Thesis (Ph. D.)--Massachusetts Institute of Technology, Dept. of Economics, 2006. / Includes bibliographical references. / This thesis consists of three separate papers. In the first paper, using the Panel Study of Income Dynamics (PSID), which has measures of both risk preferences and religiosity along with measures of many risky behaviors, I investigate the implications of the correlations among risk preferences, religiosity and gender for the observed relationship of each of these variables with risky behaviors. I conclude that the correlations of risk preferences, religiosity, and gender with behaviors are all strongly robust to including the others in the regression; although they are correlated, they have independent relationships with risky behaviors. The second paper reports the results of a randomized field experiment to study the impact of choice in charitable giving; in this experiment half of the recipients of a newsletter from a Dutch NGO were able to choose what program area their donation would be spent on. There is no difference in either mean response rates or mean donation amounts between the treatment and control groups; I thus conclude that while most of the treatment group in this experiment did not value the choice that they were given, the choice also did not make them any less likely to donate. / (cont.) In the third paper, a coauthor and I develop a computer model in which individual agents choose a neighborhood based on preferences over the area's racial composition; this model of residential segregation is loosely based on the 1971 Schelling model. We find that both the strength of preferences for diversity, and historical segregation, have strong effects on equilibrium levels of integration. When we include contemporary discrimination in our model, however, we find that it increases segregation in an initially unsegregated model, but has no additional effect on segregation in an initially segregated model. Finally, we examine a simple social policy that encourages integration, and find that it is successful in creating diversity, making diversity-seeking agents better off. / by Sarah Y. Siegel. / Ph.D.

Thesis (Ph. D.)--Massachusetts Institute of Technology, Dept. of Economics, 2008. / Includes bibliographical references. / This dissertation consists of three chapters on international capital flows. Chapter 1 emphasizes the importance of innovations in the investment opportunity set, captured by changes in expected asset returns, as an important mechanism to explain international capital flows. More specifically, it analyzes the implications of time-varying portfolio shares on the dynamics of the current account. The predictions of a partial-equilibrium model of the current account, with dynamic portfolio choices, are evaluated using data for the U.S. and Japan. We show that variations in investment opportunities change agents' optimal portfolios in a direction consistent with the actual bilateral current account movements. Chapter 2 focuses on two questions related to international investment and access to international capital markets. First, does the structural change in the U.S. mutual fund industry toward more "aggregation" (favoring funds that invest globally over funds that invest in specific countries or regions) affect firms in other countries? And second, are investors forgoing gains from international diversification by shifting toward more global funds? The empirical evidence presented suggests that the answer is yes to both questions. Chapter 3 investigates the relation between information asymmetries and institutional investor mandate. The results suggest that information asymmetries vary across institutional investor mandates, being significantly more pronounced for funds with broader mandates. / by Tatiana Glindmeier Didier Brandão. / Ph.D.

Thesis (Ph. D.)--Massachusetts Institute of Technology, Dept. of Economics, 2003. / Includes bibliographical references. / This thesis is a collection of three essays on development economics and finance. The first chapter studies the 1992 presidential impeachment in Brazil to evaluate the impact of an anti-corruption drive on politically connected companies. I identify two types of firms: companies owned by friends and relatives of the impeached president ('family-connected') and firms proven to be connected to him in a parliamentary investigation ('other-connected'). Using an event study procedure, I establish that family-connected firms have on average negative daily abnormal returns of 2 to 9 percentage points when damaging information about the president is released. However, the 'other-connected' companies do not experience a decline in their stock market valuation during the impeachment. Furthermore, the stock market decline experienced by 'family connected' companies was reversed entirely within a year. The impeachment had limited success in reducing corruption. The second chapter evaluates the effects on multinational firms of the OECD "Convention on Combating Bribery of Foreign Public Officials in International Business Transactions". I compare the balance sheet performance of foreign companies in 24 developing host countries whose source countries have implemented the convention with the performance of firms whose source countries have not yet implemented it. I find that the OECD convention had a negative impact on profit and sales growth of multinational companies. This effect is amplified in countries with less efficient bureaucracies. In economies where bribery is more valuable to firms, the OECD convention has a larger negative impact on multinational firms. The third chapter studies in detail the distribution of one type of financial market participant: mutual funds. The essay documents that their size follows a regularity observed in several other area of economics, Zipf's law: the number of funds with size greater than x is proportional to 1/x. This chapter extends previous theories of random growth to explain why this is the case: Zipf's law arises when mutual funds grow at the highest speed allowed by constraints in the system, something we call a "maximum growth principle." We investigate empirically the key features of the theory, and show that they are validated by the data. / by Rita Maria Ramalho. / Ph.D.

