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...

Micro-loans, Insecticide-Treated Bednets, and Malaria: Evidence from a Randomized Controlled Trial in Orissa, India

By Alessandro Tarozzi, Aprajit Mahajan, Brian Blackburn, Dan Kopf, Lakshmi Krishnan, and Joanne Yoong

American Economic Review, July 2014

We describe findings from the first large-scale cluster randomized controlled trial in a developing country that evaluates the uptake of a health-protecting technology, insecticide-treated bednets (ITNs), through micro-consumer loans, as compared to free ...

Household Bargaining and Excess Fertility: An Experimental Study in Zambia

By Nava Ashraf, Erica Field, and Jean Lee

American Economic Review, July 2014

We posit that household decision-making over fertility is characterized by moral hazard since most contraception can only be perfectly observed by the woman. Using an experiment in Zambia that varied whether women were given access to contraceptives alone...

E-lections: Voting Behavior and the Internet

By Oliver Falck, Robert Gold, and Stephan Heblich

American Economic Review, July 2014

This paper analyzes the effects on voting behavior of information disseminated over the Internet. We address endogeneity in Internet availability by exploiting regional and technological peculiarities of the preexisting voice telephony network that hinder...

Default Tips

By Kareem Haggag and Giovanni Paci

American Economic Journal: Applied Economics, July 2014

We examine the role of defaults in high-frequency, small-scale choices using unique data on over 13 million New York City taxi rides. Using a regression discontinuity design, we show that default tip suggestions have a large impact on tip amounts. These r...

Learning about an Infrequent Event: Evidence from Flood Insurance Take-Up in the United States

By Justin Gallagher

American Economic Journal: Applied Economics, July 2014

I examine the learning process that economic agents use to update their expectation of an uncertain and infrequently observed event. I use a new nation-wide panel dataset of large regional floods and flood insurance policies to show that insurance take-up...

Beyond Happiness and Satisfaction: Toward Well-Being Indices Based on Stated Preference

By Daniel J. Benjamin, Ori Heffetz, Miles S. Kimball, and Nichole Szembrot

American Economic Review, September 2014

This paper proposes foundations and a methodology for survey-based tracking of well-being. First, we develop a theory in which utility depends on "fundamental aspects" of well-being, measurable with surveys. Second, drawing from psychologists, philosopher...

The Short-Run and Long-Run Effects of Behavioral Interventions: Experimental Evidence from Energy Conservation

By Hunt Allcott and Todd Rogers

American Economic Review, October 2014

We document three remarkable features of the Opower program, in which social comparison-based home energy reports are repeatedly mailed to more than six million households nationwide. First, initial reports cause high-frequency "action and backsliding,...

Consumption, Income Changes, and Heterogeneity: Evidence from Two Fiscal Stimulus Programs

By Kanishka Misra and Paolo Surico

American Economic Journal: Macroeconomics, October 2014

Almost half of American families did not adjust their consumption following receipt of the 2001 or 2008 tax rebates. Another 20 percent, with low income and more likely to rent, spent a small but significant amount. Households with large spending prope...

Fiscal Policy and MPC Heterogeneity

By Tullio Jappelli and Luigi Pistaferri

American Economic Journal: Macroeconomics, October 2014

We use responses to survey questions in the 2010 Italian Survey of Household Income and Wealth that ask consumers how much of an unexpected transitory income change they would consume. The marginal propensity to consume (MPC) is 48 percent on average. W...