Working papers

Abstract Urban low-emission zones (LEZs) are increasingly used to reduce transportrelated air pollution, yet little is known about their long-run general equilibrium effects on the urban spatial structure and their implications in term of pollution exposure. To explore this question, we develop a quantitative spatial equilibrium model with endogenous commuting, transport mode choice and air pollution generated by transport, housing and firms activity. Pollution dispersion is described by an advection-diffusion equation accounting for atmospheric diffusion, deposition, and wind. We apply the model to the Grand Paris Low-Emission Zone and evaluate a long-run counterfactual in which internal combustion engine vehicles are banned from commuting within or through the regulated area. The results show that the policy substantially reduces car use and transport-related emissions. However, endogenous relocation by workers and firms partly offsets environmental gains by shifting economic activity and commuting flows toward more car-dependent peripheral areas, while simultaneously attenuating welfare losses. As a result, partial-equilibrium approaches that abstract from spatial reorganization tend to overestimate both the environmental benefits and welfare costs of the LEZ policy.
Keywords General equilibrium effects, Low-emission zones, Air pollution, Transport policies, Quantitative spatial equilibrium
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Abstract We develop a unified dynamic game-theoretic theory of institutional change that delivers three common equilibrium outcomes as limiting cases: Lipsetian transition to democracy, transition through popular revolution, and permanent autocracy. An impulse-control framework captures both the citizens’ revolutionary option and the elites’ strategic choice of voluntary democratisation, with human capital as the unique endogenousstate and resource windfalls as an exogenous contributor to production and exports. The framework allows us to (1) characterise a reformation frontier, a state-feedbacklocus of minimal concessions that keeps the regime marginally stable as human capital evolves, and (2) identify conditions under which voluntary handover strictly dominates revolution or the status quo, providing a formal stopping rule for elites. We then confront the most distinctive part of the theory, the reformation-frontier mechanism, with data on a panel of 223 autocratic spells between 1970 and 2024. Two empirical signatures of the mechanism are present in the data: the within-spell adjustment of concessions saturates as human capital accumulates, and a cluster of long-lived high-polyarchy autocracies persists on the back of rent revenues. The joint configuration is consistent with our theoryand inconsistent with thin modernisation, rentier-curse, and state-capacity alternatives.
Keywords Dynamic games, Reformation frontier, Redistribution, Education, Political transition
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Abstract This paper studies whether large swings in global crude oil prices reflect observable fundamentals alone or also embody forward-looking speculative dynamics. We develop a stylised asset-pricing model in which fundamentalists and sentimentdriven speculators coexist, which motivates a two-component equilibrium price: a backward-looking fundamental part and a forward-looking speculative part. Longmemory in the dividend process further motivates the use of fractional filtering. The theoretical model motivates our empirical specification: we combine fractional filtering with a mixed causal-noncausal autoregressive model to distinguish persistent movements from expectation-driven price dynamics in the oil prices, allowing speculative pressures to be two-sided and generate both upward bubble-like episodes and downward crash-like dislocations. We find that, even conditional on a rich set of oil-market, macro-financial, and geopolitical determinants, crude oil prices retain a forward-looking component. The results suggest that major oil-price fluctuations are shaped not only by fundamentals, but also by expectation-driven forces that amplify boom-bust dynamics.
Keywords Overpricing, Crashes, Noncausal models, Long-memory, Oil prices
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Abstract I study games with self-locating uncertainty in which an agent at a single information set is uncertain of his position evenwithina given information set of a given play of the game. In such games, there is an analogy to be drawn with Newcomb’s problem: in bothsettings, locally rational (thirder) reasoning and globally optimal (planning) reasoning can prescribe different strategies. I call this aNewcomb tension, and present a representation theorem: a Bayesian with commitment power and an uncommitted agent holding incorrect ‘one-boxer’ beliefs are behaviourally equivalent. In the single-agent case, randomisation always resolves the tension but in multi-agent games, in which planning and interim social weights diverge under some conditions, a multi-agent Newcomb tension can survive this randomisation resolution with an asymmetric awakening structure across agents. I consider the implications of this for the duplicating Sleeping Beauty problem, and a duplicating variant of the absent-minded driver.
