"Search,
Moral Hazard, and Price Dispersion" (with Brennan C. Platt)
We study the effects of insurance coverage on consumer search behavior and the
pricing of services covered by insurance, constructing a general equilibrium model of
moral hazard in search with an endogenous price distribution. When an insured event
occurs, households request quotes from firms, who offer a homogenous service at various
prices. We show that lower coinsurance rates reduce the amount of search by
households, allowing firms to increase their prices. Hence, moral hazard in search is far
more costly than shown in previous models, which ignored equilibrium firm response
to changes in consumer search behavior.
"Immigration, Fiscal Policy, and Welfare: Evidence from Germany" (Previously distributed under the title "Population aging, social security, and immigration policy in
Germany") (Under review)
I evaluate the effects of exogenous changes in immigration policy on individual welfare by constructing a heterogeneous agent overlapping generations model with agents differing in age, origin, and skills. Calibrating the model to Germany, I match the main features of the social security and tax systems, and account for differences in inter-generational transmission of skills and fertility between immigrants and natives. I find that a prohibition on immigration reduces welfare for the natives, whereas a policy that allows an annual inflow equal to 0.4 percent of the population increases welfare for all agents on the new balanced growth path (by 0.1 to 2.8 percent depending on the type of the agent). The key is the interaction between the social security system, taxes, and equilibrium prices: immigration reduces wages, but generates a rise in the rental rate of capital and in the number of workers per retiree, which allows for higher pension benefits and a lower consumption tax rate.
"The n-person Kalai-Smorodinsky bargaining solution manipulated via
predonations is Concessionary" (with Murat R. Sertel) (Under review)
This study examines the manipulability of simple n-person bargaining
problems by pre-donations where the Kalai-Smorodinsky solution is
operant. We extend previous results on the manipulation of two-person
bargaining problems to the n-person case and show that in a world where
a pre-bargaining stage is instituted in which the bargainers may
unilaterally alter the bargaining problem, bargainers with greater
ideal payoffs transform the bargaining set into one on which the
Kalai-Smorodinsky solution distributes payoffs in accordance with the
Concessionary division rule of disputed property.