Signaling Character in Electoral Competition

We study a one-dimensional Hotelling-Downs model of electoral competition with the following innovation: a fraction of candidates have “character” and are exogenously committed to a campaign platform; this is unobservable to voters. Character is desirable, and a voter's utility is a convex combination of standard policy preferences and her assessment of a candidate's character. This structure induces a signaling game between strategic candidates and voters, since a policy platform affects voters' utilities not only directly, but also indirectly through inferences about a candidate's character. The model generates a number of predictions, starting with a failure of the median voter theorem. (JEL D72, D82

Decomposing changes in income risk using consumption data

This paper concerns the decomposition of income risk into permanent and transitory components using repeated cross-section data on income and consumption. Our focus is on the detection of changes in the magnitudes of variances of permanent and transitory risks. A new approximation to the optimal consumption growth rule is developed. Evidence from a dynamic stochastic simulation is used to show that this approximation can provide a robust method for decomposing income risk in a nonstationary environment. We examine robustness to unobserved heterogeneity in consumption growth and to unobserved heterogeneity in income growth. We use this approach to investigate the growth in income inequality in the UK in the 1980s

A fast-neutron spectrometer of advanced design

Fast neutron spectrometer combines helium filled proportional counters with solid-state detectors to achieve the properties of high efficiency, good resolution, rapid response, and effective gamma ray rejection

Imputing consumption in the PSID using food demand estimates from the CEX

In this paper we discuss an empirical strategy that allows researchers to impute consumptiondata from the CEX to the PSID. The strategy consists of inverting a demand for food equationestimated in the CEX. We discuss the conditions under which such procedure is successful inreplicating the trends of the first two moments of the consumption distribution. We argue thattwo factors appear to be empirically relevant: accounting for differences in the distribution offood expenditures in the two data sets, and accounting for the presence of measurement error inconsumption data in the CEX. In this paper we discuss an empirical strategy that allows researchers to impute consumptiondata from the CEX to the PSID. The strategy consists of inverting a demand for food equationestimated in the CEX. We discuss the conditions under which such procedure is successful inreplicating the trends of the first two moments of the consumption distribution. We argue thattwo factors appear to be empirically relevant: accounting for differences in the distribution offood expenditures in the two data sets, and accounting for the presence of measurement error inconsumption data in the CEX

License Prices for Financially Constrained Firms

It is often alleged that high auction prices inhibit service deployment. We investigate this claim under the extreme case of financially constrained bidders. If demand is just slightly elastic, auctions maximize consumer surplus if consumer surplus is a convex function of quantity (a common assumption), or if consumer surplus is concave and the proportion of expenditure spent on deployment is greater than one over the elasticity of demand. The latter condition appears to be true for most of the large telecom auctions in the US and Europe. Thus, even if high auction prices inhibit service deployment, auctions appear to be optimal from the consumers' point of view.

Pricing Damaged Goods

Companies with market power occasionally engage in intentional quality reduction of a portion of their output as a means of offering two qualities of goods for the purpose of price discrimination, even absent a cost saving. This paper provides an exact characterization in terms of marginal revenues of when such a strategy is profitable, which, remarkably, does not depend on the distribution of customer valuations, but only on the value of the damaged product relative to the undamaged product. In particular, when the damaged product provides a constant proportion of the value of the full product, selling a damaged good is unprofitable. One quality reduction produces higher profits than another if the former has higher marginal revenue than the latter