The Harvard community has made this article openly available. Please share how this access benefits you. Your story matters Using data from rural Bangladesh, we explore the hypothesis that women attain less schooling as a result of social and financial pressure to marry young. We isolate the causal effect of marriage timing using age of menarche as an instrumental variable. Our results indicate that each additional year that marriage is delayed is associated with 0.22 additional year of schooling and 5.6 percent higher literacy. Delayed marriage is also associated with an increase in use of preventive health services. In the context of competitive marriage markets, we use the above results to obtain estimates of the change in equilibrium female education that would arise from introducing age of consent laws.
We explain trends in dowry levels in Bangladesh by drawing attention to an institutional feature of marriage contracts previously ignored in the literature: the mehr or traditional Islamic brideprice. We develop a model of marriage contracts in which mehr serves as a barrier to husbands exiting marriage and a component of dowry as an amount that ex ante compensates the groom for the cost of mehr. We investigate how mehr and dowry respond to exogenous changes in the costs of polygamy and divorce, and show that our model gives a different set of predictions than traditional models. We show that major changes in dowry levels took place precisely after the legal changes, corresponding to simultaneous changes in levels of mehr.
This paper investigates firms' pricing decisions and consumers' network choices in two-sided markets with network externalities. Consumers are heterogeneous in how much they value the externality. We show that imposing some restrictions on the extent of coordination failure among consumers leads to clear qualitative conclusions about equilibrium market configurations. Multiple asymmetric networks can coexist in equilibrium, both in the case of a monopolist network provider and in the case of competing providers. These equilibria have the property that can be observed in many different two-sided markets: one network is cheaper and larger on one side, while the other network is cheaper and larger on the other side. Product differentiation is endogenized by consumers' network choices.JEL classification numbers: D43, D62, L11, L14
This paper experimentally investigates the effects of a costly punishment option on cooperation and social welfare in long, finitely repeated public good contribution games. In a perfect monitoring environment, increasing the severity of the potential punishment monotonically increases average net payoffs. In a more realistic imperfect monitoring environment, we find a U-shaped relationship. Access to a standard punishment technology in this setting significantly decreases net payoffs, even in the long run. Access to a severe punishment technology leads to roughly the same payoffs as with no punishment option, as the benefits of increased cooperation offset the social costs of punishing. (JEL C92, H41, K42)
We develop a model of informal risk-sharing in social networks, where relationships between individuals can be used as social collateral to enforce insurance payments. We characterize incentive compatible risk-sharing arrangements and obtain two results. (1) The degree of informal insurance is governed by the expansiveness of the network, measured by the number of connections that groups of agents have with the rest of the community, relative to group size. Two-dimensional networks, where people have connections in multiple directions, are sufficiently expansive to allow very good risk-sharing. We show that social networks in Peruvian villages satisfy this dimensionality property; thus, our model can explain Townsend's (1994) puzzling observation that village communities often exhibit close to full insurance. (2) In second-best arrangements, agents organize in endogenous "risk-sharing islands" in the network, where shocks are shared fully within, but imperfectly across islands. As a result, network based risk-sharing is local: socially closer agents insure each other more. A B C D E F G H I J X Agricultural tool (74.3%) Other tool (7.3%) Animals (1.8%) Electric device (0.8%) Kitchen utensil (5.6%) Clothes (0.7%) Food (7.0%) Other (2.5%) 0 to 10 S/. 40.5% 11 to 20 S/. 15.6% 21 to 50 S/. 17.1% 51 to 100 S/. 11.0% 101 S/. or more 15.9% Huaraz Community Figure 1: Financial and real transactions between relatives and friends in a rural community in Peru, represented as lines between transacting parties in the village map. Thickness of line measures value of transaction in Peruvian New Soles.state of the world. This arrangement is subject to moral hazard: ex post, an agent who is expected to make a transfer to a network neighbor may prefer to deviate and withhold payment. In our model, such deviations result in the loss of the a¤ected link. Intuitively, network links serve as social collateral ensuring that agents live up to their obligations under the informal risk-sharing arrangement.Our …rst result is that an incentive-compatible risk-sharing arrangement always gives rise to a consumption allocation that is coalition-proof in the following sense: the net transfer from any group of agents to the rest of the community, de…ned as the di¤erence between the group's total endowment and consumption, cannot exceed the sum of the values of all links between the group and the community. Intuitively, individual obligations embedded in the value of links build up to group obligations represented by the total value of links connecting the group with the larger community. This equivalence between coalition-proof allocations and incentive compatible risk-sharingWe show that full insurance requires highly expansive networks like the in…nite binary tree. However, we do not …nd that real-world social networks in rural villages in Peru exhibit this large degree of expansiveness. Instead, these social networks are more similar to planar networks, possibly because people tend to have connections at close geographic distance. We next sh...
In media markets, consumers spread their attention to several outlets, increasingly so as consumption migrates online. The traditional framework for competition among media outlets rules out this behavior by assumption. We propose a new model that allows consumers to choose multiple outlets and use it to study the effects on advertising levels and the impact of entry and mergers. We identify novel forces which reflect outlets' incentives to control the composition of their customer base. We link consumer preferences and advertising technologies to market outcomes. The model can explain several empirical regularities that are difficult to reconcile with existing models. (JEL D42, D43, L12, L13, L82, L86, M37)
How do geographically concentrated income shocks influence the long-run spatial distribution of poverty within a city? We examine the impact on housing prices of a cholera epidemic in one neighborhood of nineteenth century London. Ten years after the epidemic, housing prices are significantly lower just inside the catchment area of the water pump that transmitted the disease. Moreover, differences in housing prices persist over the following 160 years. We make sense of these patterns by building a model of a rental market with frictions in which poor tenants exert a negative externality on their neighbors. This showcases how a locally concentrated income shock can persistently change the tenant composition of a block. (JEL D62, O18, R21, R31)
We develop a model in which connections between individuals serve as social collateral to enforce informal insurance payments. We show that: (i) The degree of insurance is governed by the expansiveness of the network, measured with the per capita number of connections that groups have with the rest of the community. “Two-dimensional” networks—like real-world networks in Peruvian villages—are sufficiently expansive to allow very good risk-sharing. (ii) In second-best arrangements, insurance is local: agents fully share shocks within, but imperfectly between endogenously emerging risk-sharing groups. We also discuss how endogenous social collateral affects our results. (JEL D85, G22, O15, O17, Z13)
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