We study random assignment of indivisible objects among a set of agents, when each agent is to receive one object and has strict preferences over the objects. Random Serial Dictatorship (RSD) satisfies equal treatment of equals, ex post efficiency, and strategy-proofness. Answering a longstanding open question, we show that RSD is not characterized by those properties—there are other mechanisms satisfying equal treatment of equals, ex post efficiency, and strategy-proofness which are not welfare-equivalent to RSD. On the other hand, we show that RSD is not Pareto dominated by any mechanism that is (i) strategy-proof and (ii) boundedly invariant. Moreover, the same holds for all mechanisms that are ex post efficient, strategy-proof, and boundedly invariant: no such mechanism is dominated by any other mechanism that is strategy-proof and boundedly invariant.
{"title":"On (Constrained) Efficiency of Strategy-Proof Random Assignment","authors":"Christian Basteck, Lars Ehlers","doi":"10.3982/ECTA22762","DOIUrl":"https://doi.org/10.3982/ECTA22762","url":null,"abstract":"<div>\u0000 \t\t\t<p>We study random assignment of indivisible objects among a set of agents, when each agent is to receive one object and has strict preferences over the objects. Random Serial Dictatorship (RSD) satisfies equal treatment of equals, ex post efficiency, and strategy-proofness. Answering a longstanding open question, we show that RSD is not characterized by those properties—there are other mechanisms satisfying equal treatment of equals, ex post efficiency, and strategy-proofness which are not welfare-equivalent to RSD. On the other hand, we show that RSD is not Pareto dominated by any mechanism that is (i) strategy-proof and (ii) boundedly invariant. Moreover, the same holds for all mechanisms that are ex post efficient, strategy-proof, and boundedly invariant: no such mechanism is dominated by any other mechanism that is strategy-proof and boundedly invariant.</p>\u0000 \t\t</div>","PeriodicalId":50556,"journal":{"name":"Econometrica","volume":"93 2","pages":"569-595"},"PeriodicalIF":6.6,"publicationDate":"2025-03-29","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://onlinelibrary.wiley.com/doi/epdf/10.3982/ECTA22762","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143726889","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Is more novel research always desirable? We develop a model in which knowledge shapes society's policies and guides the search for discoveries. Researchers select a question and how intensely to study it. The novelty of a question determines both the value and difficulty of discovering its answer. We show that the benefits of discoveries are nonmonotone in novelty. Knowledge expands endogenously step-by-step over time. Through a dynamic externality, moonshots—research on questions more novel than what is myopically optimal—can improve the evolution of knowledge. Moonshots induce research cycles in which subsequent researchers connect the moonshot to previous knowledge.
{"title":"A Quest for Knowledge","authors":"Christoph Carnehl, Johannes Schneider","doi":"10.3982/ECTA22144","DOIUrl":"https://doi.org/10.3982/ECTA22144","url":null,"abstract":"<div>\u0000 \t\t\t<p>Is more novel research always desirable? We develop a model in which knowledge shapes society's policies and guides the search for discoveries. Researchers select a question and how intensely to study it. The novelty of a question determines both the value and difficulty of discovering its answer. We show that the benefits of discoveries are nonmonotone in novelty. Knowledge expands endogenously step-by-step over time. Through a dynamic externality, moonshots—research on questions more novel than what is myopically optimal—can improve the evolution of knowledge. Moonshots induce research cycles in which subsequent researchers connect the moonshot to previous knowledge.</p>\u0000 \t\t</div>","PeriodicalId":50556,"journal":{"name":"Econometrica","volume":"93 2","pages":"623-659"},"PeriodicalIF":6.6,"publicationDate":"2025-03-29","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://onlinelibrary.wiley.com/doi/epdf/10.3982/ECTA22144","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143726891","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Andrew Garin, Dmitri Koustas, Carl McPherson, Samuel Norris, Matthew Pecenco, Evan K. Rose, Yotam Shem-Tov, Jeffrey Weaver
We study the effect of incarceration on wages, self-employment, and taxes and transfers in North Carolina and Ohio using two quasi-experimental research designs: discontinuities in sentencing guidelines and random assignment to judges. Across both states, incarceration generates short-term drops in economic activity while individuals remain in prison. As a result, a year-long sentence decreases cumulative earnings over five years by 13%. Beyond five years, however, there is no evidence of lower employment, wage earnings, or self-employment in either state, as well as among defendants with no prior incarceration history. These results suggest that upstream factors, such as other types of criminal justice interactions or pre-existing labor market detachment, are more likely to be the cause of low earnings among the previously incarcerated, who we estimate would earn just $5000 per year on average if spared a prison sentence.
