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LUNCH SEMINAR 2013-2014

Archives

Program June 2014

Monday, June 2, 2014
Location: Ground Floor Library, Department of Economics, Building 081
12:15 - 13:15

Robert SOMOGYI ( Dept. of Economics, Ecole Polytechnique)

Title: "Ticket Pricing with Forward-Looking Buyers"

We investigate screening by a capacity-constrained monopoly facing uncertain demand, as a firm selling tickets in different price categories. Serving two consumer groups in a context of adverse selection, the monopoly divides its total capacity between two categories, both available only in limited quantity. Consumers are forward-looking: they understand that if they choose the cheaper product they might get rationed with a higher probability. We compare this mechanism to a two-period model of intertemporal price discrimination in which strategic consumers may buy early to avoid rationing in the sales period. We show that the monopoly obtains a higher profit by dividing its capacity over using sales whenever the valuation of consumers is sufficiently heterogeneous.

Contact: Robert Somogyi

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Monday, June 23, 2014

Location: Ground Floor Library, Department of Economics, Building 081
12:15 - 13:15

François FONTAINE

Title: "tba"

Contact: Jean-Baptiste Michau

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Archives

Program May 2014

Monday, May 12, 2014
Location: Ground Floor Library, Department of Economics, Building 081
12:15 - 13:30

Philippe CHONE (CREST)

Title: "Income tax and retirement schemes"

Abstract: This article aims at understanding the interplay between pension schemes and tax instruments. The model features extensive labor supply in a stationary environment with overlapping generations and perfect financial markets. Compared with the reference case of a pure taxation economy, we find that taxes become more redistributive when the pension instrument is available, while pensions provide incentives to work

Contact: Robert Somogyi

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Monday, May 19, 2014
Location: Ground Floor Library, Department of Economics, Building 081
12:15 - 13:15

Christian BELZIL ( Dept. of Economics, Ecole Polytechnique)

Contact: Robert Somogyi

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Program April 2014

Monday, April 7, 2014
Location: Ground Floor Library, Department of Economics, Building 081
12:15 - 14:00

No Lunch Seminar - Meeting of resident members

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Monday, April 28, 2014
Location: Ground Floor Library, Department of Economics, Building 081
12:15 - 13:15

Yukio KORIYAMA (Department of Economics, Ecole Polytechnique)

Title: "Endogenous cognitive hierarchy model: theory and experiments"

Joint work with Ali Ihsan Ozkes (Department of Economics, Ecole Polytechnique)

Abstract: Powerful theoretical tools have been provided in the literature of strategic thinking, in order to explain systematic deviations from the equilibrium behavior in a variety of games. Especially, the cognitive hierarchy model has been developped to explain heterogeneity  among the observed behaviors in certain classes of games. This paper provides a new model, endogenous cognitive hierarchy model, which better explains the behavioral structure of the strategies in the games for which the standard cognitive hierarchy model cannot  provide a reasonable prediction. Each agent is assumed to best-reply to the agents who may have the same level of cognitive hierarchy, instead of best-replying to agents who all have a lower hierarchy. The theory is applied to laboratory experiments on the game of information aggregation of the Condorcet Jury Theorem."

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March 2014
Monday, March 10
Location: Ground Floor Library, Department of Economics, Building 081
12:15 - 13:15

Jean-Marc BOURGEON (Department of Economics, Ecole Polytechnique)

Title: "Agricultural Trade, Biodiversity Effects and Price Volatility"

Joint work with Cécilia Bellora

Abstract: We examine the importance of production risks in agriculture due to biotic elements like pests in determining the pattern of trade and the distribution of prices in a Ricardian two-country setup. These elements create biodiversity effects that result in an incomplete specialization at the free trade equilibrium. Their effects on the distribution of prices depend on the countries openness to trade. Pesticides allow to diminish these effects but they are damaging for the environment and the human health. When regulating farming practices, governments have to counterbalance theses side-effects with the competitiveness of their agricultural sector on international markets. Nevertheless, restrictions on pesticides under free trade are generally more stringent than under autarky.

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Monday, March 17
Location: Ground Floor Library, Department of Economics, Building 081
12:15 - 13:15

Francisco RUIZ-ALISEDA (Department of Economics, Ecole Polytechnique)

Title: "When Do Switching Costs Make Market More or Less Competitive?"

