1,721,163 research outputs found
Beyond the Melting Pot: Cultural Transmission, Marriage, and the Evolution of Ethnic and Religious Traits
No full textThis paper presents an economic analysis of the intergenerational transmission of ethnic and religious traits through family socialization and marital segregation decisions. Frequency of intragroup marriage (homogamy), as well as socialization rates of religious and ethnic groups, depend on the group's share of the population: minority groups search more intensely for homogamous mates, and spend more resources to socialize their offspring. This pattern generally induces a dynamics of the distribution of ethnic and religious traits which converges to a culturally heterogeneous stationary population. Existing empirical evidence bearing directly and indirectly on the implications of the model is discussed
Decentralizing efficient allocations in economies with adverse selection
No full textFirst Version April 2003, Last Revision March 200
A model of cultural transmission, voting and political ideology
No full textIn this paper, we present a model of cultural transmission of preferences on goods, some of which are provided publicly through simple majority voting. We emphasize the existence of a two-way causality between socialization decisions and political outcomes. This generates the possibility of indeterminacies and multiple self-fulfilling equilibrium paths in cultural change and politics. We provide then a rationale for ideologies and collective socialization institutions as coordination mechanisms allowing cultural groups to preserve or shift political power in favor of their preference profile in the long run
Efficient policy interventions in an epidemic
Full text linkIn the context of an epidemic, a society is forced to face a system of externalities in consumption and in production. Command economy interventions can support efficient allocations at the cost of severe information requirements. Competitive markets for infection rights (alternatively, Pigouvian taxes) can guarantee efficiency without requiring direct policy interventions on socio-economic activities. We demonstrate that this is the case also with moral hazard, when the infections cannot be associated to the specific activities which originated them. Finally, we extend the analysis to situations where governments have only incomplete information regarding the values of the parameters of the infection or of firms’ production
On the cultural transmission of preferences for social status
No full textWe study the formation of preferences for ‘social status' as the result of intergenerational transmission of cultural traits. We characterize the behavior of parents with preferences for status in terms of socialization of their children to this particular cultural trait. We show that degenerate distributions of the population (whereby agents have either all status preferences or all non-status preferences) are dynamically unstable. Moreover, under some conditions, there exists a unique stationary distribution which is non-degenerate (in which both status and non-status preferences co-exist in the population), and this distribution is locally stable. Finally, we study the dependence of the stable stationary distribution of status preferences on institutional, technological and policy parameters which affect agents' economic conditions
Managerial Hedging and Portfolio Monitoring
No full textIncentive compensation induces correlation between the portfolio of managers and the cash flow of the firms they manage. This correlation exposes managers to risk and hence gives them an incentive to hedge against the poor performance of their firms. We study the agency problem between shareholders and a manager when the manager can hedge his compensation using financial markets and shareholders can monitor the manager's portfolio in order to keep him from hedging, but monitoring is costly. We find that the optimal incentive compensation and governance provisions have the following properties:
(i) the manager's portfolio is monitored only when the firm performs poorly, (ii) the manager’s compensation is more sensitive to firm performance when the cost
of monitoring is higher or when hedging markets are more developed, and (iii)
conditional on the firm’s performance, the manager’s compensation is lower
when his portfolio is monitored, even if no hedging is revealed by monitoring.
Moreover, the model suggests that the optimal level of portfolio monitoring is
higher for managers of firms whose performance can be hedged more easily,
such as larger firms and firms in more developed financial markets
Efficient competitive equilibria with adverse selection
Full text linkDo Walrasian markets function orderly in the presence of adverse selection? In particular, is
their outcome efficient? This paper addresses these questions in the context of a Rothschild
and Stiglitz insurance economy. We identify an externality associated with the presence of
adverse selection as a special form of consumption externality. Consequently, we show that
while competitive equilibria always exist, they are not typically incentive efficient. However,
as markets for pollution rights can internalize environmental externalities, markets for
consumption rights can be designed so as to internalize the consumption externality due to
adverse selection. With such markets competitive equilibria exist and are always incentive
efficient. Moreover, any incentive efficient allocation can be decentralized as a competitive
equilibrium
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