What Should a Firm Know? Protecting Consumers' Privacy Rents

By Daniel Bird and Zvika Neeman

American Economic Journal: Microeconomics, November 2022

A monopolistic firm observes a signal about the state of the world and then makes a take-it-or-leave-it offer to an uninformed consumer who has recourse to some outside option. We provide a geometric characterization of the firm's information structure th...

Reaping the Informational Surplus in Bayesian Persuasion

By Ronen Gradwohl, Niklas Hahn, Martin Hoefer, and Rann Smorodinsky

American Economic Journal: Microeconomics, November 2022

The Bayesian persuasion model studies communication between an informed sender and a receiver with a payoff-relevant action, emphasizing the ability of a sender to extract maximal surplus from his informational advantage. In this paper, we study a setting...

Rational Inattention in the Infield

By Vivek Bhattacharya and Greg Howard

American Economic Journal: Microeconomics, November 2022

This paper provides evidence of rational inattention by experienced professionals in strategic interactions. We add rational inattention to a game of matching pennies with state-dependent payoffs. Unlike the full-information, mixed-strategy Nash equilibri...

On the Foundations of Ex Post Incentive-Compatible Mechanisms

By Takuro Yamashita and Shuguang Zhu

American Economic Journal: Microeconomics, November 2022

This paper considers an interdependent-value robust mechanism design problem, where the principal has little knowledge about the agent's belief. Although ex post incentive-compatible (EPIC) mechanisms can implement allocations without any knowledge about ...

Reporting Sexual Misconduct in the #MeToo Era

By Ing-Haw Cheng and Alice Hsiaw

American Economic Journal: Microeconomics, November 2022

We model the reporting of sexual misconduct. Individuals underreport misconduct due to strategic uncertainty over whether others will report and corroborate a pattern of behavior. Underreporting occurs if and only if misconduct is widespread. Making sanct...

Mandatory Energy Efficiency Disclosure in Housing Markets

By Erica Myers, Steven L. Puller, and Jeremy West

American Economic Journal: Economic Policy, November 2022

Mandatory disclosure policies are implemented broadly despite sparse evidence that they improve market outcomes. We study the effects of requiring home sellers to provide buyers with certified audits of residential energy efficiency. Using similar nearby ...

Dynamic Matching in Overloaded Waiting Lists

By Jacob D. Leshno

American Economic Review, December 2022

This paper introduces a stylized model to capture distinctive features of waiting list allocation mechanisms. First, agents choose among items with associated expected wait times. Waiting times serve a similar role to that of monetary prices in directing ...

Learning from Manipulable Signals

By Mehmet Ekmekci, Leandro Gorno, Lucas Maestri, Jian Sun, and Dong Wei

American Economic Review, December 2022

We study a dynamic stopping game between a principal and an agent. The principal gradually learns about the agent's private type from a noisy performance measure that can be manipulated by the agent via a costly and hidden action. We fully characterize th...

The Limits of Multiproduct Price Discrimination

By Nima Haghpanah and Ron Siegel

American Economic Review: Insights, December 2022

We consider a multiproduct seller who has access to information about consumer preferences that he can use for second- and third-degree price discrimination. We characterize markets for which such information can lead to the efficient allocation with cons...

A Taste of Their Own Medicine: Guideline Adherence and Access to Expertise

By Amy Finkelstein, Petra Persson, Maria Polyakova, and Jesse M. Shapiro

American Economic Review: Insights, December 2022

We use administrative data from Sweden to study adherence to 63 medication-related guidelines. We compare the adherence of patients without personal access to medical expertise to that of patients with access, namely doctors and their close relatives. We ...

Modeling Knowledge in Economic Analysis

By Larry Samuelson

Journal of Economic Literature, June 2004

This paper provides an introduction to how knowledge is modeled in economic contexts and the role played by the concepts of knowledge and common knowledge in economic analysis.

Did US Politicians Expect the China Shock?

By Matilde Bombardini, Bingjing Li, and Francesco Trebbi

American Economic Review, January 2023

Information sets, expectations, and preferences of politicians are fundamental, but unobserved determinants of their policy choices. Employing repeated votes in the US House of Representatives on China's normal trade relations (NTR) status during the two ...

Anchored Inflation Expectations

By Carlos Carvalho, Stefano Eusepi, Emanuel Moench, and Bruce Preston

American Economic Journal: Macroeconomics, January 2023

We develop a theory of low-frequency movements in inflation expectations, and use it to interpret joint dynamics of inflation and inflation expectations for the United States and other countries over the postwar period. In our theory, long-run inflation e...

Robust Predictions for DSGE Models with Incomplete Information

By Ryan Chahrour and Robert Ulbricht

American Economic Journal: Macroeconomics, January 2023

We provide predictions for DSGE models with incomplete information that are robust across information structures. Our approach maps an incomplete-information model into a full-information economy with time-varying expectation wedges and provides condition...

Enabling or Limiting Cognitive Flexibility? Evidence of Demand for Moral Commitment

By Silvia Saccardo and Marta Serra-Garcia

American Economic Review, February 2023

Moral behavior is more prevalent when individuals cannot easily distort their beliefs self-servingly. Do individuals seek to limit or enable their ability to distort beliefs? How do these choices affect behavior? Experiments with over 9,000 participants s...

The Voice of Monetary Policy

By Yuriy Gorodnichenko, Tho Pham, and Oleksandr Talavera

American Economic Review, February 2023

We develop a deep learning model to detect emotions embedded in press conferences after the Federal Open Market Committee meetings and examine the influence of the detected emotions on financial markets. We find that, after controlling for the Federal Res...

Price Transparency, Media, and Informative Advertising

By Itai Ater and Oren Rigbi

American Economic Journal: Microeconomics, February 2023

We study the effects of a price transparency regulation in Israeli supermarkets. Using price data collected before and after the regulation and a difference-in-difference research design, we show that price levels and price dispersion declined significant...

Alert the Inert? Switching Costs and Limited Awareness in Retail Electricity Markets

By Luisa Dressler and Stefan Weiergraeber

American Economic Journal: Microeconomics, February 2023

We quantify how switching costs and limited awareness affect consumer inertia in liberalized retail electricity markets by developing and estimating a structural demand model using a novel dataset on electricity contract choices in Belgium. Our data allow...

Product Quality and Consumer Search

By José L. Moraga-González and Yajie Sun

American Economic Journal: Microeconomics, February 2023

An increase in quality shifts up the distribution of match utilities offered by firms and makes consumers pickier. The number of products that consumers inspect does not necessarily increase in quality. Higher search costs may lead to less quality investm...

Two-Stage Contests with Private Information

By Greg Kubitz

American Economic Journal: Microeconomics, February 2023

In perfectly discriminating contests with private information, low-ability contestants prefer to appear strong, while high-ability contestants prefer to appear weak. In a two-stage contest, this leads to a unique symmetric equilibrium with partial pooling...