About

Levon Barseghyan is the Robert Julius Thorne Professor of Economics at Cornell University. He joined Cornell in 2003 after receiving his PhD in Economics from Northwestern University. He also holds a Diploma in Mathematics from Yerevan State University, an MS in Industrial Engineering from the American University of Armenia, and an MS in Policy Economics from the University of Illinois at Urbana-Champaign. His research primarily focuses on two broad areas. The first area studies decision-making under risk and uncertainty, emphasizing risk preferences, probability distortions, insurance choices, and limited consideration in discrete choice. This research combines rich field data, structural modeling, and econometric methods to understand how households perceive risk, make choices across different contexts, and respond to market design and public policy. It also develops tools for measuring the welfare consequences of those choices and for distinguishing preference heterogeneity from limited consideration and related behavioral forces. The second area examines how institutions and public policy shape economic outcomes. In this research, he studies questions at the intersection of growth, public finance, political economy, and local public finance, with work on macroeconomic policy, institutional design, zoning, public goods provision, and community development. A central theme of his work is how political and institutional constraints influence the evolution of policy and, in turn, economic performance and welfare. Across both areas, his work is motivated by a common goal: to understand how individuals and institutions make decisions under constraints and uncertainty, and how those decisions shape economic outcomes and welfare.

Research topics

• Computer Science
• Economics
• Microeconomics
• Public economics
• Finance
• Market economy
• Mathematical economics
• Mathematics
• Business
• Econometrics
• Macroeconomics
• Statistics
• Law
• Actuarial science
• Economic growth

Selected publications

• Learning about Stability of Risk Preferences 

  SSRN Electronic Journal · 2025-01-01

  preprintOpen access1st authorCorresponding
  PublisherDOI

• Risk Preference Types, Limited Consideration, and Welfare

  Journal of Business and Economic Statistics · 2023-09-18 · 5 citations

  article1st author

  We provide sufficient conditions for semi-nonparametric point identification of a mixture model of decision making under risk, when agents make choices in multiple lines of insurance coverage (contexts) by purchasing a bundle. As a first departure from the related literature, the model allows for two preference types. In the first one, agents behave according to standard expected utility theory with CARA Bernoulli utility function, with an agent-specific coefficient of absolute risk aversion whose distribution is left completely unspecified. In the other, agents behave according to the dual theory of choice under risk combined with a one-parameter family distortion function, where the parameter is agent-specific and is drawn from a distribution that is left completely unspecified. Within each preference type, the model allows for unobserved heterogeneity in consideration sets, where the latter form at the bundle level—a second departure from the related literature. Our point identification result rests on observing sufficient variation in covariates across contexts, without requiring any independent variation across alternatives within a single context. We estimate the model on data on households’ deductible choices in two lines of property insurance, and use the results to assess the welfare implications of a hypothetical market intervention where the two lines of insurance are combined into a single one. We study the role of limited consideration in mediating the welfare effects of such intervention.

  PublisherDOI

• Financing local public projects

  Regional Science and Urban Economics · 2023 · 7 citations

  1st authorCorresponding
  • Economics
  • Public economics
  • Finance
  PublisherDOI

• Risk Preference Types, Limited Consideration, and Welfare

  arXiv (Cornell University) · 2023-07-18 · 2 citations

  preprintOpen access1st authorCorresponding

  We provide sufficient conditions for semi-nonparametric point identification of a mixture model of decision making under risk, when agents make choices in multiple lines of insurance coverage (contexts) by purchasing a bundle. As a first departure from the related literature, the model allows for two preference types. In the first one, agents behave according to standard expected utility theory with CARA Bernoulli utility function, with an agent-specific coefficient of absolute risk aversion whose distribution is left completely unspecified. In the other, agents behave according to the dual theory of choice under risk(Yaari, 1987) combined with a one-parameter family distortion function, where the parameter is agent-specific and is drawn from a distribution that is left completely unspecified. Within each preference type, the model allows for unobserved heterogeneity in consideration sets, where the latter form at the bundle level -- a second departure from the related literature. Our point identification result rests on observing sufficient variation in covariates across contexts, without requiring any independent variation across alternatives within a single context. We estimate the model on data on households' deductible choices in two lines of property insurance, and use the results to assess the welfare implications of a hypothetical market intervention where the two lines of insurance are combined into a single one. We study the role of limited consideration in mediating the welfare effects of such intervention.

  PublisherOA PDFDOI

• Rejoinder

  Journal of Business and Economic Statistics · 2023-10-02

  article1st author

  Click to increase image sizeClick to decrease image size Notes1 Our analysis, available upon request, allows for endogenous loss probabilities via a linear function of effort, (1−e)μ. The effort level, e, is in turn associated with a (potentially heterogeneous across agents) quadratic cost function. The analysis shows that for deductible levels as in our data, the choice of $200 in collision is not rationalizable, even in the presence of endogenous loss probabilities.

