Title: The Legal Origins of Financial Development: Evidence from the Shanghai Concessions

This seminar is joint with Bristol University and Warwick will be hosting today's event.

Title to be advised.

This AYEW Workshop on Firms will be a 1.5 hour event, with three 30-minute presentations.

Here are the details:

1. Daniel Morrison (Princeton): “Disentangling the motivations for campaign contributions: Corruption or policy alignment”
2. Xiangyu Shi (Yale): “Hometown favoritism and intercity investment networks in China”
3. Jian Xie (Warwick): “The cultural origins of family firms” (joint with Song Yuan)

Title: A Cooperative Theory of Market Segmentation by Consumers

Abstract: We consider a market that may be segmented and is served by a single seller. The surplus of each consumer in a segment depends on the price that the seller optimally charges, and this optimal price depends on the set of consumers in that segment. This gives rise to a novel cooperative game between consumers that determines market segmentation. We study several solution concepts. The most demanding solution concept, the core, requires that there is no objection to the segmentation by a coalition of consumers who benefit by forming a new segment. We show that the core is empty except for trivial cases. We then introduce a new solution concept, stability. A segmentation is stable if for each possible objection by a coalition, there is a counter-objection by a coalition in the original segmentation. We characterize stable segmentations as ones that are efficient and ``saturated,'' which means that the segments are maximal in some sense. We use this characterization to constructively show that stable segmentations exist. Even though stable segmentations are efficient, they need not maximize average consumer surplus, and segmentations that maximize average consumer surplus need not be stable. Our weakest solution concept, fragmentation-proofness, rules out objections by coalitions that include consumers from more than one segment. We show that a segmentation is fragmentation-proof if and only if it is efficient.

This is joint work with Ron Siegel.

Title of Nathan’s talk is Political Parties as Drivers of U.S. Polarization: 1927-2018 (with Chad Kendall and Francesco Trebbi) .

This visit is hosted by Andreas Stegmann.

Title: Contracting with Unconscious Biases

Abstract: A principal and an agent have non-common priors on uncertainty in optimal contracting with moral hazard. I introduce an outside observer's belief considered as accurate to conduct objective welfare analysis. Without incentive provision, the two players' biases exhibit asymmetric effects on welfare. An overconfident (underconfident) agent is better-off if the principal is more overconfident (underconfident) than him. However, a biased principal not only benefits if the agent is more biased than him in the same direction, but also could be better-off if the agent biases towards a different direction. With incentive provision, only the agent's bias affects welfare. It costs a biased principal less as long as the agent is overconfident, while only an underconfident agent benefits.

This is an opportunity for our PhD student to practice job talk seminar.

Gianni will be presenting paper: When Nation Building Goes South: Draft Evasion, Government Repression, And The Origins Of The Sicilian Mafia

Fields: Economic History, Political Economy

Supervisors: James Fenske, Sharun Mukand

Title: Tax Audits Under Weak Fiscal Capacity: Experimental Evidence from Senegal, joint work with Pierre Bachas, Alipio Ferreira, and Bassirou Sarr.

Abstract: Developing economies are characterized by limited compliance with government regulations, such as taxation. Resources for enforcement are scarce and audit cases are often selected in a discretionary manner. We study whether the increasing availability of digitized data helps improve audit targeting. In a field experiment at scale in Senegal, we compare tax audits selected by inspectors to audits selected by a risk-scoring algorithm. We find that inspector-selected audits are more likely to be conducted and uncover similar amounts of evasion as algorithm-selected audits. However, algorithm-selected audits require less manpower, are faster and may generate less corruption. In ongoing work, we attempt to unpack the algorithm’s (dis)functioning and its interaction with human capital.

Seminar organisers: Manuel Bagues & Ludovica Gazze

Title: A Behavioral Heterogeneous Agent New Keynesian Model

Abstract: “We develop a New Keynesian model with household heterogeneity and bounded rationality in the form of cognitive discounting. The resulting behavioral heterogeneous agent New Keynesian model is consistent with recent empirical facts about the effectiveness and the transmission mechanisms of monetary and fiscal policy: monetary policy is amplified through indirect general equilibrium effects, fiscal multipliers on consumption are positive and the model delivers empirically-realistic intertemporal marginal propensities to consume. Simultaneously, and consistent with the data, the model resolves the forward guidance puzzle and remains stable at the effective lower bound as the model features equilibrium determinacy even under an interest-rate peg. The model is analytically tractable and nests a wide range of existing models as special cases, none of which can produce all the listed features within one model. We further show how the main insights from the tractable model extend to a quantitative version of the model, how the model-implied household expectations can be aligned with recent findings from survey data, and how to derive an equivalence result between heterogeneous-household models with bounded rationality and those featuring incomplete information and learning.”

This MIMA session is via Zoom, information below

Time: 31/05/2022, Tuesday 05:00 PM London

Zoom Link: https://us02web.zoom.us/j/81719302554?pwd=TTFMVUhwSjRobERnK0czRXZFeEpXZz09

Meeting ID: 817 1930 2554 Passcode: MIMA

This is an opportunity for our PhD student to practice job talk seminar.

