American Economic Association Nashville, TN 1945-7669 1945-7685 American Economic Journal: Microeconomics http://www.aeaweb.org/aej-micro/ 4 4 November 2012 http://www.aeaweb.org/issue.php?journal=MIC&volume=4&issue=4 Journal Article Front Matter i vi http://www.aeaweb.org/articles.php?doi=10.1257/mic.4.4.i 10.1257/mic.4.4.i American Economic Association Nashville, TN 1945-7669 1945-7685 American Economic Journal: Microeconomics http://www.aeaweb.org/aej-micro/ 4 4 November 2012 http://www.aeaweb.org/issue.php?journal=MIC&volume=4&issue=4 Journal Article A Theory of Occupational Choice with Endogenous Fertility DilipMookherjeeBoston U SilviaPrinaCase Western Reserve U DebrajRayNYU 1 34 Theories based on partial equilibrium reasoning alone cannot explain the widespread negative cross-sectional correlation between parental wages and fertility, without restrictive assumptions on preferences and childcare costs. We argue that incorporating a dynamic general equilibrium analysis of returns to human capital can help explain observed empirical patterns. Other by-products of this theory include explanations for intergenerational mobility without stochastic shocks, connections between mobility and fertility patterns, and locally determinate steady states. Comparative statics exercises on steady states shed light on the effects of education, childcare subsidies, child labor regulations, and income redistribution policy on long run living standards. (JEL H23, I31, J13, J24, J62, J82) http://www.aeaweb.org/articles.php?doi=10.1257/mic.4.4.1 10.1257/mic.4.4.1 American Economic Association Nashville, TN 1945-7669 1945-7685 American Economic Journal: Microeconomics http://www.aeaweb.org/aej-micro/ 4 4 November 2012 http://www.aeaweb.org/issue.php?journal=MIC&volume=4&issue=4 Journal Article Evolutionary Selection of Individual Expectations and Aggregate Outcomes in Asset Pricing Experiments MikhailAnufrievU Technology Sydney CarsHommesCeNDEF, U Amsterdam 35 64 In recent "learning to forecast" experiments (Hommes et al. 2005), three different patterns in aggregate price behavior have been observed: slow monotonic convergence, permanent oscillations, and dampened fluctuations. We show that a simple model of individual learning can explain these different aggregate outcomes within the same experimental setting. The key idea is evolutionary selection among heterogeneous expectation rules, driven by their relative performance. The out-of-sample predictive power of our switching model is higher compared to the rational or other homogeneous expectations benchmarks. Our results show that heterogeneity in expectations is crucial to describe individual forecasting and aggregate price behavior. (JEL C53, C91, D83, D84, G12) http://www.aeaweb.org/articles.php?doi=10.1257/mic.4.4.35 10.1257/mic.4.4.35 http://www.aeaweb.org/aej/mic/data/2011-0130_data.zip http://www.aeaweb.org/aej/mic/app/2011-0130_app.pdf American Economic Association Nashville, TN 1945-7669 1945-7685 American Economic Journal: Microeconomics http://www.aeaweb.org/aej-micro/ 4 4 November 2012 http://www.aeaweb.org/issue.php?journal=MIC&volume=4&issue=4 Journal Article Information Acquisition in Competitive Markets: An Application to the US Mortgage Market Jeremy M.BurkeRAND Corporation, Arlington, VA Curtis R.TaylorDuke U LiadWagmanIL Institute of Technology 65 106 How do price commitments impact the amount of information firms acquire about potential customers? We examine this question in the context of a competitive market where firms search for information that may disqualify applicants. Contracts are incomplete because the amount of information acquired cannot be observed. Despite competition, we find that firms search for too much information in equilibrium. If price discrimination is prohibited, members of high-risk groups suffer disproportionately high rejection rates. If rejected applicants remain in the market, the resulting adverse selection can be severe. We apply the results to the US mortgage market. (JEL D82, D83, D86, G21) http://www.aeaweb.org/articles.php?doi=10.1257/mic.4.4.65 10.1257/mic.4.4.65 American Economic Association Nashville, TN 1945-7669 1945-7685 American Economic Journal: Microeconomics http://www.aeaweb.org/aej-micro/ 4 4 November 2012 http://www.aeaweb.org/issue.php?journal=MIC&volume=4&issue=4 Journal Article Auctions in Markets: Common Outside Options and the Continuation Value Effect StephanLauermannU MI GaborViragU Toronto 107 30 In this paper, we study auctions with outside options provided by future market interaction focusing on the revenue effects of some information revelation policies. We show that auctions with less information revelation may yield higher revenues. In particular, we show that it is never optimal for the auctioneer to reveal information after the auction. Moreover, it is also not optimal to reveal information before the auction unless bidders already have precise information on