{"title":"The Impact of Incarceration on Employment, Earnings, and Tax Filing","authors":"Andrew Garin, Dmitri Koustas, Carl McPherson, Samuel Norris, Matthew Pecenco, Evan K. Rose, Yotam Shem-Tov, Jeffrey Weaver","doi":"10.3982/ECTA22028","DOIUrl":"https://doi.org/10.3982/ECTA22028","url":null,"abstract":"<div>\u0000 \t\t\t<p>We study the effect of incarceration on wages, self-employment, and taxes and transfers in North Carolina and Ohio using two quasi-experimental research designs: discontinuities in sentencing guidelines and random assignment to judges. Across both states, incarceration generates short-term drops in economic activity while individuals remain in prison. As a result, a year-long sentence decreases cumulative earnings over five years by 13%. Beyond five years, however, there is no evidence of lower employment, wage earnings, or self-employment in either state, as well as among defendants with no prior incarceration history. These results suggest that upstream factors, such as other types of criminal justice interactions or pre-existing labor market detachment, are more likely to be the cause of low earnings among the previously incarcerated, who we estimate would earn just $5000 per year on average if spared a prison sentence.</p>\u0000 \t\t</div>","PeriodicalId":50556,"journal":{"name":"Econometrica","volume":"93 2","pages":"503-538"},"PeriodicalIF":6.6,"publicationDate":"2025-03-29","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://onlinelibrary.wiley.com/doi/epdf/10.3982/ECTA22028","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143726767","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We estimate valence measures of candidates running in U.S. House elections from data on vote shares. Our identification and estimation strategy builds on ideas developed for estimating production functions, allowing us to control for possible endogeneity of campaign spending and sample selection of candidates due to endogenous entry. We find that incumbents have substantially higher valence measures than challengers running against them, resulting in about 3.5 percentage-point differences in the vote share, on average. Eliminating differences in the valence of challengers and incumbents results in an increase in the winning probability of a challenger from 6.5% to 12.1%. Our measure of candidate valence can be used to study various substantive questions of political economy. We illustrate its usefulness by studying the source of incumbency advantage in U.S. House elections.
{"title":"Estimating Candidate Valence","authors":"Kei Kawai, Takeaki Sunada","doi":"10.3982/ECTA20496","DOIUrl":"https://doi.org/10.3982/ECTA20496","url":null,"abstract":"<p>We estimate valence measures of candidates running in U.S. House elections from data on vote shares. Our identification and estimation strategy builds on ideas developed for estimating production functions, allowing us to control for possible endogeneity of campaign spending and sample selection of candidates due to endogenous entry. We find that incumbents have substantially higher valence measures than challengers running against them, resulting in about 3.5 percentage-point differences in the vote share, on average. Eliminating differences in the valence of challengers and incumbents results in an increase in the winning probability of a challenger from 6.5% to 12.1%. Our measure of candidate valence can be used to study various substantive questions of political economy. We illustrate its usefulness by studying the source of incumbency advantage in U.S. House elections.</p>","PeriodicalId":50556,"journal":{"name":"Econometrica","volume":"93 2","pages":"463-501"},"PeriodicalIF":6.6,"publicationDate":"2025-03-29","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143726766","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We propose two general equilibrium models, quota equilibrium, and emission tax equilibrium. Government specifies quotas or taxes on emissions, and then refrains from further action. All results remain valid regardless of how government chooses its emissions target. Quota equilibrium exists; the allocation of emission property rights impacts the distribution of welfare. If the only externality arises from total net emissions, quota equilibrium is Pareto optimal among all feasible outcomes with the same total net emissions. For certain tax rates, emission tax equilibrium may not exist. Every quota equilibrium can be realized as an emission tax equilibrium and vice versa. However, different quota prices may arise in equilibrium from a single quota, and different emission levels may arise in equilibrium from a single tax rate. This leads to inequivalence between quota and emission tax equilibria.
{"title":"Cap-and-Trade and Carbon Tax Meet Arrow–Debreu","authors":"Robert M. Anderson, Haosui Duanmu","doi":"10.3982/ECTA22923","DOIUrl":"https://doi.org/10.3982/ECTA22923","url":null,"abstract":"<div>\u0000 \t\t\t<p>We propose two general equilibrium models, quota equilibrium, and emission tax equilibrium. Government specifies quotas or taxes on emissions, and then refrains from further action. All results remain valid regardless of how government chooses its emissions target. Quota equilibrium exists; the allocation of emission property rights impacts the distribution of welfare. If the only externality arises from total net emissions, quota equilibrium is Pareto optimal among all feasible outcomes with the same total net emissions. For certain tax rates, emission tax equilibrium may not exist. Every quota equilibrium can be realized as an emission tax equilibrium and vice versa. However, different quota prices may arise in equilibrium from a single quota, and different emission levels may arise in equilibrium from a single tax rate. This leads to inequivalence between quota and emission tax equilibria.</p>\u0000 \t\t</div>","PeriodicalId":50556,"journal":{"name":"Econometrica","volume":"93 2","pages":"357-393"},"PeriodicalIF":6.6,"publicationDate":"2025-03-29","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://onlinelibrary.wiley.com/doi/epdf/10.3982/ECTA22923","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143726950","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We develop a theory of monotone comparative statics for models with adjustment costs. We show that comparative-statics conclusions may be drawn under the usual ordinal complementarity assumptions on the objective function, assuming very little about costs: only a mild monotonicity condition is required. We use this insight to prove a general Le Chatelier principle: under the ordinal complementarity assumptions, if short-run adjustment is subject to a monotone cost, then the long-run response to a shock is greater than the short-run response. We extend these results to a fully dynamic model of adjustment over time: the Le Chatelier principle remains valid, and under slightly stronger assumptions, optimal adjustment follows a monotone path. We apply our results to models of saving, production, pricing, labor supply, and investment.
