Heuristic Thinking and Limited Attention in the Car Market

By Nicola Lacetera, Devin G. Pope, and Justin R. Sydnor

American Economic Review, August 2012

Can heuristic information processing affect important product markets? Analyzing over 22 million wholesale used-car transactions, we find evidence of left-digit bias in the processing of odometer values, whereby individuals focus on the number's leftmost ...

Inefficiency in Legislative Policymaking: A Dynamic Analysis

By Marco Battaglini and Stephen Coate

American Economic Review, March 2007

This paper develops an infinite horizon model of public spending and taxation in which policy decisions are determined by legislative bargaining. The policy space incorporates both productive and distributive public spending and distortionary taxation....

(Good and Bad) Reputation for a Servant of Two Masters

By Heski Bar-Isaac and Joyee Deb

American Economic Journal: Microeconomics, November 2014

We present a model in which an agent takes actions to affect her reputation with two audiences with diverse preferences. This contrasts with standard reputation models that consider a homogeneous audience. A new aspect that arises is that different audie...

Optimal Executive Compensation versus Managerial Power: A Review of Lucian Bebchuk and Jesse Fried's Pay without Performance: The Unfulfilled Promise of Executive Compensation

By Michael S. Weisbach

Journal of Economic Literature, June 2007

This essay reviews Lucian A. Bebchuk and Jesse M. Fried's Pay without Performance: The Unfulfilled Promise of Executive Compensation. Bebchuk and Fried criticize the standard view of executive compensation, in which executives negotiate contracts w...

Contracting with Third Parties

By Sandeep Baliga and Tomas Sjöström

American Economic Journal: Microeconomics, February 2009

In bilateral holdup and moral hazard in teams models, introducing a third party allows implementation of the first best, even if renegotiation is possible. Fines paid to the third party provide incentives for truth-telling and investment. This result h...

The History of Technological Anxiety and the Future of Economic Growth: Is This Time Different?

[Symposium: Automation and Labor Markets]

By Joel Mokyr, Chris Vickers, and Nicolas L. Ziebarth

Journal of Economic Perspectives, Summer 2015

Technology is widely considered the main source of economic progress, but it has also generated cultural anxiety throughout history. The developed world is now suffering from another bout of such angst. Anxieties over technology can take on several fo...

Correspondence: The Source of Animal Spirits

By D. E. Moggridge

Journal of Economic Perspectives, Summer 1992

Correspondence and response regarding: The Source of Animal Spirits

Regulating Asset Price Risk

By Philippe Bacchetta, Cédric Tille, and Eric van Wincoop

American Economic Review, May 2011

There has been a long debate about whether speculators are stabilizing or not. We consider a model where speculators have a stabilizing role in normal times, but may also provoke large risk panics. The very feature that makes arbitrageurs liquidity provid...

Dynamic Deception

By Axel Anderson and Lones Smith

American Economic Review, December 2013

We characterize the unique equilibrium of a competitive continuous time game between a resource-constrained informed player and a sequence of rivals who partially observe his action intensity. Our game adds noisy monitoring and impatient players to Aum...

Information Asymmetries in Consumer Credit Markets: Evidence from Payday Lending

By Will Dobbie and Paige Marta Skiba

American Economic Journal: Applied Economics, October 2013

Information asymmetries are prominent in theory but difficult to estimate. This paper exploits discontinuities in loan eligibility to test for moral hazard and adverse selection in the payday loan market. Regression discontinuity and regression kink ap...

A Review Essay on Alvin Roth's Who Gets What—And Why

By Edward L. Glaeser

Journal of Economic Literature, December 2017

Alvin Roth's Who Gets What—And Why provides a richly accessible introduction to his pioneering work on market design. Much of economics ignores the institutions that allocate goods, blithely assuming that the mythical Walrasian auctioneer wil...

Taxes and Employment Subsidies in Optimal Redistribution Programs

By Paul Beaudry, Charles Blackorby, and Dezsö Szalay

American Economic Review, March 2009

This paper explores how to optimally set taxes and transfers when taxation authorities are uninformed about individuals' value of time in both market and nonmarket activities; and can observe both market-income and time allocated to market employment. ...

Wine Retail Price Dispersion in the United States: Searching for Expensive Wines?

By David A. Jaeger and Karl Storchmann

American Economic Review, May 2011

Similar to other markets in which deviations from Jevons' "law of one price" is the norm rather than the exception, the retail wine market in the United States is characterized by large price dispersions. Drawing on a large sample of retail prices from wi...

In Defense of Inequality

By Finis Welch

American Economic Review, May 1999

Business Ascendancy and Economic Impasse: A Structural Retrospective on Conservative Economics, 1979-87

By Samuel Bowles, David M. Gordon, and Thomas E. Weisskopf

Journal of Economic Perspectives, Winter 1989

Conservatives have been waging economic revolution since the late Carter years. Have they succeeded? Ronald Reagan and the early architects sought their place in the history books as institutional innovators, not economic tinkerers. Viewed in this perspec...

Poverty and Economic Decision-Making: Evidence from Changes in Financial Resources at Payday

By Leandro S. Carvalho, Stephan Meier, and Stephanie W. Wang

American Economic Review, February 2016

We study the effect of financial resources on decision-making. Low-income US households are randomly assigned to receive an online survey before or after payday. The survey collects measures of cognitive function and administers risk and intertemporal cho...

The Origins of Ethnolinguistic Diversity

By Stelios Michalopoulos

American Economic Review, June 2012

This study explores the determinants of ethnolinguistic diversity within as well as across countries, shedding light on its geographic origins. The empirical analysis conducted across countries, virtual countries, and pairs of contiguous regions establish...

A Balls-and-Bins Model of Trade

By Roc Armenter and Miklós Koren

American Economic Review, July 2014

Many of the facts about the extensive margin of trade—which firms export, and how many products are sent to how many destinations—are consistent with a surprisingly large class of trade models because of the sparse nature of trade data. We pro...

An Individual Health Plan Exchange: Which Employees Would Benefit and Why?

By Leemore Dafny, Katherine Ho, and Mauricio Varela

American Economic Review, May 2010

The Political Economy of the US Mortgage Default Crisis

By Atif Mian, Amir Sufi, and Francesco Trebbi

American Economic Review, December 2010

We examine the effects of constituents, special interests, and ideology on congressional voting on two of the most significant pieces of legislation in US economic history. Representatives whose constituents experience a sharp increase in mortgage defaul...