matching with waiting times the german entry level labor market for lawyers abstract we study the allocation of german lawyers to regional courts for legal trainee ships because of excess demand in some regions lawyers often have to wait before being allocated the currently used berlin mechanism is not weakly pareto efficient does not eliminate justified envy and does not respect improvements we introduce a mechanism based on the matching with contracts literature using waiting time as the contractual term the resulting mechanism is strategy proof weakly pareto efficient eliminates justified envy and respects improvements we extend our proposed mechanism to allow for a more flexible allocation of positions over time

cumulative offer process is order independent this note shows that in the matching with contracts model the outcome of the cumulative offer process is order independent if every hospital has a choice function that satisfies the bilateral substitutability condition and the irrelevance of rejected contracts condition

matching with contracts comment abstract the matching with contracts model hatfield and milgrom 2005 is widely considered to be one of the most important advances of the last two decades in matching theory one of their main messages is that the set of stable allocations is non empty under a substitutes condition we show that an additional irrelevance of rejected contracts irc condition is implicitly assumed throughout their analysis and in the absence of irc several of their results including the guaranteed existence of a stable allocation fail to hold jel c78 d86

bidding for army career specialties improving the rotc branching mechanism motivated by the low retention rates of us military academy and reserve officer training corps graduates the army recently introduced incentives programs in which cadets could bid 3 years of additional service obligation to obtain higher priority for their desired branches the full potential of this incentives program is not utilized because of the rotc s deficient matching mechanism i propose a design that eliminates these shortcomings and mitigates several policy problems the army has identified in contrast to the rotc mechanism my design utilizes market principles more extensively and it is a hybrid between a market mechanism and a priority based allocation mechanism

optimal truncation in matching markets abstract although no stable matching mechanism can induce truth telling as a dominant strategy for all participants roth 1982 recent studies have presented conditions under which truthful reporting by all agents is close to optimal immorlica and mahdian 2005 kojima and pathak 2009 lee 2011 our results demonstrate that in large uniform markets using the men proposing deferred acceptance algorithm each woman s best response to truthful behavior by all other agents is to truncate her list substantially in fact the optimal degree of truncation for such a woman goes to 100 of her list as the market size grows large in general one to one markets we provide comparative statics for optimal truncation strategies reduction in risk aversion and reduced correlation across preferences each lead agents to truncate more so while several recent papers focused on the limits of strategic manipulation our results serve as a reminder that without pre conditions ensuring truthful reporting there exists a potential for significant manipulation even in settings where agents have little information

affirmative action in higher education how do admission and financial aid rules affect future earnings this paper addresses how changing the admission and financial aid rules at colleges affects future earnings i estimate a structural model of the following decisions by individuals where to submit applications which school to attend and what field to study the model also includes decisions by schools as to which students to accept and how much financial aid to offer simulating how black educational choices would change were they to face the white admission and aid rules shows that race based advantages had little effect on earnings however removing race based advantages does affect black educational outcomes in particular removing advantages in admissions substantially decreases the number of black students at top tier schools while removing advantages in financial aid causes a decrease in the number of blacks who attend college

strategy proof exchange we consider the allocation of goods in exchange economies with a finite number of agents who may have private information about their preferences in such a setting standard allocation rules such as walrasian equilibria or rational expectations equilibria are not compatible with individual incentives we characterize the set of allocation rules which are incentive compatible or in other words the set of strategy proof social choice functions social choice functions which are strategy proof are those which can be obtained from trading according to a finite number of pre specified proportions the number of proportions which can be accommodated is proportional to the number of agents such rules are necessarily inefficient even in the limit as the economy grows

on stable and strategy proof rules in matching markets with contracts abstract this paper studies stable and one sided strategy proof rules in many to one matching markets with contracts not assuming any kind of substitutes condition or the law of aggregate demand we obtain the following results first the number of stable and strategy proof rules is at most one second the doctor optimal stable rule whenever it exists is the unique candidate for a stable and strategy proof rule third a stable and strategy proof rule whenever it exists is second best optimal for doctor welfare in that no individually rational and strategy proof rule can dominate it this last result is further generalized to non wasteful and strategy proof rules due to the weak assumptions our analysis covers a broad range of markets including cases where a unique stable and strategy proof rule is not equal to the one induced by the cumulative offer process or the deferred acceptance algorithm

does affirmative action reduce productivity a case study of the indian railways summary our objective is to shed empirical light on a claim often made by critics of affirmative action policies that increasing the representation of members of marginalized communities in jobs comes at the cost of reduced productive efficiency we undertake a systematic empirical analysis of productivity in the indian railways the world s largest employer subject to affirmative action in order to assess whether higher proportions of affirmative action beneficiaries in employment have reduced efficiency in the railway system we find no evidence for such an effect indeed some of our results suggest that the opposite is true

constrained school choice an experimental study 31 pages 18 tables jel classification c72 c78 d78 i20 trabajo publicado como articulo en american economic review 100 4 1860 1874 2010 http dx doi org 10 1257 aer 100 4 1860

