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SSRN Research Paper Series
The Social Science Research Network’s Research Paper Series includes working papers produced by Stanford GSB the Rock Center.
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Agency problems, Screening and Increasing Credit Lines
We propose a model in which an optimal dynamic financing contract for a cash-constrained entrepreneur is a credit line with a growing credit limit. This simple contract, which resembles those used in practice, presents a good benchmark to…
Mean-Squared-Error Calculations for Average Treatment Effects
This paper develops a new nonparametric series estimator for the average treatment effect for the case with unconfounded treatment assignment, that is, where selection for treatment is on observables. The new estimator is efficient. In addition…
Ability and Employer Learning: Evidence from the Economist Labor Market
I study the human capital development and firm-worker matching processes for PhD economists. This group is useful for this purpose because the types of jobs they hold can be easily categorized and they have an observable productivity measure (…
Computational Methods for Oblivious Equilibrium
Oblivious equilibrium is a new solution concept for approximating Markov perfect equilibrium in dynamic models of imperfect competition among heterogeneous firms and has recently been used in multiple economic studies. In this paper, we present…
A Decomposition Algorithm for N-Player Games
An N-player game can be approximated by adding a coordinator who interacts bilaterally with each player. The coordinator proposes strategies to the players, and his payoff is maximized when each player’s optimal reply agrees with his proposal.…
Estimating Dynamic Models of Imperfect Competition
We describe a two-step algorithm for estimating dynamic games under the assumption that behavior is consistent with Markov perfect equilibrium. In the first step, the policy functions and the law of motion for the state variables are estimated.…
Information Disclosure and Unraveling in Matching Markets
This paper explores information disclosure in matching markets, e.g., the informativeness of transcripts given out by universities. We show that the same, benchmark, amount of information is disclosed in essentially all equilibria. We then…
Markov Perfect Industry Dynamics with Many Firms
We propose an approximation method for analyzing Ericson and Pakes (1995)-style dynamic models of imperfect competition. We develop a simple algorithm for computing an oblivious equilibrium, in which each firm is assumed to make decisions based…
Metastable Equilibria
We define a refinement of Nash equilibria called metastability. This refinement supposes that the given game might be embedded within any global game that leaves its local best reply correspondence unaffected. A selected set of equilibria is…
On Forward Induction
We examine Hillas and Kohlberg’s conjecture that invariance to the addition of payoff-redundant strategies implies that a backward induction outcome survives deletion of strategies that are inferior replies to all equilibria with the same outcome…
Supply Function Equilibrium in a Constrained Transmission System
This article characterizes a supply function equilibrium in an auction market constrained by limited capacities of links in a transportation network and limited input/output capacities of participants. The formulation is adapted to a wholesale…
When are Auctions Best?
We compare the two most common bidding processes for selling a company or other asset when participation is costly to buyers. In an auction all entry decisions are made prior to any bidding. In a sequential bidding process earlier entrants can…
Debt Relief
The G-8 Multilateral Debt Relief Initiative (MDRI) is the next step of the Highly Indebted Poor Countries Initiative (HIPC). There are two reasons why the MDRI is unlikely to help poor countries. First, the amount of money at stake is trivial.…
Discussion of "Malaysian Capital Controls: An Assessment" by Simon Johnson, Kalpana Kochar, Todd Mitton and Natalia Tamirisa
Abstract not available.
On the Nonparametric Identification of Nonlinear Simultaneous Equations Models: Comments on B. Brown (1983) and Roehrig (1988)*
This note revisits the identification theorems of B. Brown (1983) and Roehrig (1988). We describe an error in the proofs of the main identification theorems in these papers, and provide an important counterexample to the theorems on the…
Pricing of Complementary Goods and Network Effects
We discuss the case of a monopolist of a base good in the presence of a complementary good provided either by it or by another firm. We assess and calibrate the extent of the influence of the profits from the base good that is created by the…
Stable Outcomes of Generic Games in Extensive Form
We apply Mertens’ definition of stability for a game in strategic form to a game in extensive form with perfect recall. We prove that if payoffs are generic then the outcomes of stable sets of equilibria defined via homological essentiality by…
Strategic Proxy Voting
Despite its importance, voting in the elections of corporate boards of directors remains relatively unexplored in the empirical literature. We construct a comprehensive dataset of 3,204,890 mutual fund votes in director elections that took place…
The Diffusion of Development
This paper studies the barriers to the diffusion of development across countries over the very long run. We find that genetic distance, a measure associated with the amount of time elapsed since two populations’ last common ancestors, bears a…
Accounting, Governance, and Broad-Based Stock Option Grants
We estimate the costs of broad-based stock option programs relative to cash compensation and restricted stock grants. Using detailed data on stock-option grants to middle managers, we first compute the cost of option grants under the assumption…