Report Cards: The Impact of Providing School and Child Test Scores on Educational Markets

By Tahir Andrabi, Jishnu Das, and Asim Ijaz Khwaja

American Economic Review, June 2017

We study the impact of providing school report cards with test scores on subsequent test scores, prices, and enrollment in markets with multiple public and private providers. A randomly selected half of our sample villages (markets) received report cards....

Sorting through Search and Matching Models in Economics

By Hector Chade, Jan Eeckhout, and Lones Smith

Journal of Economic Literature, June 2017

Toward understanding assortative matching, this is a self-contained introduction to research on search and matching. We first explore the nontransferable and perfectly transferable utility matching paradigms, and then a unifying imperfectly transferable u...

The Effect of Labor Migration on the Diffusion of Democracy: Evidence from a Former Soviet Republic

By Toman Barsbai, Hillel Rapoport, Andreas Steinmayr, and Christoph Trebesch

American Economic Journal: Applied Economics, July 2017

Migration contributes to the circulation of goods, knowledge, and ideas. Using community and individual-level data from Moldova, we show that the emigration wave that started in the aftermath of the Russian crisis of 1998 strongly affected electoral outco...

Team Production in International Labor Markets: Experimental Evidence from the Field

By Elizabeth Lyons

American Economic Journal: Applied Economics, July 2017

Coworkers are increasingly diverse in their nationality and skill sets. This paper studies the effect of diversity on how workers are organized using data from a field experiment conducted in an environment where diversity is pervasive. Findings show that...

Inflation Expectations, Learning, and Supermarket Prices: Evidence from Survey Experiments

By Alberto Cavallo, Guillermo Cruces, and Ricardo Perez-Truglia

American Economic Journal: Macroeconomics, July 2017

Information frictions play a central role in the formation of household inflation expectations, but there is no consensus about their origins. We address this question with novel evidence from survey experiments. We document two main findings. First, indi...

Knowledge of Future Job Loss and Implications for Unemployment Insurance

By Nathaniel Hendren

American Economic Review, July 2017

This paper studies the implications of individuals' knowledge of future job loss for the existence of an unemployment insurance (UI) market. Learning about job loss leads to consumption decreases and spousal labor supply increases. This suggests existing ...

Information Spillovers in Asset Markets with Correlated Values

By Vladimir Asriyan, William Fuchs, and Brett Green

American Economic Review, July 2017

We study information spillovers in a dynamic setting with correlated assets owned by privately informed sellers. In the model, a trade of one asset can provide information about the value of other assets. Importantly, the information content of trading be...

Buyer-Optimal Learning and Monopoly Pricing

By Anne-Katrin Roesler and Balázs Szentes

American Economic Review, July 2017

This paper analyzes a bilateral trade model where the buyer's valuation for the object is uncertain and she observes only a signal about her valuation. The seller gives a take-it-or-leave-it offer to the buyer. Our goal is to characterize those signal str...

Retrospectives: Friedrich Hayek and the Market Algorithm

By Samuel Bowles, Alan Kirman, and Rajiv Sethi

Journal of Economic Perspectives, Summer 2017

Friedrich A. Hayek (1899-1992) is known for his vision of the market economy as an information processing system characterized by spontaneous order: the emergence of coherence through the independent actions of large numbers of individuals, each with limi...

The Double Diamond Paradox

By Daniel Garcia, Jun Honda, and Maarten Janssen

American Economic Journal: Microeconomics, August 2017

We study vertical relations in markets with consumer and retailer search. We obtain three important new results. First, we provide a novel explanation for price dispersion that does not depend on some form of heterogeneity among consumers. Price dispersio...

More Haste, Less Speed? Signaling through Investment Timing

By Catherine Bobtcheff and Raphaël Levy

American Economic Journal: Microeconomics, August 2017

We consider a cash-constrained firm learning on the value of an irreversible project at a privately known speed. Under perfect information, the optimal date of investment may be non-monotonic in the learning speed: better learning increases the value of e...

Simultaneous Search and Efficiency of Entry and Search Intensity

By Pieter A. Gautier and Christian L. Holzner

American Economic Journal: Microeconomics, August 2017

We consider a model where firms open vacancies and post and commit to a wage mechanism. Search is costly and workers simultaneously apply to multiple jobs. Firms can be connected to multiple workers and workers to multiple firms. We use a new method to de...

Full Implementation and Belief Restrictions

By Mariann Ollár and Antonio Penta

American Economic Review, August 2017

Multiplicity of equilibria and the dependence on strong common knowledge assumptions are well-known problems in mechanism design. We address them by studying full implementation via transfer schemes, under general restrictions on agents' beliefs. We show ...

Stock Price Booms and Expected Capital Gains

By Klaus Adam, Albert Marcet, and Johannes Beutel

American Economic Review, August 2017

Investors' subjective capital gains expectations are a key element explaining stock price fluctuations. Survey measures of these expectations display excessive optimism (pessimism) at market peaks (troughs). We formally reject the hypothesis that this is ...

Hayek, Local Information, and Commanding Heights: Decentralizing State-Owned Enterprises in China

By Zhangkai Huang, Lixing Li, Guangrong Ma, and Lixin Colin Xu

American Economic Review, August 2017

Hayek (1945) argues that local information is key to understanding the efficiency of alternative economic systems and whether production should be centralized or decentralized. The Chinese experience of decentralizing SOEs confirms this insight: when the ...

The Political Economy of Dynamic Elections: Accountability, Commitment, and Responsiveness

By John Duggan and César Martinelli

Journal of Economic Literature, September 2017

We survey the literature on dynamic elections in the traditional settings of spatial preferences and rent seeking under perfect and imperfect monitoring of politicians. We define stationary electoral equilibrium, which encompasses notions used by Barro (1...

Law, Coercion, and Expression: A Review Essay on Frederick Schauer's The Force of Law and Richard McAdams's The Expressive Powers of Law

By Eric Rasmusen

Journal of Economic Literature, September 2017

What is law and why do people obey it? This question from jurisprudence has recently been tackled using the tools of economics. The field of law and economics has long studied how fines and imprisonment affect behavior. Nobody believes, however, that all ...

Persuasion: A Case Study of Papal Influences on Fertility-Related Beliefs and Behavior

By Vittorio Bassi and Imran Rasul

American Economic Journal: Applied Economics, October 2017

We study the persuasive impacts of non-informative communication on the short-run beliefs and long-run behavior of individuals. We do so in the context of the Papal visit to Brazil in October 1991, in which persuasive messages related to fertility were ...

Noisy News in Business Cycles

By Mario Forni, Luca Gambetti, Marco Lippi, and Luca Sala

American Economic Journal: Macroeconomics, October 2017

We investigate the role of "noise" shocks as a source of business cycle fluctuations. To do so we set up a simple model of imperfect information and derive restrictions for identifying the noise shock in a VAR model. The novelty of our approach is that id...

Search at the Margin

By José A. Carrasco and Lones Smith

American Economic Review, October 2017

We extend search theory to multiple indivisible units and perfectly divisible assets, solving them respectively with induction and recursion. Buyer demands and prices are random, and the seller can partially exercise orders. With divisible assets, the Bel...