Keywords Sleeping Beauty Problem, Newcomb’s Problem, Self-Locating/Indexical Uncertainty, Imperfect Recall, Absent-Minded Driver
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Abstract This paper proposes a dynamic model in which natural disasters affect the accumulation of private wealth, public spending, and output in an economy that is intended to capture salient features of developing countries. The central object of the analysis is the stationary distribution of key macroeconomic variables that emerges in the presence of recurrent, stochastic disasters. Within this framework, we derive analytic characterizations of the stationary distributions of private wealth, government spending, and GDP, and study how their shapes and tails depend on both disaster risk and institutional parameters. Natural disasters affect the economy via two channels. First, the effects on production are transmitted through a demand channel by altering the consumption-savings trade-off of households and thus the proportion of capital that can be invested in capital accumulation. Second, natural disaster shocks also activate a supply channel: they destroy capital and alter the way in which public spending influences total factor productivity. The stationary distributions of capital stock and public expenditure exhibit unusual characteristics such as Pareto laws and upper Gamma distributions. Our stylized model describes key mechanisms in developing countries and allows us to investigate the factors that enhance economic resilience to shocks, as well as those that may render their effects persistent.
Keywords Stochastic growth, Public spending, Developing countries, Natural disasters
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Abstract This paper is devoted to developing the alternating minimization algorithm for problems of structured nonconvex optimization proposed by Attouch, Bolt´e, Redont, and Soubeyran in 2010. Our main result provides significant improvements of the convergence rate of the algorithm, especially under the low exponent PolyakLojasiewicz-Kurdyka condition when we establish either finite termination of this algorithm or its superlinear convergence rate instead of the previously known linear convergence. We also investigate the PLK exponent calculus and discuss applications to noncooperative games and behavioralscience.
Keywords Polyak- Lojasiewicz-Kurdyka conditions, Convergence rates, Noncooperative games, Alternating minimization algorithm, Nonsmooth optimization
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Abstract We study the problem of maximizing Rényi entropy of order $2$ (equivalently, minimizing the index of coincidence) over the set of joint distributions with prescribed marginals. A closed-form optimizer is known under a feasibility condition on the marginals; we show that this condition is highly restrictive. We then provide an explicit construction of an optimal coupling for arbitrary marginals. Our approach characterizes the optimizer's structure and yields an iterative algorithm that terminates in finite time, returning an exact solution after at most $p-1$ updates, where $p$ is the number of rows.
Keywords Entropy maximization, Index of coincidence minimization, Coupling, Marginal constraints
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Abstract Using field data from an insurtech firm and a survey experiment, this paper studies health belief formation within couples. We document a strong gender asymmetry: Women increase critical illness insurance purchases for their husbands after negative health signals of COVID-19, hospital visits, and unhealthy lifestyles but do not adjust coverage for themselves, while men do not respond to either. Experimental evidence reveals pervasive health overconfidence and shows that women update on husbands’ negative health information but not their own, whereas men update neither. The findings highlight gendered belief updating and the importance of household decision-makers in financial choices.
Keywords Health overconfidence, Motivated beliefs, Gender differences, Insurance
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Abstract This paper studies whether expanding women’s decision-making authority within marriage affects female labor supply and girls’ human capital investment. We exploit a major reform of French marital law in 1966, which reallocated control over labor and financial decisions from husbands to wives while leaving divorce institutions unchanged. Using census and family survey data, we implement two complementary empirical strategies. First, exploiting the discontinuity in access to the new marital regime by date of marriage, we show that women married under the new regime are 7 percentage points more likely to be employed more than thirty years later, after childrearing constraints have largely passed. Second, using cohort- and gender-based exposure to the reform, we find that girls who are at key educational decision ages when the reform is announced complete more schooling and are 13 percent more likely to obtain a baccalauréat or a higher-education degree. These education gains translate into higher employment rates and access to higher-skilled occupations in adulthood.