Abstract: In a two-period duopoly setting in which switching costs are the only reason why products may be perceived as differentiated, we provide necessary and sufficient conditions for switching costs to lead to higher prices in the first period as well as to higher overall profitability. We show that this happens if and only if switching costs are not too large. A necessary condition for switching costs not to be "large" is that second-period profitability be nonmonotonic in first-period market share. Because previous literature has examined situations in which switching costs are such that second-period profits grow with first-period market share, a unified treatment of how switching costs (and only switching costs) affect competition is missing. We manage to provide such a unified framework for this analysis by making switching costs heterogeneous across the population of consumers. In so doing, we illustrate the undesired byproduct of assuming that products exhibit substantial horizontal differentiation, drawing implications for the classical literature on competition with switching costs as well as the more recent one built upon such an assumption.

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Monday, March 24
Location: Ground Floor Library, Department of Economics, Building 081
12:15 - 13:15

Raïcho BOJILOV (Department of Economics, Ecole Polytechnique)

Title: "Closed-Form Formulas for Multivariate Matching"

Joint work with Alfred Galichon

Abstract: This paper provides closed-form formulas for a multidimensional two-sided matching problem with transferable utility. When the matching surplus is quadratic, the marginal distributions of the characteristics are normal, and when heterogeneity in tastes is of the logit-type as in a continuous version of Choo and Siow (2006), we show that the optimal matching distribution is also jointly normal and can be computed in closed form from the quadratic surplus function, and that, conversely, the quadratic surplus function can be identified from the optimal matching distribution. The closed-form formulas make it computationally easy to solve problems with a large number of matches and allow for quantitative predictions about the evolution of the solution as the technology and the characteristics of the matching populations change. They also provide the basis for the theoretical analysis of equilibrium assignment and division of surplus in multidimensional setting. We apply the econometric framework to the analysis of occupational choice of the 1979 cohort of the NLSY. The empirical results show that occuptional choice depends on many dimensions: cognitive capacity, non-cognitive skills, and the nature of the occupational tasks. In addition, we find that unobserved heterogeneity still drives much of the sorting in labor markets. With the help of compensation data, we also analyze the pecuniary and non-pecuniary rewards of various occupations, income inequality, and equilibrium rewards on individual characteristics. Finally, the closed-form formulas allows us also to perform counterfactual experiments and comparative statics exercises.

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Monday, March 31
Location: Ground Floor Library, Department of Economics, Building 081
12:15 - 13:15

Jordan ROULLEAU-PASDELOUP (CREST)

Title: "The Government Spending Multiplier in a Recession with a Binding Zero Lower Bound"

Abstract: The usual mechanism through which government spending can be efficient at boosting output in a liquidity trap emphasizes the role of aggregate demand. Higher government spending generates lower real rates through higher inflation, which further boosts private consumption. I review evidence that casts doubt on the empirical relevance of this mechanism. In particular, recessions appear to be periods in which higher government spending generates little if no inflation. I build a model that is more in line with the response of key macroeconomic variables to a government spending shock in recssions/expansions. The model features sticky prices, search and matching frictions and downward nominal wage rigidity. In this model, government spending generates little inflation at the Zero Lower Bound and the multiplier is only slightly higher than in normal times.

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February 2014

Monday, February 3
Location: Ground Floor Library, Department of Economics, Building 081
12:15 - 13:15

Raïcho BOJILOV (Department of Economics, Ecole Polytechnique)

Title: "O, Matchmaker, Matchmaker! Where Art Thou?"

Abstract: This paper investigates how the quality of referrals varies with the nature and length of the relation between the referring agent and the job candidate, as well as with the agent's tenure and positions at the hiring firm. It also considers how explicit and implicit incentives determine the decision to refer or not and, if yes, what signal to send. Referrals are incorporated within a model of learning about the match quality between a firm and its job candidates or, if hired, workers. Using unique data on referrals, we test the predicitons of the model. The results show that referred candidates are more likely to enter, to stay, and crucially to stay conditional on entry. The estimates are consistent with learning about match quality but rule out the presence of any search by inspection, as well as an alternative explanation for the positive effect of referrals based on treatment of the referred by the referring agents after hiring. Finally, we find evidence for moral hazard at the very top of the hierarchy: very senior people provide many low quality referrals because they face weak implicit incentives.

