The foster care system attempts to prepare children and youth who have suffered child maltreatment for successful adult lives. This study documents the economic advantages of a privately funded foster care program that provided longer term, more intensive, and more expensive services compared to public programs. The study found significant differences in major adult educational, health, and soc...

This paper proves that, in a general financial model with incomplete markets, the multiplicity of certainty equilibria is not necessary for the existence of sunspot effects. These effects are present, by definition, when real economic variables differ across realizations of extrinsic uncertainty. In a financial model of incomplete markets with identical payouts across realizations of extrinsic ...

This paper studies equilibria of first price auctions with participation costs in the independent private values environment. We focus on the cutoff strategies in which each bidder participates and submits a bid if his value is greater than or equal to a critical value, the cutoff point. It is shown that, when bidders are homogenous, there always exists a symmetric equilibrium, and further, tha...

Laboratory experiments employing an induced-values methodology report on allocative efficiencies observed. That methodology requires experimenters know subjects’ motivations, impossible in field experiments. Allocative efficiency implies a hypothetical costless aftermarket would be inactive. An allocation mechanism’s outcome is defined to be behaviorally efficient if an appropriate aftermarket ...

In Esteban and Ray (1999, Inequality public allocation and development, Mimeo.) we formalize a model in which individuals lobby before the government in order to bene"t from some productivity-enhancing government action (infrastructures, direct subsidies, permissions, in short). The government honestly tries to allocate these permissions to the agents that will make the best use of them, as rev...

This paper derives analytically the growth rate of the social cost of carbon (SSC) on an optimal balanced growth path. More specifically, the paper examines a deterministic Ramsey model of optimal economic growth with carbon emissions. In this model, restrictions on technology and preferences are imposed that guarantee optimal balanced growth, i.e., that guarantee an optimal path with constant ...

This paper considers a pure exchange stochastic overlapping generations model in which agents live for two periods. At each date, either a young or an old agent has larger endowments than the other, which is stochastically determined. In addition to the uncertainty, commitment cannot be externally enforced in this economy. In this environment, I suggest a transfer rule from a young agent to an ...

Many school districts in the US employ centralized clearing houses for the placement of students to public schools. A popular mechanism from two-sided matching theory, the Gale-Shapley studentoptimal stable mechanism, has recently replaced two de…cient mechanisms that were in use in NYC and Boston. An important potential threat against any school choice mechanism is the tendency of schools to c...

In this paper we investigate incentive aspects of a general price-setting equilibrium principle in production economies with increasing returns or more general types of non-convexities. We do so by introducing the notion of generalized mechanism. We allow preferences and individual endowments to be unknown to the planner. We present a simple generalized mechanism whose social equilibrium alloca...

We study the problem of allocating heterogeneous indivisible tasks in a multi-object-demand model (i.e., each agent can be assigned multiple objects) where monetary transfers are allowed. Agents’ costs for performing tasks are their private information and depend on what other tasks they are obtained with. First, we show that when costs are unrestricted or superadditive, then there is no envy-f...