Thesis (Ph. D.)--Massachusetts Institute of Technology, Dept. of Economics, 1992. / Includes bibliographical references (leaves 91-97). / by Raúl Labán. / Ph.D.

Thesis (Ph. D.)--Massachusetts Institute of Technology, Dept. of Economics, 2009. / Cataloged from PDF version of thesis. / Includes bibliographical references (p. 155-168). / This thesis explores the impact of individual decision making on the functioning of firms and markets. The first chapter examines how deviations from strict rationality by individuals impact the market for consumer goods. A growing body of evidence documents individual behavior that is difficult to reconcile with standard models of rational choice, and firm behavior difficult to reconcile with rational markets. In this paper I present a boundedly rational model of choice that reconciles several behavioral anomalies, and provides micro-foundational support for some puzzling empirical regularities in firm behavior. If the evaluation of an alternative is costly, individuals may find it inefficient to compare all available alternatives. Instead, when faced with an unfeasibly large choice set, some individuals may compare groups of alternatives (i.e. categories) to reduce the choice set into a more manageable set of relevant alternatives. I call these individuals categorical considerers and develop a model in which these decision makers sequentially apply a single well-behaved preference relation at different levels of aggregation. I explore the implications of this model for both individual behavior and equilibrium firm behavior in market settings. Under certain conditions, the existence of categorical considerers in a market causes firms to utilize strategies different from what would be optimal in a market of fully rational consumers. This simple model generates predictions about behavior consistent with several new field experiments, and offers possible explanations for excess spatial product differentiation, brand name premiums, and product branding. / (cont.) The second chapter, written jointly with Mireille Jacobson, explores the question of what exactly not-for-profit hospitals maximize. While theories of not-for-profit hospital behavior abound, most are general statements of preferences and do not yield empirically testable (differentiable) predictions. To address this shortcoming we use a unified theoretical framework to model three popular theories of not-for profit hospital behavior: (1) "for-profits in disguise," (2) social welfare maximizers and (3) perquisite maximizers. We develop testable implications of a hospital's response to a fixed cost shock under each of these theories. We then examine the effect of a recent un-funded mandate in California that requires hospitals to retrofit or rebuild in order to comply with modern seismic safety standards. Since the majority of hospitals in the State were built between 1940 and 1970, well before a sophisticated understanding of seismic safety, a hospital's compliance cost is plausibly exogenously predetermined by its underlying geologic risk. We present evidence that within counties seismic risk is uncorrelated with a host of hospital characteristics, including ownership type. We show that hospitals with higher seismic risk experience larger increases in the category of spending that should be affected by retrofitting and that hospitals facing higher compliance costs are more likely to shut down, irrespective of ownership type. In contrast, private not-for-profits alone increase their mix of profitable services such as neonatal intensive care days and MRI minutes. / (cont.) Government hospitals respond by decreasing the provision of charity care. As expected, for-profit hospitals do not change their service mix in response to this shock. These results are most consistent with the theory of not-for-profit hospitals as perquisite maximizers and allow us to reject two of the leading theories of not-for-profit hospital behavior - "for-profits in disguise" and "pure altruism." These results also imply that government owned hospitals have welfare as their maximand. More work is needed to determine the overall welfare implications of these different ownership structures. The third chapter, written jointly with Antoinette Schoar, examines the impact of individual judges on the disposition and long run success of firms seeking Chapter 11 bankruptcy protection. Using case information on Chapter 11 filings for almost 5000 private companies across five district courts in the US between 1989 and 2004, we first establish that within districts cases are assigned randomly to judges, which allows us to estimate judge specific fixed effects in their Chapter 11 rulings. We find very strong and economically significant differences across judges in the propensity to grant or deny specific motions. Specifically some judges appear to rule persistently more favorably towards creditors or debtors. Based on the judge fixed effects we created an aggregate index to measure the pro-debtor (pro-creditor) friendliness of each judge. We show that a pro-debtor bias leads to increased rates of re-filing and firm shutdown as well as lower post-bankruptcy credit ratings and lower annual sales growth up to five years after the original bankruptcy filing. / by Tom Y. Chang. / Ph.D.

Thesis (Ph. D.)--Massachusetts Institute of Technology, Dept. of Economics, 2005. / Includes bibliographical references. / This dissertation is a collection of three independent essays in theoretical and applied econometrics, organized in the form of three chapters. In the first two chapters, I investigate the properties of parametric and semiparametric fixed effects estimators for nonlinear panel data models. The first chapter focuses on fixed effects maximum likelihood estimators for binary choice models, such as probit, logit, and linear probability model. These models are widely used in economics to analyze decisions such as labor force participation, union membership, migration, purchase of durable goods, marital status, or fertility. The second chapter looks at generalized method of moments estimation in panel data models with individual-specific parameters. An important example of these models is a random coefficients linear model with endogenous regressors. The third chapter (co-authored with Joshua Angrist and Victor Chernozhukov) studies the interpretation of quantile regression estimators when the linear model for the underlying conditional quantile function is possibly misspecified. / by Iván Fernández-Val. / Ph.D.

