Related papers: Quantity Limits on Addictive Goods
In this note, we explicitly solve the problem of maximizing utility of consumption (until the minimum of bankruptcy and the time of death) with a constraint on the probability of lifetime ruin, which can be interpreted as a risk measure on…
This paper adapts ideas from social identity theory to set out a new framework for modelling conspicuous consumption. Agents derive utility from their consumption of a status good and from belonging to an identity group with high status…
Dynamic logit models are popular tools in economics to measure state dependence. This paper introduces a new method to derive moment restrictions in a large class of such models with strictly exogenous regressors and fixed effects. We…
We examine the quantitative condition which has been widely used as a criterion for the adiabatic approximation but was recently found insufficient. Our results indicate that the usual quantitative condition is sufficient for a special…
With the fragmentation of electronic markets, exchanges are now competing in order to attract trading activity on their platform. Consequently, they developed several regulatory tools to control liquidity provision / consumption on their…
This paper analyzes and explicitly solves a class of long-term average impulse control problems and a related class of singular control problems. The underlying process is a general one-dimensional diffusion with appropriate boundary…
An income loss can have a negative impact on households, forcing them to reduce their consumption of some staple goods. This can lead to health issues and, consequently, generate significant costs for society. We suggest that consumers can,…
There is a widespread recent interest in using ideas from statistical physics to model certain types of problems in economics and finance. The main idea is to derive the macroscopic behavior of the market from the random local interactions…
Individuals are always limited by some inelastic resources, such as time and energy, which restrict them to dedicate to social interaction and limit their contact capacity. Contact capacity plays an important role in dynamics of social…
We axiomatically define a cardinal social inefficiency function, which, given a set of alternatives and individuals' vNM preferences over the alternatives, assigns a unique number -- the social inefficiency -- to each alternative. These…
The illness-death model for chronic conditions is combined with a renewal equation for the number of newborns taking into account possibly different fertility rates in the healthy and diseased parts of the population. The resulting boundary…
The issue of whether we make decisions freely has vexed philosophers for millennia, Resolving this is vital for solving a diverse range of problems, from the physiology of how the brain makes decisions (and how we assign moral…
Increasing the infection risk early in an epidemic is individually and socially optimal under some parameter values. The reason is that the early patients recover or die before the peak of the epidemic, which flattens the peak. This…
We determine the optimal investment strategy of an individual who targets a given rate of consumption and who seeks to minimize the probability of going bankrupt before she dies, also known as {\it lifetime ruin}. We impose two types of…
This paper asks whether regulatory monitoring exhibits nonlinear capacity limits as the scale and complexity of the regulated environment increase. Using a county--year panel of U.S. Food and Drug Administration (FDA) inspections merged…
Human attention has become a scarce and strategically contested resource in digital environments. Content providers increasingly engage in excessive competition for visibility, often prioritizing attention-grabbing tactics over substantive…
The "friendship paradox" (Feld1991) refers to the fact that, on average, people have strictly fewer friends than their friends have. I show that this over-sampling of the most popular people amplifies behaviors that involve…
Heterogeneous treatment effects are of major interest in economics. For example, a poverty reduction measure would be best evaluated by its effects on those who would be poor in the absence of the treatment, or by the share among the poor…
A recent line of research has established a novel desideratum for designing approximately-revenue-optimal multi-item mechanisms, namely the buy-many constraint. Under this constraint, prices for different allocations made by the mechanism…
Rapid increases in food supplies have reduced global hunger, while rising burdens of diet-related disease have made poor diet quality the leading cause of death and disability around the world. Today's "double burden" of undernourishment in…