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Open Access Publications from the University of California

Other Recent Work

The Economics Department Working Papers Series is no longer accepting new papers. Archived papers from 1986 to 2007 will continue to be available through the California Digital Library. (See below.) For papers beyond 2007, please see the web pages of faculty members in the Economics Department for direct links to their research.

Cover page of Procrastination on Long-Term Projects

Procrastination on Long-Term Projects

(2012)

Previous papers on time-inconsistent procrastination assume projects are completed once begun. We develop a model in which a person chooses whether and when to complete each stage of a long-term project. In addition to procrastination in starting a project, a naive person might undertake costly effort to begin a project but then never complete it. When the costs of completing different stages are more unequal, procrastination is more likely, and it is when later stages are more costly that people start but don't finish projects. Moreover, if the structure of costs over the course of a project is endogenous, people are prone to choose cost structures that lead them to start but not finish projects. We also consider several extensions of the model that further illustrate how people may incur costs on projects they never complete.

Cover page of Merger Simulation:  A Simplified Approach with New Applications

Merger Simulation: A Simplified Approach with New Applications

(2012)

Merger simulation is growing in importance as a tool to evaluate the unilateral competitive effects of mergers. This paper offers a relatively non-technical description of the principles of merger simulation. In addition, it introduces PCAIDS, a new and highly flexible "calibrated-demand" merger simulation methodology that is based on a simplified version of AIDS. PCAIDS can be implemented using market shares and two price elasticities; scanner or transaction-level data are not required. The paper offers some applications of merger simulation with PCAIDS that include comparisons with other simulation models. It also shows how PCAIDS can be applied to the analysis of efficiencies, divestiture, and product repositioning/entry. Finally, the paper offers an analysis of the Merger Guidelines safeharbors. A detailed mathematical appendix is included.

Cover page of Converging Doctrines?  US and EU Antitrust Policy for the Licensing of Intellectual Property

Converging Doctrines? US and EU Antitrust Policy for the Licensing of Intellectual Property

(2012)

This paper was prepared for the Antitrust Section Spring Meeting, Washington D.C., 2004. The author discusses and compares European Community Technology Transfer Block Exemption Regulation (TTBER) and U.S. Guidelines. Together the guidelines present a framework to evaluate technology licensing arrangements that respects the objectives of EU competition policy and still provides a berth for procompetitive licensing.

Cover page of Comparing Wealth Effects:  The Stock Market versus The Housing Market

Comparing Wealth Effects: The Stock Market versus The Housing Market

(2012)

We examine the link between increases in housing wealth, financial wealth, and consumer spending. We rely upon a panel of 14 countries observed annually for various periods during the past 25 years and a panel of U.S. states observed quarterly during the 1980s and 1990s. We impute the aggregate value of owner-occupied housing, the value of financial assets, and measures of aggregate consumption for each of the geographic units over time. We estimate regressions relating consumption to income and wealth measures, finding a statistically significant and rather large effect of housing wealth upon household consumption.

Cover page of Scarcity of Ideas and Options to Invest in R&D

Scarcity of Ideas and Options to Invest in R&D

(2007)

We consider a model of the innovative environment where there is a distinction between ideas for R

amp;D investments and the investments themselves. We investigate the optimal reward policy and how it depends on whether ideas are scarce or obvious. By foregoing investment in a current idea, society as a whole preserves an option to invest in a better idea for the same market niche, but with delay. Because successive ideas may occur to different people, there is a conflict between private and social optimality. We argue that private incentives to create socially valuable options can be achieved by giving higher rewards where "ideas are scarce." We then explore how rewards should be structured when the value of an innovation comes from its applications, and ideas for the innovation may be more or less scarce than ideas for the applications.

Cover page of Efficiency in a Repeated Prisoners' Dilemma with Imperfect Private Monitoring

Efficiency in a Repeated Prisoners' Dilemma with Imperfect Private Monitoring

(2007)

We study the repeated two-player Prisoners' Dilemma with imperfect private monitoring and no communication. Letting the discount factor go to one and holding the monitoring structure fixed, we achieve asymptotic efficiency. Unlike previous works on private monitoring, which have confined attention to signals that are either almost perfect or conditionally independent, we allow for both imperfect and correlated signals but assume that they are sufficiently private, i.e. private actions are more informative than private signals about the opponent's signals. Interestingly, for the game we study, even the existing literature that allows communication has not yet yielded efficiency.

Cover page of Risk Taking and Gender in Hierarchies

Risk Taking and Gender in Hierarchies

(2006)

If promotion in a hierarchy is based on a random signal of ability, rates of promotion are affected by risk-taking. Further, the statistical properties of the surviving populations of risk-takers and non-risk-takers will be different, and will be changing throughout the hierarchy. I define promotion hierarchies with and without memory, where memory means that promotion depends on the entire history of success. In both types of hierarchies, surviving risk-takers have lower average ability than surviving non risk-takers at any stage where they have a higher probability of survival. However, that will not apply in the limit. With a common set of promotion standards, risk-takers will survive with lower probability than non risk-takers, and will have higher average ability. I give several interpretations for how these theorems relate to affirmative action, in light of considerable evidence that males are more risk-taking than females.

Cover page of Still Looking for Lost Profits: The Case of Horizontal Competition

Still Looking for Lost Profits: The Case of Horizontal Competition

(2005)

JEL Classifications: L41, K21 Abstract: When infringement of a patent dissipates profit relative to the licensing agreement that would otherwise occur, damages under the lost-profit rule deter infringement, and otherwise not. We develop this point in a general model and give two examples. However, joint profit might not be dissipated by infringement. An important example is where there are restrictions on licensing that arise from competition policy.

Cover page of The Accident Externality from Driving

The Accident Externality from Driving

(2005)

We estimate auto accident externalities (more specifically insurance externalities) using panel data on state-average insurance premiums and loss costs. Externalities appear to be substantial in traffic dense states: in California, for example, we find that a typical additional driver increases the total of other people’s insurance costs by $2231 per year. In such states, an increase in traffic density dramatically increases aggregate insurance premiums and loss costs. In contrast, the accident externality per driver in low traffic states appears quite small. On balance, accident externalities are so large that a correcting Pigouvian tax could raise $45 billion annually in California alone, and over $140 billion nationally. The extent to which this externality results from increases in accident rates, accident severity or both remains unclear. It is also not clear whether the same externality pertains to underinsured accident costs like fatality risk.

Cover page of The Choose-your-Charity Tax: A Way to Incentivize Greater Giving

The Choose-your-Charity Tax: A Way to Incentivize Greater Giving

(2005)

Abstract: Why don't people give more to charity? One reason is that the problems will be there whether individuals give or not. Here is a policy-inspired by the matching grants that charities use so effectively- that could actually make a real difference.