How Transparency Kills Information Aggregation: Theory and Experiment

By Sebastian Fehrler and Niall Hughes

American Economic Journal: Microeconomics, February 2018

We investigate the potential of transparency to influence committee decision-making. We present a model in which career concerned committee members receive private information of different type-dependent accuracy, deliberate, and vote. We study three leve...

Paternalism against Veblen: Optimal Taxation and Non-respected Preferences for Social Comparisons

By Thomas Aronsson and Olof Johansson-Stenman

American Economic Journal: Economic Policy, February 2018

This paper compares optimal nonlinear income tax policies of welfarist and paternalist governments, where the latter does not respect individual preferences regarding relative consumption. Consistent with previous findings, relative consumption concerns t...

Towards the Greater Good? EU Commissioners' Nationality and Budget Allocation in the European Union

By Kai Gehring and Stephan A. Schneider

American Economic Journal: Economic Policy, February 2018

We demonstrate that the nationalities of EU Commissioners influence budget allocation decisions in favor of their country of origin. Our focus is on the Commissioners for Agriculture, who are exclusively responsible for a specific fund that accounts for t...

The Limits to Partial Banking Unions: A Political Economy Approach

By Dana Foarta

American Economic Review, April 2018

This paper studies the welfare effects of a "partial banking union" in which cross-country transfers for bailouts are set at the supranational level, but policymakers in member countries decide the distribution of funds. This allows the self-interested po...

A Mechanism for Eliciting Second-Order Beliefs and the Inclination to Choose

By Edi Karni

American Economic Journal: Microeconomics, May 2018

This paper describes a direct revelation mechanism for eliciting decision makers' introspective beliefs on sets of subjective prior or posterior probabilities. The proposed scheme constitutes a revealed-preference procedure for measuring the inclination o...

What Do Trade Agreements Really Do?

[Symposium: Does the US Really Gain From Trade?]

By Dani Rodrik

Journal of Economic Perspectives, Spring 2018

Economists have a tendency to associate "free trade agreements" all too closely with "free trade." They may be unaware of some of the new (and often problematic) beyond-the-border features of current trade agreements. As trade agreements have evolved ...

Private Paternalism, the Commitment Puzzle, and Model-Free Equilibrium

By David Laibson

AEA Papers and Proceedings, May 2018

Paternalism is a policy that advances an individual's interests by restricting his or her freedom. In a setting with present-biased agents, I characterize the scope of private paternalism—paternalism implemented by private institutions. Private patern...

Quadratic Voting: How Mechanism Design Can Radicalize Democracy

By Steven P. Lalley and E. Glen Weyl

AEA Papers and Proceedings, May 2018

Can mechanism design save democracy? We propose a simple design that offers a chance: individuals pay for as many votes as they wish using a number of "voice credits" in the votes they buy. Only quadratic cost induces marginal costs linear in votes purcha...

A Dialogue between a Populist and an Economist

By Tito Boeri, Prachi Mishra, Chris Papageorgiou, and Antonio Spilimbergo

AEA Papers and Proceedings, May 2018

In this imaginary dialogue, a populist and an economist discuss the role of economic shocks to explain populism. A simple correlation between economic shocks and populism is weak. However, economic shocks can explain well the phenomenon of populism in cou...

Is Populism Necessarily Bad Economics?

By Dani Rodrik

AEA Papers and Proceedings, May 2018

I distinguish between political and economic populism. Both are averse to agencies of restraint, or, equivalently, delegation to technocrats or external rules. In the economic domain, delegation to independent agencies (domestic or foreign) occurs in two ...

Economic Drivers of Populism

By Sergei Guriev

AEA Papers and Proceedings, May 2018

The recent wave of populism is different from the previous ones, thus generating the demand for noneconomic explanations, such as identity politics and cultural factors. In this paper, I discuss several pieces of evidence that show that economic factors, ...

Studying the (Economic) Consequences of Populism

By Cristóbal Kaltwasser

AEA Papers and Proceedings, May 2018

Pundits and academics alike are increasingly interested in populism. This is a welcome development, since not long ago research on populism was relegated to the margins of the social sciences. Among those who are starting to undertake comparative research...

The "Standard Error" of Event Studies: Lessons from the 2016 Election

By Justin Wolfers and Eric Zitzewitz

AEA Papers and Proceedings, May 2018

The 2016 Election offers an unusually stark warning about the limitations of event studies. In four separate pre-election event windows, financial market responses to shifts in electoral probabilities were consistent with expectations that a surprise Trum...

Unequal Rewards to Firms: Stock Market Responses to the Trump Election and the 2017 Corporate Tax Reform

By Alexander F. Wagner, Richard J. Zeckhauser, and Alexandre Ziegler

AEA Papers and Proceedings, May 2018

Massive dollars shuttled back and forth among firms on the twisted path to and passage of the 2017 tax reform. Prices of individual stocks responded to the difference between initial and revised expectations. From the bill's initiation in the House to fin...

Economic Expectations, Voting, and Economic Decisions around Elections

By Gur Huberman, Tobias Konitzer, Masha Krupenkin, David Rothschild, and Shawndra Hill

AEA Papers and Proceedings, May 2018

Survey respondents who associate themselves with the "winning team" in an election, substantially increase their expectations for their stock market, but only modestly increase their expected household economic well-being. The impact of the election outco...

Enfranchising Your Own? Experimental Evidence on Bureaucrat Diversity and Election Bias in India

By Yusuf Neggers

American Economic Review, June 2018

This paper investigates the effects of polling station administrator diversity on elections in India, using a natural experiment: the random assignment of government officials to teams managing stations on election day, together with surveys conducted wit...

Will a Five-Minute Discussion Change Your Mind? A Countrywide Experiment on Voter Choice in France

By Vincent Pons

American Economic Review, June 2018

This paper provides the first estimate of the effect of door-to-door canvassing on actual electoral outcomes, via a countrywide experiment embedded in Francois Hollande's campaign in the 2012 French presidential election. While existing experiments random...

Ethnolinguistic Favoritism in African Politics

By Andrew Dickens

American Economic Journal: Applied Economics, July 2018

African political leaders have a tendency to favor members of their own ethnic group. Yet for all other ethnic groups in a country, it is unclear whether having a similar ethnicity to the leader is beneficial. To shed light on this issue, I use a continuo...

Backward Induction in the Wild? Evidence from Sequential Voting in the US Senate

By Jörg L. Spenkuch, B. Pablo Montagnes, and Daniel B. Magleby

American Economic Review, July 2018

In the US Senate, roll calls are held in alphabetical order. We document that senators early in the order are less likely to vote with the majority of their own party than those whose last name places them at the end of the alphabet. To speak to the mecha...

Electoral Accountability and Interdistrict Competition

By Galina Zudenkova

American Economic Journal: Microeconomics, August 2018

This paper analyzes a multidistrict game of electoral accountability in which constituencies compete over scarce resources by setting expectations for targeted spending. I build a political agency model in which a vote-maximizing politician is subject to ...