{"id":167460,"date":"2013-05-01T00:00:00","date_gmt":"2013-05-01T00:00:00","guid":{"rendered":"https:\/\/www.microsoft.com\/en-us\/research\/msr-research-item\/benefit-cost-analysis-for-financial-regulation\/"},"modified":"2018-10-16T20:49:47","modified_gmt":"2018-10-17T03:49:47","slug":"benefit-cost-analysis-for-financial-regulation","status":"publish","type":"msr-research-item","link":"https:\/\/www.microsoft.com\/en-us\/research\/publication\/benefit-cost-analysis-for-financial-regulation\/","title":{"rendered":"Benefit-Cost Analysis for Financial Regulation"},"content":{"rendered":"<div class=\"asset-content\">\n<p>Calls for benefit-cost analysis in rule-making, based on the Dodd-Frank Wall Street Reform Act, have revealed a paucity of work on allocative efficiency in financial markets. We propose three principles to help fill this gap. First, we highlight the need for quantifying the statistical cost of a crisis to trade off the risk of a crisis against loss of growth during good times. Second, we propose a framework quantifying the social value of price discovery, and highlighting which arbitrages are over- and under-supplied from a social perspective. Finally, we distinguish between insurance benefits and gambling-facilitation harms of market completion.<\/p>\n<\/div>\n<p><!-- .asset-content --><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Calls for benefit-cost analysis in rule-making, based on the Dodd-Frank Wall Street Reform Act, have revealed a paucity of work on allocative efficiency in financial markets. We propose three principles to help fill this gap. First, we highlight the need for quantifying the statistical cost of a crisis to trade off the risk of a [&hellip;]<\/p>\n","protected":false},"featured_media":0,"template":"","meta":{"msr-url-field":"","msr-podcast-episode":"","msrModifiedDate":"","msrModifiedDateEnabled":false,"ep_exclude_from_search":false,"_classifai_error":"","footnotes":""},"msr-content-type":[3],"msr-research-highlight":[],"research-area":[13548,13559],"msr-publication-type":[193715],"msr-product-type":[],"msr-focus-area":[],"msr-platform":[],"msr-download-source":[],"msr-locale":[268875],"msr-post-option":[],"msr-field-of-study":[],"msr-conference":[],"msr-journal":[],"msr-impact-theme":[],"msr-pillar":[],"class_list":["post-167460","msr-research-item","type-msr-research-item","status-publish","hentry","msr-research-area-economics","msr-research-area-social-sciences","msr-locale-en_us"],"msr_publishername":"American Economic Association","msr_edition":"American Economic Review Papers and Proceedings","msr_affiliation":"","msr_published_date":"2013-05-01","msr_host":"","msr_duration":"","msr_version":"","msr_speaker":"","msr_other_contributors":"","msr_booktitle":"","msr_pages_string":"","msr_chapter":"","msr_isbn":"","msr_journal":"American Economic Review Papers and Proceedings","msr_volume":"","msr_number":"","msr_editors":"","msr_series":"","msr_issue":"","msr_organization":"","msr_how_published":"","msr_notes":"","msr_highlight_text":"","msr_release_tracker_id":"","msr_original_fields_of_study":"","msr_download_urls":"","msr_external_url":"","msr_secondary_video_url":"","msr_longbiography":"","msr_microsoftintellectualproperty":1,"msr_main_download":"","msr_publicationurl":"https:\/\/www.aeaweb.org\/articles.php?doi=10.1257\/aer.103.3.393","msr_doi":"10.1257\/aer.103.3.393","msr_publication_uploader":[{"type":"url","title":"https:\/\/www.aeaweb.org\/articles.php?doi=10.1257\/aer.103.3.393","viewUrl":false,"id":false,"label_id":0},{"type":"doi","title":"10.1257\/aer.103.3.393","viewUrl":false,"id":false,"label_id":0}],"msr_related_uploader":"","msr_attachments":[{"id":0,"url":"https:\/\/www.aeaweb.org\/articles.php?doi=10.1257\/aer.103.3.393"}],"msr-author-ordering":[{"type":"text","value":"Eric Posner","user_id":0,"rest_url":false},{"type":"text","value":"E. 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