{"title":"Comparative Statics With Adjustment Costs and the Le Chatelier Principle","authors":"Eddie Dekel, John K.-H. Quah, Ludvig Sinander","doi":"10.3982/ECTA22841","DOIUrl":"https://doi.org/10.3982/ECTA22841","url":null,"abstract":"<div>\u0000 <p>We develop a theory of monotone comparative statics for models with adjustment costs. We show that comparative-statics conclusions may be drawn under the usual ordinal complementarity assumptions on the objective function, assuming very little about costs: only a mild monotonicity condition is required. We use this insight to prove a general Le Chatelier principle: under the ordinal complementarity assumptions, if short-run adjustment is subject to a monotone cost, then the long-run response to a shock is greater than the short-run response. We extend these results to a fully dynamic model of adjustment over time: the Le Chatelier principle remains valid, and under slightly stronger assumptions, optimal adjustment follows a monotone path. We apply our results to models of saving, production, pricing, labor supply, and investment.</p>\u0000 </div>","PeriodicalId":50556,"journal":{"name":"Econometrica","volume":"93 2","pages":"661-694"},"PeriodicalIF":6.6,"publicationDate":"2025-03-29","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://onlinelibrary.wiley.com/doi/epdf/10.3982/ECTA22841","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143726893","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"2024 Election of Fellows to the Econometric Society","authors":"","doi":"10.3982/ECTA932EF","DOIUrl":"https://doi.org/10.3982/ECTA932EF","url":null,"abstract":"","PeriodicalId":50556,"journal":{"name":"Econometrica","volume":"93 2","pages":"731-745"},"PeriodicalIF":6.6,"publicationDate":"2025-03-29","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143726892","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Giuseppe Cavaliere, Thomas Mikosch, Anders Rahbek, Frederik Vilandt
Based on the GARCH literature, Engle and Russell (1998) established consistency and asymptotic normality of the QMLE for the autoregressive conditional duration (ACD) model, assuming strict stationarity and ergodicity of the durations. Using novel arguments based on renewal process theory, we show that their results hold under the stronger requirement that durations have finite expectation. However, we demonstrate that this is not always the case under the assumption of stationary and ergodic durations. Specifically, we provide a counterexample where the MLE is asymptotically mixed normal and converges at a rate significantly slower than usual. The main difference between ACD and GARCH asymptotics is that the former must account for the number of durations in a given time span being random. As a by-product, we present a new lemma which can be applied to analyze asymptotic properties of extremum estimators when the number of observations is random.
{"title":"A Comment on: “Autoregressive Conditional Duration: A New Model for Irregularly Spaced Transaction Data”","authors":"Giuseppe Cavaliere, Thomas Mikosch, Anders Rahbek, Frederik Vilandt","doi":"10.3982/ECTA21896","DOIUrl":"https://doi.org/10.3982/ECTA21896","url":null,"abstract":"<div>\u0000 \t\t\t<p>Based on the GARCH literature, Engle and Russell (1998) established consistency and asymptotic normality of the QMLE for the autoregressive conditional duration (ACD) model, assuming strict stationarity and ergodicity of the durations. Using novel arguments based on renewal process theory, we show that their results hold under the stronger requirement that durations have finite expectation. However, we demonstrate that this is not always the case under the assumption of stationary and ergodic durations. Specifically, we provide a counterexample where the MLE is asymptotically mixed normal and converges at a rate significantly slower than usual. The main difference between ACD and GARCH asymptotics is that the former must account for the number of durations in a given time span being random. As a by-product, we present a new lemma which can be applied to analyze asymptotic properties of extremum estimators when the number of observations is random.</p>\u0000 \t\t</div>","PeriodicalId":50556,"journal":{"name":"Econometrica","volume":"93 2","pages":"719-729"},"PeriodicalIF":6.6,"publicationDate":"2025-03-29","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://onlinelibrary.wiley.com/doi/epdf/10.3982/ECTA21896","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143726894","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}