internet advertising and the generalized second price auction selling billions of dollars worth of keywords we investigate the generalized second price gsp auction a new mechanism used by search engines to sell online advertising although gsp looks similar to the vickrey clarke groves vcg mechanism its properties are very different unlike the vcg mechanism gsp generally does not have an equilibrium in dominant strategies and truth telling is not an equilibrium of gsp to analyze the properties of gsp we describe the generalized english auction that corresponds to gsp and show that it has a unique equilibrium this is an ex post equilibrium with the same payoffs to all players as the dominant strategy equilibrium of vcg

redesigning the israeli psychology master s match we report on the centralization of a two sided matching with contracts market in which pre existing choice functions violate the substitutes condition the ability to accommodate these choice functions was critical for the success of our design the new mechanism is stable and strategy proof for applicants it is well accepted by both sides of the market our study provides a strong empirical validation for the practical relevance of recent theoretical advances on matching without substitutes

substitutes and stability for matching with contracts we consider the matching problem with contracts of hatfield and milgrom 2005 and we introduce new concepts of bilateral and unilateral substitutes we show that bilateral substitutes is a sucient condition for the existence of a stable allocation in this framework however the set of stable allocations does not form a lattice under this condition and there does not necessarily exist a doctor optimal stable allocation under a slightly stronger condition unilateral substitutes the set of stable allocations still does not necessarily form a lattice with respect to doctors preferences but there does exist a doctor optimal stable allocation and other key results such as incentive compatibility and the rural hospitals theorem are recovered

sets arbitrage activity and stock price dynamics this paper provides an empirical description of the relationship between the trading system operated by a stock exchange and the trading behaviour of heterogeneous investors who use the exchange the recent introduction of sets in the london stock exchange provides an excellent opportunity to study the impact of an electronic trading system upon traders who use the exchange using the cost of carry model of futures prices we estimate non linearly the transaction costs and trade speeds faced by arbitragers who take advantage of mispricing of ftse100 futures contracts relative to the spot prices of the stocks that make up the ftse100 stock index we divide the sample period into pre sets and post sets sample periods and conduct a comparative study of arbitrager behaviour under different trading systems the results indicate that there has been a significant reduction in the level of transaction costs faced by arbitragers and in the degree of transaction cost heterogeneity finally generalised impulse response functions show that both spot and futures prices adjust more quickly in the post sets period these results suggest that both spot and futures markets have become more efficient under sets

on the correspondence of contracts to salaries in many to many matching abstract in this note i extend the work of echenique 2012 to show that a model of many to many matching with contracts may be embedded into a model of many to many matching with wage bargaining whenever 1 all agents preferences are substitutable and 2 the matching with contracts model is unitary in the sense that every contractual relationship between a given firm worker pair is specified in a single contract conversely i show that unitarity is essentially necessary for the embedding result

monetary incentives on inter caste marriages in india theory and evidence abstract we study the effect of a policy in india that offers monetary incentives to inter caste marriages in which one of the spouses is of historically disadvantaged castes i e scheduled castes and the other is not we show that in theory the monetary incentives increase the incidence of exogamy but may reduce the welfare of certain caste or gender building on our theoretical analysis we estimate the effect of the monetary incentives on the incidence of exogamy the welfare and inter spousal transfers using national family and health survey data we find that a 10 000 rupee increase in the incentive raises the exogamy between scheduled caste men and non scheduled caste women by 4 percent in rural india however we also find that the same increase reduces the welfare of women in rural areas

field of study earnings and self selection why do individuals choose different types of post secondary education and what are the labor market consequences of those choices we show that answering these questions is difficult because individuals choose between several unordered alternatives even with a valid instrument for every type of education instrumental variables estimation of the payoffs require information about individuals ranking of education types or strong additional assumptions like constant effects or restrictive preferences these identification results motivate and guide our empirical analysis of the choice of and payoff to field of study our context is norway s post secondary education system where a centralized admission process covers almost all universities and colleges this process creates credible instruments from discontinuities which effectively randomize applicants near unpredictable admission cutoffs into different fields of study at the same time it provides us with strategy proof measures of individuals ranking of fields taken together this allows us to estimate the payoffs to different fields while correcting for selection bias and keeping the next best alternatives as measured at the time of application fixed we find that different fields have widely different payoffs even after accounting for institutional differences and quality of peer groups for many fields the payoffs rival the college wage premiums suggesting the choice of field is potentially as important as the decision to enroll in college the estimated payoffs are consistent with individuals choosing fields in which they have comparative advantage we also test and reject assumptions of constant effects or restrictive preferences suggesting that information on next best alternatives is essential to identify payoffs to field of study

food security policy options for china lessons from other countries the authors gratefully acknowledge financial support from the world bank and australia s rural industries research and development corporation

modelling the ff mm rate by threshold cointegration analysis this paper investigates a sticky price model of exchange rate determination extension of krugman s target zone model with price inertia applied to the french franc a novel theoretical argument is considered threshold cointegration such that the long run relationship between the parity and its fundamentals is dormant within a certain range of disequilibria but is restored when the system crosses the boundaries over the period 1987 1993 nonlinearities in the ff dm rate consistent with the credibility of this target zone were detected by pointing out a band reversion mechanism a shock persistence analysis which highlights a nonlinear reversion of the exchange rate deviation is also implemented

