The price is not always right

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How do consumers estimate inflation?

The Return of the Nirvana Fallacy: A Review of John Cassidy’s Capitalism and Its Critics

By Dora L. Costa and Matthew E. Kahn

Journal of Economic Literature

John Cassidy's Capitalism and Its Critics surveys 250 years of capitalism's history through the eyes of roughly thirty critics, from the Luddites, early utopians and Marx to modern communitarians, antigrowth proponents, free trade opponents, and sc...

Front Matter

American Economic Journal: Microeconomics, May 2026

Agency Pricing and Bargaining: Evidence from the E-Book Market

By Babur De los Santos, Daniel P. O'Brien, and Matthijs R. Wildenbeest

American Economic Journal: Microeconomics, May 2026

This paper studies the pricing implications of wholesale and agency contracts when input terms are determined through bargaining. We develop a structural Nash-in-Nash bargaining model and show that the distribution of bargaining power determines whether a...

Dynamic Preference "Reversals" and Time Inconsistency

By Philipp Strack and Dmitry Taubinsky

American Economic Journal: Microeconomics, May 2026

We study the possibility of identifying time-inconsistent preferences in empirical designs where preferences are elicited in advance at time 0 and then again at time 1, after the agent receives additional information. For single-peaked preferences, time c...

On Taking a Skewed Risk More than Once

By Sebastian Ebert and Mats Köster

American Economic Journal: Microeconomics, May 2026

Penny-picking refers to the often-observed phenomenon of repeatedly taking negatively skewed risks and seems directly at odds with evidence on (positive-)skewness-seeking as observed in static settings. We show that penny-picking may not only occur despit...

Strategic Evidence Disclosure in Networks and Equilibrium Discrimination

By Leonie Baumann and Rohan Dutta

American Economic Journal: Microeconomics, May 2026

A group of agents with ex ante independent and identically uncertain quality compete for a prize, awarded by a principal. Agents may possess evidence about the quality of those they share a social connection with (neighbors), and themselves. In one equili...

Quality and Imperfect Competition

By Germain Gaudin

American Economic Journal: Microeconomics, May 2026

We study quality distortions when firms hold market power. We develop a model allowing for flexible functional forms of demand in order to extend Spence's (1975) monopoly analysis to imperfect competition. We show that quality distortions are determined b...

The Organization of Innovation: Incomplete Contracts and the Outsourcing Decision

By Thomas Jungbauer, Sean Nicholson, June Pan, Michael Waldman, and Lucy Xiaolu Wang

American Economic Journal: Microeconomics, May 2026

Why do firms outsource research and development (R&D) for some products while conducting R&D in-house for similar ones? An innovating firm risks cannibalizing its existing products. The more profitable these products, the more the firm wants to limit ...

The Effect of Mergers on Innovation

By Kaustav Das, Tatiana Mayskaya, and Arina Nikandrova

American Economic Journal: Microeconomics, May 2026

We study the effect of a merger on R&D activity in a dynamic model with uncertainty about the feasibility of innovation. The merger has three effects: It may reduce the number of follow-up innovations (cannibalization effect), increase the probability of ...

Sharing Model Uncertainty

By Chiaki Hara, Sujoy Mukerji, Frank Riedel, and Jean-Marc Tallon

American Economic Journal: Microeconomics, May 2026

This paper examines efficient allocations in economies where consumers exhibit heterogeneous smooth ambiguity preferences and face model uncertainty with a common set of identifiable models. Aggregate endowment is ambiguous. We characterize economies wher...

A Measure of Behavioral Heterogeneity

By Jose Apesteguia and Miguel A. Ballester

American Economic Journal: Microeconomics, May 2026

In this paper, we propose a novel way to measure behavioral heterogeneity in a population of stochastic individuals. Our measure is choice-based; it evaluates the probability that, over a randomly selected menu, the sampled choices of two sampled individu...

Opportunity Hunters: A Model of Competitive Sequential Inspections

By Ran Eilat, Zvika Neeman, and Eilon Solan

American Economic Journal: Microeconomics, May 2026

We introduce a new type of games, called "opportunity-hunting games," in which two players compete to discover an uncertain event ("opportunity") that occurs at an unobserved and random point in time. Players can inspect whether the event has already occu...

Concentration in Product Markets

By C. Lanier Benkard, Ali Yurukoglu, and Anthony Lee Zhang

American Economic Journal: Microeconomics, May 2026

This paper measures concentration in narrowly defined product markets for a broad range of consumer goods and services in the United States from 1994 to 2019. We document two main empirical facts. First, concentration levels are high. Of the markets in ou...

Self-Enforced Job Matching

By Ce Liu, Ziwei Wang, and Hanzhe Zhang

American Economic Journal: Microeconomics, May 2026

Complementarities and peer effects are common in matching markets, yet incorporating them often leads to nonexistence of stable matchings. We observe that matching is often an ongoing process rather than a static allocation, where long-lived firms interac...

Voter Information and Distributive Politics

By Benjamin Blumenthal

American Economic Journal: Microeconomics, May 2026

Does more information benefit voters? I examine this question in a novel setting of distributive politics and electoral accountability. Homogeneously informed electorates can benefit from less information through improvements in the control or screening o...

The Effect of Omitted Variables on the Sign of Regression Coefficients

By Matthew A. Masten and Alexandre Poirier

American Economic Review

We show that, depending on how the impact of omitted variables is measured, it can be substantially easier for omitted variables to flip coefficient signs than to drive them to zero. This behavior occurs with “Oster’s delta” (Oster 2019b), a widel...

Community Engagement and Public Safety: Evidence from Crime Enforcement Targeting Immigrants

By Felipe Gonçalves, Elisa Jácome, and Emily Weisburst

American Economic Review

We study the role of victim reporting in the production of public safety. We examine the Secure Communities program, a crime-reduction policy that involved police in detecting unauthorized immigrants and increased deportation fears in immigrant communit...

Designing Dynamic Reassignment Mechanisms: Evidence from GP Allocation

By Ingrid Huitfeldt, Victoria Marone, and Daniel Waldinger

American Economic Review

We study the problem of designing a dynamic reassignment mechanism when agents’ preferences over objects change over time. In the context of Norway’s system for (re)assigning patients to general practitioners (GPs), we provide direct evidence of mis...

Merger Effects and Antitrust Enforcement: Evidence from US Consumer Packaged Goods

By Vivek Bhattacharya, Gastón Illanes, and David Stillerman

American Economic Review

We document the effects of a comprehensive set of mergers of US consumer packaged goods manufacturers on prices, quantities, and product assortment. Across specifications, we find a small average price effect of mergers (-0.5% to 1.1%) but substantial ...