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29 août 2012
Emmanuel Thibault
28 août 2012
Xue-Zhong He et Nicolas Treich
n° 13-394, 20 août 2012
We consider a prediction market in which traders have heterogeneous prior beliefs in probabilities. In the two-state case, we derive necessary and sufficient conditions so that the prediction market is accurate in the sense that the equilibrium state price equals the mean probabilities of traders'...
n° 775, 20 août 2012
9 août 2012
Christian Gollier
juillet 2012, révision octobre 2012
There is still much confusion about which discount rates should be used to evaluate actions having long-lasting impacts, as in the contexts of climate change, social security reforms or large public infrastructures for example. Contrary to the existing literature that focuses on the discount rate...
Hippolyte D'Albis et Emmanuel Thibault
n° 12-323, juillet 2012
In this paper, ambiguity aversion to uncertain survival probabilities is introduced in a life-cycle model with a bequest motive to study the optimal demand for annuities. Provided that annuities return is sufficiently large, and notably when it is fair, positive annuitization is known to be the...
Emmanuel Farhi et Jean Tirole
n° 12-328, juillet 2012, révision octobre 2013
The paper revisits and qualifies existing insights on security design. A rich literature argues that tranching creates debt-like instruments that are robust to adverse selection or discourage wasteful information acquisition. Yet, for a given information structure, while tranching confines and...
Thomas Chaney et Ralph Ossa
juillet 2012
We generalize Krugman's (1979) "new trade"model by allowing for an explicit production chain in which a range of tasks is performed sequentially by a number of specialized teams. We demonstrate that an increase in market size induces a deeper division of labor among these teams which leads to an...
