Working papers of faculty, affiliated researchers and students at the Department of Economics, University of California at Santa Barbara.
This paper explores the way that assortative matching can maintain cooperative behavior under evolutionary dynamics.
This paper conducts an empirical test of whether local governments spend more or less than a Pareto optimal amount on local public goods. Our procedure is to check whether the Samuelson first order conditions ) for efficient provision of public goods are satisfied.
This paper is an advertisement for some facts and ideas that I think likely to lead to a richer theory of the economics of the family. The discussion references many papers from anthropology and biology. Because of the intimate connection between the family and reproduction, it should not be surprising that there is much to be learned about the economics of the family from the study of evolutionary biology. Given the increased prevalence in recent decades of unwed parenthood, divorce with sequential monogamy, and ``non-traditional'' family arrangements, it seems that anthropological studies of alternative family structures would help us to understand our own.
We study the e®ect of privately informed traders on measured high frequency price changes and trades in asset markets. We use a standard market microstructure framework where exogenous news is captured by signals that informed agents receive. We show that the entry and exit of informed traders following the arrival of news accounts for high-frequency serial correlation in squared price changes (stochastic volatility) and grades. Because the bid-ask spread of the market specialist tends to shrink as individuals trade and reveal their information, the model also accounts for the empirical observation that high-frequency serial correlation is more pronounced in trades than in squared price changes. A calibration test of the model shows that the features of the market microstructure, without serially correlated news, accounts qualitatively for the serial correlation in the data, but predicts less persistence than is present in the data.
Beyond the classical reasons of efficiency, commitment, the distribution of information, or incentive provision, a person may also delegate decision rights so as to avoid blame for an unpopular or immoral decision. We show that by delegating to an intermediary, a dictator facing an allocation decision can effectively shift moral responsibility onto the delegee even when doing so necessarily eliminates the possibility of a fair outcome. Dictators who choose selfishly via an intermediary are punished less and earn greater profits than those who directly choose a selfish outcome, while the intermediary is punished more.
We examine experimentally the impact of communication on trust and cooperation. Our design admits observation of promises, lies, and beliefs. The evidence is consistent with people striving to live up to others’ expectations in order to avoid guilt, as can be modeled using psychological game theory. When players exhibit such guilt aversion, communication may influence motivation and behavior by influencing beliefs about beliefs. Promises may enhance trustworthy behavior, which is what we observe. We argue that guilt aversion may be relevant for understanding strategic interaction in variety of settings, and that it may shed light on the role of language, discussions, agreements, and social norms in these contexts.
There is recent evidence that Ride-Hailing applications reduce the number of alcohol-related motor vehicle collisions and fatalities. This paper aims to investigates how they may impact the restaurant and bar industry by estimating a difference-in-differences model across cities in California. Results suggest an average increase of $36 in quarterly per capita restaurant and bar revenue. This result is robust to model validation where the three largest cities are separately excluded from the model. Additional robustness checks do not provide any evidence that the parallel trends assumption is violated.
This thesis outlines how Amazon prices its items differently for Amazon Prime and non-Prime customers. I use data on prices from Amazon.com to show that prices are on average higher for Amazon Prime members than non-Prime customers. I show that selecting Free One-Day Shipping while searching for an item as an Amazon Prime member causes the list price to be on average higher than the list price for the same item for a non-Prime member. So, while one-day shipping is advertised as “free” to Prime members, these customers end up paying for the shipping via higher prices. In addition, searching up an item in the morning increases the likelihood of seeing a higher list price as a Prime member. Consumable items are also more likely to be priced differently for Prime versus non-Prime members than non-consumable items. I find that the pass-through cost of shipping to Amazon Prime customers is positive, further suggesting that Prime customers pay for “free” shipping through higher prices of goods. Amazon engages in price discrimination towards Prime members based on the type of item, the time ths item is searched up, and the mode of shipping the customer selects for the item.
This paper shows that if workers have identical wealths, abilities, and preferences then a draft lottery is Pareto superior to a voluntary army. It also shows that if being a civilian is a “normal good”, then the optimal pay schedule will be such that people prefer not being chosen for the army. The paper shows how this idea extends to occupational choice in general and shows that pure gambles taken prior to occupational choice can substitute for lotteries that determine one’s occupation. The paper repairs what I think is a major flaw in standard general equilibrium theory, which assumes away the nonconvexity of preferences that follows from the discreteness of occupational choice.
This paper argues that since the supply of oil in the ground is inelastic, the incidence of a sales tax on oil, maintained forever at a fixed rate, would fall entirely on the oil-suppliers. In the world economy, however, the elasticity of supply of oil to a single country depends on that country's imports as a share of world output and on the elasticity of demand for that country. The paper calculates optimal tax rates for a country as a function of these variables and estimates optimal oil tax rates for the U.S., for some OECD countries separately, and for the U.S. plus the OECD collectively. Current U.S. tax rates are shown to be far below optimal values.
Adapting to climate change: The remarkable decline in the US temperature-mortality relationship over the Twentieth Century
This paper examines the temperature-mortality relationship over the course of the twentieth-century United States both for its own interest and to identify potentially useful adaptations for coming decades. There are three primary findings. First, the mortality impact of days with mean temperature exceeding 807F declined by 75 percent. Almost the entire decline occurred after 1960. Second, the diffusion of residential air conditioning explains essentially the entire decline in hot day–related fatalities. Third, using Dubin and McFadden’s discrete continuous model, the present value of US consumer surplus from the introduction of residential air conditioning is estimated to be $85– $185 billion (2012 dollars).
Virtually all agricultural communities worldwide are exposed to agricultural pesticides. Yet, the health consequences of such exposure are poorly understood, and the scientific literature remains ambiguous. Using individual birth and demographic characteristics for over 500 000 birth observations between 1997-2011 in the agriculturally dominated San Joaquin Valley, California, we statistically investigate if residential agricultural pesticide exposure during gestation, by trimester, and by toxicity influences birth weight, gestational length, or birth abnormalities. Overall, our analysis indicates that agricultural pesticide exposure increases adverse birth outcomes by 5-9%, but only among the population exposed to very high quantities of pesticides (e.g., top 5th percentile, i.e., ~4200 kg applied over gestation). Thus, policies and interventions targeting the extreme right tail of the pesticide distribution near human habitation could largely eliminate the adverse birth outcomes associated with agricultural pesticide exposure documented in this study.The health consequences of exposure to pesticides are uncertain and subject to much debate. Here, the effect of exposure during pregnancy is investigated in an agriculturally dominated residential area, showing that an increase in adverse birth outcomes is observed with very high levels of pesticide exposure.