Raising the Bar: Certification Thresholds and Market Outcomes

By Xiang Hui, Maryam Saeedi, Giancarlo Spagnolo, and Steven Tadelis

American Economic Journal: Microeconomics, May 2023

Certification of sellers by trusted third parties helps alleviate information asymmetries in markets, yet little is known about the impact of a certification's threshold on market outcomes. Exploiting a policy change on eBay, we study how a more selective...

Stable and Efficient Resource Allocation with Contracts

By Bobak Pakzad-Hurson

American Economic Journal: Microeconomics, May 2023

Consider indivisible-object allocation with contracts, such as college admissions, where contracts specify majors. Can a designer guarantee a stable and (student) efficient matching? I show that contracts put stability and efficiency at odds; a necessary ...

Optimal Task Scheduling under Adverse Selection and Hidden Actions

By Murali Agastya and Oleksii Birulin

American Economic Journal: Microeconomics, May 2023

A Principal owns a project consisting of several tasks. Tasks differ, both in their innate success probabilities and their incremental benefits. Moreover, only specialists can perform these tasks. Subject to moral hazard and adverse selection, in what ord...

Markets with Within-Type Adverse Selection

By Anh Nguyen and Teck Yong Tan

American Economic Journal: Microeconomics, May 2023

We study bilateral trade with a seller owning multiple units of a good, where each unit is of binary quality. The seller privately knows her "type"—defined by the number of lemons that she own—and which units in her endowments are the lemons ("within-...

A Review of Interest and Prices: Foundations of a Theory of Monetary Policy by Michael Woodford

By Edward J. Green

Journal of Economic Literature, March 2005

This is a review article of Interests and Prices: Foundations of a Theory of Monetary Policy (Princeton University Press 2003) by Michael Woodford.

Front Matter

American Economic Review, May 2023

Nobel Lecture: Banking, Credit, and Economic Fluctuations

By Ben S. Bernanke

American Economic Review, May 2023

Credit markets, including the market for bank loans, are characterized by imperfect and asymmetric information. These informational frictions can interact with other economic forces to produce periods of credit-market stress, in which intermediation is un...

Information, Mobile Communication, and Referral Effects

By Panle Jia Barwick, Yanyan Liu, Eleonora Patacchini, and Qi Wu

American Economic Review, May 2023

This paper uses the universe of cellphone records from a Chinese telecommunication provider for a northern Chinese city to examine the role of information exchange in urban labor markets. We provide the first direct evidence of increased communication amo...

The Costs of Job Displacement over the Business Cycle and Its Sources: Evidence from Germany

By Johannes F. Schmieder, Till von Wachter, and Jörg Heining

American Economic Review, May 2023

We document the sources behind the costs of job loss over the business cycle using administrative data from Germany. Losses in annual earnings after displacement are large, persistent, and highly cyclical, nearly doubling in size during downturns. A large...

Law and Norms: Empirical Evidence

By Tom Lane, Daniele Nosenzo, and Silvia Sonderegger

American Economic Review, May 2023

A large theoretical literature argues laws exert a causal effect on norms, but empirical evidence remains scant. Using a novel identification strategy, we provide a compelling empirical test of this proposition. We use incentivized vignette experiments to...

Social Exclusion and Social Preferences: Evidence from Colombia's Leper Colony

By Diego Ramos-Toro

American Economic Review, May 2023

This paper explores the intergenerational consequences of social exclusion on prosociality. A lab-in-the-field approach in the historical region of Colombia's leper colony reveals that descendants of socially excluded individuals are locally altruistic an...

Smart Contracts and the Coase Conjecture

By Thomas Brzustowski, Alkis Georgiadis-Harris, and Balázs Szentes

American Economic Review, May 2023

This paper reconsiders the problem of a durable-good monopolist who cannot make intertemporal commitments. The buyer's valuation is binary and his private information. The seller has access to dynamic contracts and, in each period, decides whether to depl...

The Cost of Information: The Case of Constant Marginal Costs

By Luciano Pomatto, Philipp Strack, and Omer Tamuz

American Economic Review, May 2023

We develop an axiomatic theory of information acquisition that captures the idea of constant marginal costs in information production: the cost of generating two independent signals is the sum of their costs, and generating a signal with probability half ...

Book Reviews

Journal of Economic Literature, March 2005

Front Matter

American Economic Journal: Economic Policy, May 2023

How Do Institutions of Higher Education Affect Local Invention? Evidence from the Establishment of US Colleges

By Michael J. Andrews

American Economic Journal: Economic Policy, May 2023

I use narrative historical data on site selection decisions for a subset of US colleges to identify runner-up locations that were strongly considered to become the sites of new colleges. Using runner-up counties as counterfactuals in a difference-in-diffe...

The Health Impacts of Hospital Delivery Practices

By David Card, Alessandra Fenizia, and David Silver

American Economic Journal: Economic Policy, May 2023

Treatment practices vary widely across hospitals, often with little connection to patients' medical needs. We assess impacts of these differences in delivery practices at childbirth. We find that infants quasi-randomly delivered at hospitals with higher C...

Optimal Income Taxation with Spillovers from Employer Learning

By Ashley C. Craig

American Economic Journal: Economic Policy, May 2023

I study optimal income taxation when human capital investment is imperfectly observable by employers. In the model, Bayesian inference about worker productivity compresses the wage distribution, lowering the private return to human capital investment. An ...

Pensions and Fertility: Microeconomic Evidence

By Alexander M. Danzer and Lennard Zyska

American Economic Journal: Economic Policy, May 2023

This study identifies the causal effect of pension generosity on women's fertility behavior. It capitalizes on Brazil's expansion of the pension system to rural workers, whose pension wealth subsequently more than tripled. Difference-in-difference, instru...

Profiting from Most-Favored-Customer Procurement Rules: Evidence from Medicaid

By Josh Feng, Thomas Hwang, and Luca Maini

American Economic Journal: Economic Policy, May 2023

Using a difference-in-difference approach, we find that an increase to Medicaid's minimum drug rebate under the Affordable Care Act in 2010 lowered non-Medicaid drug spending by 2.5 percent. A stylized bargaining model shows that this is likely driven by ...