Free Riding and Unequal Pay in Symmetric Teams

By Huseyin Yildirim

American Economic Journal: Microeconomics, August 2025

This paper studies dynamic incentive pay in teams where agents' efforts are perfect substitutes. It shows that the principal may unequally reward identical agents to mitigate dynamic free riding in the form of procrastination. Unequal pay effectively crea...

Monitoring Team Members: Information Waste and the Transparency Trap

By Matteo Camboni and Michael Porcellacchia

American Economic Journal: Microeconomics, August 2025

In a model of moral hazard in teams, we demonstrate that firms' concerns about low trust among teammates can justify two common but otherwise puzzling patterns: information waste and transparency trap. We find firms predominantly employ individual perform...

Asymmetric Players in a Meritocracy: A Case for Affirmative Action

By Tanjim Hossain and John Morgan

American Economic Journal: Microeconomics, August 2025

We model decisions to apply for college admission, attend job auditions, or run for C-suite positions as costly entry into meritocracies, where the entrant with the highest ability wins a reward. Ability is privately known and players generically differ i...

Economic Status and Health in Childhood: The Origins of the Gradient

By Anne Case, Darren Lubotsky, and Christina Paxson

American Economic Review, December 2002

The well-known positive association between health and income in adulthood has antecedents in childhood. Not only is children's health positively related to household income, but the relationship between household income and children's health becomes more...

Cursed Sequential Equilibrium

By Meng-Jhang Fong, Po-Hsuan Lin, and Thomas R. Palfrey

American Economic Review, August 2025

This paper develops a framework to extend the strategic form analysis of cursed equilibrium (CE) developed by Eyster and Rabin (2005) to multistage games. The approach uses behavioral strategies rather than normal form mixed strategies and imposes sequent...

Underbidding for Oil and Gas Tracts

By Julien Martin, Martin Pesendorfer, and Jack Shannon

American Economic Review, August 2025

Common values auction models, where bidder decisions depend on noisy signals of common values, provide predictions about Bayesian Nash equilibrium (BNE) outcomes. In settings where these common values can be estimated, these predictions can be tested. We ...

A Theory of Fair CEO Pay

By Pierre Chaigneau, Alex Edmans, and Daniel Gottlieb

American Economic Review: Insights, September 2025

This paper studies executive pay with fairness concerns: If the CEO's wage falls below a perceived fair share of output, he suffers disutility that is increasing in the discrepancy. Fairness concerns do not always lead to fair wages; instead, the firm thr...

Social Value of Public Information

By Stephen Morris and Hyun Song Shin

American Economic Review, December 2002

What are the welfare effects of enhanced dissemination of public information through the media and disclosures by market participants with high public visibility? We examine the impact of public information in a setting where agents take actions appropria...

Nested Bundling

By Frank Yang

American Economic Review, September 2025

A nested bundling strategy creates menus in which more expensive bundles include all the goods of less expensive ones. We study when nested bundling is optimal and determine which nested menu is optimal, when consumers differ in one dimension. We define a...

A Model of Populism as a Conspiracy Theory

By Adam Szeidl and Ferenc Szucs

American Economic Review, September 2025

We model populism as the dissemination of a false "alternative reality," according to which the intellectual elite conspires against the populist for purely ideological reasons. If enough voters are receptive to it, this alternative reality—by discredit...

Effects of Environmental and Land Use Regulation in the Oil and Gas Industry Using the Wyoming Checkerboard as an Experimental Design

By Mitch Kunce, Shelby Gerking, and William Morgan

American Economic Review, December 2002

Intermediated Asymmetric Information, Compensation, and Career Prospects

By Ron Kaniel and Dmitry Orlov

American Economic Review, October 2025

Adverse selection benefits firms able to identify talent. An informed intermediary expropriates agents' ability by threatening to fire and expose them to undervaluation of their skill. An agent's track record gradually reduces intermediary's information a...

Optimal Trade Mechanisms with Adverse Selection and Inferential Naïvety

By Takeshi Murooka and Takuro Yamashita

American Economic Journal: Microeconomics, November 2025

We study an adverse selection environment in which a buyer's inferential ability is heterogeneous: A rational type correctly infers the value of the good from a seller's offer, whereas a naïve type is inattentive to the correlation between the seller's p...

(Pro-)Social Learning and Strategic Disclosure

By Roland Bénabou and Nikhil Vellodi

American Economic Journal: Microeconomics, November 2025

We study a sequential experimentation model with endogenous feedback. Agents choose between a safe and risky action, the latter generating stochastic rewards. When making this choice, each agent is selfishly motivated (myopic). However, agents can disclos...

Social Learning and Strategic Pricing with Rating Systems

By Chia-Hui Chen, Kong-Pin Chen, and Junichiro Ishida

American Economic Journal: Microeconomics, November 2025

Rating systems, widely used in online transactions, often reduce buyers' diverse opinions to summary statistics. To explore the consequences of this coarse aggregation, we analyze a dynamic adverse selection model where buyers share anonymous evaluations ...

Optimal Voting Mechanisms on Generalized Single-Peaked Domains

By Tobias Rachidi

American Economic Journal: Microeconomics, November 2025

This paper studies the design of voting mechanisms. There are multiple alternatives, and the voters have generalized single-peaked preferences derived from median spaces as introduced in Nehring and Puppe (2007b). This class of preferences covers a wide r...

Simple Manipulations in School Choice Mechanisms

By Ryo Shirakawa

American Economic Journal: Microeconomics, November 2025

Market design mechanisms are often required to be strategy proof, ensuring that no misreporting is profitable. This, however, may be overly restrictive: Real-world participants may be unable to engage in complex misreporting. In the context of school choi...

On the Alignment of Consumer Surplus and Total Surplus under Competitive Price Discrimination

By Dirk Bergemann, Benjamin Brooks, and Stephen Morris

American Economic Journal: Microeconomics, November 2025

We study the role of information in Bertrand competition with differentiated goods and heterogeneous production costs. When producers know their costs and consumers know their values, consumer surplus and total surplus are aligned, in the sense that the i...

Dynamic Screening and the Dual Roles of Monitoring

By Dhruva Bhaskar

American Economic Journal: Microeconomics, November 2025

This paper studies monitoring in long-term, self-enforcing relationships with adverse selection and moral hazard. Monitoring is used to screen low types by incentivizing them to shirk. Once high types have been identified, monitoring is used both to incen...

Portfolio Choice and Trading in a Large 401(k) Plan

By Julie Agnew, Pierluigi Balduzzi, and Annika Sundén

American Economic Review, March 2003

We study nearly 7,000 retirement accounts during the April 1994-August 1998 period. Several interesting patterns emerge. Most asset allocations are extreme (either 100 percent or zero percent in equities) and there is inertia in asset allocations. Equity ...