Thesis (Ph. D.)--Massachusetts Institute of Technology, Dept. of Economics, 2001. / Includes bibliographical references (p. 167-178). / In the first chapter, I demonstrate that banks play a special role in the transmission mechanism of monetary policy, and that this role potentialy explains the excessive sensitivity and asymmetric response of the real economy to small and temporary changes in interest rates. While banks exploit imperfectly-priced deposit insurance in order to ameliorate the underinvestment problem created by financial constraints, open-market operations by the central bank control the aggregate supply of insured deposits, and thus the severity of these constraints. I demonstrate in the second chapter that tougher bank capital requirements did not affect on the banking industry in the 1980s. Banks with relatively low capital raised their capital ratios relative to better capitalized banks well before any tightening of standards, and did not change their behavior following the change in policy. This implies that banks have market-based incentives to hold capital, an important consideration in designing bank regulation. In the third chapter I illustrate that there is very little correlation between how monetary policy affects state output and how the shocks which monetary policy is trying to smooth affect state output. This correlation is weak enough to imply that while monetary policy may have reduced the variance of aggregate output growth over the last 30 years, it has actually increased volatility for a majority of states. This result has important implications in choosing appropriate target variables for the central bank. / by Adam Blair Ashcraft. / Ph.D.

Thesis (Ph. D.)--Massachusetts Institute of Technology, Dept. of Economics, 2003. / Includes bibliographical references. / This dissertation brings together three essays on the relationship between education, health, and family structure in developing countries. The first essay studies the impact of the AIDS epidemic on children's schooling in Kenya. I draw on the relationship, established in previous literature, between the lack of male circumcision and HIV prevalence. The Luo ethnic group, who does not generally practice male circumcision, had a much larger increase in the HIV prevalence rate between 1993 and 1998. I show that there was a corresponding increase in orphan rates and a decrease in educational achievement among the children in this group. This does not seem to be accounted for by alternative explanations, such as changes in the political clout of the Luo or mean reversion. The second essay examines the impact of sibling sex composition on educational outcomes of children in Tanzania. The estimates suggest that 14-year-old children with three sisters are 24 percentage points less likely to complete primary school (7th grade) after completing 6th grade than children with no sisters, and 8.4 to 9 percentage points less likely to complete primary school overall. Having two or more older sisters, however, can benefit children in completing 4th, 5th, or 6th grade of primary school. These results are robust to the inclusion of parental background characteristics and an index measuring household assets. The third essay, co-authored with Professor Esther Duflo, takes advantage of a school construction program that took place in Indonesia between 1973 and 1978 to estimate the effect of education on fertility and child mortality. Time and region varying exposure to the school construction program generates instrumental variables for the average education in the household, and the difference in education between husband and wife. / (cont.) We show that female education is a stronger determinant of age at marriage and early fertility than male education. However, female and male education seem equally important factors in reducing child mortality. We suggest that the OLS estimate of the differential effect of women' s and men's education may be biased by failure to take into account assortative matching. / by Lucia Breierova. / Ph.D.

Thesis (Ph. D.)--Massachusetts Institute of Technology, Dept. of Economics, 1998. / Includes bibliographical references (p. 158-166). / by Andrea Repetto. / Ph.D.

