Working Papers

How costly is foreclosure? Estimates of the social cost of foreclosure typically focus on financial costs. Using random judge assignment instrumental variable (IV) and propensity score matching (PSM) approaches in Cook County, Illinois, we find…

Modern applications in statistics, computer science and network science have seen tremendous values of finer matrix spectral perturbation theory. In this paper, we derive a generic ℓ2→∞ eigenspace perturbation bound for symmetric random matrices…

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 a summary statistic of the…

We consider a variant of the contextual bandit problem. In standard contextual bandits, when a user arrives we get the user’s complete feature vector and then assign a treatment (arm) to that user. In a number of applications (like health…

We model a simple market setting in which fragmentation of trade of the same asset across multiple exchanges improves allocative efficiency. Fragmentation reduces the inhibiting effect of price-impact avoidance on order submission. Although…

Adaptivity is an important yet under-studied property in modern optimization theory. The gap between the state-of-the-art theory and the current practice is striking in that algorithms with desirable theoretical guarantees typically involve…

Adaptive experiment designs can dramatically improve statistical efficiency in randomized trials, but they also complicate statistical inference. For example, it is now well known that the sample mean is biased in adaptive trials. Inferential…

In many models, economic growth is driven by people discovering new ideas. These models typically assume either a constant or a growing population. However, in high income countries today, fertility is already below its replacement rate: women…

The allocation of decision authority by a principal to either a human agent or an artificial intelligence (AI) is examined. The principal trades off an AI’s more aligned choice with the need to motivate the human agent to expend effort in…

We develop an equilibrium theory of business cycles driven by spikes in risk premiums that depress business demand for capital and labor. Aggregate shocks increase firms’ uninsurable idiosyncratic risk and raise risk premiums. We show that risk…

For many machine learning algorithms, two main assumptions are required to guarantee performance. One is that the test data are drawn from the same distribution as the training data, and the other is that the model is correctly specified. In real…

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…

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…

We develop a valuation model for venture capital-backed companies and apply it to 135 US unicorns, that is, private companies with reported valuations above $1 billion. We value unicorns using financial terms from legal filings and find that…

Eliminating firms’ access to tax havens can have unintended consequences for their domestic economic activity. We study a policy that limited profit shifting by U.S. multinationals and show it raised the tax cost of domestic investment. Firms…

This paper studies families’ preferences for peers in the school and the implications of those preferences for the distribution of academic outcomes. I develop an equilibrium model of school competition and student sorting under social…

A common challenge in estimating the long-term impacts of treatments (e.g., job training programs) is that the outcomes of interest (e.g., lifetime earnings) are observed with a long delay. We address this problem by combining several short-term…

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 equilibria. In our…

We document three new facts about entrepreneurship. First, a majority of male entrepreneurs start a firm in the same or a closely related industry as their fathers’ industry of employment. Second, this tendency is correlated with intelligence:…

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…