by Joram Mayshar, Omer Moav, Zvika Neeman

We propose a general theory that explains the extent of the state and accounts for related institutions as byproducts of the state’s extractive technology. We posit further that this extractive technology is determined by the transparency of the production technology. This theory is applied to examine two principal phases in the evolution of the early state. First, we argue that the common explanation of the emergence of the state as a consequence of the availability of food surplus due to the Neolithic Revolution is flawed, since it ignores Malthusian considerations. In contrast, we suggest that what led to the emergence of the state was a transformation of the tax technology that was induced by the greater transparency of the new farming technology. We then apply our theory to explain key institutional features that distinguished ancient Egypt from ancient Mesopotamia, and, in particular, to explain their different land tenure regimes. Read more...

by Alex Gershkov, Motty Perry

We study a novel dynamic principal—agent setting with moral hazard and adverse selection (persistent as well as repeated). In the model an agent whose skills are his private information faces a finite sequence of tasks, one after the other. Upon arrival of each task the agent learns its level of difficulty and then chooses whether to accept or refuse each task in turn, and how much effort to exert. Although his decision to accept or refuse a task is publicly known, the agent’s effort level is his private information.
We characterize optimal contracts and show that the per-period utility of the agent approaches his per-period utility when his skills are publicly known, as the discount factor and the time horizon increase. Read more...

by Theodore P. Gerber, Karine Torosyan

Using a new data source, the Georgia on the Move Survey, we examine migrant-level, household-level, and contextual variables associated with the probability that a Georgian household receives remittances.  We use propensity score matching to estimate how remittances affect particular types of household expenditures, savings, labor supply, health, and other measures of well being more precisely than is usually possible. Read more...

by Frederic Laurin, John-John D’Argensio, Thea Goginashvili

In this paper, we investigate the evolution of office market risks and property prices in Central and Eastern European (CEE) cities. We developed a methodology assessing if office property markets have been accurately valuated in CEE cities, using as a benchmark the past evolution of office markets in Western European cities.  Read more...