Sacred Values? The Effect of Information on Attitudes toward Payments for Human Organs

By Julio J. Elias, Nicola Lacetera, and Mario Macis

American Economic Review, May 2015

Are attitudes about morally controversial (and often prohibited) market transactions affected by information about their costs and benefits? We address this question for the case of payments for human organs. We find in a survey experiment with US residen...

Deciding When to Quit: Reference-Dependence over Slot Machine Outcomes

By Jaimie W. Lien and Jie Zheng

American Economic Review, May 2015

We conduct tests for reference dependent loss aversion using slot machine gamblers' decisions on when to quit playing for a visit to a casino. Evidence for a lagged status-quo reference point is found in the aggregate, while endogenously determined refere...

Loss Aversion in Post-Sale Purchases of Consumer Products and Their Substitutes

By Debajyoti Ray, Matthew Shum, and Colin F. Camerer

American Economic Review, May 2015

This paper considers the measurement of consumer loss aversion in product markets. We introduce a test based on a "substitution effect," focusing on how the end of a sale affects sales not of the good itself, but a substitute good. Such an effect cannot b...

Standing United or Falling Divided? High Stakes Bargaining in a TV Game Show

By Dennie van Dolder, Martijn J. van den Assem, Colin F. Camerer, and Richard H. Thaler

American Economic Review, May 2015

We examine high stakes three-person bargaining in a game show where contestants bargain over a large money amount that is split into three unequal shares. We find that individual behavior and outcomes are strongly influenced by equity concerns: those who ...

The Composition Effect of Consumption around Retirement: Evidence from Singapore

By Sumit Agarwal, Jessica Pan, and Wenlan Qian

American Economic Review, May 2015

It is well established that consumption is "hump" shaped over an individual's lifecycle, peaking in middle age and then declining in the years that follow. Prior research has documented that consumption declines at retirement, which is inconsistent with t...

Machine Learning Methods for Demand Estimation

By Patrick Bajari, Denis Nekipelov, Stephen P. Ryan, and Miaoyu Yang

American Economic Review, May 2015

We survey and apply several techniques from the statistical and computer science literature to the problem of demand estimation. To improve out-of-sample prediction accuracy, we propose a method of combining the underlying models via linear regression. Ou...

Post-Selection and Post-Regularization Inference in Linear Models with Many Controls and Instruments

By Victor Chernozhukov, Christian Hansen, and Martin Spindler

American Economic Review, May 2015

We consider estimation of and inference about coefficients on endogenous variables in a linear instrumental variables model where the number of instruments and exogenous control variables are each allowed to be larger than the sample size. We work within ...

What High-Achieving Low-Income Students Know about College

By Caroline M. Hoxby and Sarah Turner

American Economic Review, May 2015

Previous work demonstrates that low-income higher achievers fail to apply to selective colleges despite their being admitted at high rates and receiving financial aid so generous that they pay less than at non-selective schools. The Expanding College Oppo...

The Rise of Fringe Competitors in the Wake of an Emerging Middle Class: An Empirical Analysis

By Alon Eizenberg and Alberto Salvo

American Economic Journal: Applied Economics, July 2015

The "emerging middle class" is a force of economic importance in many consumer markets around the globe. A striking phenomenon in some of these markets is the growth of "generic," low-price brands. This paper examines these phenomena in Brazil's large sof...

The Effect of Product Demand on Inequality: Evidence from the United States and the United Kingdom

By Marco Leonardi

American Economic Journal: Applied Economics, July 2015

Using Consumer Expenditure Survey data this paper shows that more educated workers demand more high-skill-intensive services and, to a lesser extent, more very low-skill-intensive services (such as personal services). Additional evidence at the Metropolit...

What Makes Them Click: Empirical Analysis of Consumer Demand for Search Advertising

By Przemyslaw Jeziorski and Ilya Segal

American Economic Journal: Microeconomics, August 2015

We study users' responses to sponsored-search advertising using consumer-level data from Microsoft Live. We document that users click ads in a nonsequential order and that the click through rates depend on the identity of competing ads. We estimate a dyna...

Cyber-Shilling in Automobile Auctions: Evidence from a Field Experiment

By David Grether, David Porter, and Matthew Shum

American Economic Journal: Microeconomics, August 2015

We run a large field experiment with an online company specializing in selling used automobiles via ascending auctions. We manipulate experimentally the "price grid," or the possible amounts that bidders can bid above the current standing price. Using two...

Taxpayer Search for Information: Implications for Rational Attention

By Jeffrey L. Hoopes, Daniel H. Reck, and Joel Slemrod

American Economic Journal: Economic Policy, August 2015

We examine data on capital-gains-tax-related information search to determine when and how taxpayers acquire information. We find seasonal increases in information search around tax deadlines, suggesting that taxpayers seek information to comply with tax l...

Asymmetric Incentives in Subsidies: Evidence from a Large-Scale Electricity Rebate Program

By Koichiro Ito

American Economic Journal: Economic Policy, August 2015

Many countries use substantial public funds to subsidize reductions in negative externalities. Such policy designs create asymmetric incentives because increases in externalities remain unpriced. I investigate the implications of such policies by using a ...

Evaluating Behaviorally Motivated Policy: Experimental Evidence from the Lightbulb Market

By Hunt Allcott and Dmitry Taubinsky

American Economic Review, August 2015

Imperfect information and inattention to energy costs are important potential motivations for energy efficiency standards and subsidies. We evaluate these motivations in the lightbulb market using a theoretical model and two randomized experiments. We der...

Cooperation, but No Reciprocity: Individual Strategies in the Repeated Prisoner's Dilemma

By Yves Breitmoser

American Economic Review, September 2015

In the repeated prisoner's dilemma, predictions are notoriously difficult. Recently, however, Blonski, Ockenfels, and Spagnolo (2011)—henceforth, BOS‐showed that experimental subjects predictably cooperate when the discount factor exceeds a par...

Happiness and the Persistence of Income Shocks

By Christian Bayer and Falko Juessen

American Economic Journal: Macroeconomics, October 2015

We reassess the empirical effects of income and employment on self-reported well-being. Our analysis makes use of a two-step estimation procedure that allows us to apply instrumental variable regressions with ordinal observable data. As suggested by the ...

Market Structure, Reputation, and the Value of Quality Certification

By Daniel W. Elfenbein, Raymond Fisman, and Brian McManus

American Economic Journal: Microeconomics, November 2015

Quality certification programs help consumers identify high-quality products or sellers in markets with information asymmetries. Using data from eBay UK's online marketplace, we study how certification's impact on demand varies with market- and seller- le...

Inferring Rationales from Choice: Identification for Rational Shortlist Methods

By Rohan Dutta and Sean Horan

American Economic Journal: Microeconomics, November 2015

A wide variety of choice behavior inconsistent with preference maximization can be explained by Manzini and Mariotti's Rational Shortlist Methods. Choices are made by sequentially applying a pair of asymmetric binary relations (rationales) to eliminate in...

Overconfident Consumers in the Marketplace

[Symposium: Overconfidence]

By Michael D. Grubb

Journal of Economic Perspectives, Fall 2015

The term overconfidence is used broadly in the psychology literature, referring to both overoptimism and overprecision. Overoptimistic individuals overestimate their own abilities or prospects. In contrast, overprecise individuals place overly narro...