Between the Individual and the Community: Residential Patterns of the Haredi Population in Jerusalem

This article examines how different levels of internal organization are reflected in the residential patterns of different population groups. In this case, the Haredi community comprises sects and sub‐sects, whose communal identity plays a central role in everyday life and spatial organization. The residential preferences of Haredi individuals are strongly influenced by the need to live among ‘friends’ — that is, other members of the same sub‐sect. This article explores the dynamics of residential patterns in two of Jerusalem's Haredi neighbourhoods: Ramat Shlomo, a new neighbourhood on the urban periphery, and Sanhedria, an old yet attractive inner‐city neighbourhood. We reveal two segregation mechanisms: the first is top‐down determination of residence, found in relatively new neighbourhoods that are planned, built and populated with the intense involvement of community leaders; the second is the bottom‐up emergence of residential patterns typical of inner‐city neighbourhoods that have gradually developed over time.     

Systematic mistakes in the mortgage market and lack of financial sophistication

Institutions often offer a menu of contracts to consumers in an attempt to create a separating equilibrium that reveals borrower types and provides better pricing. We test the effectiveness of a specific set of contracts in the mortgage market: mortgage points. Points allow borrowers to exchange an upfront amount for a decrease in the mortgage rate. We document that, on average, points takers lose about $700. Also, points takers are less financially savvy (less educated, older), and they make mistakes on other dimensions (e.g., inefficiently refinancing their mortgages). Overall, our results show that borrowers overestimate how long they will stay with the mortgage.     

Beyond workaholism: Towards a general model of heavy work investment

Although the term workaholism is widely used, little consensus exists about its meaning, and there is a great need for further theoretical and methodological advancement. We attempt to address this need by introducing the concept of Heavy Work Investment (HWI), and viewing workaholism as only one of its subtypes. Furthermore, we propose a model consisting of four main components: HWI, its possible predictors, its types, and its outcomes.In this model, using Weiner's (1985) attributional framework, we differentiate between situational and dispositional types of HWI, each with its own subtypes, as based on the predictors of such an investment. For example, financial-needs-based and employer-directed are situational subtypes, whereas workaholism and work-devotion are dispositional subtypes. Based on the proposed HWI model, we compare dispositional investors with situational investors.Finally, the measurement of HWI, as well as future research directions (study of situational investors, research across time and cultures, and exploration of inter-generational similarity/difference) is also discussed.     

Economic implications of better information in a dynamic framework

Summary. We consider an OLG model with accumulation in human capital and analyze the economic implications of information about individual skills. Agents in each period differ by the random innate ability assigned to each individual. When young, all agents are screened for their abilities and this screening process (signal) constitutes a public information which is used in choosing the level of private investment in education. We demonstrate that in the presence of risk sharing markets better information may be harmful for all in equilibrium, and find conditions under which better information either enhances growth or reduces growth.Received: 8 September 2003, Revised: 3 March 2004, JEL Classification Numbers: D80, J24.Correspondence to: Bernhard EckwertWe are pleased to acknowledge the useful comments and suggestions of R. Benabou, Z. Eckstein, E. Helpman, B. Ravikumar and D. Tsiddon. Also, special thanks are given to two anonymous referees. This research was supported by a Grant from G.I.F., the German-Israeli Foundation for Scientific Research and Development.     

Bargaining over an uncertain outcome:¶the role of beliefs

We study the Nash bargaining solution of a problem in which two agents bargain over an uncertain outcome. Under the assumptions of risk neutrality and of constant absolute risk aversion, we study the way that the solution varies, ex ante, when we vary the beliefs of one agent. Changing an agent's beliefs in a way that makes them “more distant” from the other agent's beliefs makes the second agent better off. Received: 10 May 2001 / Accepted: 22 August 2001     

Aggregation of semiorders: intransitive indifference makes a difference

Summary A semiorder can be thought of as a binary relationP for which there is a utilityu representing it in the following sense:xPy iffu(x) –u(y) > 1. We argue that weak orders (for which indifference is transitive) can not be considered a successful approximation of semiorders; for instance, a utility function representing a semiorder in the manner mentioned above is almost unique, i.e. cardinal and not only ordinal. In this paper we deal with semiorders on a product space and their relation to given semiorders on the original spaces. Following the intuition of Rubinstein we find surprising results: with the appropriate framework, it turns out that a Savage-type expected utility requires significantly weaker axioms than it does in the context of weak orders.We wish to thank Tatsuro Ichiishi, Jorge Nieto, Ariel Rubinstein, Efraim Sadka and especially David Schmeidler and anonymous referees for stimulating discussions and comments. I. Gilboa received partial financial support from NSF grants nos. IRI-8814672 and SES-9113108, as well as from the Alfred P. Sloan Foundation.     

On stationary overlapping generations models

Consider a stationary consumption–loan economy with fixed amount of fiat money. We show that although the economy is stationary if the number of goods and the number of ‘types’ of consumers are larger than one, there might be no Pareto optimal stationary competitive equilibrium.     

Adaptive credit granting policies

We analyze here the optimal interest rate determination of a bank that learns about the repayment behavior of its customers from their past behavior. Optimal dynamic methods are first suggested for determining the interest rate for a bank that learns about the probability of default of its borrowers. It is shown that such a bank determines lower than or equal interest rates than a bank that does not adapt its probability of default according to its past experience. Similar results also obtain when the bank learns about the probabilities that its borrowers belong to each of K (K larger than 2) quality groups.     

Aggregation of multiple prior opinions

Experts are asked to provide their advice in a situation of uncertainty. They adopt the decision maker?s utility function, but each has a potentially different set of prior probabilities, and so does the decision maker. The decision maker and the experts maximize the minimal expected utility with respect to their sets of priors. We show that a natural Pareto condition is equivalent to the existence of a set Λ of probability vectors over the experts, interpreted as possible allocations of weights to the experts, such that (i) the decision maker?s set of priors is precisely all the weighted-averages of priors, where an expert?s prior is taken from her set and the weight vector is taken from Λ; (ii) the decision maker?s valuation of an act is the minimal weighted valuation, over all weight vectors in Λ, of the experts? valuations.