University of Colorado at BoulderDepartment of Economics

 
Anna Rubinchik

Research Interests

Published and Forthcoming Papers

Working papers

Abstract. We develop a simple method to evaluate small policy changes affecting several generations, by reducing the dynamic problem to a static one. A necessary condition is time-invariance, which is satisfied by any common solution concept in an overlapping generations model with exogenous growth. The method is applied to derive the discount rate for cost-benefit analysis under two different utilitarian welfare functions: traditional and relative. It is only under relative utilitarianism that the discount rate is well-defined for a heterogeneous society, is corroborated by an independent argument on the value of human life, and equals the growth rate of per capita consumption, thus falling in the range suggested by the U.S. Office of Management and Budget. (full text in PDF)

Abstract. In an exogenous-growth Arrow-Debreu economy with overlapping generations (OG) we analyse local stability of the “golden-rule” equilibrium with respect to perturbations of consumption endowments, thought of as the “monetised” value of a government policy to individuals. We demonstrate that the equilibrium allocation expressed in terms of efficient labour units is Frechet differentiable in the space of bounded functions with derivatives given by kernels. (full text in PDF) Abstract. We study tournaments with many ex-ante asymmetric (heterogeneous) contestants as an independent-private-values all-pay auction. The asymmetry is either with respect to the distribution of valuations for the prize or the risk preferences. By characterizing equilibria in monotone strategies we show that tournaments with many heterogenous contestants are qualitatively distinct. First, with two (or many ex-ante identical) participants, a contestant always exerts some effort with positive probability. In contrast, with many asymmetric participants, one might not exert any effort at all, even if there is a positive probability that he has the highest valuation among all. Second, in tournaments with two (or many ex-ante homogenous) contestants, equilibrium effort densities are decreasing. This prediction is at odds with experimental evidence that shows the empirical density might be increasing at high effort levels. With many heterogeneous contestants, however, the increasing bid density is consistent with an equilibrium behavior.  ( full text ) Abstract. To understand reasons for possible failures of `good' economic reforms, we consider an institution (polity) which is always successful in making the best public decision from the utilitarian perspective. We show it is bound to introduce inequality if costs of a reform are privately known: the losers can not be always compensated. Thus, if equity is a primary concern then some reforms with positive net aggregate benefit might not be undertaken, or fail. If the utilitarian welfare is the only guide for making public decisions, implementing a reform might require the ability to neglect the associated `distributional' cost. (full text in PDF)
Abstract. We develop a dynamic exchange environment to analyze the value created by contracting institutions. We derive conditions under which this value is increasing in the potential gains from exchange. The results suggest that the rise and fall of contracting institutions may be driven by economic fundamentals. ( full text in PDF )
Abstract. A budget, i.e., spending by category, is prepared by the cabinet of (three key) ministers. Finance minister wants to minimize total spending, while the rest have single-peaked preferences over budgets. The goal is to understand the effect of polarization, or a divergence of the ideal points, on the budget under two typical budgeting procedures. If the finance minister just passively compiles spending requests, as in a budgeting institution called ‘fiefdom’ by Hallerberg et al. (2001), more polarization increases the budget. If the procedure is more ‘centralized’, i.e., the initial proposal of the finance minister is costly to challenge and requires support of the other minister(s), polarization may lead to a tighter budget, as it might enlarge the set of unchallenged proposals. However, if the ideals of the spending ministers are sufficiently close, the set of unchallenged proposals shrinks with polarization. (full text in PDF)
Abstract. Two incumbent parties choose their platforms in a unidimensional policy space while facing a credible threat of an entry by the third party. Relative electoral support is the predominant objective of each party, and the third party enters only if it can displace one of the incumbents. In an equilibrium the two incumbents choose to prevent the entry, achieving the balance of power, i.e., splitting the electorate equally. The incumbents' positions might diverge more as compared to a system in which the parties seek to solely maximize the voters' support. Therefore, rank preoccupation under the threat of entry might contribute to more polarized political platforms of the two leading parties. 
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