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Monday, February 10
Location: Ground Floor Library, Department of Economics, Building 081
12:15 - 13:15

Julien PENASSE (ESSEC)

Abstract: This paper explores return predictability within a panel VAR setup. Using quarterly data from 1971 to 2013, I show that stock and bond are actually predictable in 10 countries with well-developed capital markets. While it is generally admitted that stocks are safer on the long run, I obtain a rather at term structure of risk. The “conventional wisdom” on long term investing is simply not there. Using bootstrapped confidence intervals of the conditional moments, I show that stocks are significantly riskier than bonds or bills at any horizon. Long term correlations across asset classes are very low, even at a ten-year horizon. This result is robust to alternative specifications and data. Overall, while I observe predictability with more precision than in studies focusing on a single country, the consequence of predictability is paradoxically weak.

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January 2014

Monday, January 13
Location: Ground Floor Library, Department of Economics, Building 081
12:15 - 13:15

Eduardo PEREZ (Department of Economics, Ecole Polytechnique)

Title: "Interim Bayesian Persuasion"

Abstract: This paper makes a first attempt at building a theory of interim Bayesian persuasion. I work in a model where a low or high type sender seeks validation from a receiver who is willing to validate high types exclusively. After learning her type, the sender chooses a complete conditional information structure for the receiver from a possibly constrained set. I suggest a solution to this game that takes into account the signaling potential of the sender's choice.

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Monday, January 20
Location: Ground Floor Library, Department of Economics, Building 081
12:15 - 13:15

Guilhem LECOUTEUX (Department of Economics, Ecole Polytechnique)

Title: "Can we know our own preferences? Interdependent preferences and the evolution of behavioural biases"

Abstract : A common assumption of normative economics is that individual preferences are known by the individuals or, at least, that they can be elicited by a social planner when the individuals present behavioural biases. The aim of this paper is to question the possibility of eliciting such true preferences if we endogenize those biases, by assuming that individual preferences are the result of an evolutionary process selecting the most successful types of individuals. We show that it is impossible to elicit with certainty the true preferences of the players if, in the game constituted by the perceived preferences of the players, (i) there exists a Stackelberg equilibrium that is not a Nash equilibrium, or (ii) there exists a non Pareto-optimal Nash equilibrium. We discuss the implications of our result for behavioural welfare economics and in particular the issues it raises for libertarian paternalism.

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Monday, January 27
Location: Ground Floor Library, Department of Economics, Building 081
12:15 - 13:15

Fréderic LOSS (Department of Economics, Ecole Polytechnique)

Title: "Linear Prices Equilibria in a Nonexclusive Insurance Market"
Joint work with Gwenaël Piaser

Abstract: We consider a competitive insurance market in which agents can privately enter into multicontractual insurance relationships and undertake hidden actions. We study the existence of linear equilibria when insurance companies do not have any restriction on their pricing rules. We provide sufficient conditions under which a linear equilibrium exists for DARA, CARA and IARA utility functions. We show that there are two types of linear equilibria: A first one in which there is full insurance and another one in which agents are only partially insured. We also analyze the welfare properties of the linear equilibria. We show that they are not always second best Pareto optimal.

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December 2013

Monday, December 2
Location: Ground Floor Library, Department of Economics, Building 081
9:30 - 16:00 (15:00 closing PhD presentations)

No Lunch Séminar

4th PhD Day

Contact: Gwenaël Roudaut

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Monday, December 9
Location: Ground Floor Library, Department of Economics, Building 081
12:15 - 13:15

Rafaël TREIBICH (Department of Economics, Ecole Polytechnique)

Title: "Fair Social Orderings with Other-Regarding Preferences"

Abstract: We study the fair division of a one dimensional good when individuals have other-regarding preferences. Assuming no legitimate claims, we ask how society should rank all possible allocations for every profile of ordinal preferences. In both a model of average and positional externalities, we characterize a class of social preferences which satisfy appealing efficiency and equity properties. These rankings require giving full priority to the worst off individual in the economy, where an agent's welfare is measured by the quantity which, if consumed by everyone, would leave her indifferent to the current allocation. We extend some of our results to a model with legitimate claims.

