In this paper, it is demonstrated that coefficient of determination of an ANOVA linear model provides a measure of polarization. Taking as the starting point the link between polarization and dispersion, we reformulate the measure of polarization of Zhang and Kanbur using the decomposition of...

We study preferences over lotteries in which both the prize and the payment date are uncertain. In particular, atime lotteryis one in which the prize is fixed but the date is random. With Expected Discounted Utility, individuals must be riskseekingover time lotteries (RSTL). In an incentivized...

This paper shows that the informativeness principle, as originally formulated by Holmstrom (1979), does not hold if the first-order approach is invalid. We introduce a "generalized informativeness principle" that takes into account non-local incentive constraints and holds generically, even...

This paper shows that the informativeness principle, as originally formulated by Holmstrom (1979), does not hold if the first-order approach is invalid. We introduce a "generalized informativeness principle" that takes into account non-local incentive constraints and holds generically, even...

This paper shows that the informativeness principle does not automatically extend to settings with limited liability. Even if a signal is informative about effort, it may have no value for contracting. An agent with limited liability is paid zero for certain output realizations. Thus, even if...

The informativeness principle demonstrates qualitative benefits to increasing signal precision. However, it is difficult to quantify these benefits -- and compare them against the costs of precision -- since we typically cannot solve for the optimal contract and analyze how it changes with...

This paper presents a model of choice based on imperfect memory and self-deception. I assume that people have preferences over their own attributes (e.g., skill, knowledge, or competence) and can manipulate their memories. The model provides a prior-dependent theory of regret aversion and allows...

In this paper we study income polarization by first comparing the efficiency of two statistical models to identify the number of poles in the income distribution empirically. The statistical models used are a multi-resolution analysis (MRA) and a log-normal approach (LNA). We then apply the...