Keywords Gender, Education, Labor supply, Marriage law, Intra-household decision making
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Abstract A subset of economic agents in a society is aware of the existence of an economic opportunity, and compete to exploit the opportunity. We study incentives to communicate about the existence of this economic opportunity when the exploitation of the opportunity by the winner generates externalities to other agents. We characterize the equilibria of the communication game and identify conditions under which more externalities generate more communication.
Keywords Opportunity, Strategic Communication, Externalities
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Abstract We study the almost sure convergence of the occupation measure of evolution models where mutation rates decrease over time. We show that if the mutation parameter vanishes at a controlled rate, then the empirical occupation measure converges almost surely to a specific invariant distribution of a limiting Markov chain. Our results are obtained through the analysis of a larger class of time-inhomogeneous Markov chains with finite states pace, where the control on the mutation parameter is explained by the energy barrier of the limit process. Additionally, we derive an explicit L1 convergence rate, explained through the tree-optimality gap, that may be of independent interest.
Keywords Evolution models, Inhomogeneous Markov chain, Occupation measure, Energy barrier
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Abstract This review examines how virtual embodiment interventions can inform economic research on inequality across social groups. These interventions, widely used in psychology and related disciplines, consist of using virtual reality to embody individuals in virtual bodies whose appearance can be experimentally manipulated. By varying key characteristics such as skin-tone, gender, or age, researchers caninduce the illusion of inhabiting the body of an outgroup member. I synthesize existing research on outgroup embodiment and provide both a practical guide to designing embodiment interventions and a critical assessment of the methodological trade-offs involved in their implementation. In addition, I discuss how combining embodimentinterventions with tools from experimental economics can serve two purposes: first, to advance research on social inequality by introducing new methods to study its socio-cognitive foundations; and second, to address open questions in the embodiment literature by testing whether “changing bodies” can change not only minds but also behavior.
Keywords Discrimination, Inequality, Prejudice, Identity, Virtual reality, Experimental economics
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Abstract We study choice among lotteries in which the decision maker chooses from a small library of decision rules. At each menu, the applied rule must make the realized choice a strict improvement under a dominance benchmark on perceived lotteries. We characterize the maximal Herfindahl-Hirschman concentration of rule shares over all locally admissible assignments, and diagnostics that distinguish rules that unify behavior across many menus from rules that mainly act as substitutes. We provide a MIQP formulation, a scalable heuristic, and a finite-sample permutation test of excess concentration relative to a menu-independent random-choice benchmark. Applied to the CPC18 dataset (N= 686 subjects, each making 500-700 repeated binary lottery choices), the mean rule concentration is 0.545, and 64.1% of subjects show excess rule concentration, rejecting menu-independent random choice at the 1% level. Concentration gains are primarily driven by modal-payoff focusing, salience-thinking, and regret-based comparisons.
Keywords Behavioral economics, Decision Theory, Revealed Preference
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Abstract We develop a new model of faith-based organizations (FBOs) as multi-sided platforms. Faithbased platforms (FBPs) offer two types of services. The first is a religious service that includes providing a moral narrative, giving guidance and counselling, and proposing access to the divine through prayer, meditation or rituals. The second is a networking service that allows members to connect with members who come for the religious service. By offeringboth types of service, FBPs benefit from the spill-over effect of the religious service, whichhelps to screen for trustworthy network members. FBPs are more profitable than organizations that only offer areligious service, often even per capita, and are generally larger in size. The optimal community size depends on the type of interactions the FBP fosters and how much it invests in the quality of the religious service. This can explain the diversity of FBOs that continue to thrive despite secular competition and some recent phenomena that cannot be fully explained by existing models of FBOs, such as the growth of religion in some urban settings and the emergence of religious communities that have grown very large without sacrificing high profits per member.
Keywords Religion, Faith-based organisations, Platforms
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