Standard economic models have long been applied to choices over private consumption goods, but have recently been extended to incorporate social situations as well. We challenge the applicability of standard decision theoretic models to social settings. We argue that, in economically relevant social settings, agents may choose to randomize over any of the deterministic outcomes in a way that clashes with standard decision theory axioms that require lotteries not to be valued strictly above the best deterministic outcome. Thus, mainstream economic analysis is unable to fully accommodate such choices. We find little evidence of such deviations in non-social settings.
On the Difference Between Social and Private Goods
B.E. Journals of Theoretical Economics, 2013, Vol 13 (1). With S. Ludwig and A. Sandroni.
We document a revealed preference for randomization for “social goods”, while such non-standard behavior is not present for private consumption goods.
Explore More
Publications
Econometrica, 2010, Vol. 78(2), 539–574. With Jan Eeckhout. In search models with price competition the sorting of heterogeneous buyers and sellers depends on complementarities both in output and in search. Go to paper
American Economic Review P&P, 2017, 107(5): 158–162 With J. Greenwood, C. Santos & M. Tertilt. In a quantitative equilibrium model of sexual behavior and HIV/AIDS transmission we study policies that encourage long-term partnerships. Go to paper
Journal of Political Economy, 2017, 124(1), 224-264. With G. Grossman & E. Helpman. (simulations, matlab). We introduce two-sided heterogeneity into a Hecksher-Ohlin-style trade model to study factor reallocation and wage inequality within and across sectors. Go to paper
Publications
Review of Economic Studies, 2011, Vol. 78 (3), 872-906. With Jan Eeckhout. Wage and employment data can identify the strength of sorting in search models, though two-sided fixed effects are always mis-specified. Go to paper
Review of Economic Studies, 2019 86(4): 1411-1447. With Michèle Belot and Paul Muller. We develop and evaluate experimentally a novel tool that redesigns the job search process by providing tailored online advice about related occupations. Go to paper
Publications
American Economic Review, 2015, Vol 105 (10), 3030-3060. With Leo Kaas. We propose a tractable competitive search model with heterogeneous multi-worker firms, and investigate firm growth and business cycles. Go to paper
Publications
Journal of Monetary Economics, 2008, Vol. 55, pp. 1054-1066. With M. Galenianos. We characterize price dispersion and welfare in a monetary model with private information: inflation is regressive even though the rich hold more money. Go to paper
Publications
Journal of the European Economic Association, 2022, 20(6), 2317–2352. This paper showcases studies that illustrate the potential of analyzing online job search data and of intervening in the online job search process, and highlights conditions under which some of the recent interventions are likely to improve market outcomes overall, rather than improving only the outcomes for the treated individuals. Go to paper