How Do Firms Form Their Expectations? New Survey Evidence

By Olivier Coibion, Yuriy Gorodnichenko, and Saten Kumar

American Economic Review, September 2018

We survey New Zealand firms and document novel facts about their macroeconomic beliefs. There is widespread dispersion in beliefs about past and future macroeconomic conditions, especially inflation. This dispersion in beliefs is consistent with firms' in...

Mentors or Teachers? Microenterprise Training in Kenya

By Wyatt Brooks, Kevin Donovan, and Terence R. Johnson

American Economic Journal: Applied Economics, October 2018

We use a randomized controlled trial to demonstrate that inexperienced female microenterprise owners in a Kenyan slum benefit from mentorship by an experienced entrepreneur in the same community. Mentorship increases profits by 20 percent on average with ...

Diabetes and Diet: Purchasing Behavior Change in Response to Health Information

By Emily Oster

American Economic Journal: Applied Economics, October 2018

Individuals with obesity and related conditions are often reluctant to change their diet. Evaluating the details of this reluctance is hampered by limited data. I use household scanner data to estimate food purchase response to a diagnosis of diabetes. I ...

Learning from Others' Outcomes

By Alexander Wolitzky

American Economic Review, October 2018

I develop a simple model of social learning in which players observe others' outcomes but not their actions. A continuum of players arrives continuously over time, and each player chooses once-and-for-all between a safe action (which succeeds with known p...

Sophisticated Bidders in Beauty-Contest Auctions

By Stefano Galavotti, Luigi Moretti, and Paola Valbonesi

American Economic Journal: Microeconomics, November 2018

We study bidding behavior by firms in beauty-contest auctions, i.e., auctions in which the winning bid is the one which gets closest to some function (average) of all submitted bids. Using a dataset on public procurement beauty-contest auctions, we show t...

Disclosure to a Psychological Audience

By Elliot Lipnowski and Laurent Mathevet

American Economic Journal: Microeconomics, November 2018

We study how a benevolent expert should disclose information to an agent with psychological concerns. We first provide a method to compute an optimal information policy for many psychological traits. The method suggests, for instance, that an agent suffer...

Measuring and Bounding Experimenter Demand

By Jonathan de Quidt, Johannes Haushofer, and Christopher Roth

American Economic Review, November 2018

We propose a technique for assessing robustness to demand effects of findings from experiments and surveys. The core idea is that by deliberately inducing demand in a structured way we can bound its influence. We present a model in which participants resp...

Mismatch of Talent: Evidence on Match Quality, Entry Wages, and Job Mobility

By Peter Fredriksson, Lena Hensvik, and Oskar Nordström Skans

American Economic Review, November 2018

We examine the impact of mismatch on entry wages, separations, and wage growth using unique data on worker talents. We show that workers are sorted on comparative advantage across jobs within occupations. The starting wages of inexperienced workers are un...

Market Integration, Demand, and the Growth of Firms: Evidence from a Natural Experiment in India

By Robert Jensen and Nolan H. Miller

American Economic Review, December 2018

In many developing countries, the average firm is small, does not grow and has low productivity. Lack of market integration and limited information on non-local products often leave consumers unaware of the prices and quality of non-local firms. They ther...

Speed, Accuracy, and the Optimal Timing of Choices

By Drew Fudenberg, Philipp Strack, and Tomasz Strzalecki

American Economic Review, December 2018

We model the joint distribution of choice probabilities and decision times in binary decisions as the solution to a problem of optimal sequential sampling, where the agent is uncertain of the utility of each action and pays a constant cost per unit time f...

An Economic Analysis of Privacy Protection and Statistical Accuracy as Social Choices

By John M. Abowd and Ian M. Schmutte

American Economic Review, January 2019

Statistical agencies face a dual mandate to publish accurate statistics while protecting respondent privacy. Increasing privacy protection requires decreased accuracy. Recognizing this as a resource allocation problem, we propose an economic solution: ope...

Learning, Career Paths, and the Distribution of Wages

By Santiago Caicedo, Robert E. Lucas Jr., and Esteban Rossi-Hansberg

American Economic Journal: Macroeconomics, January 2019

We develop a theory of career paths and earnings where agents organize in production hierarchies. Agents climb these hierarchies as they learn stochastically from others. Earnings grow as agents acquire knowledge and occupy positions with more subordinate...

Firm Uncertainty Cycles and the Propagation of Nominal Shocks

By Isaac Baley and Andrés Blanco

American Economic Journal: Macroeconomics, January 2019

We develop a framework to study the impact of idiosyncratic uncertainty on aggregate economic outcomes. Agents learn about individual characteristics, which receive infrequent, large, and persistent shocks. In this environment, idiosyncratic uncertainty m...

The Impact of Monitoring in Infinitely Repeated Games: Perfect, Public, and Private

By Masaki Aoyagi, V. Bhaskar, and Guillaume R. Fréchette

American Economic Journal: Microeconomics, February 2019

This paper uses a laboratory experiment to study the effect of the monitoring structure on the play of the infinitely repeated prisoner's dilemma. Keeping the strategic form of the stage game fixed, we examine the behavior of subjects when information abo...

The Risk of Failure: Trial and Error Learning and Long-Run Performance

By Steven Callander and Niko Matouschek

American Economic Journal: Microeconomics, February 2019

Innovation is often the key to sustained progress, yet innovation itself is difficult and highly risky. Success is not guaranteed as breakthroughs are mixed with setbacks and the path of learning is typically far from smooth. How decision makers learn by ...

Are Consumers Poorly Informed about Fuel Economy? Evidence from Two Experiments

By Hunt Allcott and Christopher Knittel

American Economic Journal: Economic Policy, February 2019

It is often asserted that consumers are poorly informed about and inattentive to fuel economy, causing them to buy low-fuel economy vehicles despite their own best interest. This paper presents evidence on this assertion through two experiments providing ...

Physician Beliefs and Patient Preferences: A New Look at Regional Variation in Health Care Spending

By David Cutler, Jonathan S. Skinner, Ariel Dora Stern, and David Wennberg

American Economic Journal: Economic Policy, February 2019

There is considerable controversy about the causes of regional variations in health care expenditures. Using vignettes from patient and physician surveys linked to fee-for-service Medicare expenditures, this study asks whether patient demand-side factors ...

The Value of US Government Data to US Business Decisions

[Symposium: Public Provision of Economic Data]

By Ellen Hughes-Cromwick and Julia Coronado

Journal of Economic Perspectives, Winter 2019

The US government is a major producer of economic and financial data, statistics, analysis, and forecasts that are gathered, compiled, and published as public goods for use by citizens, government agencies, researchers, nonprofits, and the business comm...

Beliefs about Gender

By Pedro Bordalo, Katherine Coffman, Nicola Gennaioli, and Andrei Shleifer

American Economic Review, March 2019

We conduct laboratory experiments that explore how gender stereotypes shape beliefs about ability of oneself and others in different categories of knowledge. The data reveal two patterns. First, men's and women's beliefs about both oneself and others exce...

Research and the Approval Process: The Organization of Persuasion

By Emeric Henry and Marco Ottaviani

American Economic Review, March 2019

An informer sequentially collects and disseminates information through costly research to persuade an evaluator to approve an activity. Payoffs and control rights are split between informer and evaluator depending on the organizational rules governing the...