Cora will present paper: Unemployment, Migration, And Right-Wing Voting: Evidence From Germany

Fields: Economic History, Political Economy, Gender Economics

Supervisors: James Fenske, Manuel Bagues

Title: The Value of Data Records (with Simone Galperti & Aleksandr Levkun)

Abstract: Many online platforms intermediate trade between sellers and buyers using data records of the buyers' personal characteristics. How much value do such intermediaries derive from each record? Is this value higher for specific buyers? What are its properties? We find that an important component of the value of a data record is a novel externality that arises when a platform pools records to withhold information from the sellers. Ignoring this externality can significantly bias our understanding of the value of data records. We then characterize a platform's willingness to pay for more data, thereby establishing a series of basic properties of the demand side of data markets. Our analysis combines modern information design with classic duality methods and applies to a large class of principal-agent problems.

Long-Run Agglomeration: Evidence from County Seat Wars

Urban areas are shaped by their size, perhaps particularly so over the long run. We study how historical shocks to the size of towns in the American West affected long-run economic outcomes, using elections which determined county seats (capitals) in the 1800s and a regression discontinuity (RD) design. High rates of mobility in the frontier period meant that these elections quintupled population density in winning locations, ultimately determining where 15% of a county resides today. Although the county seat provides relatively few government jobs, we show that the increased town size reshaped their modern local economies in several important ways. First, reported IRS income increases with an elasticity of 0.15 with respect to density. Second, these gains are distributed primarily to the upper end of the income distribution, leading to a 2.9pp increase in the top 5% income share. Finally, spillover effects onto nearby communities are minimal, cutting against notions of positive amenity provision and negative agglomeration shadows.

Joint with WBS

Title: Efficient Industrial Policy for Innovation: Standing on the shoulders of hidden grants

This is a 2-day conference.

Organiser: Alperen Tosun (PGR)

Title: Profitable Inequality, joint with Francesco Nava (LSE)

QAPEC visitor

Title to be advised.

This workshop is taking place in Scarman House

Organiser: Bhaskar Dutta

This is an opportunity for our PhD student to practice job talk seminar.

Giulia will present paper: Worker Sorting And The Gender Wage Gap

Fields: Labour

Supervisors: Manuel Bagues, Roland Rathelot

This is an opportunity for our PhD student to practice job talk seminar

Eleonora will present paper: Bad Science

Fields: Political

Supervisors: Thiemo Fetzer, Sascha Becker, Andreas Stegmann

Chang Wang, a visiting student at WBS, presenting at the CAGE AMES Workshop. It will be a hybrid format workshop.

Title: The environmental benefits of electricity industry restructuring in China

Abstract: Ownership mixing vs. vertical unbundling Ownership mixing and vertical unbundling are the two pending electricity industry restructuring reforms in many developing countries, while few studies compared the two reforms, or explored the relative environmental effects of them. In this paper, we empirically examine the effects of ownership mixing and vertical unbundling on electricity generation firms’ SO2 emission intensity. We exploit both the ownership mixing and vertical unbundling reforms in China and use a difference-in-differences (DD) strategy to deal with identification. We rely on a unique firm-level dataset that contains comprehensive information on firms’ pollution records, production activities, and electricity generation. We document that ownership mixing, while achieving the main reform purpose of increased access to electricity and generation efficiency, also has unintended environmental benefits of significantly and substantially reducing firms’ air pollution intensity. The underlying channels are firms’ increased electricity generation and better enforcement of environmental regulations. Vertical unbundling, on the other hand, has no significant effects on firms’ air pollution. Our findings document an effective and environmentally friendly pathway for electricity industry restructuring in developing countries.

This is a hybrid format via MS Teams (https://teams.microsoft.com/l/meetup-join/19%3aeafd670486bc4ed6be08da79cf05d9ca%40thread.tacv2/1654765963206?context=%7b%22Tid%22%3a%2209bacfbd-47ef-4465-9265-3546f2eaf6bc%22%2c%22Oid%22%3a%22282d13eb-4c12-413a-b24a-e55af45e44c1%22%7d)

Title: Causality: a Decision-Theoretic Foundation

Abstract: We propose a decision-theoretic model akin to that of Savage that is useful for defining causal effects. Within this framework, we define what it means for a decision maker (DM) to act as if the relation between two variables is causal. Next, we provide axioms on preferences that are equivalent to the existence of a (unique) directed acyclic graph (DAG) that represents the DM's preferences. The notion of representation has two components: the graph factorizes the conditional independence properties of the DM's subjective beliefs, and arrows point from cause to effect. Finally, we explore the connection between our representation and models used in the statistical causality literature (for example, that of Pearl).

This is an opportunity for our PhD student to present job talk seminar.

Jian will present paper: Investment, Connections, And Innovation: Evidence From Chinese Artificial Intelligence Startups

Fields: Applied Microeconomics

Supervisors: Daniel Sgroi, James Fenske

This is an opportunity for our PhD student to practice job talk seminar.

Diego will present paper: Multiple Equilibria And Exchange Rate Volatility

Fields: Macroeconomics

Supervisors: Roger Farmer, Herakles Polemarchakis, Pablo Beker

Link to the programme is here

This is a “local social event” in the department, if you are around, please join to say hi to Leonardo, Francesca, Giulio e Dado and maybe we can go all together to have lunch on campus afterwards.