American Economic Association Nashville, TN 1945-7669 1945-7685 American Economic Journal: Microeconomics http://www.aeaweb.org/aej-micro/ 1 2 August 2009 http://www.aeaweb.org/issue.php?journal=MIC&volume=1&issue=2 Journal Article Front Matter i ii http://www.aeaweb.org/articles.php?doi=10.1257/mic.1.2.i 10.1257/mic.1.2.i American Economic Association Nashville, TN 1945-7669 1945-7685 American Economic Journal: Microeconomics http://www.aeaweb.org/aej-micro/ 1 2 August 2009 http://www.aeaweb.org/issue.php?journal=MIC&volume=1&issue=2 Journal Article On the Potential of Neuroeconomics: A Critical (but Hopeful) Appraisal B. DouglasBernheimStanford U 1 41 This paper attempts to identify and articulate the specific ways in which the emerging field of neuroeconomics might shed light on traditional positive and normative questions in economics, as well as the likely limitations of its potential contributions. It sets forth both reservations and reasons for guarded optimism. (JEL D01, D87) http://www.aeaweb.org/articles.php?doi=10.1257/mic.1.2.1 10.1257/mic.1.2.1 American Economic Association Nashville, TN 1945-7669 1945-7685 American Economic Journal: Microeconomics http://www.aeaweb.org/aej-micro/ 1 2 August 2009 http://www.aeaweb.org/issue.php?journal=MIC&volume=1&issue=2 Journal Article A Comment on Bernheim's Appraisal of Neuroeconomics FarukGulPrinceton U WolfgangPesendorferPrinceton U 42 47 This paper comments on "On the Potential of Neuroeconomics: A Critical (but Hopeful) Appraisal" by B. Douglas Beinheim (JEL D01, D87) http://www.aeaweb.org/articles.php?doi=10.1257/mic.1.2.42 10.1257/mic.1.2.42 American Economic Association Nashville, TN 1945-7669 1945-7685 American Economic Journal: Microeconomics http://www.aeaweb.org/aej-micro/ 1 2 August 2009 http://www.aeaweb.org/issue.php?journal=MIC&volume=1&issue=2 Journal Article Is There a Method of Neuroeconomics? AldoRustichiniU MN 48 59 This note tries to state, precisely, the method of neuroecomics, and is based on the discussion in B. Douglas Bernheim's (2009) appraisal. We claim that the theory formulates hypotheses modeling the choice process as an algorithmic procedure. The hypothesis of the algorithmic procedure imposes restriction on the neural processes implementing it, and, so, a joint test of the hypothesis based on behavioral and neural data is possible, increasing the statistical and the explanatory power of the theory. (JEL B41, D87) http://www.aeaweb.org/articles.php?doi=10.1257/mic.1.2.48 10.1257/mic.1.2.48 American Economic Association Nashville, TN 1945-7669 1945-7685 American Economic Journal: Microeconomics http://www.aeaweb.org/aej-micro/ 1 2 August 2009 http://www.aeaweb.org/issue.php?journal=MIC&volume=1&issue=2 Journal Article Neuroeconomics: A Comment on Bernheim JoelSobelU CA, San Diego 60 67 This paper comments on "On the Potential of Neuroeconomics: A Critical (but Hopeful) Appraisal" by B. Douglas Bernheim. (JEL D01, D87) http://www.aeaweb.org/articles.php?doi=10.1257/mic.1.2.60 10.1257/mic.1.2.60 American Economic Association Nashville, TN 1945-7669 1945-7685 American Economic Journal: Microeconomics http://www.aeaweb.org/aej-micro/ 1 2 August 2009 http://www.aeaweb.org/issue.php?journal=MIC&volume=1&issue=2 Journal Article Sniping and Squatting in Auction Markets Jeffrey C.ElyNorthwestern U TanjimHossainU Toronto 68 94 We conducted a field experiment to test the benefit from late bidding (sniping) in online auction markets. We compared sniping to early bidding (squatting) in auctions for newly-released DVDs on eBay. Sniping led to a statistically significant increase in our average surplus. However, this improvement was small. The two bidding strategies resulted in a variety of other qualitative differences in the outcomes of auctions. We show that a model of multiple concurrent auctions, in which our opponents are naive or incremental bidders as identified in the lab, explain the results well. Our findings