What Do Bargainers' Preferences Look Like? Experiments with a Convex Ultimatum Game

By James Andreoni, Marco Castillo, and Ragan Petrie

American Economic Review, June 2003

The ultimatum game, by its all-or-nothing nature, makes it difficult to discern what kind of preferences may be generating choices. We explore a game that convexifies the decisions, allowing us a better look at the indifference curves of bargainers while ...

Learning from Experiments When Context Matters

By Lant Pritchett and Justin Sandefur

American Economic Review, May 2015

Suppose a policymaker is interested in the impact of an existing social program. Impact estimates using observational data suffer potential bias, while unbiased experimental estimates are often limited to other contexts. This creates a practical trade-off...

Industry Compensation under Relocation Risk: A Firm-Level Analysis of the EU Emissions Trading Scheme

By Ralf Martin, Mirabelle Muûls, Laure B. de Preux, and Ulrich J. Wagner

American Economic Review, August 2014

When regulated firms are offered compensation to prevent them from relocating, efficiency requires that payments be distributed across firms so as to equalize marginal relocation probabilities, weighted by the damage caused by relocation. We formalize thi...

On the Use of Holdout Samples for Model Selection

By Frank Schorfheide and Kenneth I. Wolpin

American Economic Review, May 2012

Researchers often hold out data from the estimation of econometric models to use for external validation. However, the use of holdout samples is suboptimal from a Bayesian perspective, which prescribes using the entire sample to form posterior model weigh...

The Economics of Predation: What Drives Pricing When There Is Learning-by-Doing?

By David Besanko, Ulrich Doraszelski, and Yaroslav Kryukov

American Economic Review, March 2014

We formally characterize predatory pricing in a modern industry-dynamics framework that endogenizes competitive advantage and industry structure. As an illustrative example we focus on learning-by-doing. To disentangle predatory pricing from mere compet...

Of Mice and Academics: Examining the Effect of Openness on Innovation

By Fiona Murray, Philippe Aghion, Mathias Dewatripont, Julian Kolev, and Scott Stern

American Economic Journal: Economic Policy, February 2016

This paper argues that openness, by lowering costs to access existing research, can enhance both early and late stage innovation through greater exploration of novel research directions. We examine a natural experiment in openness: late-1990s NIH agreemen...

Measuring the Labor Market Impacts of Hurricane Katrina Migration: Evidence from Houston, Texas

By Molly Fifer McIntosh

American Economic Review, May 2008

How Much Consumption Insurance beyond Self-Insurance?

By Greg Kaplan and Giovanni L. Violante

American Economic Journal: Macroeconomics, October 2010

We assess the degree of consumption smoothing implicit in a calibrated life-cycle version of the standard incomplete-markets model, and we compare it to the empirical estimates of Richard Blundell, Luigi Pistaferri, and Ian Preston (2008) (BPP hereafter)...

Fighting Corruption in Education: What Works and Who Benefits?

By Oana Borcan, Mikael Lindahl, and Andreea Mitrut

American Economic Journal: Economic Policy, February 2017

We investigate the distributional consequences of a corruption-fighting initiative in Romania targeting the endemic fraud in a high-stakes high school exit exam, which introduced CCTV monitoring of the exam and credible punishment threats for teachers and...

Power to Choose? An Analysis of Consumer Inertia in the Residential Electricity Market

By Ali Hortaçsu, Seyed Ali Madanizadeh, and Steven L. Puller

American Economic Journal: Economic Policy, November 2017

Many jurisdictions around the world have deregulated utilities and opened retail markets to competition. However, inertial decision making can diminish consumer benefits of retail competition. Using household-level data from the Texas residential electric...

Sacred Values? The Effect of Information on Attitudes toward Payments for Human Organs

By Julio J. Elias, Nicola Lacetera, and Mario Macis

American Economic Review, May 2015

Are attitudes about morally controversial (and often prohibited) market transactions affected by information about their costs and benefits? We address this question for the case of payments for human organs. We find in a survey experiment with US residen...

Just Luck: An Experimental Study of Risk-Taking and Fairness

By Alexander W. Cappelen, James Konow, Erik Ø. Sørensen, and Bertil Tungodden

American Economic Review, June 2013

Choices involving risk significantly affect the distribution of income and wealth in society. This paper reports the results of the first experiment, to our knowledge, to study fairness views about risktaking, specifically whether such views are based ...

Linear Regression Estimation of Discrete Choice Models with Nonparametric Distributions of Random Coefficients

By Patrick Bajari, Jeremy T. Fox, and Stephen P. Ryan

American Economic Review, May 2007

Behavioral Biases and Firm Behavior: Evidence from Kenyan Retail Shops

By Michael Kremer, Jean Lee, Jonathan Robinson, and Olga Rostapshova

American Economic Review, May 2013

Many subjects in lab experiments exhibit small-stakes risk aversion, consistent with loss aversion. Those with greater math skills are less likely to show small-stakes risk aversion. We argue that departures from expected utility maximization may help exp...

The Collateral Channel: How Real Estate Shocks Affect Corporate Investment

By Thomas Chaney, David Sraer, and David Thesmar

American Economic Review, October 2012

What is the impact of real estate prices on corporate investment? In the presence of financing frictions, firms use pledgeable assets as collateral to finance new projects. Through this collateral channel, shocks to the value of real estate can have a la...

The Carrot or the Stick: Rewards, Punishments, and Cooperation

By James Andreoni, William Harbaugh, and Lise Vesterlund

American Economic Review, June 2003

Identifying the Elasticity of Substitution with Biased Technical Change

By Miguel A. León-Ledesma, Peter McAdam, and Alpo Willman

American Economic Review, September 2010

The capital-labor substitution elasticity and technical biases in production are critical parameters. The received wisdom claims their joint identification is infeasible. We challenge that interpretation. Putting the new approach of "normalized" producti...

Can Mandated Political Representation Increase Policy Influence for Disadvantaged Minorities? Theory and Evidence from India

By Rohini Pande

American Economic Review, September 2003

A basic premise of representative democracy is that all those subject to policy should have a voice in its making. However, policies enacted by electorally accountable governments often fail to reflect the interests of disadvantaged minorities. This paper...

A New Measure of Monetary Shocks: Derivation and Implications

By Christina D. Romer and David H. Romer

American Economic Review, September 2004

This paper develops a measure of U. S. monetary policy shocks for the period 1969–1996 that is relatively free of endogenous and anticipatory movements. Quantitative and narrative records are used to infer the Federal Reserve's intentions for the federa...

Prediction with Misspecified Models

By John Geweke and Gianni Amisano

American Economic Review, May 2012

The assumption that one of a set of prediction models is a literal description of reality formally underlies many formal econometric methods, including Bayesian model averaging and most approaches to model selection. Prediction pooling does not invoke th...