Thesis (Ph. D.)--Massachusetts Institute of Technology, Dept. of Economics, 1996. / Includes bibliographical references (leaves 136-141). / by Catherine D. Wolfram. / Ph.D.

Thesis (Ph. D.)--Massachusetts Institute of Technology, Dept. of Economics, 1993. / Includes bibliographical references. / by Michael J. Chapman. / Ph.D.

Thesis (Ph. D.)--Massachusetts Institute of Technology, Dept. of Economics, 2004. / Includes bibliographical references. / (cont.) low achieving children. / This thesis measures some unintended consequences of government education and housing policies. Chapter 1 estimates the net educational effect, measured by student test scores, of the California Class Size Reduction Program on second and third graders. This program inadvertently created incentives for schools to combine students in multiple grade classrooms as well as reduce class size. Using the non-linear relationship between enrollment and combination classes I estimate that students placed in combination classes by the program suffered a large, significant drop in test scores. I also find little evidence of positive achievement effects due to smaller class size suggesting that the program's net effect may have been negative. Chapter 2 seeks to identify the effects of rent control on cities in the Boston area using the variation provided by a 1995 Massachusetts ballot initiative banning rent control. My findings support the intuition economist derive from simple economic models of price ceilings. Though rent controls achieve their stated aim of lowering rents, they also decrease the willingness of owners to rent apartments, lead to housing unit deterioration, and result in inefficiently long tenancy durations. I also find suggestive evidence that the deterioration in rent controlled housing quality may lower the rent in nearby non-controlled units. Chapter 3 examines an unintended strategic response of school districts to accountability testing. Using Wisconsin data I show that some school districts advance the starting date of their school year to allow their students more time to prepare for state accountability tests. I find that this leads to small test score gains in math, but may lead to higher absence rates and reduced reading scores among / by David P. Sims. / Ph.D.

Thesis: Ph. D., Massachusetts Institute of Technology, Department of Economics, 2015. / The 3rd chapter is co-authored with Jonathan Gruber. Cataloged from PDF version of thesis. / Includes bibliographical references (pages 107-111). / The first chapter investigates how hospital mergers affect technology adoption and utilization. I analyze the mergers of five for-profit hospital chains in a difference-in-difference framework, comparing markets in which two or more of the merging chains operated prior to the mergers to markets in which zero or one chain operated. The estimates suggest that treated markets gained 5.1 to 7.1 technologies as a result of the mergers. An increase of 5.1 technologies represents 39% of the increase in technology levels in these markets during the post-merger period. I find little evidence that utilization increased post-merger, but there is some evidence that utilization of certain technologies increased when they were more widely available. In the second chapter, I investigate whether the hospitals that were part of the merging chains achieved cost savings through local consolidation and economies of scale resulting from the formation of a large hospital system. Exploiting variation in how the hospitals were affected by the mergers, I find no evidence that local consolidation led to lower expenditures. However, I document that expenditures at hospitals that were part of the merging chains declined by 14% after the mergers, suggesting there may be economies of scale for a large, national chain. Taken together, the results imply limited cost efficiencies from local consolidation for hospitals that are part of a larger system. The final chapter, co-authored with Jonathan Gruber, examines how individuals respond to changes in copays for physician office visits using data from over 1500 employer-sponsored insurance plans with 1.5 million enrollees. Within our sample, there are 171 separate changes in copays for physician office visits, and we use a difference-in-difference methodology to evaluate their effect. We estimate the elasticity of office visit spending with respect to patient contribution is -0.13. Individuals with chronic conditions appear to be less sensitive to the price of office visits than individuals without chronic conditions. We find suggestive evidence that these effects compound, as copay increases correspond with declines in spending on labs and radiology and a larger decrease in total spending than office visit spending alone. / by Kathleen Fehring Easterbrook. / Chapter 1. The Chapter 2. Chapter 3. effects of hospital mergers on technology adoption and utilization -- Market consolidation, system formation, and hospital expenditures -- Patient cost-sharing for physician visits and utilization in employer-sponsored insurance plans. / Ph. D.

