Jon Elster's Securities against Misrule: Juries, Assemblies, Elections: A Review Essay

By David Austen-Smith

Journal of Economic Literature, March 2015

The standard economic approach to designing institutions for collective decision making recognizes individuals' strategically rational motivations for misrepresentation and asks how best, given an objective function, to design a set of incentives and cons...

A Review of William Easterly's The Tyranny of Experts: Economists, Dictators, and the Forgotten Rights of the Poor

By Carol Graham

Journal of Economic Literature, March 2015

William Easterly marshals yet another brilliant critique of established development policies, with a focus on the experts' excessive focus on state-led policies and goals (a la Myrdal) and ignorance of bottom-up solutions, including technology and individ...

The Role of Connections in Academic Promotions

By Natalia Zinovyeva and Manuel Bagues

American Economic Journal: Applied Economics, April 2015

This paper analyzes how evaluators' private information and subjective biases affect evaluations in academia. We use evidence from centralized selection exams in Spain, where evaluators are randomly assigned to promotion committees. Candidates are signifi...

Unemployment Insurance Fraud and Optimal Monitoring

By David L. Fuller, B. Ravikumar, and Yuzhe Zhang

American Economic Journal: Macroeconomics, April 2015

An important incentive problem for the design of unemployment insurance is the fraudulent collection of unemployment benefits by workers who are gainfully employed. We show how to efficiently use a combination of tax/subsidy and monitoring to prevent such...

Formal versus Informal Monitoring in Teams

By Alex Gershkov and Eyal Winter

American Economic Journal: Microeconomics, May 2015

In this paper we analyze a principal's optimal monitoring strategies in a team environment. In doing so we study the interaction between formal monitoring and informal (peer) monitoring. We show that if the technology satisfies complementarity, peer monit...

Becoming the Neighbor Bidder: Endogenous Winner's Curse in Dynamic Mechanisms

By Alejandro Francetich

American Economic Journal: Microeconomics, May 2015

This paper addresses the problem of sequentially allocating time sensitive goods, or one-period leases on a durable good, among agents who compete through time and learn about the common component of their valuation privately through experience. I show th...

Grading Standards and Education Quality

By Raphael Boleslavsky and Christopher Cotton

American Economic Journal: Microeconomics, May 2015

We consider school competition in a Bayesian persuasion framework. Schools compete to place graduates by investing in education quality and by choosing grading policies. In equilibrium, schools strategically adopt grading policies that do not perfectly re...

Tagging and Targeting of Energy Efficiency Subsidies

By Hunt Allcott, Christopher Knittel, and Dmitry Taubinsky

American Economic Review, May 2015

A corrective tax or subsidy is "well-targeted" if it primarily affects choices that are more distorted by market failures. Energy efficiency subsidies are designed to correct multiple distortions: externalities, credit constraints, "landlord-tenant" infor...

Endogenous Liquidity and the Business Cycle

By Saki Bigio

American Economic Review, June 2015

I study an economy where asymmetric information about the quality of capital endogenously determines liquidity. Liquid funds are key to relaxing financial constraints on investment and employment. These funds are obtained by selling capital or using it as...

Team Contests with Multiple Pairwise Battles

By Qiang Fu, Jingfeng Lu, and Yue Pan

American Economic Review, July 2015

We consider a multi-battle team contest in which players from two rival teams form pairwise matches to fight in distinct component battles, which are carried out sequentially or (partially) simultaneously. A team wins if and only if its players win a majo...

Pricing and Efficiency in the Market for IP Addresses

By Benjamin Edelman and Michael Schwarz

American Economic Journal: Microeconomics, August 2015

We consider market rules for transferring IP addresses, numeric identifiers required by all computers connected to the Internet. Transfers usefully move resources from lowest- to highest-valuation networks, but transfers tend to cause socially costly grow...

Collusion and the Organization of the Firm

By Alfredo Burlando and Alberto Motta

American Economic Journal: Microeconomics, August 2015

This paper shows that the threat of collusion between a productive agent and the auditor in charge of monitoring production can influence a number of organizational dimensions of the firm, including outsourcing decisions and the allocation of productio...

Referrals: Peer Screening and Enforcement in a Consumer Credit Field Experiment

By Gharad Bryan, Dean Karlan, and Jonathan Zinman

American Economic Journal: Microeconomics, August 2015

Empirical evidence on peer intermediation lags behind both theory and practice in which lenders use peers to mitigate adverse selection and moral hazard. Using a referral incentive under individual liability, we develop a two-stage field experiment that p...

Two-Sided Matching with Endogenous Preferences

By Yair Antler

American Economic Journal: Microeconomics, August 2015

We modify the stable matching problem by allowing agents' preferences to depend on the endogenous actions of agents on the other side of the market. Conventional matching theory results break down in the modified setup. In particular, every game that is i...

Learning from Failure: A Review of Peter Schuck's Why Government Fails So Often: And How It Can Do Better

By David M. Levy and Sandra J. Peart

Journal of Economic Literature, September 2015

Peter Schuck catalogs an overwhelming list of US government failures. He points to both structural problems (culture and institutions) and incentives. Despairing of cultural change, Schuck focuses on incentives. He relies on Charles Wolf's theory of nonma...

Checklists and Worker Behavior: A Field Experiment

By C. Kirabo Jackson and Henry S. Schneider

American Economic Journal: Applied Economics, October 2015

We analyze data from a field experiment in which an auto repair firm provided checklists to mechanics and monitored their use. Revenue was 20 percent higher during the experiment, and the effect is equivalent to that of a 1.6 percentage point (10 percent)...

Non-Optimal Mechanism Design

By Jason D. Hartline and Brendan Lucier

American Economic Review, October 2015

The optimal allocation of resources in complex environments—like allocation of dynamic wireless spectrum, cloud computing services, and Internet advertising—is computationally challenging even given the true preferences of the participants. In...

Optimal Annuitization with Stochastic Mortality and Correlated Medical Costs

By Felix Reichling and Kent Smetters

American Economic Review, November 2015

The conventional wisdom since Yaari (1965) is that households without a bequest motive should fully annuitize their investments. Numerous frictions do not break this sharp result. We modify the Yaari framework by allowing a household's mortality risk itse...

Exclusive Contracts and Market Dominance

By Giacomo Calzolari and Vincenzo Denicolò

American Economic Review, November 2015

We propose a new theory of exclusive dealing. The theory is based on the assumption that a dominant firm has a competitive advantage over its rivals, and that the buyers' willingness to pay for the product is private information. In this setting, the domi...

Market Structure, Reputation, and the Value of Quality Certification

By Daniel W. Elfenbein, Raymond Fisman, and Brian McManus

American Economic Journal: Microeconomics, November 2015

Quality certification programs help consumers identify high-quality products or sellers in markets with information asymmetries. Using data from eBay UK's online marketplace, we study how certification's impact on demand varies with market- and seller- le...