the mechanism is truthful why aren t you abstract honesty is the best policy in the face of a strategy proof mechanism irrespective of others behavior the best course of action is to report one s preferences truthfully we review evide

matching with contracts comment the theory of two sided matching markets has interested researchers for its theoretical appeal and its relevance to the design of real world institutions the medical residency matching mecha nism in the united states the national resident matching program nrmp and student assign ment systems in new york city and boston are important mechanisms designed by economists using the theory 1 hatfield and paul r milgrom 2005 present a unified framework of matching with contracts which includes the two sided matching and package auction models as well as a simplified version of a labor market model of alexander kelso and vincent p crawford 1982 as special cases they introduce the substitutes condition of contracts which is an adaptation of the substitutability condition in the matching literature roth and marilda a oliveira sotomayor 1990 to matching with contracts they show that there exists a stable allocation if contracts are substitutes for hospitals and that a number of other results in matching generalize to problems with contracts they further claim that the substitutes condition on individual hospitals prefer ences is necessary to guarantee the existence of a stable allocation for all possible singleton preferences of others that is if contracts are not substitutes for a hospital then there exists a preference profile of other hospitals with single job openings and doctors such that there exists no stable allocation we show that this last claim of hatfield and milgrom 2005 does not hold in general the counterexample we present involves a hospital which has two different kinds of positions and the preferences of the hospital are a combination of preferences of these two positions while the substitutes condition does not hold for that hospital we adopt a technique developed by bettina klaus and flip klijn 2005 and show that there exists a stable allocation we then present the weak substitutes condition which we show is necessary to guarantee existence of stable allocations the modified result we present as well as the original contribu tion of hatfield and milgrom 2005 suggest a connection between the substitutes condition and stability 2

a threshold error correction model for intraday futures and index returns index futures arbitragers only enter into the market if the deviation from the arbitrage relation is sufficiently large to compensate for transaction costs and associated interest rate and dividend risks we estimate the band around the theoretical futures price within which arbitrage is not profitable for most arbitragers using a threshold autoregression model combining these thresholds with an error correction model we show that the impact of the mispricing error is increasing with the magnitude of that error and that the information effect of lagged futures returns on index returns is significantly larger when the mispricing error is negative 1998 john wiley sons ltd

stable and strategy proof matching with flexible allotments we introduce a framework of matching with flexible allotments that can be used to model firms with cross division hiring restrictions our framework also allows us to nest some prior models of matching with distributional constraints building upon our recent work on observable substitutability we show that multi division choice functions with flexible allotments enable stable and strategy proof matching these results illustrate the value of clearly mapping when stable and strategy proof matching is possible

the impact of education expansion on wage inequality abstarctthe findings on education expansion and income inequality have important implications for policymakers to implement effective policies to reduce income inequality this study attempts to explain how education expansion affects income inequality by education distribution and the rate of return to education we decompose the effect of education expansion on wage gaps into price effect and structure effect we compare the income inequality from 2002 to 2013 using the chinese household income project chip 2002 and chip2013 survey data and employ ffl decomposition method our findings suggest that income inequality increased in 2013 and that income inequality among the high income groups increased even more significantly the structure effect of education expansion on income inequality is negative when average education increases one year the income gap between 80th and 20th will decrease 1 2 in other words education expansion decreases income inequality by allowing a wide range of individuals t

index arbitrage and dynamics between reit index futures and spot prices abstractthis article contributes to the real estate literature by investigating the pricing relationship between reit index futures and spot based on the cost of carry model we first show that there exist three arbitrage regimes in australia s reit spot futures price dynamics further analysis indicates that the two thresholds which separate the regimes are largely consistent with the level dictated by transaction costs we then estimate a threshold vector error correction model tvecm the results show that mean reversion of the mispricing error only takes place in the two outer regimes furthermore we find evidence that reit spot market is more informationally efficient than the futures market given its short history it will take time for reit index futures market to mature finally we find that we can enhance hedging performance by accommodating the feature of threshold cointegration displayed by the data as the futures spot relationship differs across regimes we can develop a hedging strate

does access to formal agricultural credit depend on caste summary this paper analyzes whether caste impedes access to formal agricultural credit in india credit is provided mainly through cooperative and commercial banks using national data we find that cooperative banks discriminate against lower caste borrowers and find weak evidence that commercial banks instead bias lending in their favor in accordance with affirmative action policies we compare the organizational structures of the two types of bank and explain discrimination by cooperative banks in terms of interest group capture at the district level by showing that discrimination takes place in those districts where higher castes dominate

