Browsing by Subject "Economics"
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Item Academic couples and the economics of the co-location problem.(2009-05) Li, JinxiongDual career couples often face the problem of finding two jobs close to each other, mostly in the same metropolitan areas, which is called the co-location problem. The co-location problem has significant implications in the study of the distribution of human resources across cities. In Chapter 1 of this thesis, we employ the data set of National Study of Postsecondary Faculty (NSOPF), which consists of 4 cycles of comprehensive surveys about the faculty and/or institutions in postsecondary education, to study the demographical changes and co-location problem of the postsecondary faculty in USA from year 1987 to year 2004. We document some demographical changes of the postsecondary faculty. Our work shows that the co-location problem has more impacts on the faculty in smaller cities. We find evidences of ability sorting of the faculty among cities of different sizes. Chapter 2 of this thesis develops a parsimonious model that examines equilibrium behaviors by universities as well as by academics. The model has a deterministic structure with cities differing in the variety of schools. Schools in cities with more varieties of schools have an advantage over schools of the same type in cities with fewer varieties of schools, because schools of the other type in the same cities help accommodate spouses with different ability levels. Schools can make hiring decisions based the average of a couple's abilities, which is referred to as couple accommodation policy in this thesis, or based on the merit of each individual in isolation. We establish in this chapter that it is better off for any school to adopt the couple accommodation policy regardless of its location and quality. However, the impact on each school of the couple accommodation policy in the equilibrium where every school implements such a policy differs by school location and quality. High quality schools in large cities always get worse off and low quality schools in small cities always get better off. Chapter 3 of the thesis provides a probabilistic model of the co-location problem for any labor market in general. In the model, cities differ solely in the number of firms. Firms are ex ante the same to all workers. We establish the theoretical results that dual career couples are more likely to locate in larger cities as compared to single career couples and that larger cities get higher ability workers. We also simulate the job choices by academics, and examine the quantitative implications of the co-location problem for the distribution of ability across cities in the academic labor market. The results show that as the labor market gets thinner or the marriage rate gets higher, the impact of co-location problem becomes stronger, i.e., the ability gap between faculty in large cities and those in small cities gets larger.Item Algorithmic bounded rationality, optimality and noise.(2009-05) Ioannou, Christos AndreasA model of learning, adaptation and innovation is used to simulate the evolution of Moore machines(executing strategies) in the repeated Prisoner's Dilemma stage-game. In contrast to previous simulations that assumed perfect informational and implementation accuracy, the agents' machines are prone to two types of errors: (a) action-implementation errors, and (b) perception errors. The impact of bounded rationality on the agents' machines is examined under different error-levels. The computations indicate that the incorporation of bounded rationality is sufficient to alter the evolutionary structure of the agents' machines. In particular, the evolution of cooperative machines becomes less likely as the likelihood of errors increases.Item Application of Power System Economic Metrics to a Microgrid with Storage and Renewables(2017-12) Hunt, MichelleInterest in multisource microgrids is becoming more prevalent in areas without access to grid power. Many of these areas are currently served by groups of diesel generators. However, the high capital cost of storage and renewable sources makes the initial investment in multisource microgrids frightening. This work is interested in examining the factors that can make a difference in whether or not these additional investments will reduce the total cost of ownership. To do so, this work uses the load and generation profiles of the MEHPS microgrid - a well-defined remote microgrid - and adds in the renewable resources of interest, solar, and storage in order to analyze the cost of the additions. This work takes multiple variables that could have an effect on the final total cost of ownership into consideration, including the price of fuel, price of PV panels, price of batteries, location of installation of the microgrid, cost of pollution, duration of installation, and cost of capital. All of these factors are considered in order to suggest what will make a difference to whether or not additional investments will reduce the total cost of ownership. The results of this work offer suggestions to those planning to deploy multisource microgrid systems in remote areas around the world.Item