Upcoming Webinars
Equilibrium Spillover of Big Data
Maryam Farboodi, Peter Kondor, and Pablo Kurlat
April 3, 2025
Seminar: 12:00 pm - 1:00 pm ET
Virtual Coffee Break: 1:00 pm - 1:30 pm ET
Presented by Maryam Farboodi
Abstract: We study a model of credit markets with adverse selection where ex-ante identical lenders invest in a screening technology to reduce their type I and type II error in identifying good borrowers. A rich market structure emerges in equilibrium with continuous heterogeneity in lender screening and non-assortative matching between lenders and borrowers. Furthermore, the equilibrium features a hockey stick interest rate schedule—a segmented market structure with variable degrees of fragmentation across different level of borrower opacity. We demonstrate that this market structure is robust to changes in the screening technology as well as lender entry. We then use the model to study the impact of AI adoption and mandatory data sharing regulation on the credit market and show that while AI adoption leads to more financial inclusion, data sharing does not benefit the underserved population and counterintuitively, increases the inequality in financial access.
Ethics and Trust in the Market for Financial Advisors
Simon Gervais and John Thanassoulis
May 1, 2025
Seminar: 12:00 pm - 1:00 pm ET
Virtual Coffee Break: 1:00 pm - 1:30 pm ET
Presented by Simon Gervais
Abstract: We construct an overlapping generations model of financial advisors, who have ethics, are hired competitively, interact with strategic investment funds, and are regulated. Misconduct is the outcome of the tension between the endogenous career concerns created by a competitive labour market rewarding good advisor behaviour and the strategic fund which can frustrate clients’ inference through advisor incentives. We characterise market conditions leading to high misconduct. We offer a prediction as to the pattern of misconduct as wealth inequality increases. And we establish when, over the course of a career, financial advisors are most trustworthy.
Putting the ‘Finance’ into ‘Public Finance’: A Theory of Capital Gains Taxation
Mark Aguiar, Benjamin Moll, and Florian Scheuer
June 5, 2025
Seminar: 12:00 pm - 1:00 pm ET
Virtual Coffee Break: 1:00 pm - 1:30 pm ET
Presented by Benjamin Moll
Abstract: Standard optimal capital tax theory abstracts from modeling asset prices, making it un- suitable for thinking about capital gains and wealth taxation. We study optimal redistribu- tive taxation in an environment with asset price movements, adopting the modern finance view that asset prices fluctuate not only because of changing cash flows, but also due to other factors (“discount rates”). We show that the optimal tax base (i) generally differs from the case with constant asset prices, and (ii) includes realized trades whenever asset-price changes are not exclusively driven by cash flow changes. A combination of realization- based capital gains and cash flow taxes implements the optimal allocation regardless of the source of asset-price fluctuations. These results stand in contrast to the classic Haig-Simons comprehensive income tax concept as well as recent proposals for wealth or accrual-based capital gains taxes.