illustrate how the overall impact of naivete, and the benefit from sniping observed in the lab, may be substantially attenuated in real-world market settings. (JEL D44) http://www.aeaweb.org/articles.php?doi=10.1257/mic.1.2.68 10.1257/mic.1.2.68 American Economic Association Nashville, TN 1945-7669 1945-7685 American Economic Journal: Microeconomics http://www.aeaweb.org/aej-micro/ 1 2 August 2009 http://www.aeaweb.org/issue.php?journal=MIC&volume=1&issue=2 Journal Article Assignment Messages and Exchanges PaulMilgromStanford U 95 113 "Assignment messages" are maximally general messages to describe substitutable preferences by means of a linear program. With "integer assignment messages," there exist integer-valued Walrasian allocations, extending a result of Lloyd S. Shapley and Martin Shubik (1971). Any pure Nash equilibrium profile of the Walrasian mechanism with participants limited to assignment messages is also a Nash equilibrium of the unrestricted Walrasian mechanism. Assignment exchanges are generalizations of single-product double auctions and are related to ascending multi-product clock auctions and the Vickrey mechanism. Assignment messages also have additional applications in mechanism design. (JEL D44, D82) http://www.aeaweb.org/articles.php?doi=10.1257/mic.1.2.95 10.1257/mic.1.2.95 American Economic Association Nashville, TN 1945-7669 1945-7685 American Economic Journal: Microeconomics http://www.aeaweb.org/aej-micro/ 1 2 August 2009 http://www.aeaweb.org/issue.php?journal=MIC&volume=1&issue=2 Journal Article Trading in Networks: A Normal Form Game Experiment Douglas M.GaleNYU ShacharKarivU CA, Berkeley 114 32 This paper reports an experimental study of trading networks. Networks are incomplete in the sense that each trader can only exchange assets with a limited number of other traders. The greater the incompleteness of the network, the more intermediation is required to transfer the assets between initial and final owners. The uncertainty of trade in networks constitutes a potentially important market friction. Nevertheless, we find the pricing behavior observed in the laboratory converges to competitive equilibrium behavior in a variety of treatments. However, the rate of convergence varies depending on the network, pricing rule, and payoff function. (JEL C91, C92, G10, G19) http://www.aeaweb.org/articles.php?doi=10.1257/mic.1.2.114 10.1257/mic.1.2.114 http://www.aeaweb.org/aej/mic/data/2007-0025_data.zip http://www.aeaweb.org/aej/mic/app/2007-0025_app.zip American Economic Association Nashville, TN 1945-7669 1945-7685 American Economic Journal: Microeconomics http://www.aeaweb.org/aej-micro/ 1 2 August 2009 http://www.aeaweb.org/issue.php?journal=MIC&volume=1&issue=2 Journal Article Incentive Reversal EyalWinterHebrew U Jerusalem 133 47 By incentive reversal we refer to situations in which an increase in rewards for all agents results in fewer agents exerting effort. We show that externalities among peers may give rise to such intriguing situations even when all agents are fully rational. We provide a necessary and sufficient condition for the organizational technology so that it will be susceptible to incentive reversal. The condition implies that some degree of complementarity is enough to allow incentive reversal. (JEL D23, D82, M54) http://www.aeaweb.org/articles.php?doi=10.1257/mic.1.2.133 10.1257/mic.1.2.133 American Economic Association Nashville, TN 1945-7669 1945-7685 American Economic Journal: Microeconomics http://www.aeaweb.org/aej-micro/ 1 2 August 2009 http://www.aeaweb.org/issue.php?journal=MIC&volume=1&issue=2 Journal Article A "Dual Self" Representation for Stochastic Temptation KalyanChatterjeePA State U R. VijayKrishnaU NC 148 67 We consider the following two-period problem of self-control. In the first period, an individual has to decide on the set of feasible choices from which she will select one in the second period. In the second period, the individual