The Welfare Effects of Misperceived Product Costs: Data and Calibrations from the Automobile Market

By Hunt Allcott

American Economic Journal: Economic Policy, August 2013

This analysis exploits new data from the Vehicle Ownership and Alternatives Survey, which elicits beliefs over the financial benefits of owning higher fuel economy vehicles. The data are used to test for underestimation and to document evidence of "MPG Il...

Beyond Work Ethic: Religion, Individual, and Political Preferences

By Christoph Basten and Frank Betz

American Economic Journal: Economic Policy, August 2013

We investigate the effect of Reformed Protestantism, relative to Catholicism, on preferences for leisure, and for redistribution and intervention in the economy. We use a Fuzzy Spatial Regression Discontinuity Design to exploit a historical quasi-experime...

Trade, Tastes, and Nutrition in India

By David Atkin

American Economic Review, August 2013

This paper explores the causes and consequences of regional taste differences. I introduce habit formation into a standard general equilibrium model. Household tastes evolve over time to favor foods consumed as a child. Thus, locally abundant foods are...

Consumer Spending and the Economic Stimulus Payments of 2008

By Jonathan A. Parker, Nicholas S. Souleles, David S. Johnson, and Robert McClelland

American Economic Review, October 2013

We measure the change in household spending caused by receipt of the economic stimulus payments of 2008, using questions added to the Consumer Expenditure Survey and variation from the randomized timing of disbursement. Households spent 12-30 percent (dep...

Demand Estimation under Incomplete Product Availability

By Christopher T. Conlon and Julie Holland Mortimer

American Economic Journal: Microeconomics, November 2013

Incomplete product availability is an important feature of many markets, and ignoring changes in availability may bias demand estimates. We study a new dataset from a wireless inventory system on vending machines to track product availability every fou...

Intertemporal Price Discrimination in Storable Goods Markets

By Igal Hendel and Aviv Nevo

American Economic Review, December 2013

We study intertemporal price discrimination when consumers can store for future consumption needs. We offer a simple model of demand dynamics, which we estimate using market-level data. Optimal pricing involves temporary price reductions that enable sell...

Vertical Integration and Exclusivity in Platform and Two-Sided Markets

By Robin S. Lee

American Economic Review, December 2013

This paper measures the impact of vertically integrated and exclusive software on industry structure and welfare in the sixth-generation of the US video game industry (2000-2005). I specify and estimate a dynamic model of both consumer demand for hardw...

A Review Essay about Foundations of Neuroeconomic Analysis by Paul Glimcher

By Colin F. Camerer

Journal of Economic Literature, December 2013

Neuroeconomics aims to discover mechanisms of economic decision, and express them mathematically, to predict observed choice. While the contents of neuroeconomic models and evidence are obviously different than in traditional economics, (some of the) go...

Violence and Risk Preference: Experimental Evidence from Afghanistan

By Michael Callen, Mohammad Isaqzadeh, James D. Long, and Charles Sprenger

American Economic Review, January 2014

We investigate the relationship between violence and economic risk preferences in Afghanistan combining: (i) a two-part experimental procedure identifying risk preferences, violations of Expected Utility, and specific preferences for certainty; (ii) co...

One Swallow Doesn't Make a Summer: New Evidence on Anchoring Effects

By Zacharias Maniadis, Fabio Tufano, and John A. List

American Economic Review, January 2014

Some researchers have argued that anchoring in economic valuations casts doubt on the assumption of consistent and stable preferences. We present new evidence that explores the strength of certain anchoring results. We then present a theoretical framew...

Dynamic Implications of Subjective Expectations: Evidence from Adult Smokers

By Yang Wang

American Economic Journal: Applied Economics, January 2014

We set up a dynamic discrete choice model with subjective expectations data to explain adult smokers' find important differences between subjective survival probabilities and those estimated using observed mortality data. Subjectively, individuals att...

Do Consumers Respond to Marginal or Average Price? Evidence from Nonlinear Electricity Pricing

By Koichiro Ito

American Economic Review, February 2014

Nonlinear pricing and taxation complicate economic decisions by creating multiple marginal prices for the same good. This paper provides a framework to uncover consumers' perceived price of nonlinear price schedules. I exploit price variation at spatia...

Do Prices and Attributes Explain International Differences in Food Purchases?

By Pierre Dubois, Rachel Griffith, and Aviv Nevo

American Economic Review, March 2014

Food purchases differ substantially across countries. We use detailed household level data from the US, France and the UK to (i) document these differences; (ii) estimate a demand system for food and nutrients, and (iii) simulate counterfactual choices ...

Knowledge Is (Less) Power: Experimental Evidence from Residential Energy Use

By Katrina Jessoe and David Rapson

American Economic Review, April 2014

Imperfect information about product attributes inhibits efficiency in many choice settings, but can be overcome by providing simple, lowcost information. We use a randomized control trial to test the effect of high-frequency information about residentia...

Neural Activity Reveals Preferences without Choices

By Alec Smith, B. Douglas Bernheim, Colin F. Camerer, and Antonio Rangel

American Economic Journal: Microeconomics, May 2014

We investigate the feasibility of inferring the choices people would make (if given the opportunity) based on their neural responses to the pertinent prospects when they are not engaged in actual decision making. The ability to make such inferences is ...

The Intergenerational Correlation of Consumption Expenditures

By Kerwin Kofi Charles, Sheldon Danziger, Geng Li, and Robert Schoeni

American Economic Review, May 2014

Using data recently collected by the Panel Study of Income Dynamics, we find that the intergenerational correlation in expenditures is no larger than that in income, suggesting limited intra-family risk-sharing. On the other hand, even after controlling f...

Rational Attention and Adaptive Coding: A Puzzle and a Solution

By Camillo Padoa-Schioppa and Aldo Rustichini

American Economic Review, May 2014

Adaptive Coding is the property of the brain to adjust its response to statistical properties of the environment. Its effect is an improved discrimination among signals under the constraints on the dynamic range of its response. It can thus be considered ...

Who Is (More) Rational?

By Syngjoo Choi, Shachar Kariv, Wieland Müller, and Dan Silverman

American Economic Review, June 2014

Revealed preference theory offers a criterion for decision-making quality: if decisions are high quality then there exists a utility function the choices maximize. We conduct a large-scale experiment to test for consistency with utility maximization. Cons...

Gift Exchange versus Monetary Exchange: Theory and Evidence

By John Duffy and Daniela Puzzello

American Economic Review, June 2014

We study the Lagos and Wright (2005) model of monetary exchange in the laboratory. With a finite population of sufficiently patient agents, this model has a unique monetary equilibrium and a continuum of non-monetary gift exchange equilibria, some of w...

Evolutionary Origins of the Endowment Effect: Evidence from Hunter-Gatherers

By Coren L. Apicella, Eduardo M. Azevedo, Nicholas A. Christakis, and James H. Fowler

American Economic Review, June 2014

The endowment effect, the tendency to value possessions more than non-possessions, is a well known departure from rational choice and has been replicated in numerous settings. We investigate the universality of the endowment effect, its evolutionary sig...