Working Papers

This paper analyzes the economic incidence of sustained changes in federal government spending at the local level. We use a new identification strategy to isolate geographical variation in formula-based federal spending and develop three sets of…

Many empirical studies use Fuzzy Regression Discontinuity (FRD) designs to identify treatment effects when the receipt of treatment is potentially correlated to outcomes. Existing FRD methods identify the local average treatment effect (LATE) on…

We propose a new form of hybrid capital for banks, Equity Recourse Notes (ERNs), which ameliorate booms and bust by creating counter-cyclical incentives for banks to raise capital, and so encourage bank lending in bad times. They avoid the…

This paper studies the role of ex-ante information asymmetries in second price, common value auctions. Motivated by information structures that arise commonly in applications such as online advertising, we seek to understand what types of…

We investigate the role of networks of military alliances in preventing or encouraging wars between groups of countries. A country is vulnerable to attack if some allied group of countries can defeat the defending country and its (remaining)…

This paper considers dynamic moral hazard settings, in which the agent’s actions have consequences in the future. To maintain incentives, the optimal contract ties deferred compensation and termination to future performance. Some of the…

This paper analyzes how the audience for internet news varies with the source of the referral, comparing the audience when users navigate directly to news outlets to that when users are referred by social media. On average, the audience referred…

This paper studies the endogenous formation of supply chain networks when procurement is subject to disruption risk. We argue that the presence of non-convexities in the chain (e.g., due to non-convex production technologies or financial…

Will fast growing emerging economies sustain rapid growth rates until they “catch-up” to the technology frontier? Are there incentives for some developed countries to free-ride off of innovators and optimally “fall-back” relative to the…

Today’s regulatory rules, especially the easily-manipulated measures of regulatory capital, have led to costly bank failures. We design a robust regulatory system such that (i) bank losses are credibly borne by the private sector (ii)…

This paper presents a tractable model of dynamic moral hazard with purely pecuniary private benefits. To obtain a tractable but binding moral hazard problem, I introduce recontracting: the agent can offer a new continuation contract to the…

This paper explores the application of oblivious equilibrium to concentrated industries. We define an extended notion of oblivious equilibrium that we call partially oblivious equilibrium (POE) that allows for there to be a set of “dominant firms…

About 10% of US employees now regularly work from home (WFH), but there are concerns this can lead to “shirking from home.” We report the results of a WFH experiment at CTrip, a 16,000- employee, NASDAQ-listed Chinese travel agency. Call center…

I build a model of balance sheet recessions where financial frictions are derived from a moral hazard problem. I show that TFP shocks are amplified through a balance sheet channel only if the private action of the agent exposes him to aggregate…

We survey the theoretical and empirical literature on decentralization within firms. We first discuss how the concept of incomplete contracts shapes our views about the organization of decision-making within firms. We then overview the empirical…

We define the class of two-player zero-sum games with payoffs having mild discontinuities, which in applications typically stem from how ties are resolved. For games in this class we establish sufficient conditions for existence of a value of the…