Related papers: Optimal Taxation under Imperfect Trust

We show how rate-distortion theory provides a mechanism for automated theory building by naturally distinguishing between regularity and randomness. We start from the simple principle that model variables should, as much as possible, render…

For the Ramsey model of economic growth, which describes the optimal allocation of consumption and saving over time, we assume the population dynamics to follow the Allee effect. The so-called Allee threshold separates two regimes from each…

Many empirical studies have shown that government quality is a key determinant of vulnerability to natural disasters. Protection against natural disasters can be a public good -- flood protection, for example -- or a natural monopoly --…

How does one allocate a collection of resources to a set of strategic agents in a fair and efficient manner without using money? For in many scenarios it is not feasible to use money to compensate agents for otherwise unsatisfactory…

A framework is developed using techniques from rate distortion theory in statistical testing. The idea is first to do optimal compression according to a certain distortion function and then use information divergence from the compressed…

In business, politics and life, folk wisdom encourages people to aim for above-average results, but to not let the perfect be the enemy of the good. Here, we mathematically formalize and extend this folk wisdom. We model a time-limited…

A well-intentioned principal provides information to a rationally inattentive agent without internalizing the agent's cost of processing information. Whatever information the principal makes available, the agent may choose to ignore some.…

We present a statistical testing framework to detect if a given machine learning classifier fails to satisfy a wide range of group fairness notions. The proposed test is a flexible, interpretable, and statistically rigorous tool for…

The ``impossibility theorem'' -- which is considered foundational in algorithmic fairness literature -- asserts that there must be trade-offs between common notions of fairness and performance when fitting statistical models, except in two…

We study a budget-aggregation setting in which a number of voters report their ideal distribution of a budget over a set of alternatives, and a mechanism aggregates these reports into an allocation. Ideally, such mechanisms are truthful,…

We introduce a general approach based on \emph{selective verification} and obtain approximate mechanisms without money for maximizing the social welfare in the general domain of utilitarian voting. Having a good allocation in mind, a…

Tax evasion, usually the largest component of an informal economy, is a persistent challenge over history with significant socio-economic implications. Many socio-economic studies investigate its dynamics, including influencing factors, the…

In the so-called ``fair'' models of peer-to-peer wealth exchanges, economic inequality tends to reach its maximum value asymptotically. This global trend is evident as the richest continuously accumulate a larger share of wealth at the…

This study develops a framework for testing hypotheses on structural parameters in incomplete models. Such models make set-valued predictions and hence do not generally yield a unique likelihood function. The model structure, however,…

Most work in mechanism design assumes that buyers are risk neutral; some considers risk aversion arising due to a non-linear utility for money. Yet behavioral studies have established that real agents exhibit risk attitudes which cannot be…

We introduce a new general framework for constructing the best trading strategy for a given historical indicator. We construct the unique trading strategy with the highest expected return. This optimal strategy may be implemented directly,…

We consider the problem of optimal consumption from labor income and investment in a general incomplete semimartingale market. The economic agent cannot borrow against future income, so the total wealth is required to be positive at (all or…

This paper demonstrates the usefulness and importance of the concept of honest times to financial modeling. It studies a financial market with asset prices that follow jump-diffusions with negative jumps. The central building block of the…

In this article, we study the fundamental limits in the design of fair and/or private representations achieving perfect demographic parity and/or perfect privacy through the lens of information theory. More precisely, given some useful data…

In contemporary society, the effective utilization of public resources remains a subject of significant concern. A common issue arises from defectors seeking to obtain an excessive share of these resources for personal gain, potentially…