Workshop Schedule for Spring 2014:

The workshop organizers for the Spring 2014 quarter are John Birge and Zhiguo He.

The Workshop on Applied Theory meets on Mondays, 1:30-3:00 PM, in Harper Center, Room 3B.

March 31

Matthieu Kenji Bouvard, McGill

Paper Title: "Transparency in the Financial System: Rollover Risk and Crises"


Abstract: We present a theory of optimal transparency when banks are exposed to rollover risk. Disclosing bank-specifc information enhances the stability of the financial system during crises, but has a destabilizing effect in normal economic times. Thus, the regulator optimally increases transparency during crises. Under this policy, however, information disclosure signals a deterioration of economic fundamentals, which gives
the regulator ex-post incentives to withhold information. This commitment problem precludes implementing a disclosure policy that provides insurance against aggregate shocks in a way that is ex-ante optimal, and can increase the likelihood of a systemic crisis.



Giovanni Maggi, Yale Econ

Paper Title: "Trade Disputes and Settlement"


Abstract: We develop a model of trade agreements with renegotiation and imperfectly verifiable information. In equilibrium, trade disputes can occur and can be resolved in a variety of ways: governments may settle "early" or trigger a court ruling, and in the latter case, they may implement the ruling or reach a post-ruling settlement. The model yields predictions on how the dispute outcome depends on the contracting environment and how it correlates with the optimal contract form. We find initial support for our model's predictions in light of data on the outcomes of actual trade disputes in the GATT/WTO.

April 14

Juuso Toikka, MIT Econ

Paper Title: "Mechanisms for Repeated Bargaining"


Abstract: How does the feasibility of efficient dynamic contracting in repeated trade depend on the features of the bargaining environment such as persistence of values, the agent's private information about the evolution of uncertainty, or trading frequency? To answer this question, we derive a necessary and sufficient condition for efficient, unsubsidized, and individually rational trade in environments satisfying a payoff-equivalence property. The characterization takes the form of a joint restriction on the sensitivity of the expected gains from trade to the agents' initial private information, implying that efficient contracting requires sufficient congruence of the agents' private expectations. This restriction translates to bounds on the persistence of values, or on the amount of asymmetric information about their evolution. It also allows us to distinguish between the effects of increasing patience and of more frequent interaction; if values are autocorrelated, the latter need not facilitate efficiency even when the former does. Finally, we discuss second-best mechanisms, and explain how our results extend to general dynamic Bayesian collective choice problems.

April 21

Bilge Yilmaz, Upenn Wharton

Paper Title: "Precision of Ratings"


Abstract: We analyze the equilibrium precision of ratings. Our results suggest that ratings become less precise as the share of uninformed investors and the gains from trade increase. The results provide an explanation for low accuracy of ABS ratings before the financial crisis. We apply the model to evaluate the effectiveness of the recent reform proposals, including Dodd-Frank Act. We show that some policies,
in particular, rating standardization and expert liability, reduce market efficiency.

April 28

Nicolas Lambert, Stanford GSB

Paper Title: "Dynamically Eliciting Unobservable Information"


Abstract: We answer the following question: At t = 1, an expert has (probabilistic) information about
a random outcome X. In addition, the expert will obtain further information about X as time passes, up to some time t = T + 1 at which X will be publicly revealed. (How) Can a protocol be devised that induces the expert, as a strict best response, to reveal at the outset his prior assessment of both X and the information flows he anticipates and, subsequently, what information he privately receives? (The protocol can provide the expert with payoffs that depend only on the realization of X, as well as any decisions he may take.) We show that this can be done with the following sort of protocol: At the penultimate time t = T, the expert chooses a payoff function from a menu of such functions, where the menu available to him was chosen by
him at time t = T - 1 from a menu of such menus, and so forth. We show that any protocol that affirmatively answers our question can be approximated by a protocol of the form described. We show how these results can be extended from discrete time to continuous time problems of this sort.

May 5

Adriano Rampini, Duke

Paper Title: "Household Risk Management"


Abstract: TBA

May 12

Rick Harbaugh, Indiana Kelley


Paper Title: TBA


Abstract: TBA

May 19

Willie Fuchs, Berkeley Haas

Paper Title: TBA


Abstract: TBA


June 2

Gabriel Weintraub, Columbia

Paper Title: TBA


Abstract: TBA




Archives of Past Workshops:

Looking for information about previous workshops? We maintain a partial archive of schedules and papers beginning in the fall of 2005. Please note that in most cases the archived papers have been significantly revised or published.
Go to archives.