When is utilitarian welfare higher under insurance risk pooling?

Risk, Inequality, Insurance, and Welfare

This paper weighs in on the ongoing debate over the appropriate balance between efficiency and equity. I explore the relationship between our attitudes about risk and our beliefs about distributive justice. The notion that there is a deep relationship between risk and inequality is not a new one; discussions of the topic date at least from Harsanyi’s work on the subject in the 1950s. Harsanyi a...

Majority Rule and Utilitarian Welfare∗

We study the welfare properties of majority and supermajority rules when voting is voluntary and costly. Voters in the model have private values with differing preference intensities and voting costs. Our model is non-parametric– with only weak assumptions on the distribution of the number of eligible voters, preferences and costs. We show that, in large elections, majority rule is utilitarian ...

Multiple-Period Market Risk Prediction under Long Memory: When VaR is Higher than Expected∗

Several authors, including Andersen and Bollerslev (1998), stress the importance of long-term volatility dependence for value-at-risk (VaR) prediction. The present paper addresses multiple-period market risk forecasts under long memory persistence in market volatility. To this aim, we propose volatility forecasts based on a combination of the GARCH(1,1)-model with potentially fat-tailed and ske...

Grouping, pooling, and when bigger is better in visual crowding.

In crowding, perception of a target is strongly deteriorated by nearby elements. Crowding is often explained by pooling models predicting that adding flankers increases crowding. In contrast, the centroid hypothesis proposes that adding flankers decreases crowding--"bigger is better." In foveal vision, we have recently shown that adding flankers can increase or decrease crowding depending on wh...

Insurance and Rural Welfare