Thesis: Ph. D., Massachusetts Institute of Technology, Department of Economics, 2017. / Cataloged from PDF version of thesis. / Includes bibliographical references (pages 109-115). / This dissertation is a collection of three empirical essays studying consumer behavior and firm strategy in the digital economy. The first chapter examines how consumers learn from their market experience in an online marketplace. Using consumers' six-month purchase history data in a unique empirical setting in one of China's largest e-commerce platforms, I find that consumers buy from cheaper sellers as they gain market experience. To investigate how market experience improves the outcomes of price search, I incorporate price learning into a flexible structural search model, in which consumers have Dirichlet priors and update their price beliefs based on their past purchase prices in a Bayesian fashion. The results suggest that consumers have an upward bias in their prior price beliefs and are increasingly more price sensitive as they gain market experience. Early in a consumer's purchase history, the memory of sellers and prices from previous purchases accounts for a large portion of the price improvements, whereas an increasing price sensitivity plays a larger role in explaining the price advantage later on. The second chapter investigates whether the new form of quality disclosure in the digital age - online reviews - incentives restaurants to improve quality. With little local information, tourists rely more on online reviews for restaurant recommendation than locals. Exploiting this source of variation in the impact of online reviews on restaurants, I study the trend of Yelp ratings for chain-affiliated restaurants in Las Vegas between 2005 and 2015. After controlling for common trends of restaurant chains and zip-code areas, I find that for chains with a moderate size, the customer reviews of their units closer to the Strip - the center of Las Vegas tourist activity - improve significantly more during the eleven-year data period when online reviews gain popularity, while the Strip units initially had worse ratings than the off-the-Strip units in the early days of online reviews. No such difference is found for very small, regional chains or large, multinational chains. While market transparency is expected to increase as a result of the digital economy, in the third chapter I document the obfuscation strategies that merchants implement on an e-commerce platform with a price-comparison feature. Furthermore, I present evidence that sellers intentionally engage in the price obfuscation strategy to be more profitable and find a systematic relation between seller experience and their choice of obfuscation strategies: experienced sellers are more likely to use the bait-pricing strategy by advertising a low price, while new sellers tend to combine similar products into one listing to appear more popular and also offer the lowest price. In addition, consistent with results found in the first chapter, consumers with less market experience are more prone to being exploited by price obfuscation. / by Mengxi Wu. / 1. The Mechanisms of Consumer Learning and Price Search in a Homogeneous Goods Market -- 2. Do Online Reviews Affect Quality? Evidence from Yelp.com -- 3. Obfuscation and Experience: Empirical Evidence from on Online Market. / Ph. D.

Massachusetts Institute of Technology. Dept. of Economics and Social Science. Thesis. 1965. Ph.D. / Ph.D.

Thesis: Ph. D., Massachusetts Institute of Technology, Department of Economics, 2018. / Cataloged from PDF version of thesis. / Includes bibliographical references (pages 213-221). / This thesis consists of three chapters on international economics. The first chapter explores the implications of the large increase in cross-border holdings of financial assets for monetary policy and capital controls. I study an open economy model with nominal rigidities, incomplete markets, and assets denominated in home and foreign currency. I develop an approximation method that allows me to characterize the optimal policy sharply. The planner trades-off stabilizing output gaps with creating insurance via cross-country balance-sheet effects. Perhaps surprisingly, as insurance considerations become more important, home-currency positions become larger, and the excess-return volatility of home-currency assets actually decreases, rather than increases as one would expect with fixed ad hoc portfolios. Capital controls are not called for by the approximate solution, i.e., private portfolio decisions are approximately efficient. In my baseline calibration, the welfare gains from the optimal policy are 1.5 times larger than those from inflation-targeting. The second chapter, joint with Ludwig Straub, develops a theory of foreign exchange interventions for small open economies. In the model, the central bank can implement nonzero spreads between home- and foreign-currency bonds by managing its portfolio due to financial frictions that limit arbitrage by the private sector. Nonzero spreads are costly as they allow foreign intermediaries to make carry-trade profits. Optimal interventions balance these costs with terms of trade benefits. The optimal policy gives rise to a smooth path for the spread, relying on credible promises of future interventions (forward guidance). By contrast, we find smoothing exchange rates aggressively is not optimal since it invites costly speculation. We conclude with a multi-country extension of our model. The third chapter, joint with Juan Carlos Hallak, studies the relevance of uncertainty and experimentation as a central feature of exporter dynamics. We show that a standard model without these features cannot explain two key facts of exporter dynamics: the strikingly low survival rates one year after entering a foreign market, and the novel fact that re-entrants in export markets are more likely to survive than first-time entrants. We develop a tractable model with experimentation that can explain these facts. We also provide support for the main mechanism of the model by exploiting variation in the degree of uncertainty across products and markets. / by Pablo Sebastiáin Fanelli. / Ph. D.

Thesis (Ph. D.)--Massachusetts Institute of Technology, Dept. of Economics, 1994. / Includes bibliographical references. / by David Isaac Laibson. / Ph.D.