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Monday, December 16
Location: Ground Floor Library, Department of Economics, Building 081
12:15

No Lunch Seminar

MEETING OF RESIDENT MEMBERS

Organized by Edouard Challe

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November 2013

Monday, November 4

Antonin MACE (Department of Economics, Ecole Polytechnique)

Title: "Voting with labels: when should we sum? What should we sum?"

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Monday, November 18

Olivier TERCIEUX (PSE)

Title: "Efficiency and Stability in Large Matching Markets", joint with Y-K. Che

Abstract: We study efficient and stable mechanisms in many-to-one matching markets when the number of agents is large and individuals' preferences are drawn randomly from a class of distributions allowing for both common value and idiosyncratic components. In this context, as the market grows large, all Pareto efficient mechanisms (including top trading cycles, serial dictatorship, and their randomized variants) generate total payoffs that converge to the utilitarian upper bound. This result implies that Pareto-efficient mechanisms are asymptotically payoff equivalent in the population distribution sense --- that is, "up to the renaming of agents". If objects' priorities are also randomly drawn but agents' common values for objects are heterogenous, then well-known mechanisms such as deferred acceptance and top trading cycle mechanisms fail either efficiency or stability even in the asymptotic sense. We propose a new mechanism that is asymptotically efficient, asymptotically stable and incentive compatible.

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Monday, November 25

Guy MEUNIER (Department of Economics, Ecole Polytechnique)

Title: "How low-carbon capital accumulation changes the optimal cost and timing of (sector-scale) climate policies"

Abstract: When reducing greenhouse gases emissions requires to replace polluting capital with clean capital, the unique and exponentially-growing carbon price is a poor indicator of the day-to-day cost of a climate policy. First, it does not reflect the urgency to invest in low-carbon capital. Optimal abatement efforts (in dollars per ton) are concentrated over the short run, and support a transition toward a low-carbon economy. Second, the shadow carbon price behind a low-carbon investment is not a sufficient piece of information to assess its cost-efficiency. The date when the transition will be over is also required. Third, the same carbon price translates in more dollars invested per abated tons in sectors that will take longer to decarbonize.

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October 2013

Monday, October 7

Agustin PEREZ-BARAHONA (INRA-UMR Economie Publique and Ecole Polytechnique) with Carmen Camacho

Abstract: We build a benchmark framework to study optimal land use, encompassing land use activities and environmental degradation. We focus on the spatial externalities of land use as drivers of spatial patterns: land is immobile by nature, but location's actions affect the whole space since pollution flows across locations resulting in both local and global damages. We show that the decision maker problem has a solution, which we can prove unique when the decision horizon is finite. We also study the steady state equilibrium and the convergence of the optimal trajectory. In particular we find that, even if the planning period is finite, the optimal trajectory approaches to the unique steady state when the decision horizon expands. Taking advantage of our analytical results, we illustrate the richness of the model by means of a numerical analysis. Considering a global dynamic algorithm, we find that our set-up reproduces a great variety of spatial patterns related to the interaction between land use activities and the environment. In particular, we identify the central role of abatement technology as pollution stabilizer, allowing the economy to achieve stable steady states that are spatially heterogeneous.

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Monday, October 14

► Jean-Baptiste MICHAU (Dept of Economics Ecole Polytechnique)

Abstract: This paper investigates the provision of insurance to workers against search-induced wage fluctuations. I rely on numerical simulations of a model of on-the-job search and precautionary savings. The model is calibrated to low skilled workers in the U.S.. The extent of insurance is determined by the degree of progressivity of a non-linear transfer schedule. The fundamental trade-off is that a more generous provision of insurance reduces incentives to search for better paying jobs, which is detrimental to the production efficiency of the economy. I show that progressivity raises the search intensity of unemployed worker, which reduces the equilibrium rate of unemployment, but lowers the search intensity of employed job seekers, which results in a lower output level. I also solve numerically for the optimal non-linear transfer schedule. The optimal policy is to provide almost no insurance up to a monthly income level of $1450, such as to preserve incentives to move up the wage ladder, and full insurance above$1650. This policy halves the standard deviation of labor incomes, increases output by 2.4% and generates a consumption-equivalent welfare gain of 1.3%. Forbidding private savings does not fundamentally change the shape of the optimal transfer function, but tilts the optimal policy towards more insurance at the expense of production efficiency.