their own. Our model provides a novel explanation for the prevalence of opaque trading mechanisms, and it offers insights into information sharing in dynamic models of trade. (JEL D44, D83) http://www.aeaweb.org/articles.php?doi=10.1257/mic.4.4.107 10.1257/mic.4.4.107 http://www.aeaweb.org/aej/mic/app/2012-0035_app.pdf American Economic Association Nashville, TN 1945-7669 1945-7685 American Economic Journal: Microeconomics http://www.aeaweb.org/aej-micro/ 4 4 November 2012 http://www.aeaweb.org/issue.php?journal=MIC&volume=4&issue=4 Journal Article Equity Aversion: Social Norms and the Desire to Be Ahead ChaimFershtmanTel Aviv U UriGneezyU CA, San Diego and CREED, U Amsterdam John A.ListU Chicago 131 44 Inequity aversion models have dominated the behavioral economics landscape in the last decade. This study uses variants of dictator and trust games to provide empirical content to these models. We manipulate market features--such as competition over resources--to demonstrate that extant models cannot explain realistic manipulations of either game. For example, we show that if socially acceptable actions provide one player with a greater portion of the rents, she will put forth extra effort to secure them, to the detriment of the other person. When she can earn more than the other player through customary actions, we find a preference for selfishness. (JEL C71, C70, D03, Z13) http://www.aeaweb.org/articles.php?doi=10.1257/mic.4.4.131 10.1257/mic.4.4.131 American Economic Association Nashville, TN 1945-7669 1945-7685 American Economic Journal: Microeconomics http://www.aeaweb.org/aej-micro/ 4 4 November 2012 http://www.aeaweb.org/issue.php?journal=MIC&volume=4&issue=4 Journal Article Truth in Consequentiality: Theory and Field Evidence on Discrete Choice Experiments Christian A.VosslerU TN MauriceDoyonU Laval DanielRondeauU Victoria 145 71 This paper explores methodological issues surrounding the use of discrete choice experiments to elicit values for public goods. We develop an explicit game theoretic model of individual decisions, providing conditions under which surveys with a single binary choice question, or sequence of binary choice questions, are incentive-compatible. We complement the theory with a framed field experiment, with treatments that span the spectrum from incentive-compatible, financially binding decisions to decisions with no direct financial consequences. The results suggest truthful preference revelation is possible, provided that participants view their decisions as having more than a weak chance of influencing policy. (JEL C83, C93, H41, Q23) http://www.aeaweb.org/articles.php?doi=10.1257/mic.4.4.145 10.1257/mic.4.4.145 http://www.aeaweb.org/aej/mic/data/2010-0142_data.zip http://www.aeaweb.org/aej/mic/app/2010-0142_app.pdf American Economic Association Nashville, TN 1945-7669 1945-7685 American Economic Journal: Microeconomics http://www.aeaweb.org/aej-micro/ 4 4 November 2012 http://www.aeaweb.org/issue.php?journal=MIC&volume=4&issue=4 Journal Article The Evolutionary Basis of Time Preference: Intergenerational Transfers and Sex Arthur J.RobsonSimon Fraser U BalazsSzentesLondon School of Economics and Political Science EmilIantchevSyracuse U 172 201 We consider the evolutionary basis of time discounting with intergenerational transfers. We show that the notion of "reproductive value" from biology provides the utility criterion for a parent to optimize the allocation of resources between transfers to offspring and to promote her own survival. This optimization has a natural dynamic programming formulation. We show that younger individuals may well be "too impatient," but older individuals "too patient" in accordance with observations. We compare the allocation of resources under sexual reproduction to that where there is asexual reproduction. Sex distorts time discounting; under plausible conditions, sex increases patience. (JEL A12, D91) http://www.aeaweb.org/articles.php?doi=10.1257/mic.4.4.172 10.1257/mic.4.4.172 American Economic Association Nashville, TN 1945-7669 1945-7685 American Economic Journal: Microeconomics http://www.aeaweb.org/aej-micro/ 4 4 November 2012 http://www.aeaweb.org/issue.php?journal=MIC&volume=4&issue=4 Journal Article Competition, Comparative Performance, and Market Transparency Bruce I.CarlinUCLA Shaun WilliamDaviesUCLA AndrewIannacconeUCLA 202 37 We study how competition affects market transparency, taking into account that comparative performance is assessed via tournaments and contests. Extending Dye (1985) to a multi-firm setting in which top performers are rewarded, we show that increased competition usually makes disclosure less likely, which lowers market transparency and may decrease per capita welfare. This result appears to be robust to several model variations and as such, has implications for market regulation. (JEL D82, D83, L77, L25) http://www.aeaweb.org/articles.php?doi=10.1257/mic.4.4.202 10.1257/mic.4.4.202