Fuqua School of Business
100 Fuqua Drive
Durham, NC 27708-0120
Institutional Affiliation: Duke University
Information about this author at RePEc
NBER Working Papers and Publications
|July 2009||When Does Libertarian Paternalism Work?|
with Bruce Ian Carlin, Gustavo Manso: w15139
We develop a theoretical model to study the effects of libertarian paternalism on knowledge acquisition and social learning. Individuals in our model are permitted to appreciate and use the information content in the default options set by the government. We show that in some settings libertarian paternalism may decrease welfare because default options slow information aggregation in the market. We also analyze what happens when the government acquires imprecise information about individuals, and characterize its incentives to avoid full disclosure of its information to the market, even when it has perfect information. Finally, we consider a market in which individuals can sell their information to others and show that the presence of default options causes the quality of advice to decreas...
Published: Libertarian Paternalism, the Production of Knowledge, and Financial Decision-Making (with Simon Gervais and Gustavo Manso). Review of Financial Studies 26: 2204-2228, 2013.
|May 2009||Legal Protection in Retail Financial Markets|
with Bruce I. Carlin: w14972
Given the importance of sound advice in retail financial markets and the fact that financial institutions outsource their advice services, what legal rules maximize social welfare in the market? We address this question by posing a theoretical model of retail markets in which a firm and a broker face a bilateral hidden action problem when they service clients in the market. All participants in the market are rational, and prices are set based on consistent beliefs about equilibrium actions of the firm and the broker. We characterize the optimal law within our modeling context, and derive how the legal system splits the blame between parties to the transaction. We also analyze how complexity in assessing clients and conflicts of interest affect the law. Since these markets are large, the im...
Published: Legal Protection in Retail Financial Markets (with Simon Gervais). Review of Corporate Finance Studies 1: 68-108, 2012.