We develop a model of a prediction market with ambiguity and derive testable implications of the presence of Knightian uncertainty. Our model can explain two commonly observed empirical regularities in betting markets: the tendency for longshots to win less often than odds would indicate and the...

We develop a model of a prediction market with ambiguity and derive testable implications of the presence of Knightian uncertainty. Our model can explain two commonly observed empirical regularities in betting markets: the tendency for longshots to win less often than odds would indicate and the...

Using the texts of the People’s Daily, an official publication of the Communist Party of China, the author shows that the socialist alliance between China and North Korea has significantly weakened since the Korean War.

Although the U.S. has a more progressive tax system than many other high-income countries, its overall fiscal system does less to reduce inequality because its tax system is smaller (OECD 2008). What societal preferences can explain these cross-country differences? We address this question by...

The authors study how the difference between federal and unitary systems of government can contribute to variations in economic volatility across democracies.

Businesses are "burdened" by government through corporate taxes and bureaucratic procedures. We interpret these two channels as tools for raising revenue and study, theoretically and empirically, how different political institutions rely on these tools. We establish two stylized facts: the...

The authors develop a quantitative indicator of the Chinese government's policy priorities over a long period of time, which they call the Policy Change Index (PCI) of China.