Do Ordeals Work for Selection Markets? Evidence from Health Insurance Auto-Enrollment

By Mark Shepard and Myles Wagner

American Economic Review, March 2025

Are application hassles, or "ordeals," an effective way to limit public program enrollment? We provide new evidence by studying (removal of) an auto-enrollment policy for health insurance, adding an extra step to enroll. This minor ordeal has a major impa...

Revisiting Kindness and Confusion in Public Goods Experiments

By Daniel Houser and Robert Kurzban

American Economic Review, September 2002

Implementing the Efficient Allocation of Pollution

By John Duggan and Joanne Roberts

American Economic Review, September 2002

Min(d)ing the President: A Text Analytic Approach to Measuring Tax News

By Lenard Lieb, Adam Jassem, Rui Jorge Almeida, Nalan Baştürk, and Stephan Smeekes

American Economic Journal: Macroeconomics, April 2025

Economic agents react to signals about future tax policy changes. Consequently, estimating their macroeconomic effects requires identification of such signals. We propose a novel text analytic approach for transforming textual information into an economic...

Price and Choose

By Federico Echenique and Matías Núñez

American Economic Journal: Microeconomics, May 2025

We describe a sequential mechanism that fully implements the set of efficient outcomes in environments with quasi-linear utilities. The mechanism asks agents to take turns in defining prices for each outcome, with a final player choosing an outcome for al...

Aggressive Pivots and Entrepreneurial Skill

By Xuelin Li and Martin Szydlowski

American Economic Journal: Microeconomics, May 2025

We study pivots as signaling devices in a dynamic experimentation model. An entrepreneur receives funding from an investor and has private information about a project, which requires costly experimentation to succeed. The entrepreneur has a real option to...

Optimal Contract Regulation in Selection Markets

By Yehuda John Levy and André Veiga

American Economic Journal: Microeconomics, May 2025

We model competitive insurance markets with continuous cost-types. A regulator sets minimum and maximum coverage levels and a fee for nonbuyers. Equilibrium is unique if the type distribution is log-concave. Increasing the nonpurchase fee increases welfar...

Severance Pay in an Optimal Contract

By Borys Grochulski, Russell Wong, and Yuzhe Zhang

American Economic Journal: Microeconomics, May 2025

We study the incentive role of severance compensation. In a canonical principal-agent model, we introduce exogenous job destruction risk and show that compensation following job destruction can reduce overall incentive costs. To mitigate the risk of ineff...

The Economics of Generic Drug Shortages: The Limits of Competition

[Symposium: Drug Pricing and Regulation]

By Rena M. Conti and Marta E. Wosińska

Journal of Economic Perspectives, Spring 2025

We examine the economics of the US generic prescription drug market, which comprises the majority of medicines sold. The market is celebrated for its benefits in the form of high quality and low prices for consumers but is also increasingly challenged by ...

Extracting Statistical Relationships from Observational Data: Predicting with Full or Partial Information

By Guillaume R. Fréchette, Emanuel Vespa, and Sevgi Yuksel

AEA Papers and Proceedings, May 2025

Decision-makers sometimes rely on past data to learn statistical relationships between variables. However, when predicting a target variable, they must adjust how they aggregate past information depending on the observables available. If agents have infor...

Information Acquisition and Time-Risk Preference

By Daniel Chen and Weijie Zhong

American Economic Review: Insights, June 2025

An agent acquires information dynamically until her belief about a binary state reaches an upper or lower threshold. She can choose any signal process subject to a constraint on the rate of entropy reduction. Strategies are ordered by "time risk"—the di...

Optimal Security Design for Risk-Averse Investors

By Alex Gershkov, Benny Moldovanu, Philipp Strack, and Mengxi Zhang

American Economic Review, June 2025

We use the tools of mechanism design combined with the theory of risk measures to analyze how a cash-constrained owner of an asset with known, stochastic returns raises capital from a population of investors who differ in their risk aversion and budget co...

Consumer Credit Reporting Data

By Christa Gibbs, Benedict Guttman-Kenney, Donghoon Lee, Scott Nelson, Wilbert van der Klaauw, and Jialan Wang

Journal of Economic Literature, June 2025

Since the 2000s, economists across fields have increasingly used consumer credit reporting data for research. We introduce readers to the economics and institutional details of these data. Using examples from the literature, we provide practical guidance ...

Salary History and Employer Demand: Evidence from a Two-Sided Audit

By Amanda Y. Agan, Bo Cowgill, and Laura K. Gee

American Economic Journal: Applied Economics, July 2025

We study how salary disclosures affect employer demand using a field experiment featuring hundreds of recruiters evaluating over 2,000 job applications. We randomize the presence of salary questions and the candidates' disclosures for male and female appl...

Search, Screening, and Sorting

By Xiaoming Cai, Pieter Gautier, and Ronald Wolthoff

American Economic Journal: Macroeconomics, July 2025

We examine how search frictions impact labor market sorting by constructing a model consistent with evidence that employers interview a subset of a pool of applicants. We derive necessary and sufficient conditions for sorting in applications and matches. ...

Information Acquisition and Product Differentiation Perception

By Gary Biglaiser, Jiadong Gu, and Fei Li

American Economic Journal: Microeconomics, August 2025

We consider the equilibrium interplay between sellers' price competition and consumers' perception of product differentiation. We analyze a situation where, before trading, consumers acquire information at a cost about their preferences between sellers' d...

Contracting Environments and Efficiency in Markets with Hidden Information: An Experiment

By Wanda Mimra and Christian Waibel

American Economic Journal: Microeconomics, August 2025

This paper provides the first systematic analysis of the role of contracting environments on market outcomes and efficiency in markets with hidden information using experimental methods. When markets are plagued by hidden information, competition does not...

Bargaining and Information Acquisition

By Kalyan Chatterjee, Miaomiao Dong, and Tetsuya Hoshino

American Economic Journal: Microeconomics, August 2025

We consider an ultimatum game where the value of the object being sold to the buyer is high or low. The seller knows the value, but the buyer does not. The value to the seller is zero. We introduce the option for the buyer to acquire costly information af...

Reputation and Efficiency: Information Design

By Allen Vong

American Economic Journal: Microeconomics, August 2025

A firm trades with a sequence of consumers who are unsure about the firm's competence and its effort to supply quality. I examine rating systems that sustain efficient outcomes in virtually all trades by providing consumers with information to motivate a ...

Asymptotic Learning with Ambiguous Information

By Pëllumb Reshidi, João Thereze, and Mu Zhang

American Economic Journal: Microeconomics, August 2025

We study asymptotic learning when the decision-maker faces ambiguity in the precision of her information sources. She aims to estimate a state and evaluates outcomes according to the worst-case scenario. Under prior-by-prior updating, we characterize the ...