Tax Simplicity and Heterogeneous Learning

Simplicity in the tax system

Learning, Simplicity, Truth, and Misinformation

Both in learning and in natural science, one faces the problem of selecting among a range of theories, all of which are compatible with the available evidence. The traditional response to this problem has been to select the simplest such theory on the basis of “Ockham’s Razor”. But how can a fixed bias toward simplicity help us find possibly complex truths? I survey the current, textbook answer...

Heterogeneous traders and the Tobin tax

To study the effectiveness of the Tobin tax, we develop a model of heterogeneous interacting agents. Traders either speculate on the basis of technical or fundamental analysis, or abstain from the market, a decision which depends on profit considerations, as well as communication between agents. Simulations generate stylized facts such as unit roots in exchange rates, fat tails for returns, or ...

Simplicity and complexity in human concept learning

The topic I’d like to talk to you about today is, I think, one of the oldest and most basic in cognition: how we learn from examples. As most famously pointed out by Hume, when we make a finite number of observations of an enduring phenomenon, there is no strictly logical (i.e., deductive) basis for forming any firm generalizations about it. Instead we must “induce,” that is, make educated gues...

Poverty-Reducing Tax Reforms with Heterogeneous Agents

The poverty impact of indirect tax reforms is analyzed using sequential stochastic dominance methods. This allows agents to differ in dimensions that cannot always be precisely captured within the usual money-metric indicators of living standards. Examples of such dimensions include household size and composition, temporal or spatial variation in price indices, and individual needs and “merits”.