Show Your Hand: The Impacts of
Fair Pricing Requirements in Procurement Contracting

Conditionally accepted at Journal of Accounting Research (2024)

Received the Best Dissertation Award from the Naveen Jindal School of Management at The University of Texas at Dallas for 2023.

Committee: Ashiq Ali (Chair), Ningzhong Li, Suresh Radhakrishnan, Ricardo Perez-Truglia, Gil Sadka

Abstract: This paper studies a provision in federal procurement regulation, known as the Truth in Negotiations Act (TINA), which stipulates how contracting officials can ensure price reasonableness. Following TINA, for contracts above a certain size threshold, contracting officials cannot rely solely on their judgment and must either require that suppliers provide accounting data supporting their proposed prices or expect multiple competing bids. Using a regression discontinuity design, I find that compared to below-threshold contracts, above-threshold contracts experience greater competition (i.e., more bids), improved performance (i.e., less frequent re-negotiations and cost overruns), and reduced reliance on cost-plus type contracts. These findings are consistent with the procurement system enhancing competition and monitoring for above-threshold contracts. 

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Snapshot from the study: The TINA threshold changed from $750,000 to $2,000,000 in 2018. Blue circles correspond to the period prior to the change, and red dots to the period after the threshold change. The rate at which the data is included exhibits a large jump at each threshold only while it was effective. This regulation is the main source of variation for the contracting outcomes examined in this study.

My Taxes Are Too Darn High,
Why Do Households Protest Their Taxes?

With Ricardo Perez-Truglia & Alejandro Zentner

American Economic Journal: Economic Policy (2024)
(Accepted for publication)

Abstract: In the United States and many other countries, taxpayers can file a protest to legally reduce their property taxes. While tax protests can provide a unique opportunity to study the (un)willingness to pay taxes, they have received little attention from researchers. To fill that gap, we study what motivates households to protest their property taxes. Using a field experiment and a quasi-experiment, we show that both expected savings and filing frictions play significant roles. We estimate the magnitude of filing frictions using a money metric. We also discuss how low-cost interventions targeted at disadvantaged groups can mitigate existing economic and racial disparities in the system of tax appeals. 

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Snapshot from the study: In many states, property taxes are based on the assessed value of the household. A household's property tax protest reduces the household's assessed value if successful. Households with "homestead" status have their taxable value limited to 10% growth per year (known as the "homestead cap" value). This implies that if a household is assessed at $X above the homestead cap, the first $X reduction in the assessed value provides zero dollars of tax savings. The figure shows that homestead households exhibit a sharp kink in protest rates at the homestead cap, since the reduction in assessed value must be larger the further the assessed value is above the cap for a household to save taxes from protesting.

Is the Partisan Divide Real? Polarization in Preferences for Redistribution

With Ricardo Perez-Truglia & Alejandro Zentner

American Economic Review Papers & Proceedings (2022)

Abstract: Republicans and Democrats are believed to be worlds apart from each other in their preferences for the role of the government, provision of public goods, and redistribution (Ahler, 2014). However, is the partisan divide real? In this paper, we provide some evidence from a context where the revealed differences in preferences for taxation and public goods provision are actually small and show that our revealed-preference evidence is consistent with some survey questions.