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Départements : Economie et Sciences de la décision

We study the effects of financial shocks on labor markets in a model with both labor and financial frictions, two types of productive capital, physical and intangible, and in which only the former serves as collateral. A tighter borrowing constraint in this environment leads to a fall in credit and investment, skewed in detriment of intangibles, which in its turn lowers the marginal product of labor and reduces the incentives to hire workers. When feeding into the model financial shocks estimated from the data, we find that they explain labor outcomes during the last three downturns in the US, including the sharp increase in unemployment during the great recession

Mots clés : Financial Shocks, Intangible Assets, Business Cycles, Employment Volatility

Départements : Economie et Sciences de la décision, GREGHEC (CNRS)

The Intergovernmental Panel on Climate Change has developed a novel framework for assessing and communicating uncertainty in the findings published in their periodic assessment reports. But how should these uncertainty assessments inform decisions? We take a formal decision-making perspective to investigate how scientific input formulated in the IPCC's novel framework might inform decisions in a principled way through a normative decision model.

Départements : Economie et Sciences de la décision, GREGHEC (CNRS)

We reexamine some of the classic problems connected with the use of cardinal utility functions in decision theory, and discuss Patrick Suppes's contributions to this field in light of a reinterpretation we propose for these problems. We analytically decompose the doctrine of ordinalism, which only accepts ordinal utility functions, and distinguish between several doctrines of cardinalism, depending on what components of ordinalism they specifically reject. We identify Suppes's doctrine with the major deviation from ordinalism that conceives of utility functions as representing preference differences, while being nonetheless empirically related to choices. We highlight the originality, promises and limits of this choice-based cardinalism.

Mots clés : Ordinal utility, Cardinal utility, Preference differences, Representation theorems, Suppes, Ordinalism, Cardinalism

Départements : Economie et Sciences de la décision, GREGHEC (CNRS)

Suppose that a group of individuals must classify objects into three or more categories, and does so by aggregating the individual classifications. We show that if the classifications, both individual and collective, are required to put at least one object in each category, then no aggregation rule can satisfy a unanimity and an independence condition without being dictatorial. This impossibility theorem extends a result that Kasher and Rubinstein (1997) proved for two categories and complements another that Dokow and Holzman (2010) obtained for three or more categories under the condition that classifications put at most one object in each category. The paper discusses an interpretation of its result both in terms of Kasher and Rubinstein's group identification problem and in terms of Dokow and Holzman's task assignment problem.

Mots clés : Aggregation of classifications, Group identification problem, Task assignment problem, Nonbinary evaluations

Départements : Economie et Sciences de la décision, GREGHEC (CNRS)

Harsanyi invested his Aggregation Theorem and Impartial Observer Theorem with utilitarian sense, but Sen described them as "representation theorems" with little ethical import. This critical view has never been subjected to full analytical scrutinity. The formal argument we provide here supports the utilitarian relevance of the Aggregation Theorem. Following a hint made by Sen himself, we posit an exogeneous utilitarian ordering that evaluates riskless options by the sum of individual utilities and we show that any social observer who obeys the conditions of the Aggregation Theorem evaluates social states in terms of a weighted variant of this utilitarian sum.

Mots clés : Utilitarianism, Aggregation Theorem, Impartial Observer Theorem, Cardinal utility, VNM utility, Harsanyi, Sen

Départements : Economie et Sciences de la décision, GREGHEC (CNRS)