Baltimore's urban fix: sounds of excess and exclusion in Station north(2013-03) Kotting, JenniferThis research seeks to tell a different kind of story about urban development, attentive to the details of everyday life that are often ignored by both supporters and critics of such projects. The case study of Station north is an immediately relevant project meant to improve the city as a whole by attracting capital investment. However, the social and political contradictions involved show the devastating consequences of a spatial fix for an urban neighborhood. Mapping neighborhood change is common, but using sound and digital mapping to evoke under-explored parts of everyday life is less typical in the field of urban studies.Item Beyond "Just Use the Free One": Connecting the Economics and Use of Technical Communication Tools(2020-05) Wold, RyanThis poster provides guidance for technical communicators navigating technology adoption decisions. First, this poster provides quotes from professional technical communicators suggesting that the pricing of technical communication tools can influence the way technical communication teams work. Second, it shows the methods and results of a research study that evaluated the pricing scheme of 30 commonly used technical communication tools. Models demonstrate how the pricing strategies, versioning strategies, and onboarding strategies used by the proprietors of technical communication tools can influence the way teams use those tools. This research indicates the strategies used to price software tools can affect usability, as minor differences at every level of a company’s pricing scheme can influence user behavior.Item Capital, Scale, and Risk Constraints to Vegetable Adoption among Smallhold Farmers in Nepal(2015) Katovich, Erik;Nepal’s agricultural productivity has stagnated in recent decades, resulting in widespread malnutrition, poverty, and civil conflict. In response, government and donor institutions have promoted high-input, high-return vegetable crops to increase earnings and productivity among smallhold farmers. This study examines the constraints limiting widespread adoption of these crops in the Mid-Western Development Region (MWDR) of Nepal. I first draw upon the technology adoption literature to generate predictions regarding potential capital, scale, and risk constraints to farmers’ vegetable adoption, and then develop Logit, Probit, OLS, and Ordered Probit regression models to measure the effects of these constraints on a sample of farmers from the MWDR. The sample is drawn from a field survey I conducted in Nepal from June to July, 2014. Principal regression results show that farm area, distance to an agricultural supplier, higher caste status, and food insecurity are all significantly negatively associated with vegetable adoption, while farmers’ age, agricultural training, and assets are significantly positively associated with adoption. I conclude that the surprising negative relation between farm size and vegetable adoption is the result of non-functioning labor markets, and that risk aversion is a significant barrier to vegetable adoption. More broadly, I find that vegetables are a relatively equitable instrument for poverty alleviation in Nepal.Item Communication, confidence and asset pricing.(2008-08) Xia, ChunStandard rational expectations models assume away direct communication among speculative traders and resort to psychological traits such as traders' overconfidence in information processing ability to explain the observed enormous trading activity in financial markets. Yet, a growing literature documents that social communication affects individual trading behavior and market trading patterns, and over- and underconfident traders may coexist. The dissertation thus has two general objectives: (1) to analyze the impact of social communication on asset pricing, agents' trading behavior and welfare, and (2) to examine how traders' changing confidences resulted from communication affect asset pricing and trading behavior. Chapter 2 develops an asset pricing model in which agents communicate information in social networks prior to trading. An agent who is more confident in her private information puts greater weight on her private signal than on signal received through communication when aggregating her information. The results are as follows: Proximity between agents in networks affects correlation of agent demands; Individual agent exploits information and influences price distinctly in different networks; Under certain circumstances social communication is welfare improving for all agents; Irrespective of different network structures, market trading patterns such as market liquidity, trading volume, price volatility and informational efficiency of prices are all higher in communication economy relative to those in economy where agents exploit private signals exclusively; Market trading patterns are strictly decreasing in agents' confidence in private signals. Interestingly, social communication can alternatively explain some intriguing empirical facts such as "gender trading differences" which were attributed to overconfidence. Chapter 3 develops a multi-period market model to examine the evolution of risk averse agents' confidence degrees in learning their abilities to obtain precise information and the properties of resulting price volatility, trading volume, and expected profits. Agents initially do not know their abilities which are related to the qualities of private signals. They assess abilities from communicating and comparing quality of their own signals with that of others. Agents are assumed to credit (blame) themselves strongly for favorable (unfavorable) outcomes. I demonstrate that under reasonable circumstances excessive trading activity can be associated with underconfidence.Item Corporate board dynamics.