectional level, we still know very little about when and where the inequality information is actually priced into the equity market.
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Three essays on agriculture economics

Three essays on agriculture economics

Table 1.6 reports the estimation results for different sub-period samples. It shows that U.S. soybean futures overnight returns and Chinese No. 1 soybean futures daytime returns significantly affect each other in five out of eleven years, while estimation results of U.S. soybean futures overnight returns and Chinese No. 2 soybean futures daytime returns are not statistically significant at conventional levels. These results indicate that information about U.S. Globex overnight trading influences the price change of Chinese No. 1 soybean futures contracts rather than No. 2 soybean futures contracts. This is mainly because Chinese No. 1 contracts are more active in the market. Thus, the short-run market price of No. 1 contracts would be more sensitive to the price in other markets due to no arbitrage theory. Therefore, the soybean futures price in Chinese No. 1 contracts are not only threshold co-integrated with those in the U.S. in the long-run, its short-run price change is also influenced by the information from overnight price changes in the U.S. market as well. Except for 2015, all significant coefficients of β i s are positive, indicating that the price increase in U.S. overnight trading will stimulate the trading of Chinese No. 1 soybean futures contracts and tend to increase daytime return.
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Three essays on the economics of crime

Three essays on the economics of crime

criminal justice processing. At the same time Community Resolutions allow offenders to correct their mistakes without suffering the consequences of a criminal record which could strongly affect future life chances. It provides an opportunity to evaluate the impact they have caused on victims, make amends and learn from the experience on just how close they were to facing a full judicial process. Also, whilst CR does not result in a criminal record on the Police National Computer, it is still recorded on police information systems and a previous case of CR would be taken into account if further offences were committed. The potential benefits of this approach are both short run in nature (short investigation, lower police costs) as well as more long-term (reduced long-term offending e.g. a disposal such as CR avoids the so-called criminogenic effect that prison entails (Killas et al., 2010, Nieuwbeerta et al., 2009)).
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