Dimitri Paolini

Delegation and Information Revelation

This paper addresses the question of delegation in an organization where there is an initial asymmetry of information between the principal and the agent. We assume that the principal cannot use revelation techniques a la Baron Myerson to elicit agents superior information and in contrast, we posit that the decision and the state of the world parameter cannot be contracted for. With these simple contracts, we show that delegation is an alternative to contracting to elicit agents information. We can show that delegated decisions completely reveal the state of the world to the principal. Therefore the principal can extract agents information by giving up the control right over some decisions. As the organization takes a sequence of decisions, the information learned by the principal can be used for the other decisions. So delegation is only partial: the principal delegates some decisions and keeps control over other.

Investments in education and welfare in a two-sector, random matching economy

We consider a random matching model where heterogeneous agents choose optimally to invest time and real resources in education. Generically, there is a steady state equilibrium, where some agents, but not all of them, invest. Regular steady state equilibria are constrained inefficient in a strong sense. The Hosios (1990) condition is neither necessary, nor sufficient, for constrained efficiency. We also provide restrictions on the fundamentals sufficient to guarantee that equilibria are characterized by overeducation (or undereducation), present some results on their comparative statics properties, and discuss the nature of welfare improving policies.

Income Taxes, Subsidies to Education, and Investments in Human Capital

We study a two-sector economy with investments in human and physical capital and imperfect labor markets. Human and physical capital are heterogeneous. Workers and firms endogenously select the sector they are active in, and choose the amount of their sector-specific investments in human and physical capital. To enter the high-skill sector, workers must pay a fixed cost that we interpret as direct cost of education. Given the distribution of the agents across sectors, at equilibrium, in each sector there is underinvestment in both human and physical capital, due to non-contractibility of investments. A second source of inefficiency is related to the self-selection of the agents into the two sectors. It typically induces too many workers to invest in education. Under suitable restrictions on the parameters, the joint effect of the two distortions is that equilibria are characterized by too many people investing too little effort in the high skill sector. We also analyze the welfare properties of equilibria and study the effects of several tax-subsidy policies on the total expected surplus.

Asymmetric information and overeducation

Abstract We consider an economy where production may use labor of two different skill levels. Workers are heterogeneous and, by investing in education, self-select into one of the two skills. Ex-ante, when firms choose their investments in physical capital, they do not know the level of human capital prevailing in the labor market they will be active in. We prove existence and constrained inefficiency of competitive equilibria, which are always characterized by overeducation. An increase in total expected surplus can be obtained by shrinking, at the margin, the set of workers investing in high skills. This can be implemented by imposing taxes on the cost of investing in high skills or by imposing a progressive labor earning tax.

Tax Treaties and the Allocation of Taxing Rights With Developing Countries

Global income taxation in the country of residence is a legal dogma of international taxation. We question this dogma from the perspective of relations with developing countries from a legal and economic perspective, and make a modern and fair proposal for tax treaties. We will show under which conditions a developing and a developed country will voluntarily sign a tax treaty where information is exchanged truthfully and whether they should share revenues. Moreover, we will demonstrate how the conclusion of a tax treaty can assist in the implementation of a tax audit system.

State Subsidies to Film and Their Effects at the Box Office: Theorizing and Measuring Why Some Genres Do Better than Others

This chapter explores several theoretical approaches that can be employed to measure the performance of the movies and to assess the main factors that may influence their performance. In particular, we focus on evaluating the impact of public intervention on the movie performance and its effects on genre success at the box office. From an empirical perspective, we provide some examples to highlight the impact of public subsidies on the movie performance in Italy. To this aim, we consider quantity (box office revenues) and quality (film festival awards) as two separate indicators. Specifically, public subsidies and movie genres are employed as explanatory variables to investigate the impact of public intervention and film genre on the movie performance. In this respect, we use specific methods, such as fixed-effects approach and count models, in accordance with the type of the dependent variable under investigation. The findings show that although public funding has an overall negative impact on quantity and quality, there are some differences when considering public subsidies by genre. On balance, there is statistical evidence that dramas and thrillers are the genres that should be primarily financed by public agents.

American Beauty: trade flows and export costs of US movies

Copyright industries face global fixed export costs, in terms of cultural and geographic distance together with formal trade barriers. Adjustment to these costs may occur along both the intensive and the extensive margin. We investigate this issue using a microeconomic approach that considers a hedonic model of revenues for US movie exports to evaluate - aggregation bias; simultaneity in the observation of imported movies and their revenues; and reliable estimations for country clusters. We find that product heterogeneity is a key element for both intensive and extensive margin adjustments at the country level.

Do managerial skills matter? An analysis of the impact of managerial features on performance for Italian football

This paper studies the impact of a set of managerial characteristics on performance in the top division (Serie A) of the Italian football league during seasons 2000/2001–2009/2010. We employ a bivariate ordered probit model applied to match-level data, which allows for asymmetric effects at home and away matches and in goals scored and conceded. Our set of coach characteristics includes indicators of skill, experience, innate features as well as empathy with the team. We find that some managerial features matter even when we control for club power and past results. Performance is positively correlated with the manager having had experience abroad and with the manager being a former player with the club; but performance is worsened by lack of managerial experience. Other features affect only some particular aspects of performance. In particular, Italian managers are more defensive in home games while older managers are more defensive in away games. Our approach also identifies a negative effect of managerial turnover on defensive performance, an effect which is masked when a more traditional aggregated model is used.

Strategic attractiveness and release decisions for cultural goods

We study how producers of cultural goods can strategically invest in raising the attractiveness of their goods in order to secure the most profitable release dates. In a game‐theoretic setting, where two producers choose their investment expenditure before simultaneously setting the release date of their good, we prove that two equilibria are possible: releases are either simultaneous (at the demand peak) or staggered (one producer delays). In the latter equilibrium, the first‐mover secures its position by investing more in attractiveness. We test this prediction on a dataset of more than 1500 American movies released in 10 countries over 12 years. Results are consistent with the theoretical predictions, indicating that higher budget movies are released closer to seasonal demand peaks.