Investment Incentives in Labor Market Matching

By John William Hatfield, Fuhito Kojima, and Scott Duke Kominers

American Economic Review, May 2014

We provide an illustration of how the design of labor market clearing mechanisms can affect incentives for human capital acquisition. Specifically, we extend the labor market matching model (with discrete transfers) of Kelso and Crawford (1982) to incorpo...

Costly Persuasion

By Matthew Gentzkow and Emir Kamenica

American Economic Review, May 2014

We study the design of informational environments in settings where generating information is costly. We assume that the cost of a signal is proportional to the expected reduction in uncertainty. We show that Kamenica & Gentzkow's (2011) concavification a...

How Sharing Information Can Garble Experts' Advice

By Matthew Elliott, Benjamin Golub, and Andrei Kirilenko

American Economic Review, May 2014

We model the strategic provision of advice in environments where a principal's optimal action depends on an unobserved, binary state of interest. Experts receive signals about the state and each recommends an action. The principal and all experts dislike ...

Interim Bayesian Persuasion: First Steps

By Eduardo Perez-Richet

American Economic Review, May 2014

This paper makes a first attempt at building a theory of interim Bayesian persuasion. I work in a minimalist model where a low or high type sender seeks validation from a receiver who is willing to validate high types exclusively. After learning her type,...

Rational Attention and Adaptive Coding: A Puzzle and a Solution

By Camillo Padoa-Schioppa and Aldo Rustichini

American Economic Review, May 2014

Adaptive Coding is the property of the brain to adjust its response to statistical properties of the environment. Its effect is an improved discrimination among signals under the constraints on the dynamic range of its response. It can thus be considered ...

The Choice between Formal and Informal Intellectual Property: A Review

By Bronwyn Hall, Christian Helmers, Mark Rogers, and Vania Sena

Journal of Economic Literature, June 2014

We survey the economic literature, both theoretical and empirical, on the choice of intellectual property protection by firms. Our focus is on the trade-offs between using patents and disclosing versus the use of secrecy, although we also look briefly at ...

Dynamic Adverse Selection: A Theory of Illiquidity, Fire Sales, and Flight to Quality

By Veronica Guerrieri and Robert Shimer

American Economic Review, July 2014

We develop a dynamic equilibrium model of asset markets with adverse selection. There exists a unique equilibrium in which better quality assets trade at higher prices but with a lower price-dividend ratio in less liquid markets. Sellers of high-quality a...

Auctions, Actions, and the Failure of Information Aggregation

By Alp E. Atakan and Mehmet Ekmekci

American Economic Review, July 2014

We study a uniform-price auction where k identical common-value objects are allocated amongst z > k bidders who have imperfect signals about the state of the world. The common valuation is determined jointly by the state and an action that is chosen after...

Household Bargaining and Excess Fertility: An Experimental Study in Zambia

By Nava Ashraf, Erica Field, and Jean Lee

American Economic Review, July 2014

We posit that household decision-making over fertility is characterized by moral hazard since most contraception can only be perfectly observed by the woman. Using an experiment in Zambia that varied whether women were given access to contraceptives alone...

Public Communication and Information Acquisition

By Ryan Chahrour

American Economic Journal: Macroeconomics, July 2014

This paper models the tradeoff, perceived by central banks and other public actors, between providing the public with useful information and the risk of overwhelming it with excessive communication. An information authority chooses how many signals to pro...

Accounting for Crises

By Venky Nagar and Gwen Yu

American Economic Journal: Macroeconomics, July 2014

We provide among the first empirical evidence, consistent with recent macro global game crisis models, that shows that the precision of public signals can coordinate crises. In these models, self-fulfilling crises independent of fundamentals can occur onl...

Competitive Framing

By Ran Spiegler

American Economic Journal: Microeconomics, August 2014

I present a simple framework for modeling two-firm market competition when consumer choice is "frame-dependent", and firms use costless "marketing messages" to influence the consumer's frame. This framework embeds several recent models in the "behavioral ...

Optimal Project Selection Mechanisms

By Talia Bar and Sidartha Gordon

American Economic Journal: Microeconomics, August 2014

We study mechanisms for selecting up to m out of n projects. Project managers' private information on quality is elicited through transfers. Under limited liability, the optimal mechanism selects projects that maximize some function of the project's obser...

Taxation of Couples under Assortative Mating

By Alexander Frankel

American Economic Journal: Economic Policy, August 2014

I present a simple and tractable model of the optimal taxation of married couples, working off of the multidimensional screening framework of Armstrong and Rochet (1999). In particular, I study how the tax code varies with the degree of assortative mating...

Man-Bites-Dog Business Cycles

By Kristoffer P. Nimark

American Economic Review, August 2014

The newsworthiness of an event is partly determined by how unusual it is and this paper investigates the business cycle implications of this fact. Signals that are more likely to be observed after unusual events may increase both uncertainty and disagreem...

Not Only What but Also When: A Theory of Dynamic Voluntary Disclosure

By Ilan Guttman, Ilan Kremer, and Andrzej Skrzypacz

American Economic Review, August 2014

We examine a dynamic model of voluntary disclosure of multiple pieces of private information. In our model, a manager of a firm who may learn multiple signals over time interacts with a competitive capital market and maximizes payoffs that increase in bot...

The Effect of Third-Party Funding of Plaintiffs on Settlement

By Andrew F. Daughety and Jennifer F. Reinganum

American Economic Review, August 2014

A significant policy concern about the emerging plaintiff legal funding industry is that loans will undermine settlement. When the plaintiff has private information about damages, we find that the optimal (plaintiff-funder) loan induces all plaintiff type...

Efficient Entry in Competing Auctions

By James Albrecht, Pieter A. Gautier, and Susan Vroman

American Economic Review, October 2014

In this paper, we demonstrate the efficiency of seller entry in a model of competing auctions in which we allow for both buyer and seller heterogeneity. This generalizes existing efficiency results in the competitive search literature by simultaneously ...

Team Incentives for Education in Developing Countries: A Randomized Field Experiment in Benin

By Moussa P. Blimpo

American Economic Journal: Applied Economics, October 2014

I examine the impact of student incentives in Benin, using three different designs that can be implemented relatively cheaply and with administrative data. The first design is a standard incentive structure where students receive monetary rewards for reac...

Moral Hazard and Claims Deterrence in Private Disability Insurance

By David Autor, Mark Duggan, and Jonathan Gruber

American Economic Journal: Applied Economics, October 2014

Exploiting within-firm, over-time variation in plan parameters for nearly 10,000 Long Term Disability (LTD) policies held by US employers, we present the first empirical analysis of the determinants of private LTD spells. We find that a shorter waiting pe...