affirmative action in education evidence from engineering college admissions in india abstract this paper examines an affirmative action program for lower caste groups in engineering colleges in india we study both the targeting properties of the program and its implications for labor market outcomes we find that affirmative action successfully targets the financially disadvantaged the upper caste applicants that are displaced by affirmative action come from a richer economic background than the lower caste applicants that are displacing them targeting by caste however may lead to the exclusion of other disadvantaged groups for example caste based targeting reduces the overall number of females entering engineering colleges we find that despite poor entrance exam scores lower caste entrants obtain a positive return to admission our estimates however also suggest that these gains may come at an absolute cost because the income losses experienced by displaced upper caste applicants are larger than the income gains experienced by displacing lower caste students limited sample sizes in our preferred econometric specifications however prevent us from drawing strong conclusions from these labor market findings

the welfare effects of coordinated assignment evidence from the new york city high school match abstract coordinated single offer school assignment systems are a popular education reform we show that uncoordinated offers in nyc s school assignment mechanism generated mismatches one third of

tipping and the dynamics of segregation schelling dynamic models of segregation journal of mathematical sociology 1 1971 143 186 showed that extreme segregation can arise from social interactions in white preferences once the minority share in a neighborhood exceeds a tipping point all the whites leave we use regression discontinuity methods and census tract data from 1970 through 2000 to test for discontinuities in the dynamics of neighborhood racial composition we find strong evidence that white population flows exhibit tipping like behavior in most cities with a distribution of tipping points ranging from 5 to 20 minority share tipping is prevalent both in the suburbs and near existing minority enclaves in contrast to white population flows there is little evidence of nonlinearities in rents or housing prices around the tipping point tipping points are higher in cities where whites have more tolerant racial attitudes

contracts versus salaries in matching a general result abstract it is shown that a matching market with contracts can be embedded into a matching market with salaries under weaker conditions than substitutability of contracts in particular the result applies to the recently studied problem of cadet to branch matching as an application of the embedding result a new class of mechanisms for matching markets with contracts is defined that generalize the firm proposing deferred acceptance algorithm to the case where contracts are unilateral substitutes for firms

does affirmative action work caste gender college quality and academic success in india public policy in modern india features affirmative action programs intended to reduce inequality that stems from a centuries old caste structure and history of disparate treatment by gender we study the effects of one such affirmative action program an admissions policy that fixes percentage quotas common across more than 200 engineering colleges for disadvantaged castes and for women we show that the program increases college attendance of targeted students particularly at relatively higher quality institutions an important concern is that affirmative action might harm intended beneficiaries by placing them in academic programs for which they are ill prepared we find no evidence of such adverse impacts

index arbitrage with heterogeneous investors a smooth transition error correction analysis abstract the traditional index arbitrage model assumes a constant threshold mispricing between the futures and cash prices for all investors allowing for heterogeneity in investors transaction costs objectives and capital constraints we model the intraday mispricing of djia futures as a smooth transition autoregressive star process with the speed of adjustment toward equilibrium varying directly with the mispricing we show that the observed mean reversion in mispricing changes is induced by heterogeneous arbitrageurs instead of a statistical illusion infrequent trading of index portfolio stocks we further use a star error correction model to describe the nonlinear dynamics between the djia futures and index this model describes not only which market is more informationally efficient than the other but also the legging process the nonsimultaneous establishing of cash and futures positions

assigning refugees to landlords in sweden efficient stable maximum matchings in this paper we investigate the problem of finding housing for refugees once they have been granted asylum in particular we demonstrate that market design can play an important role in a partial solution to the problem more specifically we investigate a specific matching system and we propose an easy to implement mechanism that finds an efficient stable and maximum matching such a matching guarantees that housing is efficiently provided to a maximum number of refugees and that no refugee prefers another specific landlord to their current match when at the same time that specific landlord prefers that refugee to their own current match

don t touch my road evidence from india on affirmative action and everyday discrimination summary this article investigates whether affirmative action in the form of electoral quotas affects group based discrimination the redistributive effect of quotas is subject to debate and their ultimate target is discrimination to identify the effect of electoral quotas i take advantage of their rotation across space and over time in india to proxy discrimination i use a measure of caste based exclusion from a public infrastructure namely streets in 2006 44 5 household members of the marginalized castes labeled scheduled castes sc still suffered from caste based exclusions i document that ongoing sc quotas reduce the likelihood of caste based exclusion for members of the scs by about one fifth the results also imply that the effect is not persistent it disappears with the end of the sc quota from a policy maker s perspective these results are mixed since electoral quotas do affect everyday discrimination even if the effect does not last these results are consistent with a temporary change in the behavior of members of the dominant castes after a one shot electoral quota these results are inconsistent with either a change in the stereotypes held by members of the dominant castes or a change in the aspirations of members of the lower castes

do gasoline prices exhibit asymmetry not usually previous studies have found evidence of asymmetric price adjustment in u s retail gasoline prices in that gasoline prices rise more rapidly in response to a cost increase than fall in response to a cost decrease by estimating a threshold cointegration model that allows for multiple regimes i am able to test how sensitive this result is to outlying observations in contrast to previous studies i find little evidence of asymmetry for the vast majority of observations and that the asymmetry is being driven by a small number of outlying observations

