Related papers: Optimal Taxation under Imperfect Trust
What is the best macroprudential regulation when households differ in their exposure to profits from the financial sector? To answer the question, I study a real business cycle model with household heterogeneity and market incompleteness.…
Optimal reinsurance when Value at Risk and expected surplus is balanced through their ratio is studied, and it is demonstrated how results for risk-adjusted surplus can be utilized. Simplifications for large portfolios are derived, and this…
A standard goal of model evaluation and selection is to find a model that approximates the truth well while at the same time is as parsimonious as possible. In this paper we emphasize the point of view that the models under consideration…
This study examines the lack of redistributive effectiveness of consumption-based tax systems with respect to social fairness. Through numerical simulations, we explore the wealth exchanges among economic agents subject to flat consumption…
We use the randomization idea and proof techniques from optimal transport to study optimal reinsurance problems. We start by providing conditions for a class of problems that allow us to characterize the support of optimal treaties, and…
We analyze how uncertain technologies should be robustly regulated and how regulation should evolve with new information. An adaptive sandbox comprising a zero marginal tax up to an evolving quantity limit is (i) robust: it delivers optimal…
This paper analyzes whether a minimum wage should be used for redistribution on top of taxes and transfers. I characterize optimal redistribution for a government with three policy instruments -- labor income taxes and transfers, corporate…
We consider a government that aims at reducing the debt-to-gross domestic product (GDP) ratio of a country. The government observes the level of the debt-to-GDP ratio and an indicator of the state of the economy, but does not directly…
We construct and study market models admitting optimal arbitrage. We say that a model admits optimal arbitrage if it is possible, in a zero-interest rate setting, starting with an initial wealth of 1 and using only positive portfolios, to…
The ``prediction + optimal control'' scheme has shown good performance in many applications of automotive, traffic, robot, and building control. In practice, the prediction results are simply considered correct in the optimal control design…
A complete description of taxation systems that ensure sustainable economic development is given. These tax systems depend on production technologies and gross output volumes. Explicit formulas for such dependencies are found. In a…
We characterize the communication complexity of truthful mechanisms. Our departure point is the well known taxation principle. The taxation principle asserts that every truthful mechanism can be interpreted as follows: every player is…
This paper studies the optimal extraction policy of an oil field as well as the efficient taxation of the revenues generated. Taking into account the fact that the oil price in worldwide commodity markets fluctuates randomly following…
Machine learning systems are increasingly used to make decisions about people's lives, such as whether to give someone a loan or whether to interview someone for a job. This has led to considerable interest in making such machine learning…
We consider the impact of fairness requirements on the social efficiency of truthful mechanisms for trade, focusing on Bayesian bilateral-trade settings. Unlike the full information case in which all gains-from-trade can be realized and…
The literature on "mechanism design from samples," which has flourished in recent years at the interface of economics and computer science, offers a bridge between the classic computer-science approach of worst-case analysis (corresponding…
If you recommend a product to me and I buy it, how much should you be paid by the seller? And if your sole interest is to maximize the amount paid to you by the seller for a sequence of recommendations, how should you recommend optimally if…
The aim of the present paper is to provide criteria for a central bank of how to choose among different monetary-policy rules when caring about a number of policy targets such as the output gap and expected inflation. Special attention is…
This paper revisits the classic instrument choice problem in a setting with consumption externalities, through the lens of robust mechanism design. A regulator can implement any incentive-compatible policy but is uncertain about how…
The most fundamental problem in statistics is the inference of an unknown probability distribution from a finite number of samples. For a specific observed data set, answers to the following questions would be desirable: (1) Estimation:…