Compatibility Choices, Switching Costs, and Data Portability

By Doh-Shin Jeon, Domenico Menicucci, and Nikrooz Nasr

American Economic Journal: Microeconomics, February 2023

We study mix-and-match compatibility choices of firms selling complementary products in a dynamic setting. Contrary to what happens in a static setting where symmetric firms choose compatibility (Matutes and Regibeau 1988), when switching costs are high a...

Alert the Inert? Switching Costs and Limited Awareness in Retail Electricity Markets

By Luisa Dressler and Stefan Weiergraeber

American Economic Journal: Microeconomics, February 2023

We quantify how switching costs and limited awareness affect consumer inertia in liberalized retail electricity markets by developing and estimating a structural demand model using a novel dataset on electricity contract choices in Belgium. Our data allow...

Product Quality and Consumer Search

By José L. Moraga-González and Yajie Sun

American Economic Journal: Microeconomics, February 2023

An increase in quality shifts up the distribution of match utilities offered by firms and makes consumers pickier. The number of products that consumers inspect does not necessarily increase in quality. Higher search costs may lead to less quality investm...

Primary-Market Auctions for Event Tickets: Eliminating the Rents of "Bob the Broker"?

By Eric Budish and Aditya Bhave

American Economic Journal: Microeconomics, February 2023

Economists have long been puzzled by event-ticket underpricing: underpricing reduces revenue for the performer and encourages socially wasteful rent-seeking by ticket brokers. What about using an auction? This paper studies the introduction of auctions in...

Misbehavior in Common Value Auctions: Bidding Rings and Shills

By Dan Levin and James Peck

American Economic Journal: Microeconomics, February 2023

We characterize the optimal misbehavior by bidding rings or an auctioneer in the ascending English auction with common values. We also show, in an extended game, that in equilibrium potential members join and truthfully reveal their signals. Under a separ...

Contest Design with Stochastic Performance

By René Kirkegaard

American Economic Journal: Microeconomics, February 2023

This paper studies optimal contest design in contests with noisy performance. Here, contest design is a team moral hazard problem that endogenizes the assignment rule that maps performance profiles into winning probabilities. The optimal design features e...

Two-Stage Contests with Private Information

By Greg Kubitz

American Economic Journal: Microeconomics, February 2023

In perfectly discriminating contests with private information, low-ability contestants prefer to appear strong, while high-ability contestants prefer to appear weak. In a two-stage contest, this leads to a unique symmetric equilibrium with partial pooling...

A Theory of Stability in Matching with Incomplete Information

By Yi-Chun Chen and Gaoji Hu

American Economic Journal: Microeconomics, February 2023

We provide a framework for studying two-sided matching markets with incomplete information. The framework accommodates two-sided incomplete information as well as heterogeneous information among the agents. We propose a notion called stability for a marke...

Rational Exuberance

By Stephen F. Le Roy

Journal of Economic Literature, September 2004

This article reviews the theory of speculative bubbles. Bubbles are a promising candidate as an explanation for the stock price run-up and collapse of the 1990s in the United States. The theory considers both irrational and rational bubbles, with emphasis...

An Information Theory of Efficient Differential Treatment

By Emil Temnyalov

American Economic Journal: Microeconomics, February 2023

When are differential treatment policies—such as preferential treatment, affirmative action, and gender equity policies—justified by efficiency concerns? I propose a nonparametric assignment model where a policymaker assigns agents to different treatm...

Dynamic Information Design under Constrained Communication Rules

By Caio Lorecchio and Daniel Monte

American Economic Journal: Microeconomics, February 2023

An information designer wishes to persuade agents to invest in a project of unknown quality. To do so, she must induce investment and collect feedback from these investments. Motivated by data regulations and simplicity concerns, our designer faces commun...

Sequential Learning

By Yair Antler, Daniel Bird, and Santiago Oliveros

American Economic Journal: Microeconomics, February 2023

We develop a model in which two players sequentially and publicly examine a project. In our model the player who moves first can fabricate evidence to influence the second mover, which creates a moral hazard problem. We find that early strategic uncertain...

When Is a Contrarian Adviser Optimal?

By Robert Evans and Sönje Reiche

American Economic Journal: Microeconomics, February 2023

We compare contrarian to conformist advice, a contrarian expert being one whose preference bias is against the decision-maker's prior optimal decision. Optimality of an expert depends on characteristics of prior information and learning. If either the exp...

Debunking Rumors in Networks

By Luca P. Merlino, Paolo Pin, and Nicole Tabasso

American Economic Journal: Microeconomics, February 2023

We study the diffusion of a true and a false message (the rumor) in a social network. Upon hearing a message, individuals may believe it, disbelieve it, or debunk it through costly verification. Whenever the truth survives in steady state, so does the rum...

Censorship and Reputation

By Daniel N. Hauser

American Economic Journal: Microeconomics, February 2023

I study how a firm manages its reputation by both investing in the quality of its product and censoring, hiding bad news from consumers. Without censorship, the threat of bad news provides strong incentives for investment. I highlight discontinuities in t...

Togetherness in the Household

By Sam Cosaert, Alexandros Theloudis, and Bertrand Verheyden

American Economic Journal: Microeconomics, February 2023

Spending time with a spouse is a major gain from marriage. We extend the classical collective model of the household to allow for togetherness between spouses. Togetherness takes the form of joint leisure and joint care for children. Using revealed prefer...

Ten Isn't Large! Group Size and Coordination in a Large-Scale Experiment

By Jasmina Arifovic, Cars Hommes, Anita Kopányi-Peuker, and Isabelle Salle

American Economic Journal: Microeconomics, February 2023

We provide experimental evidence on coordination within large groups that could proxy the atomistic nature of real-world markets. We use a bank run game where the two pure-strategy equilibria can be ranked by payoff and risk dominance and a sequence of pu...

The Effects of Time Preferences on Cooperation: Experimental Evidence from Infinitely Repeated Games

By Jeongbin Kim

American Economic Journal: Microeconomics, February 2023

This paper studies the effects of time preferences on cooperation in an infinitely repeated prisoner's dilemma game experiment. Subjects play repeated games in the lab, all decisions at once, but stage game payoffs are paid over an extended period of time...

Implications of Unequal Discounting in Dynamic Contracting

By Ilia Krasikov, Rohit Lamba, and Thomas Mettral

American Economic Journal: Microeconomics, February 2023

This paper studies a canonical dynamic screening problem where the agent has Markovian private information and limited commitment and the principal and the agent have different discount factors. Unequal discounting captures unequal access to capital marke...

Review of Mokyr's Gifts of Athena

By Hal R. Varian

Journal of Economic Literature, September 2004