do peers influence occupational preferences evidence from randomly assigned peer groups at west point abstract there is substantial variation across occupations in outcomes such as earnings job satisfaction and health yet little is known about how occupational preferences are shaped and evolve this paper assesses a channel that may influence occupational preferences peer effects by exploiting unique institutional features and a natural experiment at west point to document the way students i e cadets occupational preferences evolve and to test for peer effects after graduation cadets must enter the u s army as an officer in one of 16 occupational branches and are required to rank order their preferences for the branches repeatedly over four years west point randomly assigns cadets to social groups both at broad company and narrow roommate levels we leverage the timing of the randomization and preference elicitations to test for peer effects at the company roommate and older peer levels with the possible exception of the first few weeks of exposure we find little evidence of peer effects we also use a survey of cadets to explore mechanisms and find evidence that peer information may not be credible in this case but rather cadets rely on mentors and job characteristics when making this decision

dynamic kidney exchange we study how barter exchanges should be conducted through a centralized mechanism in a dynamically evolving agent pool with time and compatibility based preferences we derive the dynamically efficient two way and multi way exchange mechanisms that maximize total discounted exchange surplus recently several live donor kidney exchange programs were established to swap incompatible donors of end stage kidney disease patients since kidney exchange can be modeled as a special instance of our more general model dynamically efficient kidney exchange mechanisms are derived as corollaries we make policy recommendations using simulations

clicking on heaven s door the effect of immigrant legalization on crime we estimate the eect of legalization on the crime rate of immigrants by exploiting the italian policy framework as an ideal regression discontinuity design xed quotas of residence permits are available each year applications must be submitted electronically on specic click days and they are processed on a rst come rst served basis until the available quotas are exhausted by matching data on applicants including the timing of applications in milliseconds with restricted use criminal records for the year before and after click days we show that obtaining legal status reduces the probability of being reported for having committed a serious crime by 0 6 percentage points on average on a baseline crime rate of 1 percent this eect is driven by applicants that are allegedly employed by other immigrants as domestic workers but are most likely unemployed who exhibit the highest crime rate in the year before click days as well as the greatest reduction in crime after obtaining legal status by contrast applicants sponsored by rms exhibit a very low crime rate both before and after click days we conclude that undocumented immigrants confronting worse labor market opportunities are at a higher risk of committing crimes while they are also more responsive to legalization

large scale affirmative action in school choice admissions to iits in india we provide a real life application of a large scale affirmative action policy in school choice in the context of engineering school admissions in india where students not only care about what program they are matched to but also what type of seat category they are admitted under we explain the market and the mechanism currently in use two significant shortcomings of the current mechanism are explained the affirmative action policy in use leaves many seats vacant even though there are students who would take these seats we provide the insight of a potential matching theoretical solution to these problems

what explains the stagnation of female labor force participation in urban india female labor force participation rates in urban india between 1987 and 2011 are surprisingly low and have stagnated since the late 1980s despite rising growth fertility decline and rising wages and education levels married women s labor force participation hovered around 18 percent analysis of five large cross sectional micro surveys shows that a combination of supply and demand effects have contributed to this stagnation the main supply side factors are rising household incomes and husband s education as well as the falling selectivity of highly educated women on the demand side the sectors that draw in female workers have expanded least so that changes in the sectoral structure of employment alone would have actually led to declining participation rates

affirmative action as earnings redistribution the targeting of compliance reviews affirmative action may be broadly conceived of as pursuing either the goal of reducing discrimination or that of redistributing jobs and earnings i attempt to infer the ends of affirmative action policy by analyzing the historical record of enforcement optimal enforcement strategies are developed for both the antidiscrimination and the earnings redistribution models and then compared with new data on the actual targeting of affirmative action compliance reviews during the late 1970s i find that establishments with very low proportions of minority or female workers are not significantly more likely to be reviewed but that white collar intensive establishments are more likely to be reviewed this indicates the shortcomings of the antidiscrimination model in explaining the ofccp s behavior and suggests the potential usefulness of the earnings redistribution model

leveling the playing field sincere and sophisticated players in the boston mechanism empirical and experimental evidence suggests different levels of sophistication among families in the boston public school student assignment plan we analyze the preference revelation game induced by the boston mechanism with sincere players who report their true preferences and sophisticated players who play a best response we characterize the set of nash equilibrium outcomes as the set of stable matchings of a modified economy where sincere students lose priority to sophisticated students any sophisticated student weakly prefers her assignment under the pareto dominant nash equilibrium of the boston mechanism to her assignment under the recently adopted student optimal stable mechanism jel d82 i21

