Do mandatory spending programs such as Medicare improve efficiency? We analyze a model with two parties allocating a fixed budget to a public good and private transfers each period over an infinite horizon. We compare two institutions that differ in whether public good spending is discretionary or mandatory. We model mandatory spending as an endogenous status quo since it is enacted by law and ...

This paper studies equilibria of second price auctions when values and participation costs are both privation information and are drawn from general distribution functions. We consider the existence and uniqueness of equilibrium. It is shown that there always exists an equilibrium for this general economy, and further there exists a unique symmetric equilibrium when all bidders are ex ante homo...

Conventional analysis of public goods provision aggregates individual wiltitigne.ss to pay while treatitig income as exogenous, ignoring the fact that we generate income to allow us to purclia.se utility-generating goods. We explore the implicatiotis of endogenizing the lahorlleisure decision hy explicitly considering leisure detnami in a model of public goods provision. We consider benefit ana...

This paper has a twofold objective. First, we develop a new method to assess the monetary value for individuals of external effects. The method makes use of an ordinal index of life satisfaction as scored by individual respondents who are subjected in varying intensity to the external effect. Our second objective is to assess, with this method, to what extent noise nuisance effects around Amste...

This paper provides a price equilibrium existence theorem in economies where commodities may be indivisible and aggregate excess demand functions may be discontinuous. We introduce a very weak notion of continuity, called recursive transfer lower semi-continuity, which is weaker than transfer lower semi-continuity and in turn weaker than lower semicontinuity. It is shown that the condition, tog...

We consider economies with incomplete markets, one good per state, private ownership of initial endowments, a single firm, and no assets other than shares in this firm. In this simple framework, arbitrarily small income effects can render every market equilibrium resulting from some production decision constrained inefficient. Thus, even if all utility functions are approximately quasilinear, t...

This paper discusses a novel approach to elicit people’s preferences for public goods, namely the life satisfaction approach. Reported subjective well-being data are used to directly evaluate utility consequences of public goods. The strengths of this approach are compared to traditional approaches and identification issues are addressed. Moreover, it is applied to panel data to estimate utilit...

A univariate real-valued function is said to be completely monotone if it takes positive values and alternate the signs of its higher order derivatives, starting from everywhere negative first derivatives. We prove that the representative consumer’s discount factor of a continuous-time economy under uncertainty is a power function of some completely monotone function of time satisfying certain ...

We present a decomposition approach for integrated assessment modeling of climate policy based on a linear approximation of the climate system. Our objective is to demonstrate the usefulness of decomposition for integrated assessment models posed in a complementarity format. First, the complementarity formulation cum decomposition permits a precise representation of post-terminal damages thereb...

I identify assumptions under which policies that maximize expected surplus are Pareto Optimal–even when expected consumer surplus does not even locally represent preferences over price-income lotteries. Besides the oft-made partial equilibrium assumptions that only one price varies, and that income changes do not affect demand, the two other assumptions are that every consumer’s indirect utilit...