Thesis: Ph. D., Massachusetts Institute of Technology, Department of Economics, 2017. / Cataloged from PDF version of thesis. / Includes bibliographical references (pages 149-152). / The first chapter discusses procurement auction mechanisms under the political constraint that the contractor is in effect protected from ex-post loss. Many construction procurers who use first price auctions eliminate abnormally low bids in order to reduce the probability of ex-post bid adjustment. The Korean government systematizes such a bid screening process by setting a stochastic cutoff under which bids are disregarded. This chapter builds an auction model with ex-post bid adjustment and establishes that introducing a stochastic cutoff indeed decreases the probability of ex-post bid adjustment when the contractor is protected from ex-post loss. Data on Korean public procurement auctions for paving work is used to structurally estimate model parameters and assess welfare implications. Counterfactual analyses indicate that, if the Korean government were to switch to the usual first price auction, (1) the probability of bid adjustments triggered by cost overruns would significantly increase, from 14 percent to 88 percent; (2) the resulting social cost increase due to bid adjustment processes would amount to at least 360 percent of cost savings from the first price auction's ability to find an efficient firm; and therefore (3) the total social cost increase would be 7 percent. Finally, a mechanism design approach is employed to characterize an optimal mechanism under a no loss constraint and to provide a measure of efficiency loss associated with the two forms of auctions. The second chapter quantifies consumers' cognitive costs in the context of fast-food purchases. Most fast-food burger chains set different effective add-on (fries and a soda) prices in "meals" across burger items. This means that sophisticated consumers, who buy, for example, a sandwich-only and a meal, may try rearranging the add-ons across burgers in hopes of lowering their payment. This feature provides a unique opportunity to study consumers' behavior, when a firm engages in price obfuscation-charging multiple prices for an identical product and requiring consumers to incur cognitive costs before finding lowest price quotes. Using sales data of a Korean local fast-food chain, this chapter first presents descriptive evidence that consumers do respond to an opportunity to lower expenses by rearranging add-on items. Then it develops and estimates an optimal model of calculation and rearrangement where a consumer incurs a unit of cognitive cost for every effective add-on price of a burger she calculates. The third chapter documents how a persistent adverse selection problem can be eventually mitigated by market force. In 2010, a prominent conglomerate entered as a market-maker in the Korean online used car market, which had long been considered a "market for lemons". In order to alleviate the asymmetric information problem, the firm introduced a costly quality signaling mechanism: in its online platform, the company certifies at a fee the car's inspection report mandated to be provided to consumers but deemed often unreliable. This chapter examines the effect of certification on the sale price and the days on the market. It also investigates which vehicles' inspection reports are more likely to be certified. / by Dong Jae Eun. / Ph. D.

Thesis (Ph. D.)--Massachusetts Institute of Technology, Dept. of Economics, 2005. / "June 2005." / Includes bibliographical references. / This thesis is composed by three independent essays on the limits of political accountability. In the first essay I analyze an extremely stylized model of political agency with two dimensional outcomes. I show that the non-contractible nature of rewards to the agent (the politician) is especially taxing when the voters want to control outcomes in more than one dimension. I compare and contrast this environment with traditional multitasking analyses in the context of the theory of the firm. The second essay examines why political accountability has failed so miserably in post- colonial, sub-saharan Africa. I provide a theory based on the exploitation of ethnic divisions by self-interested but weak rulers. This cleavages allow the leaders to expropriate resources from the citizenry, included their own ethnic supporters and still remain in power. The model predicts ethnic bias, patronage, inefficient policies and absence of public investment. The third essay is an empirical analysis of legislative performance in the North Carolina General Assembly. Using a new dataset I am able to show that legislators find their good performance rewarded both within the state legislature and in their electoral careers. These findings have relevance for the discussion on term limits and the theoretical modeling of political agency. / by Gerard Padró i Miquel. / Ph.D.

Thesis: Ph. D., Massachusetts Institute of Technology, Department of Economics, 2015. / Cataloged from PDF version of thesis. / Includes bibliographical references. / I study the effects of disability insurance receipt on the long-term outcomes of children and their families. I use data from the Social Security Administration on children enrolled in the Supplemental Security Income (SSI) program and their family members. In Chapter 1, I estimate the long-term effects of removing low-income youth with disabilities from SSI on the level and variance of their earnings and income in adulthood. Using a regression discontinuity design based on a change in the likelihood of removal at age 18, I find that SSI youth who are removed earn on average $4,000 per year in adulthood and recover only one-third of their lost SSI payment. They experience a present discounted income loss of $73,000 over the 16 years following removal. In addition, the within person variance of income quadruples as a result of removal. Under various assumptions, I find that up to one-quarter of the recipient's welfare loss from SSI removal is attributable to the increase in income volatility rather than to the fall in income levels. This result suggests that ignoring the income stabilization effects of disability programs could underestimate their value to recipients. Chapter 2 examines the effects of removing children from SSI before age 18, prior to the completion of education decisions, on their earnings in adulthood. Using variation in child medical reviews, I find no evidence of a difference in earnings between SSI children who are removed at a young age versus those who stay on, though the estimates are imprecise. I provide suggestive evidence on the channels through which early-life removal affects adult outcomes by studying effects on younger siblings. Using the empirical strategy from Chapter 1, I find that removing an 18-year-old decreases the adult earnings of younger siblings by $3,100 per year. In Chapter 3, I estimate the effects of removing young children with disabilities from SSI on parental earnings and household income, using the child medical review empirical strategy from Chapter 2. I find that parents fully offset the SSI loss with increased earnings. The child's removal also discourages parents and siblings from applying for disability insurance themselves. / by Manasi Deshpande. / Chapter 1. Chapter 2. The Chapter 3. The Does welfare inhibit success? : the long-term effects of removing low-income youth from disability insurance -- effects and channels of early-life removal from disability insurance : evidence from Supplemental Security Income children -- effect of disability payments on household earnings and income : evidence from the SSI Children's Program. / Ph. D.