contracts versus salaries in matching workers and firms may bargain over general multidimensional contracts they may negotiate over health benefits housing retirement plans etc substitutes on the other hand is the assumption commonly placed on firms preferences to guarantee the existence of stable matchings of workers and firms in this paper i show that when firms regard contracts as substitutes bargaining over contracts can be embedded into a model of bargaining over wages the economics of the embedding is straightforward except for a small twist when a firm and a worker negotiate over a contract they may bargain over many dimensions however the pareto frontier of contracts is in a sense one dimensional what is better for the worker is worse for the firm so pareto optimal contracts may be viewed as salaries with the better contracts for the firm meaning lower salaries and the better contracts for the worker meaning higher salaries the twist is that a firm s ranking over contracts might be affected by the firm s other hires for example health plan a may be better than b for a firm if it has many employees but b beats a if it has few when contracts are substitutes it turns out that the ranking is not affected in this way hatfield and milgrom 2005 present a model of two sided worker firm matching with contracts a firm will hire a collection of workers and will negotiate a contract with each one of them the model is a generalization of kelso and crawford 1982 where each firm and each worker negotiate a wage 1 kelso and crawford show that when firms demands satisfy gross substitutes the core of the matching market is nonempty hatfield and milgrom show that when the firms preferences over contracts satisfy their notion of substitutes the core of the market is nonempty i show that hatfield and milgrom s model can be embedded into the model of kelso and crawford hatfield and milgrom s assumption of substitutability enables an embedding where firms demands for workers satisfy kelso and crawford s notion of gross substitutes as a result the nonemptiness of the core follows from the argument in kelso and crawford and their salary adjustment algorithm finds a stable matching of workers to firms and a vector of supporting salaries hatfield and milgrom s paper is an elegant analysis of two sided matching it simplifies matching models and makes their relationship to auction models more transpar ent their paper contributes much more than showing the nonemptiness of the core when firms and workers can sign general contracts and my result does not diminish

the english auction with differentiated commodities abstract we study economies with indivisibilities that satisfy the gross substitutes gs condition we define an excess demand set with the property that increasing the prices of all goods in excess demand eventually leads to the smallest walrasian prices this procedure is a generalization of the auction studied by g demange d gale and m j sotomayor polit econ 94 1986 863 872 in our auction truthful revelation of demand is a perfect bayesian equilibrium if the smallest walrasian prices correspond to the vickrey clarke groves payments however no dynamic auction can reveal sufficient information to implement the vickrey mechanism if all gs preferences are allowed journal of economic literature classification numbers d4 d44 d5 d51

unilateral substitutability implies substitutable completability in many to one matching with contracts abstract we prove that the unilateral substitutability property introduced in hatfield and kojima 2010 implies the substitutable completability property from hatfield and kominers 2014 this paper provides a novel linkage between these two sufficient conditions for the existence of a stable matching in many to one matching markets with contracts a substitutable completion of a preference is a substitutable preference created by adding some sets of contracts to the original preference order we provide an algorithm which when operated on the unilaterally substitutable preferences produces such a substitutable completion thus it provides a constructive proof of the connection between the two properties

some further properties of the cumulative offer process we investigate extension resource monotonicity and respecting improvements properties of the cumulative offer process cop extension monotonicity says that no doctor is to be better off whenever others start preferring more contracts to being unmatched resource monotonicity on the other hand requires that no doctor becomes worse off whenever hospitals start hiring more doctors the cop becomes extension and resource monotonic whenever contracts are unilateral substitutes us satisfying an irrelevance of rejected contracts condition irc this result implies that the cop is population monotonic under us and the irc we then turn to the respecting improvements property which states that no doctor should be harmed if some of his contracts become more popular with an additional law of aggregate demand condition we show that the cop respects improvements

matching with contracts we develop a model of matching with contracts which incorporates as special cases the college admissions problem the kelso crawford labor market matching model and ascending package auctions we introduce a new law of aggregate demand for the case of discrete heterogeneous workers and show that when workers are substitutes this law is satisfied by profit maximizing firms when workers are substitutes and the law is satisfied truthful reporting is a dominant strategy for workers in a worker offering auction matching algorithm we also parameterize a large class of preferences satisfying the two conditions

the combinatorial assignment problem approximate competitive equilibrium from equal incomes this paper proposes a new mechanism for combinatorial assignment for example assigning schedules of courses to students based on an approximation to competitive equilibrium from equal incomes ceei in which incomes are unequal but arbitrarily close together the main technical result is an existence theorem for approximate ceei the mechanism is approximately efficient satisfies two new criteria of outcome fairness and is strategyproof in large markets its performance is explored on real data and it is compared to alternatives from theory and practice all other known mechanisms are either unfair ex post or manipulable even in large markets and most are both manipulable and unfair

smooth transition models and arbitrage consistency slow adjustment of real exchange rate towards equilibrium in linear models has long puzzled researchers stimulating the adoption of nonlinear models the exponential smooth transition model has been particularly successful providing faster adjustment speeds this paper discusses some of its theoretical limitations for example that expectations are adaptive we propose a new nonlinear model conceptually superior to the estar model since it is consistent with rational expectations one of its advantages is that it can be solved and estimated by nonlinear least squares using monthly post 1973 real exchange rate data we show that the model implies even faster speeds of adjustment

traditional hierarchies and affirmative action in a globalizing economy evidence from india abstract we compare successive age cohorts of three broad social groups scheduled castes and tribes sc sts other backward classes obcs and others and provide the first disaggregated picture of the evolution of inter caste disparities in india the results show that absolute caste gaps in years of schooling and prestigious occupation of white collar jobs have remained static whereas log wages below the median have convergence and above the median diverged examining extension of job quotas to obcs in 1993 we find positive effects of affirmative action on probability of holding government jobs as well as on secondary schooling completion

