Repeated Trading: Transparency and Market Structure

By Ayça Kaya and Santanu Roy

American Economic Review, August 2024

We analyze the effect of transparency of past trading volumes in markets where an informed long-lived seller can repeatedly trade with short-lived uninformed buyers. Transparency allows buyers to observe previously sold quantities. In markets with intrape...

Data, Competition, and Digital Platforms

By Dirk Bergemann and Alessandro Bonatti

American Economic Review, August 2024

A monopolist platform uses data to match heterogeneous consumers with multiproduct sellers. The consumers can purchase the products on the platform or search off the platform. The platform sells targeted ads to sellers that recommend their products to con...

Learning by Offending: How Do Criminals Learn about Criminal Law?

By Arnaud Philippe

American Economic Journal: Economic Policy, August 2024

This paper investigates how criminals learn about criminal laws. It uses a natural experiment in which sentences were drastically increased for a specific type of recidivism in France. In the short run, advertising the reform did not trigger any change in...

Firm Donations and Political Rhetoric: Evidence from a National Ban

By Julia Cagé, Caroline Le Pennec, and Elisa Mougin

American Economic Journal: Economic Policy, August 2024

We study France's 1995 ban on firm donations to politicians. We use a difference-in-differences approach and a novel dataset combining the campaign manifestos issued by candidates running in French parliamentary elections with data on their campaign contr...

Indirect Savings from Public Procurement Centralization

By Clarissa Lotti, Arieda Muço, Giancarlo Spagnolo, and Tommaso Valletti

American Economic Journal: Economic Policy, August 2024

Centralization of public procurement can lower prices for the government's direct purchase of goods and services. This paper focuses on indirect savings. Public administrations that do not procure directly through a central procurement agency might benefi...

Experimentation in Networks

By Simon Board and Moritz Meyer-ter-Vehn

American Economic Review, September 2024

We propose a model of strategic experimentation on social networks in which forward-looking agents learn from their own and neighbors' successes. In equilibrium, private discovery is followed by social diffusion. Social learning crowds out own experimenta...

Comparisons of Signals

By Benjamin Brooks, Alexander Frankel, and Emir Kamenica

American Economic Review, September 2024

A signal is a description of an information source that specifies both its correlation with the state and its correlation with other signals. Extending Blackwell (1953), we characterize when one signal is more valuable than another regardless of preferenc...

Bounded Rationality in Choice Theory: A Survey

By Geoffroy de Clippel and Kareen Rozen

Journal of Economic Literature, September 2024

A vibrant literature incorporates elements of bounded rationality into choice theory. We survey this work, discussing five central ways in which the literature has modeled departures from the rational choice procedure. We discuss the variety of purposes a...

Information Cascades and Social Learning

By Sushil Bikhchandani, David Hirshleifer, Omer Tamuz, and Ivo Welch

Journal of Economic Literature, September 2024

Social learning is the updating of beliefs based on observation of others. Such observation can lead to efficient aggregation of information, but also to inaccurate decisions, fragility of mass behaviors, and, in the case of information cascades, to compl...

Experience-Based Discrimination

By Louis-Pierre Lepage

American Economic Journal: Applied Economics, October 2024

I study discrimination arising from individual experiences of employers with worker groups. I present a model in which employers are uncertain about the productivity of one of two groups and learn through hiring. Positive experiences lead to positive bias...

Independent Media, Propaganda, and Religiosity: Evidence from Poland

By Irena Grosfeld, Etienne Madinier, Seyhun Orcan Sakalli, and Ekaterina Zhuravskaya

American Economic Journal: Applied Economics, October 2024

Exploring a drastic change in media landscape in Poland, we show that mainstream media can significantly affect religious participation. After nationalist populist party PiS came to power in 2015, news on state and private independent TV diverged due to p...

Public Discourse and Socially Responsible Market Behavior

By Björn Bartling, Vanessa Valero, Roberto A. Weber, and Lan Yao

American Economic Review, October 2024

We investigate the causal impact of public discourse on socially responsible market behavior. Across three laboratory experiments, having market participants engage in public discourse generally increases market social responsibility. These positive impac...

Optimally Imprecise Memory and Biased Forecasts

By Rava Azeredo da Silveira, Yeji Sung, and Michael Woodford

American Economic Review, October 2024

We propose a model of optimal decision-making subject to a memory constraint in the spirit of models of rational inattention. Our theory differs from that of Sims (2003) in not assuming costless memory of past cognitive states. The model implies that both...

The Status Quo and Belief Polarization of Inattentive Agents: Theory and Experiment

By Vladimír Novák, Andrei Matveenko, and Silvio Ravaioli

American Economic Journal: Microeconomics, November 2024

We show that rational but inattentive agents can become polarized ex ante. We present how optimal information acquisition and subsequent belief formation depend crucially on the agent-specific status quo valuation. Beliefs can systematically—in expectat...

Consistent Depth of Reasoning in Level-k Models

By David J. Cooper, Enrique Fatas, Antonio J. Morales, and Shi Qi

American Economic Journal: Microeconomics, November 2024

Level-k models often assume that individuals employ a fixed depth of reasoning across different games. We study this assumption by having subjects make choices in five classes of games chosen to identify inconsistent depth of reasoning. We demonstr...

Recovering the Anchoring of Economic Valuations

By Liang Guo

American Economic Journal: Microeconomics, November 2024

We revisit the interpretation of the anchoring effect as evidence for nonexisting or arbitrary preferences. A theory of endogenous information acquisition (i.e., deliberation) is developed to rationalize the causal dependence of economic valuations on arb...

Fair Shares and Selective Attention

By Dianna R. Amasino, Davide D. Pace, and Joël J. van der Weele

American Economic Journal: Microeconomics, November 2024

Attitudes toward fairness and redistribution differ along socioeconomic lines. To understand their formation, we conduct a large-scale experiment on attention to merit and luck and the effect of attention on fairness decisions. Randomly advantaged subject...

Secure Survey Design in Organizations: Theory and Experiments

By Sylvain Chassang and Christian Zehnder

American Economic Journal: Microeconomics, November 2024

We study secure survey designs in organizational settings where fear of retaliation makes it hard to elicit truth. Theory predicts that (i) randomized-response techniques offer no improvement because they are strategically equivalent to direct elicitation...

Corrupted Votes and Rule Compliance

By Arno Apffelstaedt ⓡ Jana Freundt

American Economic Journal: Microeconomics, November 2024

Allegations of voter fraud accompany many real-world elections. How does electoral malpractice affect the acceptance of elected institutions? Using an online experiment in which participants distribute income according to majority-elected rules, we show t...

Signaling in Retrospect and the Informational Structure of Markets

By Michael Spence

American Economic Review, June 2002