Dynamic Certification and Reputation for Quality

By Iván Marinovic, Andrzej Skrzypacz, and Felipe Varas

American Economic Journal: Microeconomics, May 2018

We study firm's incentives to build and maintain reputation for quality, when quality is persistent and can be certified at a cost. We characterize all reputation-dependent MPEs. They vary in frequency of certification and payoffs. Low payoffs arise in eq...

A Theory of Indicative Bidding

By Daniel Quint and Kenneth Hendricks

American Economic Journal: Microeconomics, May 2018

When selling a business by auction, sellers typically use indicative bids—nonbinding preliminary bids—to select a small number of bidders to conduct due diligence and submit binding offers. We show that if entry into the auction is costly, ind...

Career Concerns and the Nature of Skills

By Gonzalo Cisternas

American Economic Journal: Microeconomics, May 2018

I examine how career concerns are shaped by the nature of productive actions taken by workers. A worker's skills follow a Gaussian process with an endogenous component reflecting human-capital accumulation. Effort and skills are substitutes both in th...

Dynamic Noisy Signaling

By Sander Heinsalu

American Economic Journal: Microeconomics, May 2018

This article studies costly signaling. The signaling effort is chosen in multiple periods and observed with noise. The signaler benefits from the belief of the market, not directly from the effort or the signal. Optimal signaling behavior in time-varying ...

A Mechanism for Eliciting Second-Order Beliefs and the Inclination to Choose

By Edi Karni

American Economic Journal: Microeconomics, May 2018

This paper describes a direct revelation mechanism for eliciting decision makers' introspective beliefs on sets of subjective prior or posterior probabilities. The proposed scheme constitutes a revealed-preference procedure for measuring the inclination o...

What Can Machines Learn, and What Does It Mean for Occupations and the Economy?

By Erik Brynjolfsson, Tom Mitchell, and Daniel Rock

AEA Papers and Proceedings, May 2018

Advances in machine learning (ML) are poised to transform numerous occupations and industries. This raises the question of which tasks will be most affected by ML. We apply the rubric evaluating task potential for ML in Brynjolfsson and Mitchell (2017) to...

Human Judgment and AI Pricing

By Ajay Agrawal, Joshua S. Gans, and Avi Goldfarb

AEA Papers and Proceedings, May 2018

This paper examines the pricing choices of a provider of artificial intelligence (AI) services. It does so in the context of AI providing predictions to a decision-maker who also exercises what we term judgment; specifically, the discovery of payoffs from...

Can Information Change Personal Retirement Savings? Evidence from Social Security Benefits Statement Mailings

By Susan Payne Carter and William Skimmyhorn

AEA Papers and Proceedings, May 2018

Despite concern about the viability of public retirement programs and potential undersaving for retirement, we still know little about the impact of government provided information on individual behavior. We exploit plausibly exogenous variation in exposu...

The Language of Discrimination: Using Experimental versus Observational Data

By Aislinn Bohren, Alex Imas, and Michael Rosenberg

AEA Papers and Proceedings, May 2018

We use experimental and observational data to examine whether people respond differently to questions posed by females versus males. We document significant differences in the language of responses, both in terms of the distribution of language utilized, ...

Gendered Language on the Economics Job Market Rumors Forum

By Alice H. Wu

AEA Papers and Proceedings, May 2018

This paper examines the existence of an unwelcoming or stereotypical culture using evidence on how women and men are portrayed in anonymous discussions on the Economics Job Market Rumors forum (EJMR). I use a Lasso-Logistic model to measure gendered langu...

Will a Five-Minute Discussion Change Your Mind? A Countrywide Experiment on Voter Choice in France

By Vincent Pons

American Economic Review, June 2018

This paper provides the first estimate of the effect of door-to-door canvassing on actual electoral outcomes, via a countrywide experiment embedded in Francois Hollande's campaign in the 2012 French presidential election. While existing experiments random...

Estimating Risk Preferences in the Field

By Levon Barseghyan, Francesca Molinari, Ted O'Donoghue, and Joshua C. Teitelbaum

Journal of Economic Literature, June 2018

We survey the literature on estimating risk preferences using field data. We concentrate our attention on studies in which risk preferences are the focal object and estimating their structure is the core enterprise. We review a number of models of risk ...

Emotional Judges and Unlucky Juveniles

By Ozkan Eren and Naci Mocan

American Economic Journal: Applied Economics, July 2018

Employing the universe of juvenile court decisions in a U.S. state between 1996 and 2012, we analyze the effects of emotional shocks associated with unexpected outcomes of football games played by a prominent college team in the state. We find that unexpe...

News or Noise? The Missing Link

By Ryan Chahrour and Kyle Jurado

American Economic Review, July 2018

The literature on belief-driven business cycles treats news and noise as distinct representations of agents' beliefs. We prove they are empirically the same. Our result lets us isolate the importance of purely belief-driven fluctuations. Using three promi...

Consumer Price Search and Platform Design in Internet Commerce

By Michael Dinerstein, Liran Einav, Jonathan Levin, and Neel Sundaresan

American Economic Review, July 2018

The platform design, the process that helps potential buyers on the internet navigate toward products they may purchase, plays a critical role in reducing search frictions and determining market outcomes. We study a key trade-off associated with two impor...

Backward Induction in the Wild? Evidence from Sequential Voting in the US Senate

By Jörg L. Spenkuch, B. Pablo Montagnes, and Daniel B. Magleby

American Economic Review, July 2018

In the US Senate, roll calls are held in alphabetical order. We document that senators early in the order are less likely to vote with the majority of their own party than those whose last name places them at the end of the alphabet. To speak to the mecha...

Preferences and Social Influence

By Chaim Fershtman and Uzi Segal

American Economic Journal: Microeconomics, August 2018

Interaction between decision makers may affect their preferences. We consider a setup in which each individual is characterized by two sets of preferences: his unchanged core preferences and his behavioral preferences. Each individual has a social influen...

Should First-Price Auctions Be Transparent?

By Dirk Bergemann and Johannes Hörner

American Economic Journal: Microeconomics, August 2018

We investigate the role of market transparency in repeated first-price auctions. We consider a setting with independent private and persistent values. We analyze three distinct disclosure regimes regarding the bid and award history. In the minimal disclos...

The Role of Information in Disability Insurance Application: An Analysis of the Social Security Statement Phase-In

By Philip Armour

American Economic Journal: Economic Policy, August 2018

This paper exploits a natural experiment in information provision on US Disability Insurance (DI) applications: the Social Security statement. Although the effect of the statement on DI application was negligible in the general health and retirement study...

Forward Guidance without Common Knowledge

By George-Marios Angeletos and Chen Lian

American Economic Review, September 2018

How does the economy respond to news about future policies or future fundamentals? Standard practice assumes that agents have common knowledge of such news and face no uncertainty about how others will respond. Relaxing this assumption attenuates the gene...