matching with branch of choice contracts at the united states military academy branch selection is a key decision in a cadet s military career cadets at usma can increase their branch priorities at a fraction of slots by extending their service agreement this real life matching problem lls an important gap in market design literature although priorities fail a key substitutes condition the agent optimal stable mechanism is well dened and in contrast to the current usma mechanism it is fair stable and strategy proof adoption of this mechanism benets cadets and the army this new

sorting through affirmative action three field experiments in colombia the use of affirmative action policies to promote female employment remains debated do affirmative action policies attract female applicants and does that come at the expense of deterring highly

testing for threshold cointegration and error correction evidence in the petroleum futures market this article examines the existence of threshold cointegration between futures and spot prices for the brent petroleum market we then estimate the asymmetric error correction specification utilizing the momentum threshold autoregressive consistent m tar c approach particularly proposed by enders and siklos 2001 we find that for the daily data over 2 january 2001 through 15 october 2006 the petroleum futures prices are cointegrated with the spot prices this effectively confirms the expectations hypothesis and that asymmetric adjustments for the futures basis towards the long run value display a negative basis from the long run equilibrium level more persistently than a positive basis from that level the empirical result suggests that short run arbitrages manipulating buy long sell short futures contracts be profitable when a positive basis is weakening a negative basis is strengthening

bayesian arbitrage threshold analysis a bayesian estimation procedure is developed for estimating multiple regime multiple threshold error correction models appropriate for deviations from financial arbitrage relationships this approach has clear advantages over classical stepwise threshold autoregressive analysis unlike many other applications of threshold models the knowledge of some costs involved in setting up arbitrage positions allows us to specify an informative prior to illustrate the bayesian procedure we estimate a no arbitrage band within which index futures arbitrage is not profitable despite persistent deviations from parity

dynamic hedge ratio for stock index futures application of threshold vecm this study represents one of the first papers in stock index futures arbitrage literature to investigate the effects of arbitrage threshold on stock index futures hedging effectiveness by using threshold vector error correction model hereafter threshold vecm moreover in contrast to prior studies focusing on examining case studies involving mature stock markets this study not only adopts us s p 500 stock market as the sample but also adds an analysis of one emerging stock market hungarian bsi and examines the differences between them finally this investigation employs a rolling estimation process to examine the impact of arbitrage threshold behaviours on the setting of futures hedging ratio the empirical findings of this study are consistent with the following notions first arbitrage behaviour reduces co movement between futures and spot markets and increases the volatility of both futures and spot markets second this article denotes the outer regime of futures spot market for the case of hung

comment on the u s structural transformation and regional convergence a reinterpretation in an otherwise interesting and informative article caselli and coleman 2001 make a claim to foresight and originality that is wholly unjustified the first contribution of this paper is to present a model featuring a third ingredient that seems essential to matching all four of the key facts of the structural transformation our new explanation includes a downward shift in the farm labor supply curve so that the decline in farm employment is consistent with an increase in farm wages p 586 they also add that we show in this paper however that by attributing the decline in farm output and employment to falling demands the traditional explanations also predict falling relative prices for farm goods and falling relative wages to farm workers in other words they fail completely with respect to the less well known behavior of the prices in rows 3 and 4 of table 1 p 586 there are several things wrong with these statements first they did not discover that a decline in farm employment may result in an increase in farm wages both absolute and relative to nonfarm wages second it is not always true that a decline in farm employment leads to a narrowing of the gap between farm and nonfarm labor returns and third if farm productivity growth is greater than in the rest of the economy the relative prices of farm products can and should decline in fact in their table 1 the relative prices of farm products in 1980 were 24 percent lower than for the average of 1880 1900 and 1920 had they carried their data on through 1997 they would have found that relative farm prices fell much farther by 34 percent from the 1980 level as one would expect if total factor

recent developments in matching with constraints in an earlier work kamada and kojima 2015 we introduced matching with constraints a two sided matching problem in which the market is subject to feasibility constraints that paper proposed and analyzed a possible solution to this problem and discussed various real market applications of our results the present paper reorganizes some of the findings from our more recent effort based on kamada and kojima 2016a b

the impact of employment quotas on the economic lives of disadvantaged minorities in india abstract india has the world s biggest and arguably most aggressive employment based affirmative action policy for minorities this paper exploits the institutional features of a federally mandated employment quota policy to examine its causal impact on the economic lives of the two distinct minority groups scheduled castes and scheduled tribes my main finding is that a 1 percentage point increase in the employment quota for scheduled castes increases the likelihood of obtaining a salaried job by 0 6 percentage points for male scheduled caste members residing in the rural sector the employment quota policy has no impact for scheduled tribes contrary to popular notion i do not find evidence of elite capture among the scheduled castes the impact is concentrated among members who have completed less than secondary education consistent with the employment results i find that the policy improved the well being of scheduled castes members in rural areas who have completed less than secondary education finally the impact of the employment quota policy varies by state characteristics