(2009-06) Schmeiser, Steven MauriceThis dissertation is composed of two chapters which examine the dynamic aspects of the corporate board of directors. In the first essay, I propose a dynamic model in which corporate directors perform firm tasks (such as monitoring management) and choose new directors. Previous literature has focused on the board composition that statically optimizes firm tasks. I incorporate features of these models and give directors the additional task of hiring new directors. This introduces an important dynamic element: the board must consider both how new directors will perform in firm tasks and how new directors will try to change board composition in future hiring rounds. I find that the optimal board composition in the dynamic model differs from that of the static model. Additionally, lack of a commitment mechanism means directors do not always choose board compositions that maximize shareholder value. This creates an opportunity for policy to benefit shareholders. In 2003, the NYSE and Nasdaq exchanges implemented two new rules. First, boards must be composed of a majority of outside directors. Second, director selection must be done by a nominating committee composed of outside directors. I use the model to analytically and numerically investigate the effects of these new regulations on shareholder value. I find that the regulations may benefit shareholders of a firm in the dynamic environment, but never benefit shareholders in the static environment. In the second essay, I examine the response of corporate boards to the majority independent outsider policy of the NYSE and Nasdaq stock exchanges. I estimate a two period model of the board composition choice before and after the regulatory change. In this model, boards stray from the expected optimal independence and board size in response to the quality of individual director candidates. I use the model to investigate the counterfactual experiment of no majority outsider regulation. The model predicts that nearly 59% of firms not in compliance with the majority outsider rule would have moved into compliance even in the absence of the majority regulation. Factors other than the static response to majority outsider rules account for 60% of the observed increase in board independence among non-compliant firms over the years of regulation. These factors may be contemporaneous changes in committee requirements, general trends in corporate governance, or the dynamic considerations examined in the first essay.Item Cost-Benefit Analysis of Marker-Assisted Selection in Rosaceous Fruit Crop Breeding Programs(2018-07) Wannemuehler, SethChallenges exist in breeding horticultural fruit crops in the Rosaceae family including self-incompatibility, high heterozygosity, and lengthy juvenile phases. Breeders are constantly exploring new methods of overcoming these challenges with marker-assisted selection (MAS) being a prominent example in current programs. MAS has been identified as a method for improving crops by countering some of these challenges. A list of criteria has been developed to gauge the effectiveness of MAS in a program. For MAS to be effective: the trait should be simply inherited, the trait should be expressed in mature plants, and monetary and genetic resources must exist for implementation (Luby and Shaw, 2001). The juvenile phase in some of these crops is lengthy and require multiple years to achieve fruit production. MAS allows the screening of younger plants in the program and earlier removal before considerable labor cost investments. However, breeders have difficulty incorporating MAS and other genetic technologies due to a lack of DNA test availability testing facilities, uncertainties calculating cost of utilization, and a lack of monetary investment (Ru et al., 2015). This research focuses on removing some of these barriers by developing a budget tool to identify cost-efficient DNA-informed breeding applications across three breeding operations in rosaceous breeding programs: apple, peach, and strawberry. The budget tool incorporates aspects of economics (both fixed and variable costs) and plant breeding (breeding records and program details). This tool will allow breeders to more quickly and efficiently judge how implementation of DNA technologies affects costs and benefits to their program.Item Data for Process Design and Economic Analysis of Renewable Isoprene from Biomass via Mesaconic Acid(2019-02-13) Dauenhauer, Paul J; Lundberg, Daniel J; Lundberg, David J; hauer@umn.edu; Dauenhauer, Paul J; Dauenhauer Research Laboratory - Chemical Engineering and Materials ScienceThe data contain the process design and economic information for the design and optimization of a chemical process to manufacture isoprene from biomass via mesaconic intermediate.Item The Development of a National Market in the United States(1921-06) Ensrud, Elma KarolynItem The Development of the Twin Cities as a Metropolitan Market(1921-05) Hartsough, Mildred LucileItem Does public capital spur private investment in developing economies?