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Recent Studies in Applied Microeconomics

Paper Session

Saturday, Jan. 6, 2018 12:30 PM - 2:15 PM

Marriott Philadelphia Downtown, Grand Ballroom Salon C
Hosted By: Korea-America Economic Association & American Economic Association
  • Chair: Byung-Cheol Kim, University of Alabama

Online Intermediaries and the Consumption of Polarized and Inaccurate News During the 2016 Presidential Election

Susan Athey
Stanford University, NBER, Microsoft Research New England
Markus M. Mobius
Microsoft Research New England


During the 2016 Presedential Election, citizens consumed news in fundamentally different ways than in the past.
Online news took on new prominence, but the biggest change was likely the central role of social media.
A number of research questions emerge, such as, how important were fake and highly polarized news articles during the U.S. election? Which groups consumed it? Did they consume only one-sided news, or did they consume both left and right leaning news? How did consumers get exposed to fake and polarized news? In this paper, we analyze these questions using panel data about consumer behavior on web browsers and mobile phones. We find that fake and polarized news were significant factors for subsets of the population, particularly right-leaning readers, older readers, and readers of social media. Social Media was responsible for a large share of fake news reading. We also look at the demographics of news reading; race is a strong predictor for reading, where Black readers are much less likely to read fake news, and also much less likely to visit the campaign website for Donald Trump. Gender is a strong predictor of visiting Hillary Clinton's campaign website and particularly for visiting donation pages, while is is less important for predicting Trump website visits.

Price Formation in Bilateral Trade: Evidence From Online Bargaining

Matthew Backus
Columbia University
Thomas C. Blake
Bradley Larsen
Stanford University
Steven Tadelis
University of California-Berkeley


We study patterns of price formation in bilateral trade using new publicly available data describing 25 million bargaining sequences from eBay’s Best Offer platform. We document both behavior and outcomes, and relate the ob- served patterns to “rational” and “psychological” theories of bargaining. We find that bargaining sequences are short, and conditional on an offer being made, highly likely to succeed. Bargaining patterns can be explained by both player and prod- uct heterogeneity. We also find that players’ bargaining strength impacts the out- comes, and that players exhibit equitable behavior by making offers that split-the- difference between negotiating positions.

Optimal Sequential Decision with Limited Attention

Yeon-Koo Che
Columbia University
Konrad Mierendorff
University College London


We consider a dynamic model of information acquisition. Before taking an action, a decision maker may direct her limited attention to collecting different types of evidence that support alternative actions. The optimal policy combines three strategies: (i) immediate action, (ii) a contradictory strategy seeking to challenge the prior belief, and (iii) a confirmatory strategy seeking to confirm the prior. The model produces a rich dynamic stochastic choice pattern as well as predictions in settings such as jury deliberation and political media choice.

Second-degree Price Discrimination by a Two-sided Monopoly Platform

Doh-Shin Jeon
Toulouse School of Economics and CEPR
Byung-Cheol Kim
University of Alabama
Domenico Menicucci
University of Florence


In this article we study second-degree price discrimination by a two-sided monopoly platform. We find novel distortions that arise due to the two-sidedness of the market, which make the standard result "no distortion at top and downward distortion at bottom" not hold. They generate a new type of non-responsiveness, different from the one found by Guesnerie and Laffont (1984). However, the platform may mitigate or remove non-responsiveness at one side by properly designing price discrimination on the other side. We also analyze welfare effect of price discrimination. These findings help to address our central question, i.e., when price discrimination on one side substitutes for or complements price discrimination on the other side. As applications, we study net neutrality regulation and mechanism design for an advertising platform mediating advertisers and consumers.
Karam Kang
Carnegie Mellon University
Jihye Jeon
Boston University
Jeong-Ho "John" Kim
Emory University
Ilwoo Hwang
University of Miami
JEL Classifications
  • D7 - Analysis of Collective Decision-Making
  • L1 - Market Structure, Firm Strategy, and Market Performance