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The Complexity of Economic Policy: I. Restricted Local Optima in Tax Policy Design

Saint-Paul, Gilles - Institute for the Study of Labor (IZA) - 2002

Economists traditionally tackle normative problems by computing optimal policy, i.e. the one that maximizes a social welfare function. In practice, however, a succession of marginal changes to a limited number of policy instruments are implemented, until no further improvement is feasible. I...

Persistent link: https://www.econbiz.de/10005822405

Do I Have What It Takes? Equilibrium Search with Type Uncertainty and Non-Participation

Falk, Armin; Huffman, David; Sunde, Uwe - Institute for the Study of Labor (IZA) - 2006

This paper presents a model of the labor market in which unemployed workers are uncertain about their relative ability to find a job. Unsuccessful search induces individuals to revise their beliefs downwards. Once self-confidence is sufficiently low, workers become discouraged and give up on...

Persistent link: https://www.econbiz.de/10005822513

Information and Beliefs in a Repeated Normal-Form Game

Fehr, Dietmar; Kübler, Dorothea; Danz, David N. - Institute for the Study of Labor (IZA) - 2008

feedback as the main driving force of learning to play strategically and to form beliefs that accurately predict the behavior …

Persistent link: https://www.econbiz.de/10005822932

Social Reciprocity

Carpenter, Jeffrey; Matthews, Peter Hans - Institute for the Study of Labor (IZA) - 2004

We define social reciprocity as the act of demonstrating one's disapproval, at some personal cost, for the violation of widely-held norms (e.g., don't free ride). Social reciprocity differs from standard notions of reciprocity because social reciprocators intervene whenever a norm is violated...

Persistent link: https://www.econbiz.de/10005823004

Learning about Education

Emerson, Patrick M.; McGough, Bruce - Institute for the Study of Labor (IZA) - 2011

levels. This paper builds a model of human capital and growth that incorporates an adaptive learning mechanism to capture the …, the learning mechanism, influenced by the agents' priors and cultural bias, may impart low human capital investment for … extended periods. Policies that can speed up the learning process are examined and it is found that faster rates of growth can …

Persistent link: https://www.econbiz.de/10009149147

Dynamic Incentive Contracts under Parameter Uncertainty

Prat, Julien; Jovanovic, Boyan - Institute for the Study of Labor (IZA) - 2010

We analyze a long-term contracting problem involving common uncertainty about a parameter capturing the productivity of the relationship, and featuring a hidden action for the agent. We develop an approach that works for any utility function when the parameter and noise are normally distributed...

Persistent link: https://www.econbiz.de/10008727782

Effects of Stress on Economic Decision-Making: Evidence from Laboratory Experiments

Delaney, Liam; Fink, Günther; Harmon, Colm P. - Institute for the Study of Labor (IZA) - 2014

The ways in which preferences respond to the varying stress of economic environments is a key question for behavioral economics and public policy. We conducted a laboratory experiment to investigate the effects of stress on financial decision making among individuals aged 50 and older. Using the...

Persistent link: https://www.econbiz.de/10011105080

The Empirics of Agglomeration Economies

Combes, Pierre-Philippe; Gobillon, Laurent - Institute for the Study of Labor (IZA) - 2014

We propose an integrated framework to discuss the empirical literature on the local determinants of agglomeration effects. We start by presenting the theoretical mechanisms that ground individual and aggregate empirical specifications. We gradually introduce static effects, dynamic effects, and...

Persistent link: https://www.econbiz.de/10010959614

Child Labor and Learning

Emerson, Patrick M.; Ponczek, Vladimir; Portela Souza, … - Institute for the Study of Labor (IZA) - 2013

This paper investigates the impact of working while in school on learning outcomes through the use of a unique micro … learning outcomes is addressed through the use of a difference-in-difference estimator and it is shown that the results are … robust. A negative and significant effect of working on learning outcomes in both math and Portuguese is found. The effects …

Persistent link: https://www.econbiz.de/10010884083

Cognitive Ability, Character Skills, and Learning to Play Equilibrium: A Level-k Analysis

Gill, David; Prowse, Victoria L. - Institute for the Study of Labor (IZA) - 2014

understand better how subjects with different cognitive abilities learn differently, we estimate a structural model of learning … ability to that of character skills, and find that both cognition and personality affect behavior and learning. More agreeable …

Persistent link: https://www.econbiz.de/10010886141