(2014-10) Zoff, Mark StevenWhat drives private investment in a country is a question of paramount importance to both researchers and policy makers. Additions to a country's private capital stock help drive both faster growth and faster wealth creation, which often creates many positive spillover effects for a country's populace. In a study of twenty-two developing countries over a total of 660 country-year observations utilizing vector error correction models, this report found preliminary evidence that public capital stock growth positively caused growth in future values of the private capital stock in a country. Additionally, this study found that changes in the level of the population and changes in the strength of political institutions also caused changes in the level of the stock of private capital in a developing country. Tentative causal evidence also existed for changes in the domestic credit to the private sector as a share of GDP, financial openness, and the size of the economy causing changes in the stock of private capital in a country. Policy makers in developing countries should focus future efforts on improving the quality of their institutions and providing high quality infrastructure, both traditional and social, if they want to help increase their country's private capital formation and, consequently, growth.Item The economics of a new health technology: an evaluation of the impact of statins on lifestyle behaviors(2012-04) Dehmer, Steven PatrickBackground: Heart disease has been the leading cause of death in the United States since 1921, and although death rates have declined since their peak in the 1960s, it remains a significant burden to the population's health. For most of the second half of the 20th century, changes in lifestyle--such as in diet and exercise--have been the most salient intervention to prevent cardiovascular disease. However, pharmaceutical interventions have gained significant traction in recent decades and may now be supplanting lifestyle change therapies. This study presents a theoretical framework for conceptualizing behavioral feedbacks from new medical technologies, and conducts an empirical case study to investigate whether the introduction of cholesterol-lowering statin drugs can be associated with changes in diet and exercise behavior. Although statins are highly effective in reducing cardiovascular disease risk, lifestyle improvements can garner significant health benefits in addition to lowering cholesterol. Methods: Grossman's model for the demand of health is applied to inform theoretical predictions on health behaviors with the introduction of a new medical technology such as statins. An extension incorporating uncertainty in one's own health status is introduced to motivate the demand for prevention. This extension also allows for the possibility that prevention screening services may send signals of varying quality to an individual regarding one's true health status. If a prescription for a statin sends a stronger informational signal than a high cholesterol diagnosis alone, this could lead to an association of statin use with improved health behaviors. An empirical investigation to test the theoretical predictions is conducted through a causal inference analysis of the introduction of statins on therapeutic lifestyle behaviors (i.e., improved diet and exercise). Longitudinal survey data on a panel of 8,000 individuals from 1995-1998 is linked with statin prescription (claims) data for analysis. Key to causal inference, the timing of this survey coincides with a rapid secular trends in statin adoption. This corresponds with considerable intrapersonal heterogeneity in observed treatment (i.e., statin use) and allows for multiple analytical strategies to account for potential endogeneity bias--namely, panel data and physician/clinic-based instrumental variable methods. To test the practical implications of behavioral changes associated with statin use, multiple simulations are conducted to estimate the economic and health impacts on a U.S.