Migrants at Sea: Unintended Consequences of Search and Rescue Operations

By Claudio Deiana, Vikram Maheshri, and Giovanni Mastrobuoni

American Economic Journal: Economic Policy, May 2024

Many countries are facing and resisting strong migratory pressure, fueling irregular migration. In response to mounting deaths in the Central Mediterranean, European nations intensified rescue operations in 2013. We develop a model of irregular migration ...

Auditability in School Choice

By Aram Grigoryan and Markus Möller

AEA Papers and Proceedings, May 2024

In centralized public school admissions, participants may not fully observe other participants' preference rankings and priorities. In this paper, we evaluate prominent assignment rules in terms of their auditability properties. We show that Serial Dictat...

Welfare Comparisons for Biased Learning

By Mira Frick, Ryota Iijima, and Yuhta Ishii

American Economic Review, June 2024

We study robust welfare comparisons of learning biases (misspecified Bayesian and some forms of non-Bayesian updating). Given a true signal distribution, we deem one bias more harmful than another if it yields lower objective expected payoffs in all decis...

The Political Economics of Non-democracy

By Georgy Egorov and Konstantin Sonin

Journal of Economic Literature, June 2024

We survey recent theoretical and empirical literature on political economics of non-democracies. Nondemocratic regimes face multiple challenges to their rule, both internal, such as palace coups or breakdown of their support coalition, and external, such ...

Optimal Income Taxation

By Louis Kaplow

Journal of Economic Literature, June 2024

This article explores subjects in optimal income taxation characterized by recent research interest, practical importance in light of concerns about inequality, potential for misunderstanding, and prospects for advancement. Throughout the analysis, path...

Opportunity Unraveled: Private Information and the Missing Markets for Financing Human Capital

By Daniel Herbst and Nathaniel Hendren

American Economic Review, July 2024

We examine whether adverse selection has unraveled private markets for equity and state-contingent debt contracts for financing higher education. Using survey data on beliefs, we show a typical college-goer would have to repay $1.64 in present value for e...

Personalized Pricing and Competition

By Andrew Rhodes and Jidong Zhou

American Economic Review, July 2024

We study personalized pricing in a general oligopoly model. The impact of personalized pricing relative to uniform pricing hinges on the degree of market coverage. If market conditions are such that coverage is high (e.g., the production cost is low or th...

Correlation Neglect in Student-to-School Matching

By Alex Rees-Jones, Ran Shorrer, and Chloe Tergiman

American Economic Journal: Microeconomics, August 2024

We present results from three experiments containing incentivized school choice scenarios. In these scenarios, we vary whether schools' assessments of students are based on a common priority (inducing correlation in admissions decisions) or are based on i...

Monitoring Teams

By Marina Halac, Ilan Kremer, and Eyal Winter

American Economic Journal: Microeconomics, August 2024

A principal incentivizes a group of agents to work by choosing a monitoring structure and a scheme of performance-contingent rewards. The monitoring structure partitions the set of agents into monitoring teams, each delivering a signal of joint performanc...

Negotiating Cooperation under Uncertainty: Communication in Noisy, Indefinitely Repeated Interactions

By Fabian Dvorak and Sebastian Fehrler

American Economic Journal: Microeconomics, August 2024

Case studies of cartels and recent theory suggest that communication is a key factor for cooperation under imperfect monitoring, where actions can only be observed with noise. We conduct a laboratory experiment to study how communication affects cooperati...

Limited Strategic Thinking and the Cursed Match

By Olivier Bochet and Jacopo Magnani

American Economic Journal: Microeconomics, August 2024

In vertically differentiated matching markets with private information, agents face an acceptance curse: being accepted as a partner conveys bad news. We experimentally investigate whether individuals anticipate the acceptance curse in such an environment...

Dynamic Oligopoly Pricing with Asymmetric Information: Implications for Horizontal Mergers

By Andrew Sweeting, Xuezhen Tao, and Xinlu Yao

American Economic Journal: Microeconomics, August 2024

We model repeated pricing by differentiated product firms when each firm has private information about its serially correlated marginal cost. In a fully separating equilibrium of the dynamic game, signaling incentives can lead equilibrium prices to be sig...

Selling Dreams: Endogenous Optimism in Lending Markets

By Luc Bridet and Peter Schwardmann

American Economic Journal: Microeconomics, August 2024

We propose a model of borrower optimism in competitive lending markets with asymmetric information. Borrowers engage in self-deception to arrive at beliefs that optimally trade off the anticipatory utility benefits and material costs of optimism. Lenders'...

Monotone Function Intervals: Theory and Applications

By Kai Hao Yang and Alexander K. Zentefis

American Economic Review, August 2024

A monotone function interval is the set of monotone functions that lie pointwise between two fixed monotone functions. We characterize the set of extreme points of monotone function intervals and apply this to a number of economic settings. First, we leve...

Repeated Trading: Transparency and Market Structure

By Ayça Kaya and Santanu Roy

American Economic Review, August 2024

We analyze the effect of transparency of past trading volumes in markets where an informed long-lived seller can repeatedly trade with short-lived uninformed buyers. Transparency allows buyers to observe previously sold quantities. In markets with intrape...

Data, Competition, and Digital Platforms

By Dirk Bergemann and Alessandro Bonatti

American Economic Review, August 2024

A monopolist platform uses data to match heterogeneous consumers with multiproduct sellers. The consumers can purchase the products on the platform or search off the platform. The platform sells targeted ads to sellers that recommend their products to con...

Buying from a Group

By Nima Haghpanah, Aditya Kuvalekar, and Elliot Lipnowski

American Economic Review, August 2024

A buyer procures a good owned by a group of sellers whose heterogeneous cost of trade is private information. The buyer must either buy the whole good or nothing, and sellers share the transfer in proportion to their share of the good. We characterize the...

Optimal Internality Taxation of Product Attributes

By Andreas Gerster and Michael Kramm

American Economic Journal: Economic Policy, August 2024

This paper explores how a benevolent policymaker should optimally tax (or subsidize) product attributes when consumers are behaviorally biased. We demonstrate that market choices are informative about biases, which can be exploited for targeting biased co...

Experimentation in Networks

By Simon Board and Moritz Meyer-ter-Vehn

American Economic Review, September 2024

We propose a model of strategic experimentation on social networks in which forward-looking agents learn from their own and neighbors' successes. In equilibrium, private discovery is followed by social diffusion. Social learning crowds out own experimenta...

Comparisons of Signals

By Benjamin Brooks, Alexander Frankel, and Emir Kamenica

American Economic Review, September 2024

A signal is a description of an information source that specifies both its correlation with the state and its correlation with other signals. Extending Blackwell (1953), we characterize when one signal is more valuable than another regardless of preferenc...