Les risques majeurs sont associés à des événements dont les conséquences défavorables, pour l’humanité ou pour l’environnement, sont d'une gravité exceptionnelle, sans qu’ils soient eux-mêmes nécessairement, comme on le dit souvent, d'une intensité physique extrême ou d’une fréquence très faible. Il en existe de multiples sortes: les risques naturels, comme ceux d’inondation et de submersion marine; les risques technologiques; les risques nucléaires, que l'on traite séparément parce qu’ils mettent en jeu le phénomène de radioactivité; les risques sanitaires; les risques alimentaires, parfois liés aux précédents; enfin, des catégories plus récentes telles que le risque climatique et le terrorisme, auxquels il faudrait ajouter les risques militaires pour être complet.Dans un rapport récent, le Conseil d’analyse économique [Grislain-Letrémy, Lahidji et Mongin, 2013] s’est penché sur le concept général de risque majeur et a étudié de façon plus spécifique le cas des risques naturels, technologiques et nucléaires présents sur le territoire français. Le rapport a abordé les trois risques transversalement, à travers les prismes de la géographie et de la technologie, de l'histoire institutionnelle et juridique, enfin d'un bilan normatif et de recommandations relatifs à l’action publique. Cet article présentera successivement les diagnostics du rapport et ses recommandations.

Mots clés : Major risks, natural hazards, technological disasters, nuclear accidents, public action against major risks, disaster prevention management, insurance against catastrophic risks

Départements : Economie et Sciences de la décision

We show that the transition from an economy characterized by idiosyncratic income shocks and incomplete markets à la Aiyagari (1994) to markets where state-contingent assets are available but costly (in order to purchase a contingent asset, households have to pay a fixed participation cost) leads to a large increase of wealth inequality. Using a standard calibration our model can match a Gini of 0.93 close to the level of wealth inequality observed in the US. In addition, under this level of participation costs, wealth inequality is particularly sensitive to income inequality. We label this phenomenon as the Inequality Accelerator. We demonstrate how costly access to contingent asset-markets generates these effects. The key insight stems from the non-monotonic relationship between wealth and desired degree of insurance, in an economy with participation costs. Poor borrowing constrained households remain uninsured, middle-class households are almost perfectly insured, while rich households decide to self-insure by purchasing risk-free assets. This feature of households' risk management has crucial effects in asset prices, wealth inequality, and social mobility.

Mots clés : Wealth inequality, Participation costs, Insurance

Départements : Finance, GREGHEC (CNRS), Economie et Sciences de la décision

We examine whether industry structure of an economy can be affected by its banks’ lending policies. We use US interstate bank-entry deregulations to identify the effect of banking integration on states’ manufacturing sector compositions. We find that states’ under-specialized (with respect to the US) and external-finance-dependent industries grow faster upon entry of banks from states that are overspecialized in the same sectors. We observe growth for industry value added, gross operating surplus, and output per employee, but none for the number of employees, their compensation or wages. Our results are indicative of a banking channel shaping the states’ industrial landscape.

Mots clés : banking integration; industry structure; industrial specialization; economic convergence

Départements : Economie et Sciences de la décision, GREGHEC (CNRS), Finance

We introduce the model of Stochastic Revision Games where a finite set of players control a state variable and receive payoffs as a function of the state at a terminal deadline. There is a Poisson clock which dictates when players are called to choose of revise their actions. This paper studies the existence of Markov perfect equilibria in those games. We give an existence proof assuming some form of correlation

Départements : Economie et Sciences de la décision, GREGHEC (CNRS)

This handbook chapter covers the existing theoretical literature on social preference and social welfare under risk (i.e., when probability values enter the data of the situation) and uncertainty (i.e., when this is not the case and only subjective probability assessments can be formed). Section 1 sets the stage historically by contrasting classical social choice theory and welfare economics, which are restricted to the certainty case, with Harsanyi's pathbreaking attempt at extending these fields to the risk case. Section 2 reviews the work, both ancient and recent, stemming from Harsanyi's Impartial Observer Theorem. Section 3 does the same job for Harsanyi's Social Aggregation Theorem and discusses Sen's objections against the utilitarian relevance of either theorem. Section 4 explains why the Social Aggregation Theorem does not carry through from risk to uncertainty, a major conundrum that can also be expressed as a clash between ex ante and ex post welfare assessments; the proposed solutions are covered, including some very recent ones. Section 5 explains that equality, like social welfare, can be defined either ex ante or ex post, and using a basic example by Diamond, that these two definitions clash with each other. Section 6 covers the main solutions that egalitarian writers have given to this problem, again including some very recent ones.


Département Economie et Sciences de la Décision

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Economie - Sciences de la Décision

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