We investigate conditions sufficient for identification of average treatment effects using instrumental variables. First we show that the existence of valid instruments is not sufficient to identify any meaningful average treatment effect. We then establish that the combination of an instrument and a condition on the relation between the instrument and the participation status is sufficient for identification of a local average treatment effect for those who can be induced to change their participation status by changing the value of the instrument. Finally we derive the probability limit of the standard IV estimator under these conditions. It is seen to be a weighted average of local average treatment effects.

Evolution and Rationality Some Recent Game-Theoretic Results. Identification and Estimation of Local Average Treatment Effects

The past twenty years have seen great theoretical and empirical advances in the field of corporate finance Whereas once the subject addressed mainly the financing of corporations--equity, debt, and valuation--today it also embraces crucial issues of governance, liquidity, risk management, relationships between banks and corporations, and the macroeconomic impact of corporations However, this progress has left in its wake a jumbled array of concepts and models that students are often hard put to make sense of Here, one of the world's leading economists offers a lucid, unified, and comprehensive introduction to modern corporate finance theory Jean Tirole builds his landmark book around a single model, using an incentive or contract theory approach Filling a major gap in the field, The Theory of Corporate Finance is an indispensable resource for graduate and advanced undergraduate students as well as researchers of corporate finance, industrial organization, political economy, development, and macroeconomics Tirole conveys the organizing principles that structure the analysis of today's key management and public policy issues, such as the reform of corporate governance and auditing; the role of private equity, financial markets, and takeovers; the efficient determination of leverage, dividends, liquidity, and risk management; and the design of managerial incentive packages He weaves empirical studies into the book's theoretical analysis And he places the corporation in its broader environment, both microeconomic and macroeconomic, and examines the two-way interaction between the corporate environment and institutions Setting a new milestone in the field, The Theory of Corporate Finance will be the authoritative text for years to come

The Theory of Corporate Finance

A central issue in school choice is the design of a student assignment mechanism. Education literature provides guidance for the design of such mechanisms but does not offer specific mechanisms. The flaws in the existing school choice plans result in appeals by unsatisfied parents. We formulate the school choice problem as a mechanism design problem and analyze some of the existing school choice plans including those in Boston, Columbus, Minneapolis, and Seattle. We show that these existing plans have serious shortcomings, and offer two alternative mechanisms each of which may provide a practical solution to some critical school choice issues.

/pdf/school-choice-a-mechanism-design-approach-11t5vq18ed.pdf

School Choice: A Mechanism Design Approach

The emergence of software-based platforms is shifting competition toward platform-centric ecosystems, although this phenomenon has not received much attention in information systems research. Our premise is that the coevolution of the design, governance, and environmental dynamics of such ecosystems influences how they evolve. We present a framework for understanding platform-based ecosystems and discuss five broad research questions that present significant research opportunities for contributing homegrown theory about their evolutionary dynamics to the information systems discipline and distinctive information technology-artifact-centric contributions to the strategy, economics, and software engineering reference disciplines.

Research Commentary---Platform Evolution: Coevolution of Platform Architecture, Governance, and Environmental Dynamics

I survey the literature post Ledyard (Handbook of Experimental Economics, ed. by J. Kagel, A. Roth, Chap. 2, Princeton, Princeton University Press, 1995) on three related issues in linear public goods experiments: (1) conditional cooperation; (2) the role of costly monetary punishments in sustaining cooperation and (3) the sustenance of cooperation via means other than such punishments. Many participants in laboratory public goods experiments are “conditional cooperators” whose contributions to the public good are positively correlated with their beliefs about the average group contribution. Conditional cooperators are often able to sustain high contributions to the public good through costly monetary punishment of free-riders but also by other mechanisms such as expressions of disapproval, advice giving and assortative matching.

https://www.cepr.org/sites/default/files/events/papers/796_CHAUDHURI.pdf

Sustaining cooperation in laboratory public goods experiments: a selective survey of the literature

Charter schools are publicly funded but operate outside the regulatory framework and collective bargaining agreements characteristic of traditional public schools. In return for this freedom, charter schools are subject to heightened accountability. This paper estimates the impact of charter school attendance on student achievement using data from Boston, where charter schools enroll a growing share of students. We also evaluate an alternative to the charter model, Boston's pilot schools. These schools have some of the independence of charter schools, but operate within the school district, face little risk of closure, and are covered by many of same collective bargaining provisions as traditional public schools. Estimates using student assignment lotteries show large and significant test score gains for charter lottery winners in middle and high school. In contrast, lottery-based estimates for pilot schools are small and mostly insignificant. The large positive lottery-based estimates for charter schools are similar to estimates constructed using statistical controls in the same sample, but larger than those using statistical controls in a wider sample of schools. The latter are still substantial, however. The estimates for pilot schools are smaller and more variable than those for charters, with some significant negative effects.

https://papers.ssrn.com/sol3/Delivery.cfm/nber_w15549.pdf?abstractid=1517008&mirid=1

Accountability and Flexibility in Public Schools: Evidence from Boston's Charters and Pilots

Measuring the ease of manipulation{deviating from reporting truthfully{ is a central issue in social choice, mechanism design and game theory. This paper introduces a new measure of the ease of manipulation for direct mechanisms based on the following idea:

/pdf/comparing-mechanisms-by-their-vulernability-to-manipulation-434aeke29o.pdf

Comparing Mechanisms by their Vulernability to Manipulation

This paper studies the consequences of xed commissions and low entry barriers in Greater Boston’s real estate brokerage industry from 1998-2007, a period with substantial agent turnover. We nd that entry is not associated with increased sales probabilities or reduced sales time. Instead, it decreases the market share of experienced agents and reduces average service quality. We develop a dynamic empirical model motivated by these patterns to study the extent of ineciency in the current system compared to alternatives. To accommodate a large state space, we approximate the value function using sieves and impose the Bellman equation as an equilibrium constraint. If commissions are cut in half, there would be 40% fewer agents implying social savings of 23% of industry revenue, and the average agent would facilitate 73% more transactions. House price appreciation of 50% during our sample period accounts for a 24% increase in the number of agents and a 31% decline in average agent productivity. Finally, improving information about past agent performance can increase productivity and generate signicant social savings.

/pdf/the-costs-of-free-entry-an-empirical-study-of-real-estate-2aqu1z3kp5.pdf

The Costs of Free Entry: An Empirical Study of Real Estate Agents in Greater Boston

Top trading cycles (TTC) is Pareto efficient and strategy-proof in priority-based matching, but so are other mechanisms including serial dictatorship. We show that TTC minimizes justified envy among all Pareto efficient and strategy-proof mechanisms in one-to-one matching. In many-to-one matching, TTC admits less justified envy than serial dictatorship in an average sense. Empirical evidence from New Orleans OneApp and Boston Public Schools shows that TTC has significantly less justified envy than serial dictatorship.

Parag A. Pathak

Papers

Accountability and Flexibility in Public Schools: Evidence from Boston's Charters and Pilots

Comparing Mechanisms by their Vulernability to Manipulation

The Costs of Free Entry: An Empirical Study of Real Estate Agents in Greater Boston

Efficiency, Justified Envy, and Incentives in Priority-Based Matching

Lotteries in student assignment: An equivalence result: Lotteries in student assignment