-representative birth cohort, as well as the surveyed cohort from which the empirical results are drawn. An evidence-based Markov microsimulation model is presented for the conduct of this simulation analysis. Results: Preliminary results show an effect that is ostensibly counter-intuitive: a new statin prescription tends to improve health behaviors. Physical activity, in particular, is shown to increase by as much as 30 to 50 percent with statin use. The available data limits inference to short-run impacts (i.e., within four years), but simulations are used to test a range of potential short- and long-term consequences. Short-run impact on health and costs is negligible; however, the predicted long-term impact of improved behaviors on health outcomes can reach 5 to 10 percent reductions in events. For most scenarios, predicted changes in costs are negligible, in part due to their general inverse relationship with longevity. Conclusions: When faced with a newly introduced technology, people are anticipated to respond to any altered incentives. However, if a new technology also serves as a conduit for improved health information, people should be expected to respond to that new information as well. With the introduction of statins, this study shows that a new prescription caused people to choose to exercise more. This result suggests that although both potential modes of action may be in effect, the response to new information may dominate--at least in the short-run. Further empirical and theoretical study will be needed to fully understand the long-term response to statins or similar "new" health technologies.Item The Economics of Alternative Transportation Modes: An Empirical Assessment of the Twin Cities(1994-05) Kanninen, Barbara J.; Mohn, CraigThis report presents a model of travel behavior for the Twin Cities Metropolitan Area using the 1990 Travel Behavior Inventory. The model incorporates mode choice and the number of trips individuals take. Using the estimation results, we report estimates for mode share price elasticities and find that they are quite low. All mode share elasticities are less than 0.25 which means that a 4% price change could cause no more than a 1% change in mode share. Mode share elasticities for nonwork trips are higher than those for work trips indicating that there is greater flexibility in non-work trip mode choices than in work trip choices. Two pricing policy simulations are performed and the results verify that there is low mode choice responsiveness to price changes. The welfare costs associated with these policies are derived. It is found that a 10% gasoline tax would cost the average traveler $0.33 per day. A transit fare reduction by one-half would benefit the average traveler $0.12 per day. It should be noted though that the transit fare reduction affects only a small part of the population who, apparently, receive large cost savings. Although the transit fare reduction does not reduce vehicle use by much, it does increase the transit share by 24%, a substantial increase in ridership. The results presented here imply that large price changes are necessary to induce people to reduce their vehicle use either by switching modes or reducing the number of trips they take.Item The economics of mortgage lending regulations.(2012-01) Golyaev, KonstantinIn this dissertation, I consider various aspects of the U.S. residential mortgage lending market in 2005. In particular, I examine how existing regulations may have contributed to the mortgage default crisis that began in early 2007. The first chapter of the dissertation is concerned with the Community Reinvestment Act (CRA). The CRA is a federal lending regulation that creates incentives for depository institutions to lend in low- and moderate-income areas. Only a subset of market areas is closely monitored by the regulators. I exploit this CRA enforcement mechanism to identify its effect on the banks’ loan approval decisions. I employ a novel nonlinear Bayesian Instrumental Variables method to quantify the above effect while admitting unobserved heterogeneity among mortgage lenders. I find that, other things equal, loans in closely monitored areas have a 21:7 percent higher average chance of being approved. This implies that more than 327; 000 extra loans originated in 2005 in California and suggests that banks’ responses to the CRA enforcement mechanism sharply contradict the original CRA goals of providing credit in all eligible neighborhoods. Namely, CRA-induced incentives led banks to issue substantially more loans to marginal borrowers in monitored areas. The second chapter of the dissertation explores the degree of strategic interactions among mortgage lenders and how these interactions differ depending on the regulatory agency. Conventional economic wisdom suggests that competition among mortgage lenders will result in overall welfare improvements. Recent theoretical research challenges this wisdom. Using the data concerning home mortgage loan applications, I test the “race-to-the-bottom” hypothesis that competition among lenders causes them to relax lending standards. I exploit the recently developed structural methods of estimating static games with incomplete information to identify how lenders form beliefs about the actions of their competitors. I find strong evidence supporting the “race-to-the-bottom” story among all types of mortgage lenders, with the exception of those regulated by the Federal Reserve System. Thus, my results provide a partial explanation for the subprime mortgage collapse of the early 2007.Item Entrepreneurship and the macroeconomy.