Monthly Archives: April 2011

It has been observed that high-income folks in the United States tend to live in the suburbs outside of the city and away from the CBD (e.g. Detroit, MI) with some rare exceptions like New York City. Contrast this to how Paris and other western European cities are structured, where the rich tend to be [...]

In this paper, Alesina and Spolaore propose a politico-economic model to address questions regarding the number and size of countries.  This is achieved by considering the trade-offs between having large and small countries. Click here to read more.

In this paper, Daniel Kahneman and Amos Tversky present a critique of expected utility theory as a descriptive model of decision making under risk and introduces prospect theory as an alternative model. Expected utility theory is widely accepted as a descriptive model of decision making under risk and has been generally accepted as a normative [...]

The aim of designing a hierarchical organization and a corresponding incentive system is to prevent corrupt behavior at the individual level without causing collusion between supervisors and subordinates.  Former models that add a supervisor to the principal-agent hierarchy ((Tirole (1986) and Laffont (1990) ) have studied the potential conflict between preventing corruption as well as [...]

In this paper, Holmstrom and Milgrom discuss a principal-agent model contextualized to the work environment. Unlike previous papers, which were limited to agents who only performed a single job task, Holmstrom and Milgrom introduce agents whom are responsible for a variety of tasks. Keeping in line with previous models, Holmstrom and Milgrom also assume a [...]