might choose an alternative that she would find inferior in the first period, an eventuality that need not occur with certainty. We propose a model for this problem and axioms for first-period preferences, in which the second-period choice could be interpreted as being made by an "alter ego" who appears randomly. We provide a discussion of the behavioral implications of our model as compared with existing theories. (JEL D11, D80) http://www.aeaweb.org/articles.php?doi=10.1257/mic.1.2.148 10.1257/mic.1.2.148 American Economic Association Nashville, TN 1945-7669 1945-7685 American Economic Journal: Microeconomics http://www.aeaweb.org/aej-micro/ 1 2 August 2009 http://www.aeaweb.org/issue.php?journal=MIC&volume=1&issue=2 Journal Article Dynamic Revenue Maximization with Heterogeneous Objects: A Mechanism Design Approach AlexGershkovU Bonn BennyMoldovanuU Bonn 168 98 We study the revenue-maximizing allocation of several heterogeneous, commonly ranked objects to impatient agents with privately known characteristics who arrive sequentially. There is a deadline after which no more objects can be allocated. We first characterize implementable allocation schemes, and compute the expected revenue for any implementable, deterministic and Markovian allocation policy. The revenue-maximizing policy is obtained by a variational argument which sheds more light on its properties than the usual dynamic programming approach. Finally, we use our main result in order to derive the optimal inventory choice, and explain empirical regularities about pricing in clearance sales. (JEL C61, D21, D82) http://www.aeaweb.org/articles.php?doi=10.1257/mic.1.2.168 10.1257/mic.1.2.168 American Economic Association Nashville, TN 1945-7669 1945-7685 American Economic Journal: Microeconomics http://www.aeaweb.org/aej-micro/ 1 2 August 2009 http://www.aeaweb.org/issue.php?journal=MIC&volume=1&issue=2 Journal Article Market Culture: How Rules Governing Exploding Offers Affect Market Performance MurielNiederleStanford U Alvin E.RothHarvard U 199 219 Many markets encounter difficulty maintaining a thick marketplace because they experience transactions made at dispersed times. To address such problems, many markets try to establish norms concerning when offers can be made, accepted, and rejected. Examining such markets suggests it is difficult to establish a thick market at an efficient time if firms can make exploding offers, and workers cannot renege on early commitments. Laboratory experiments allow us to isolate the effects of exploding offers and binding acceptances. In a simple experiment, we find inefficient early contracting when firms can make exploding offers and applicants' acceptances are binding. (JEL C91, D40, D81) http://www.aeaweb.org/articles.php?doi=10.1257/mic.1.2.199 10.1257/mic.1.2.199 http://www.aeaweb.org/aej/mic/data/2007-0007_data.zip http://www.aeaweb.org/aej/mic/app/2007-0007_app.pdf American Economic Association Nashville, TN 1945-7669 1945-7685 American Economic Journal: Microeconomics http://www.aeaweb.org/aej-micro/ 1 2 August 2009 http://www.aeaweb.org/issue.php?journal=MIC&volume=1&issue=2 Journal Article Corruptible Advice ErikDurbinFederal Trade Commission GaneshIyerU CA, Berkeley 220 42 We study information transmission to a decision maker from an advisor who values a reputation for incorruptibility in the presence of a third party who offers unobservable payments/bribes. While it is common to ascribe negative effects to such bribes, we show that given reputational concerns, bribes can play a positive role by restoring truthful communication that would otherwise not occur. Thus, while bribes can influence self-interested bad advisors to lie about the unfavorable state, they can also be used to motivate good advisors who care more about the decision maker’s utility to truthfully report the favorable state. (JEL D82, D83) http://www.aeaweb.org/articles.php?doi=10.1257/mic.1.2.220 10.1257/mic.1.2.220