(2009-08) Kartashova, Katsiaryna L.This thesis focuses on entrepreneur as an owner of a privately held business. As the name "privately held" suggests, there are no readily available markets for trading risks associated with entrepreneurs' investments in their businesses. On the contrary, investments in publicly traded companies provide opportunities for diversification of risks through trade in public equity markets. I study the characteristics of these alternative investments and their effect on decisions of entrepreneurs to invest in a portfolio of private and public equities. First, I compare empirically returns to an index of all non-traded entrepreneurial equity and to an index of publicly traded equity in the United States. Second, I study the aggregate effects of improving investment conditions in public equity markets through their influence on entrepreneurs' individual portfolio decisions. I provide explicit quantitative measures of associated changes in the welfare of entrepreneurs and levels of aggregate economic activity using data from Ecuador and Chile.Item Essays in dynamic macroeconomic policy.(2012-05) Shourideh, AliIn this dissertation, we study optimal macroeconomic policy in dynamic environments. In Chapter 1, we focus on optimal tax policies in environments with idiosyncratic capital income risk. We develop a model in which entrepreneurs are subject to idiosyncratic shocks to their capital income. Shocks to capital income have two components: 1) a component that is known to the entrepreneur at the time of investment, 2) a residual component that is realized after investment. This creates two types of incentive problems: a hidden type problem and a hidden action problem. We show that, absent private markets for insurance of idiosyncratic risk, entrepreneurial and non-entrepreneurial capital income should be taxed differently. Moreover, the government should subsidize non-entrepreneurial capital income when the known and lowest value. Furthermore, for a wide variety of distributions, the optimal tax schedule is progressive with respect to entrepreneurial capital income. Finally, the results regarding taxation of entrepreneurial income depend on the extent to which incentives and insurance are provided by private contracts. In particular, private contracts can approximately implement the efficient allocation if convertible securities are available. The prevalence of these securities in venture capital contracts suggest that the forces identified here are important in practice. In Chapter 2, we study optimal intergenerational transmission of consumption and wealth with endogenous fertility. We use an extended Barro-Becker model of endogenous fertility, in which parents are heterogeneous in their labor productivity, to study the efficient degree of consumption inequality in the long run when parents productivity is private information. We show that a feature of the informationally constrained optimal insurance contract is that there is a stationary distribution over per capita continuation utilities, i.e. there is an efficient amount of long run inequality. This contrasts with much of the earlier literature on dynamic contracting where ``immiseration'' occurs. Further, the model has interesting and novel implications for the policies that can be used to implement the efficient allocation. Two examples of this are: 1) estate taxes are positive and 2) there are positive taxes on family size. In Chapter 3, we focus on optimal design of pension systems in providing incentives for efficient retirement. We study lifecycle environments with active intensive and extensive labor margins. First, we analytically characterize Pareto efficient policies when the main tension is between redistribution and provision of incentives: while it may be more efficient to have highly productive individuals work more and retire older, earlier retirement may be needed to give them incentives to fully realize their productivity when they work. We show that, under plausible conditions, efficient retirement ages increase in lifetime earnings. We also show that this pattern is implemented by pension benefits that not only depend on the age of retirement but are designed to be actuarially unfair. Second, using individual earnings and retirement data for the U.S. as well as intensive and extensive labor elasticities, we calibrate policy models to simulate robust implications: it is efficient for individuals with higher lifetime earning to retire (i) older than they do in the data and (ii) older than their less productive peers, in sharp contrast to the pattern observed in the data. In Chapter 4, we focus on optimal policies in remedying problems in secondary loan markets. Loan originators often securitize some loans in secondary loan markets and hold on to others. New issuances in such secondary markets collapse abruptly on occasion, typically when collateral values used to secure the underlying loans fall and these collapses are viewed by policymakers as inefficient. We develop a dynamic adverse selection model in which small reductions in that a variety of policies intended to remedy market inefficiencies do not do so.Item Essays in empirical industrial organization.