Related papers: Resolving Aaron's Social Insurance Paradox
In high-risk environments, traditional indemnity insurance is often unaffordable or ineffective, despite its well-known optimality under expected utility. We compare excess-of-loss indemnity insurance with parametric insurance within a…
In several socioeconomic-critical decision-making settings, such as fair resource allocation, climate policy, or AI alignment, multiple principals interact within a common arena. While it is well established that these principals may have…
Multilateral index numbers are often used to make claims about welfare, such as treating PPPs as cross-country costs of living or real incomes as indicators of living standards. However, such interpretations may not be consistent with the…
We solve a lifecycle model in which the consumer's chronological age does not move in lockstep with calendar time. Instead, biological age increases at a stochastic non-linear rate in time like a broken clock that might occasionally move…
Pharmaceutical markets for life-saving therapies combine monopoly power with insurance coverage. We build a tractable sequential game in which a patent-holder chooses the drug price, a profit-maximising insurer sets its premium, and a…
We study the effects of data sharing between firms on prices, profits, and consumer welfare. Although indiscriminate sharing of consumer data decreases firm profits due to the subsequent increase in competition, selective sharing can be…
The use of dynamic pricing by profit-maximizing firms gives rise to demand fairness concerns, measured by discrepancies in consumer groups' demand responses to a given pricing strategy. Notably, dynamic pricing may result in buyer…
Automation raises productivity and reduces paid human labor, but it also reallocates income and ownership claims. This paper studies that tradeoff in a static benchmark and in a stationary heterogeneous-agent general equilibrium. Firms…
Keeping up with "The Joneses" matters. This paper examines a model of reference dependent choice where reference points are determined by social comparisons. An increase in the strength of social comparisons, even by only a few agents,…
We consider design of monetary mechanisms for two-sided matching. Mechanisms in the tradition of the deferred acceptance algorithm, even in variants incorporating money, tend to focus on the criterion of stability. Instead, in this work we…
Statistical parity metrics have been widely studied and endorsed in the AI community as a means of achieving fairness, but they suffer from at least two weaknesses. They disregard the actual welfare consequences of decisions and may…
Sequential Social Dilemmas (SSDs) provide a key framework for studying how cooperation emerges when individual incentives conflict with collective welfare. In Multi-Agent Reinforcement Learning, these problems are often addressed by…
The question of why we age is a fundamental one. It is about who we are, and it also might have critical practical aspects as we try to find ways to age slower. Or to not age at all. Different reasons point at distinct strategies for the…
We study an overlapping generations (OLG) exchange economy with an asset that yields dividends. First, we derive general conditions, based on exogenous parameters, that give rise to three distinct scenarios: (1) only bubbleless equilibria…
Thomas Piketty's Capital in the Twenty-First Century puts forth a logically consistent explanation for changes in income and wealth inequality patterns. However, while rich in data, the book provides no formal empirical testing for its…
This study proposes a new efficiency requirement, a minimal almost weak Pareto principle, which says that x is socially better than y whenever the only one individual never prefers y to x, and all the others prefers x to y. Then, I show…
AI systems now function as cognitive extensions, evolving from tools to active cognitive collaborators within human-AI integrated systems. While these systems can amplify cognition - enhancing problem-solving, learning, and creativity -…
Innovation records often exhibit "hockey-stick" patterns of abrupt, near-singular growth at the collective level. However, this macroscopic explosiveness stands in stark contrast to individual discovery, which remains bounded by cognitive…
Currently, pension providers are running into trouble mainly due to the ultra-low interest rates and the guarantees associated to some pension benefits. With the aim of reducing the pension volatility and providing adequate pension levels…
How to distribute welfare in a society is a key issue in the subject of distributional justice, which is deeply involved with notions of fairness. Following a thought experiment by Dworkin, this work considers a society of individuals with…