We investigate the dynamic general equilibrium effects of introducing a social assistance program to elderly informal sector workers in developing countries. We find that the extension of such “retirement benefits” in environments with lacking private sector risksharing mechanisms results in welfare increases and relatively minor efficiency losses. Our results suggest that welfare gains attribu...

There is by now a large literature arguing that auctions with a variety of after-market interactions may not yield an efficient allocation of the objects for sale, especially when the bidders impose strong negative externalities upon each other. This paper argues that these inefficiencies can be avoided by asking bidders prior to the auction to submit any public payment they would like to make....

We consider partnerships among risk-averse professionals endowed with (i) a risky and personally-costly production technology and (ii) a personally-costly monitoring technology providing contractible noisy signals about partners’ productive efforts. Partners shirk both production and monitoring tasks because efforts are unobservable. We characterize optimal partnership size, profit shares and i...

This paper uses a mechanism design framework to characterize how an intermediary can design profit-maximizing matching markets when agents have private information about their quality. When match surpluses are supermodular, sufficient conditions are provided that ensure positive assortative matching is profit maximizing. Under these conditions, two-sided position auctions are characterized that...

Why Pay Taxes When No One Else Does? In this paper we try to understand the phenomena whereby a large proportion of the population evades tax payments. We present a model which incorporates elements from the theory of information cascades with the standard model of tax evasion and analyze the connection between the decision of a potential tax evader, the number of tax evaders and the number cau...

Income Inequality, Mobility, and the Welfare State: A Political Economy Model In this paper, we set up a three-period stochastic overlapping generations model to analyze the implications of income inequality and mobility for demand for redistribution and social insurance. We model the size of two different public programs under the welfare state. We investigate bidimensional voting on the tax r...