Working Papers

These papers are working drafts of research which often appear in final form in academic journals. The published versions may differ from the working versions provided here.

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Yuichi Yamamoto, Takuo Sugaya
October 15, 2019

We study repeated games in which players learn the unknown state of the world by observing a sequence of noisy private signals. We find that for generic signal distributions, the folk theorem obtains using ex-post...

Jess Benhabib, Jesse Perla, Christopher Tonetti
September 2019

We study how innovation and technology diffusion interact to endogenously determine the shape of the productivity distribution and generate aggregate growth. We model firms that choose to innovate, adopt technology, or produce with their existing...

Charles M. C. Lee, Yanruo Wang, Qinlin Zhong
August 2019

We develop a Loan Portfolio Risk (LPR) variable that measures time-varying volatility in default risk for a portfolio of bank loans.  An Equity-to-LPR ratio (ELPR) is incrementally important in predicting bank failure up to five...

Charles I. Jones, Christopher Tonetti
August 2019

Data is nonrival: a person’s location history, medical records, and driving data can be used by any number of firms simultaneously. Nonrivalry leads to increasing returns and implies an important role for market structure and...

Jonathan Johannemann, Vitor Hadad, Susan Athey, Stefan Wager
August 2019

Many learning algorithms require categorical data to be transformed into real vectors before it can be used as input. Often, categorical variables are encoded as one-hot (or dummy) vectors. However, this mode of representation can...

Paulo Somaini
July 9, 2019

This paper provides a positive identification result for first-price procurement models with asymmetric bidders, statistically dependent private signals,
and interdependent costs. When bidders are risk neutral, the model’s payoff-relevant primitives are: (i) the joint...

David M. Kreps, Walter Schachermayer
July 2019

We examine Kreps’ (2019) conjecture that optimal expected utility in the classic Black–Scholes–Merton (BSM) economy is the limit of optimal expected utility for a sequence of discrete-time economies that “approach” the BSM economy in a natural...

David M. Kreps, Walter Schachermayer
June 12, 2019

We prove a fundamental result concerning the connection between discrete-time models of financial markets and the celebrated Black–Scholes–Merton continuous-time model in which “markets are complete.” Specifically, we prove that if (a) the probability law of a...

Rob Donnelly, Francisco R, Ruiz, David Blei, Susan Athey
June 2019

This paper proposes a method for estimating consumer preferences among discrete choices, where the consumer chooses at most one product in a category, but selects from multiple categories in parallel. The consumer’s utility is additive...

Jesse Perla, Christopher Tonetti, Michael E. Waugh
May 2019

We study how opening to trade affects economic growth in a model where heterogeneous firms can adopt new technologies already in use by other firms in their home country. We characterize the growth rate using...

Susan Athey, Guido W. Imbens
March 24, 2019

We discuss the relevance of the recent Machine Learning (ML) literature for economics and econometrics. First we discuss the differences in goals, methods and settings between the ML literature and the traditional econometrics and statistics...

Dmitry Arkhangelsky, Susan Athey, David A. Hirshberg, Guido W. Imbens, Stefan Wager
February 1, 2019

We present a new perspective on the Synthetic Control (SC) method as a weighted least squares regression estimator with time fixed effects and unit weights. This perspective suggests a generalization with two way (both unit...

Susan Athey, Billy Ferguson, Mathew Gentzkow, Tobias Schmidt
February 2019

We introduce a novel measure of segregation, experienced isolation, that captures individuals’ exposure to diverse others in the places they visit over the course of their days. Using novel Global Positioning System (GPS) data collected...

Nikhil Agarwal, Itai Ashlagi, Michael Rees, Paulo Somaini, Daniel Waldinger
January 27, 2019

A transplant can improve a patient’s life while saving several hundreds of thousands of dollars in healthcare expenditures. Organs from deceased donors, like many other scarce public resources (e.g. public housing, child-care, publicly funded long-term...

Zhiyao Chen, Dirk Hackbarth, Ilya A. Strebulaev
January 19, 2019

We build a dynamic model to link two empirical patterns: the negative failure probability-return relation (Campbell, Hilscher, and Szilagyi, JF, 2008) and the positive distress risk premium-return relation (Friewald, Wagner, and Zechner, JF, 2014). We...

Maria Dimakopoulou, Susan Athey, Guido W. Imbens
December 2018

Contextual bandit algorithms are sensitive to the estimation method of the outcome model as well as the exploration method used, particularly in the presence of rich heterogeneity or complex outcome models, which can lead to...

Piotr Dworczak, Scott Duke Kominers, Mohammad Akbarpour
November 11, 2018

When macroeconomic tools fail to respond to wealth inequality optimally, regulators can still seek to mitigate inequality within individual markets. A social planner with distributional preferences might distort allocative efficiency to achieve a more desirable...

Hunt Allcott, Rebecca Diamond, Jean-Pierre Dubé, Jessie Handbury, Ilya A. Rahkovsky, Molly Schnell
November 9, 2018

We study the causes of “nutritional inequality”: why the wealthy eat more healthfully than the poor in the United States. Exploiting supermarket entry, household moves to healthier neighborhoods, and purchasing patterns among households with identical...

Shai Bernstein, Rebecca Diamond, Timothy James McQuade, Beatriz Pousada
November 6, 2018

We characterize the contribution of immigrants to US innovation, both through their direct productivity as well as through their indirect spillover effects on their native collaborators. To do so, we link patent records to a...

Susan Athey, Zhengyuan Zhou, Stefan Wager
October 10, 2018

In many settings, a decision-maker wishes to learn a rule, or policy, that maps from observable characteristics of an individual to an action. Examples include selecting offers, prices, advertisements, or emails to send to consumers,...