  PublisherDOI

• Discrete Choice under Risk with Limited Consideration

  American Economic Review · 2021 · 45 citations

  1st authorCorresponding
  • Computer Science
  • Econometrics
  • Economics

  This paper is concerned with learning decision-makers’ preferences using data on observed choices from a finite set of risky alternatives. We propose a discrete choice model with unobserved heterogeneity in consideration sets and in standard risk aversion. We obtain sufficient conditions for the model’s semi-nonparametric point identification, including in cases where consideration depends on preferences and on some of the exogenous variables. Our method yields an estimator that is easy to compute and is applicable in markets with large choice sets. We illustrate its properties using a dataset on property insurance purchases. (JEL D81, D83, D91, G22, G52)

  PublisherDOI

• Heterogeneous Choice Sets and Preferences

  Econometrica · 2021 · 55 citations

  1st authorCorresponding
  • Computer Science
  • Econometrics
  • Mathematical economics

  We propose a robust method of discrete choice analysis when agents' choice sets are unobserved. Our core model assumes nothing about agents' choice sets apart from their minimum size. Importantly, it leaves unrestricted the dependence, conditional on observables, between choice sets and preferences. We first characterize the sharp identification region of the model's parameters by a finite set of conditional moment inequalities. We then apply our theoretical findings to learn about households' risk preferences and choice sets from data on their deductible choices in auto collision insurance. We find that the data can be explained by expected utility theory with low levels of risk aversion and heterogeneous non‐singleton choice sets, and that more than three in four households require limited choice sets to explain their deductible choices. We also provide simulation evidence on the computational tractability of our method in applications with larger feasible sets or higher‐dimensional unobserved heterogeneity.

  PublisherOA PDFDOI

• Community development with externalities and corrective taxation

  Journal of Economic Geography · 2021 · 4 citations

  1st authorCorresponding
  • Economics
  • Public economics
  • Microeconomics

  Abstract This paper studies the impact of granting a community the authority to tax development when growth imposes negative externalities on existing residents. Taxes are chosen in each period by the residents who are fully forward-looking. Residents’ policy choices reflect not only the desire to counter negative externalities but also their wish to raise tax revenues and the value of their homes. There exists an equilibrium in which taxes are gradually lowered to close to optimal levels, resulting in falling housing prices and increasing community size. In addition, there exist equilibria in which taxes are set much too high and development is permanently stalled. In these equilibria, residents anticipate that lowering taxes will cause a sharp fall in the value of their homes. This multiplicity of equilibrium means that, for a broad range of initial conditions, allowing residents to tax development can increase or decrease social welfare. Regulating growth with zoning generates even worse outcomes, but allowing the community to charge developers impact fees does better.

  PublisherDOI

• The Cost of Legal Restrictions on Experience Rating

  eYLS (Yale Law School) · 2020-03-11

  articleOpen access1st authorCorresponding

  We investigate the cost of legal restrictions on experience rating in auto and home insurance. The cost is an opportunity cost as experience rating can mitigate the problems associated with unobserved heterogeneity in claim risk, including mispriced coverage and resulting demand distortions. We assess this cost through a counterfactual analysis in which we explore how risk predictions, premiums, and demand in home insurance and two lines of auto insurance would respond to unrestricted multiline experience rating. Using claims data from a large sample of households, we first estimate the variance-covariance matrix of unobserved heterogeneity in claim risk. We then show that conditioning on claims experience leads to material refinements of predicted claim rates. Lastly, we assess how the households’ demand for coverage would respond to multiline experience rating. We find that the demand response would be large.

  PublisherOA PDF

• The Cost of Legal Restrictions on Experience Rating

  Journal of Empirical Legal Studies · 2020-02-17 · 1 citations

  article1st authorCorresponding

  We investigate the cost of legal restrictions on experience rating in auto and home insurance. The cost is an opportunity cost as experience rating can mitigate the problems associated with unobserved heterogeneity in claim risk, including mispriced coverage and resulting demand distortions. We assess this cost through a counterfactual analysis in which we explore how risk predictions, premiums, and demand in home insurance and two lines of auto insurance would respond to unrestricted multiline experience rating. Using claims data from a large sample of households, we first estimate the variance‐covariance matrix of unobserved heterogeneity in claim risk. We then show that conditioning on claims experience leads to material refinements of predicted claim rates. Last, we assess how households’ demand for coverage would respond to multiline experience rating. We find that the demand response would be large.

  PublisherDOI

Recent grants

• An Empirical Investigation Into the Nature of Risk Preferences

  NSF · $323k · 2010–2014

Frequent coauthors

• Francesca Molinari

  Cornell University

  61 shared

• Joshua C. Teitelbaum

  58 shared

• Riccardo DiCecio

  Federal Reserve Bank of St. Louis

  34 shared

• Maura Coughlin

  Rice University

  26 shared

• Aureo Barwick

  Institute for Fiscal Studies

  25 shared

• Ulrich Manski

  Institute for Fiscal Studies

  25 shared

• Chuck Houde

  Cornell University

  25 shared

• Jia Panle

  Rice University

  25 shared

Awards & honors

• Robert Julius Thorne Professor of Economics at Cornell Unive…