Ahmed Khwaja

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We create a novel measure of optimism using the Survey of Consumer Finance by comparing self-reported life expectancy to that implied by statistical tables. This measure of optimism correlates with positive beliefs about future e onomic conditions and with psychometric tests of optimism. Optimism is related to numerous work/life choices: more optimistic(More)
In the neoclassical theory of the firm, actions are taken to maximize the present value of the firm’s cash flows -there is no role for managerial attitudes in forming corporate policies. In contrast, our paper provides striking evidence that links psychological traits such as managerial risk aversion, time preference, and optimism to corporate financial(More)
Theoretical models predict asymmetric information in health insurance markets may generate inefficient outcomes due to adverse selection and moral hazard. However, previous empirical research has found it difficult to disentangle adverse selection from moral hazard in health care. We empirically study this question by using data from the Health and(More)
A well-known method of validating econometric models (structural or otherwise) is to examine their performance in out-of-sample prediction. That is, given a change in the policy environment, do the key endogenous variables of the model move in ways that are in some sense “reasonably close” to the model’s forecasts? Unfortunately, however, as noted by Keane(More)
Experience in one product market can potentially improve firm performance in a related product market in the future. Thus, entry into a market is determined not just by profits in that market but also by its future impact on profitability in other markets. We formulate and estimate a dynamic model of entry decisions of firms in the presence of such(More)
We develop a dynamic discrete choice model of teen sex and pregnancy that incorporates habit persistence. Habit persistence has two sources here. The first is a ‘fixed cost’ of having sex which relates to a moral or psychological barrier that has been crossed the first time one has sex. The second is a ‘transition cost’ whereby once a particular(More)
This study examines the relationship between time discounting, other sources of time preference, and choices about smoking. Using a survey fielded for our analysis, we elicit rates of time discount from choices in financial and health domains. We also examine the relationship between other determinants of time preference and smoking status. We find very(More)
This paper tests the rationality of retirement expectations, controlling for sample selection and reporting biases. We find that retirement expectations in the Health and Retirement Study are consistent with the Rational Expectations hypothesis. We also analyze how new information affects the evolution of retirement expectations and discover that, on(More)
The last decade has been characterized by unprecedented inflation in health care expenditures. One commonly suggested source for this inflation is the distortion in the health insurance market due to asymmetric information about the latent health status of individuals that leads to adverse selection in health insurance contracts and run away medical(More)
This paper investigates the impact of spatial zoning restrictions on retail market outcomes. We estimate a structural model of entry, location and format choice across a large number of markets in the presence of zoning restrictions. The paper contributes to the literature in three ways: First, the paper demonstrates that estimates of factors affecting(More)