estimating the distortionary effects of ethnic quotas in singapore using housing transactions abstract desegregation is a key policy issue in many countries i investigate a residential desegregation program in singapore the ethnic housing quotas i show that choice restrictions imposed on apartment blocks above the quota limits constrained could have distortionary effects causing price and quantity differences for constrained versus unconstrained blocks i test these predictions by hand matching more than 500 000 names in the phonebook to ethnicities to calculate ethnic proportions at the apartment block level i can then investigate differences for constrained and unconstrained blocks close to the quota limits and test for sorting around the limits i find that price differences are between 3 and 5 quantity effects are economically significant translating to longer time on market durations selection cannot fully explain these results my results point to challenges in achieving desegregation using quantity restrictions

moving off the farm land institutions to facilitate structural transformation and agricultural productivity growth in china agriculture has made major contributions to china s economic growth and poverty reduction but the literature has rarely focused on the institutional factors that might underpin such structural transformation and productivity this paper aims to fill that gap drawing on an 8 year panel of 1 200 households in six key provinces it explores the impact of government land reallocations and formal land use certificates on agricultural productivity growth as well as the likelihood of households to exit from agriculture or send family members to the non farm sector it finds that land tenure insecurity measured by the history of past land reallocations discourages households from quitting agriculture the recognition of land rights through formal certificates encourages the temporary migration of rural labor both factors have a large impact on productivity at about 30 percent each mainly by encouraging market based land transfers a sustained increase in non agricultural opportunities will likely reinforce the importance of secure land tenure which is a precondition for successful structural transformation and continued economic attractiveness of rural areas

spatial market integration in the presence of threshold effects a large body of research has evaluated price linkages in spatially separate markets much recent research has applied models appropriate for nonstationary data such analyses have been criticized for their ignorance of transactions costs which may inhibit price adjustments and thus affect tests of integration this analysis utilizes threshold autoregression and cointegration models to account for a neutral band representing transactions costs we evaluate daily price linkages among four corn and four soybean markets in north carolina nonlinear impulse response functions are used to investigate dynamic patterns of adjustments to shocks our results confirm the presence of thresholds and indicate strong support for market integration though adjustments following shocks may take many days to be complete in every case the threshold models suggest much faster adjustments in response to deviations from equilibrium than is the case when threshold behavior is ignored a large amount of empirical research has evaluated the extent to which spatially separate markets are integrated though the term is used loosely in the literature tests of market integration usually consider the extent to which shocks are transmitted among spatially separate markets the integration of markets can have important implications for price discovery and the operation of the market since persistent deviations from integration may imply riskless profit opportunities for spatial traders

the incentive effects of affirmative action in a real effort tournament abstract affirmative action policies bias tournament rules in order to provide equal opportunities to a group of competitors who have a disadvantage they cannot be held responsible for its implementation affects the underlying incentive structure which might induce lower performance by participants and additionally result in a selected pool of tournament winners that is less efficient in this paper we study the empirical validity of such concerns in a case where the disadvantage affects capacities to compete we conducted real effort tournaments between pairs of children from two similar schools who systematically differed in how much training they received ex ante on the task at hand contrary to the expressed concerns our results show that the implementation of affirmative action did not result in a significant performance loss for either advantaged or disadvantaged subjects instead it rather enhanced the performance for a large group of participants moreover affirmative action resulted in a more equitable tournament winner pool where half of the selected tournament winners came from the originally disadvantaged group hence the negative selection effects due to the biased tournament rules were at least partially offset by performance enhancing incentive effects

spatial market arbitrage and threshold cointegration goodwin and piggott reported that corn and soybean prices in spatially separated markets in north carolina exhibited threshold cointegration and that commodity prices in different markets may persistently diverge here a multivariate approach is used to test for threshold cointegration and nonlinear cointegration the results suggest that departures from the law of one price do not persist indefinitely goodwin and piggott gp examined daily corn and soybean prices across spatially separated markets in north carolina and reported that bivariate pairings of prices were threshold cointegrated gp used a twothreshold model in which price differences across markets could persist indefinitely they concluded that empirical models should consider threshold effects in order to adequately characterize spatially integrated markets the purpose of this article is to extend the gp analysis in several directions gp employed the techniques of martens kofman and vorst which involve a multistepped search for thresholds in the residuals of a cointegrating regression this single equation search process is subject to potential misspecification so it is interesting to determine whether the direct multivariate test of threshold cointegration of hansen and seo provides confirmatory evidence in addition gp allowed two thresholds to affect each commodity pair without directly testing for the number of thresholds the second extension uses hansen tests to determine the number of thresholds two thresholds imply no arbitrage bounds that allow persistent departures from the law of one price one threshold is consistent with the traditional view that price differentials are fleeting as arbitrageurs drive excess returns to zero the final extension recognizes that spatially integrated markets might follow a nonlinear relationship that depends on transactions costs peter s sephton is professor school of business queen s university kingston ontario canada the author would like to thank nick piggott for providing his dataset and the dean s research fund in the school of business for financial assistance two anonymous referees provided helpful comments sufficiently large deviations from the law of one price should lead to a reduced price dispersion a direct test of nonlinear cointegration demonstrates that price differences tend to be resolved over time background