Transition Dynamics in Equilibrium Search

By Ş. Nuray Akın and Brennan C. Platt

American Economic Journal: Microeconomics, November 2022

We study a dynamic equilibrium search model where sellers differ in their urgency to liquidate an asset. Buyers strategically make price offers without knowing a given seller's urgency. We study liquidity and price dynamics on the transition path after an...

Disclosure and Favoritism in Sequential Elimination Contests

By Qiang Fu and Zenan Wu

American Economic Journal: Microeconomics, November 2022

We consider a two-stage contest, in which only a subset of contestants enters the finale. We explore the optimal policy for disclosing contestants' interim status after the preliminary round, i.e., their interim ranking and elimination decision. The optim...

Expectations-Based Loss Aversion May Help Explain Seemingly Dominated Choices in Strategy-Proof Mechanisms

By Bnaya Dreyfuss, Ori Heffetz, and Matthew Rabin

American Economic Journal: Microeconomics, November 2022

Deferred acceptance (DA), a widely implemented algorithm, is meant to improve allocations: under classical preferences, it induces preference-concordant rankings. However, recent evidence shows that—in both real, large-stakes applications and experiment...

The Effect of Sequentiality on Cooperation in Repeated Games

By Riccardo Ghidoni and Sigrid Suetens

American Economic Journal: Microeconomics, November 2022

Sequentiality of moves in an infinitely repeated prisoner's dilemma does not change the conditions under which mutual cooperation can be supported in equilibrium relative to simultaneous decision-making. The nature of the interaction is different, however...

Screening Dominance: A Comparison of Noisy Signals

By David Lagziel and Ehud Lehrer

American Economic Journal: Microeconomics, November 2022

This paper studies the impact of noisy signals on screening processes. It deals with a decision problem in which a decision-maker screens a set of elements based on noisy unbiased evaluations. Given that the decision-maker uses threshold strategies, we sh...

Communication and Cooperation in Markets

By S. Nageeb Ali and David A. Miller

American Economic Journal: Microeconomics, November 2022

Many markets rely on traders truthfully communicating who has cheated in the past and ostracizing those traders from future trade. This paper investigates when truthful communication is incentive compatible. We find that if each side has a myopic incentiv...

Coordination and Organization Design: Theory and Micro-Evidence

By Wouter Dessein, Desmond (Ho-Fu) Lo, and Chieko Minami

American Economic Journal: Microeconomics, November 2022

We explore the relationship between the volatility of a firm's local environment and its organizational structure. Using micro-level data on managers working for a large retailer, we empirically test and provide support for our theory that a more volatile...

Rational Inattention in the Infield

By Vivek Bhattacharya and Greg Howard

American Economic Journal: Microeconomics, November 2022

This paper provides evidence of rational inattention by experienced professionals in strategic interactions. We add rational inattention to a game of matching pennies with state-dependent payoffs. Unlike the full-information, mixed-strategy Nash equilibri...

Making Elections Work: Accountability with Selection and Control

By Vincent Anesi and Peter Buisseret

American Economic Journal: Microeconomics, November 2022

We study the limits of dynamic electoral accountability when voters are uncertain about politicians' characteristics (adverse selection) and their actions (moral hazard). Existing work argues that voters cannot achieve their first-best payoff. This is att...

Crime Chains

By Mehmet Bac

American Economic Journal: Microeconomics, November 2022

How should law enforcement resources be allocated to minimize the harms from flexible, chain-form trafficking organizations? I show that optimal interventions focus on one target, the feeding source (decapitation) or the revenue-generating tail (amputatio...

Crime, Broken Families, and Punishment

By Emeline Bezin, Thierry Verdier, and Yves Zenou

American Economic Journal: Microeconomics, November 2022

We develop a two-period overlapping generations model in which both the family structure and the decision to commit crime are endogenous and the dynamics of moral norms of good conduct is transmitted intergenerationally by families and peers. By "destroyi...

Games Played by Teams of Players

By Jeongbin Kim, Thomas R. Palfrey, and Jeffrey R. Zeidel

American Economic Journal: Microeconomics, November 2022

We develop a general framework for analyzing games where each player is a team and members of the same team all receive the same payoff. The framework combines noncooperative game theory with collective choice theory, and is developed for both strategic f...

Reaping the Informational Surplus in Bayesian Persuasion

By Ronen Gradwohl, Niklas Hahn, Martin Hoefer, and Rann Smorodinsky

American Economic Journal: Microeconomics, November 2022

The Bayesian persuasion model studies communication between an informed sender and a receiver with a payoff-relevant action, emphasizing the ability of a sender to extract maximal surplus from his informational advantage. In this paper, we study a setting...

License Complementarity and Package Bidding: US Spectrum Auctions

By Mo Xiao and Zhe Yuan

American Economic Journal: Microeconomics, November 2022

US spectrum licenses cover geographically distinct areas and often complement each other. A bidder seeking to acquire multiple licenses is exposed to the risk of winning only isolated patches. Using Auction 73 data, we model the bidding process as an entr...

Sequential Screening with Type-Enhancing Investment

By Bin Liu and Jingfeng Lu

American Economic Journal: Microeconomics, November 2022

Due to the well-known efficiency–rent extraction trade-off, the optimal mechanism in a pure screening environment (e.g., revenue maximization in auctions or cost minimization in procurement) typically calls for distortions in allocative efficiency when ...

Call for Proposals: Hong Kong Institute of Monetary and Financial Research - Open-bid Applied Research Programme

[News]

November 12, 2020

Deadline for submissions is January 15, 2023.

14th International Conference "Challenges of Europe"

[News]

October 27, 2022

The conference will be held May 17-19, 2023 in Croatia.

Front Matter

American Economic Journal: Economic Policy, November 2022

Gerrymandering in State Legislatures: Frictions from Axiomatic Bargaining

By Hisam Sabouni and Cameron A. Shelton

American Economic Journal: Economic Policy, November 2022

Theories of partisan redistricting postulate unitary actors maximizing their party's expected seat share. Yet, the partition of a fixed supply of friendly voters necessarily implies a tragedy of the commons. We recast partisan redistricting as a bargainin...

Enhancing the Efficacy of Teacher Incentives through Framing: A Field Experiment

By Roland G. Fryer, Jr., Steven D. Levitt, John List, and Sally Sadoff

American Economic Journal: Economic Policy, November 2022

In a field experiment, we provide financial incentives to teachers framed either as gains, received at the end of the year, or as losses, in which teachers receive up-front bonuses that must be paid back if their students do not improve sufficiently. Pool...