WORKING PAPERS

"Estimating Strategic Response in Sequential Data" 

with Eli Berman and Danny Klinenberg, March 2026

Abstract: Social scientists often estimate how actors respond to each-other. However, data is usually aggregated temporally, into days, weeks, or years, when response occurs at higher frequency. How does temporal aggregation affect standard regression estimates? We show that studying interactions aggregated (or disaggregated) into predetermined intervals, rather than the actual response, can distort estimates, generating attenuation, amplification and even reverse signs. We provide analytic derivations, simple examples, and empirical Monte Carlo simulations. We conclude by examining how temporal aggregation can distort our understanding of the Israel-Gaza conflict from 2007 to 2017.

"Deterrence through Reaction Curves: An Empirical Analysis of the Israel-Gaza Conflict" 

with Eli Berman, Prabin Khadka, and Danny Klinenberg, March 2026

Abstract: Deterrence is central to theories of conflict, yet it often produces persistent, low-level violence rather than peace. This paper reconceptualizes deterrence as a dynamic relationship between actions and responses, which we term deterrence curves, and provides a tractable empirical framework for analyzing strategic interaction. This framework shifts attention from whether deterrence succeeds to how it influences the intensity and persistence of conflict. We show that the curvature of deterrence curves plays a central role in determining whether interactions escalate or converge to stable equilibria. When responses are sufficiently concave, deterrence generates a unique and stable equilibrium characterized by ongoing but bounded violence—what we term incomplete deterrence. We empirically estimate deterrence curves using high-frequency incident data from the Israel-Gaza conflict between 2007 and 2017. Our estimates match the dynamics of the raw data and exhibit a posture consistent with incomplete deterrence: episodes de-escalate, but to a violent equilibrium. We further show that the introduction of Israeli missile defense shifts the Gazan response curve to a less aggressive posture, as predicted by theory.

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"Capital Taxation, Income Shifting, and Retained Earnings: Evidence from Dividend Tax Reforms" 

with Yonatan Berman, March 2026

Abstract: This paper analyzes the effects of dividend tax reforms on tax revenues, income shifting, and earnings retention. It examines two significant policy changes in Israel during the 2010s. Using administrative tax records, we study a permanent five-percentage point increase in the dividend tax rate in 2012, and a temporary tax relief enacted in 2017. The permanent tax hike triggered an immediate surge of over 100% in reported dividend income and tax revenues. It did not generate a lasting shift in dividend flows. In contrast, the temporary relief of 2017 led to a sharp decline in dividend payments upon its expiration. Notably, firms increased earnings retention after the preferential rate ended, potentially anticipating similar future relief. We also find evidence of income shifting via wage-to-dividend conversions for tax planning. Finally, increased earnings retention after 2017 produced a 1–2 percentage point downward bias in the top 1% income share due to unreported dividend income.