Repression and Repertoires

By Stephen Morris and Mehdi Shadmehr

American Economic Review: Insights, September 2024

We formalize Tilly's concept of repertoires of collective action and analyze how state repression affects the variety of observed contentious actions. When repression accelerates with higher levels of antiregime actions (convex repression structure), oppo...

Information Cascades and Social Learning

By Sushil Bikhchandani, David Hirshleifer, Omer Tamuz, and Ivo Welch

Journal of Economic Literature, September 2024

Social learning is the updating of beliefs based on observation of others. Such observation can lead to efficient aggregation of information, but also to inaccurate decisions, fragility of mass behaviors, and, in the case of information cascades, to compl...

The Paradox of Innovation Nondisclosure: Evidence from Licensing Contracts

By Gaurav Kankanhalli, Alan Kwan, and Kenneth Merkley

American Economic Journal: Applied Economics, October 2024

Innovative firms must trade off disclosing to investors and maintaining secrecy from competitors. We study this trade-off in a sample of IP licenses mandatorily disclosed by US public firms, whose contents can be temporarily redacted. Hand classifying the...

Monitoring in Small Firms: Experimental Evidence from Kenyan Public Transit

By Erin M. Kelley, Gregory Lane, and David Schönholzer

American Economic Review, October 2024

Small firms struggle to grow beyond a few employees. We introduce monitoring devices into commuter minibuses in Kenya and randomize which minibus owners have access to the data using a novel mobile app. We find that treated vehicle owners modify the terms...

Dynamic Outside Options and Optimal Negotiation Strategies

By Andrew McClellan

American Economic Review, October 2024

We study the design of negotiation strategies when a principal and agent must decide how to split a pie while the agent's outside option changes over time. The principal's optimal strategy under commitment demonstrates a new, but intuitive, set of negotia...

Dual Moral Hazard and the Tyranny of Success

By Enrique Ide

American Economic Journal: Microeconomics, November 2024

I explain why current success can undermine an organization's ability to innovate. I consider a standard bandit problem between a safe and a risky arm with two modifications. First, a principal allocates resources. Second, an agent must install the risky ...

On Optimal Scheduling

By Kfir Eliaz, Daniel Fershtman, and Alexander Frug

American Economic Journal: Microeconomics, November 2024

We consider a decision-maker sequentially choosing among alternatives when periodic payoffs depend on both chosen and unchosen alternatives in that period. We show that when flow payoffs are the sum or product of payoffs from chosen and unchosen alternati...

Signaling in Retrospect and the Informational Structure of Markets

By Michael Spence

American Economic Review, June 2002

Information Frictions and Skill Signaling in the Youth Labor Market

By Sara B. Heller and Judd B. Kessler

American Economic Journal: Economic Policy, November 2024

This paper provides evidence that information frictions limit the labor market trajectories of US youth. We provide credible skill signals—recommendation letters based on supervisor feedback—to a random subset of 43,409 participants in New York's summ...

Evaluating Behavioral Incentive Compatibility: Insights from Experiments

[Symposium: Behavioral Incentive Compatibility]

By David Danz, Lise Vesterlund, and Alistair J. Wilson

Journal of Economic Perspectives, Fall 2024

Incentive compatibility is core to mechanism design. The success of auctions, matching algorithms, and voting systems all hinge on the ability to select incentives that make it in the individual's interest to reveal their type. But how do we test whether ...

Designing Simple Mechanisms

[Symposium: Behavioral Incentive Compatibility]

By Shengwu Li

Journal of Economic Perspectives, Fall 2024

It matters whether real-world mechanisms are simple. If participants cannot see that a mechanism is incentive-compatible, they may refuse to participate or may behave in ways that undermine the mechanism. There are several ways to formalize what it means ...

Aiming for the Goal: Contribution Dynamics of Crowdfunding

By Joyee Deb, Aniko Öry, and Kevin R. Williams

American Economic Review, December 2024

We study a dynamic contribution game where investors seek private benefits offered in exchange for contributions, and a single, publicly minded donor values project success. We show that donor contributions serve as costly signals that encourage socially ...

Should They Compete or Should They Cooperate? The View of Agency Theory

By Pierre Fleckinger, David Martimort, and Nicolas Roux

Journal of Economic Literature, December 2024

What is the most efficient way of designing incentives in an organization? Over the past five decades, agency theory has provided various answers to this crucial question. This line of research suggests that, depending on the organizational context, the o...

Inequality Among World Citizens: 1820-1992

By François Bourguignon and Christian Morrisson

American Economic Review, September 2002

This paper investigates the distribution of well being among world citizens during the last two centuries. The estimates show that inequality of world distribution of income worsened from the beginning of the 19th century to World War II and after that se...

A Random Dictator Is All You Need

By Itai Arieli, Yakov Babichenko, Inbal Talgam-Cohen, and Konstantin Zabarnyi

American Economic Journal: Microeconomics, February 2025

We study information aggregation with a decision-maker aggregating binary recommendations from symmetric agents. Each agent's recommendation depends on her private information about a hidden state. While the decision-maker knows the prior distribution ove...

Scoring Strategic Agents

By Ian Ball

American Economic Journal: Microeconomics, February 2025

I introduce a model of predictive scoring. A receiver wants to predict a sender's quality. An intermediary observes multiple features of the sender and aggregates them into a score. Based on the score, the receiver makes a decision. The sender prefers "hi...

Long-Term Relationships in the US Truckload Freight Industry

By Adam Harris and Thi Mai Anh Nguyen

American Economic Journal: Microeconomics, February 2025

This paper provides evidence on the scope and incentive mechanisms of long-term relationships in the US truckload freight industry. In this setting, shippers and carriers engage in repeated interactions under fixed-rate contracts that allow for inefficien...

Monitoring, Motivation, and Management: The Determinants of Opportunistic Behavior in a Field Experiment

By Daniel S. Nagin, James B. Rebitzer, Seth Sanders, and Lowell J. Taylor

American Economic Review, September 2002

Economic models of incentives in employment relationships are based on a specific theory of motivation: employees are "rational cheaters," who anticipate the consequences of their actions and shirk when the marginal benefits exceed costs. We investigate t...

A Theory of Dynamic Inflation Targets

By Christopher Clayton and Andreas Schaab

American Economic Review, February 2025

Should central banks' inflation targets remain set in stone? We study a dynamic mechanism design problem between a government and a central bank. The central bank has persistent private information about structural shocks. Firms learn the state from the c...

The Good Wife? Reputation Dynamics and Financial Decision-Making inside the Household

By Nina Buchmann, Pascaline Dupas, and Roberta Ziparo

American Economic Review, February 2025

We study reputation dynamics within the household in a setting where women regularly receive transfers from their husbands for household purchases. We propose a signaling model in which wives try to maintain a good reputation in the eyes of their husbands...