(2009-04) Suzuki, JunichiThis thesis consists of two essays. The first essay "Land Use Regulation as a Barrier to Entry: Evidence from the Texas Lodging Industry" examines the impacts of land use regulation on the intensity of competition among hotels. In the U.S., local governments regulate private land use mainly through zoning. By creating a barrier to entry and lessening competition in local business markets, their regulation has the potential to generate a distortion. This paper assesses the empirical relevance of this hypothesis using microdata on midscale Texas chain hotels and land use regulation data collected from their local municipalities. I construct a dynamic entry-exit model of midscale hotel chains. By endogenizing their entry decisions, the model explicitly considers hotel chains' reactions to the stringency of land use regulation. Reduced form regressions indicate that local markets under stringent regulation tend to undergo fewer entries. To identify the extent to which high entry cost due to stringent land use regulation explains this negative correlation, I estimate structural parameters of the entry model by using a recently developed simulation-based algorithm. To verify the robustness of my results, I also employ a bound estimator that is consistent under weak conditions. Estimation results indicate that imposing stringent regulation increases cost enough to affect hotel chains' entry decisions. Although they are the immediate payers of the increased entry cost, incumbents shift about the half of their cost increase onto consumers by exploiting their increased market power. The second essay "Does the Threat of Entry Matter?: Case of the Texas Lodging Industry" examines the impacts of the mere threat of entry on entry decisions of hotel chains. Despite large theoretical literature studying at firms' reaction when the threat of entry exists, there has been few empirical studies looking at this topic. In this essay, I attempt to quantify the importance of the threat of entry on firms' behavior in the case of the Texas lodging industry. My approach is to implement counterfactual experiments based on the structural dynamic entry-exit model of hotel chains that are presented and estimated in the previous chapter. To isolate the impacts of the threat of entry from the impacts of real entry, I simulate the entry-exit decisions of hotel chains under the following three distinct environments: (1) pure monopoly, (2) expost monopoly, and (3) pure duopoly. While pure monopoly and pure duopoly consider their decisions under realistic environments, the expost monopoly let hotel chains make entry decisions as if they were in duopoly while real entry never occurs. By comparing these three environments, I attempt to identify the impacts of the threat of the entry separately.Item Essays in health care economics: structural approaches to measuring moral hazard and adverse selection.(2010-07) Marsh, Christina L.The classic issues of moral hazard and adverse selection as they appear in health care are addressed in this dissertation using new tools of analysis. In the first essay, I construct a new estimator and estimates to measure the price response of patients in health insurance. These estimates allow us to measure the magnitude of moral hazard. Recent health care initiatives attempt to stem rising costs by increasing patients' cost sharing. These initiatives include high deductible plans, the Medicare Drug Plan \doughnut hole," and Health Savings Accounts (HSAs). The success of such initiatives depends on how health expenditures change as patients' reimbursement decreases. Estimating this elasticity is complicated by selection bias, as high expenditure patients can self-select into high reimbursement plans. Additionally, nonlinear reimbursement is prevalent in U.S. insurance contracts and the aforementioned initiatives. Nonlinearities introduce bias when using previous estimation methods by simultaneously determining expenditure and reimbursement rate. This paper develops an elasticity estimation method that controls for selection bias by taking advantage of nonlinear reimbursement rates. Discontinuous reimbursement rates induced by a nonlinearity are used to isolate patients' expenditure choices. Using detailed claims-level data of employer-sponsored health insurance, I nd a tight range of elasticities between -0.25 and -0.33 in the range of average U.S. spending. I then use these estimates in a policy experiment measuring moral hazard and calculate the resulting welfare eects. This paper's estimation method may be used on many policies with nonlinear reimbursement which previous tools could not address. In the second essay, I present joint work with Patrick Bajari, Han Hong, and Ahmed Khwaja wherein we construct an estimator that can address both moral hazard and adverse selection simultaneously. Theoretical models predict asymmetric information in health insurance markets may generate inefficient outcomes due to adverse selection and moral hazard. However, previous empirical research has found it dicult to disentangle adverse selection from moral hazard in health care. We empirically study this question by a using unique data set with condential information from a large self-insured employer to estimate a structural model of the demand for health insurance and medical care. We propose a two-step semiparametric estimation strategy that builds on the work on identification and estimation of auction models. We find significant evidence of moral hazard and adverse selection.