Team Incentives and Performance: Evidence from a Retail Chain

By Guido Friebel, Matthias Heinz, Miriam Krueger, and Nikolay Zubanov

American Economic Review, August 2017

In a field experiment with a retail chain (1,300 employees, 193 shops), randomly selected sales teams received a bonus. The bonus increases both sales and number of customers dealt with by 3 percent. Each dollar spent on the bonus generates $3.80 in sales...

Gender Quotas and the Crisis of the Mediocre Man: Theory and Evidence from Sweden

By Timothy Besley, Olle Folke, Torsten Persson, and Johanna Rickne

American Economic Review, August 2017

We develop a model where party leaders choose the competence of politicians on the ballot to trade off electoral success against their own survival. The predicted correlation between the competence of party leaders and followers is strongly supported in S...

Full Implementation and Belief Restrictions

By Mariann Ollár and Antonio Penta

American Economic Review, August 2017

Multiplicity of equilibria and the dependence on strong common knowledge assumptions are well-known problems in mechanism design. We address them by studying full implementation via transfer schemes, under general restrictions on agents' beliefs. We show ...

Identifying and Spurring High-Growth Entrepreneurship: Experimental Evidence from a Business Plan Competition

By David McKenzie

American Economic Review, August 2017

Almost all firms in developing countries have fewer than ten workers, with a modal size of one. Are there potential high-growth entrepreneurs, and can public policy help identify them and facilitate their growth? A large-scale national business plan compe...

Multi-category Competition and Market Power: A Model of Supermarket Pricing

By Øyvind Thomassen, Howard Smith, Stephan Seiler, and Pasquale Schiraldi

American Economic Review, August 2017

In many competitive settings, consumers buy multiple product categories, and some prefer to use a single firm, generating complementary cross-category price effects. To study pricing in supermarkets, an organizational form where these effects are internal...

Stock Price Booms and Expected Capital Gains

By Klaus Adam, Albert Marcet, and Johannes Beutel

American Economic Review, August 2017

Investors' subjective capital gains expectations are a key element explaining stock price fluctuations. Survey measures of these expectations display excessive optimism (pessimism) at market peaks (troughs). We formally reject the hypothesis that this is ...

Clearing Up the Fiscal Multiplier Morass

By Eric M. Leeper, Nora Traum, and Todd B. Walker

American Economic Review, August 2017

We quantify government spending multipliers in US data using Bayesian prior and posterior analysis of a monetary model with fiscal details and two distinct monetary-fiscal policy regimes. The combination of model specification, observable data, and relati...

Hayek, Local Information, and Commanding Heights: Decentralizing State-Owned Enterprises in China

By Zhangkai Huang, Lixing Li, Guangrong Ma, and Lixin Colin Xu

American Economic Review, August 2017

Hayek (1945) argues that local information is key to understanding the efficiency of alternative economic systems and whether production should be centralized or decentralized. The Chinese experience of decentralizing SOEs confirms this insight: when the ...

Front Matter

American Economic Journal: Economic Policy, August 2017

Police Officer on the Frontline or a Soldier? The Effect of Police Militarization on Crime

By Vincenzo Bove and Evelina Gavrilova

American Economic Journal: Economic Policy, August 2017

Sparked by high-profile confrontations between police and citizens in Ferguson, Missouri, and elsewhere, many commentators have criticized the excessive militarization of law enforcement. We investigate whether surplus military-grade equipment acquired by...

Profit with Purpose? A Theory of Social Enterprise

By Timothy Besley and Maitreesh Ghatak

American Economic Journal: Economic Policy, August 2017

When social benefits cannot be measured, an organization that selects managers based on pro-social motivation can be used to balance profits with a social purpose. This paper develops a model of social enterprise based on selection of citizen-managers to ...

Tenure in Office and Public Procurement

By Decio Coviello and Stefano Gagliarducci

American Economic Journal: Economic Policy, August 2017

We study the impact of politicians' tenure in office on the outcomes of public procurement using a dataset on Italian municipal governments. To identify a causal relation, we first compare elections where the incumbent mayor barely won or barely lost anot...

Inferring Carbon Abatement Costs in Electricity Markets: A Revealed Preference Approach Using the Shale Revolution

By Joseph A. Cullen and Erin T. Mansur

American Economic Journal: Economic Policy, August 2017

This paper examines how carbon pricing would reduce emissions in the electricity sector. Both carbon prices and cheap natural gas reduce the historic cost advantage of coal plants. The shale revolution resulted in unprecedented variation in natural gas pr...

Mafia in the Ballot Box

By Giuseppe De Feo and Giacomo Davide De Luca

American Economic Journal: Economic Policy, August 2017

We study the impact of organized crime on electoral results, analyzing in detail the national parliamentary elections in Sicily for the period 1946-1992. We document the significant support given by the Sicilian mafia to the Christian Democratic Party whe...

The Fiscal Cost of Hurricanes: Disaster Aid versus Social Insurance

By Tatyana Deryugina

American Economic Journal: Economic Policy, August 2017

Little is known about the fiscal costs of natural disasters, especially regarding social safety nets that do not specifically target extreme weather events. This paper shows that US hurricanes lead to substantial increases in non-disaster government trans...

Household Finance after a Natural Disaster: The Case of Hurricane Katrina

By Justin Gallagher and Daniel Hartley

American Economic Journal: Economic Policy, August 2017

Little is known about how affected residents are able to cope with the financial shock of a natural disaster. This paper investigates the impact of flooding on household finance. Spikes in credit card borrowing and overall delinquency rates for the most f...

The Effect of Disability Insurance Payments on Beneficiaries' Earnings

By Alexander Gelber, Timothy J. Moore, and Alexander Strand

American Economic Journal: Economic Policy, August 2017

A crucial issue is whether social insurance affects work decisions through income or substitution effects. We examine this in the context of US Social Security Disability Insurance (DI), exploiting discontinuous changes in the benefit formula with a regre...

Dishonesty and Selection into Public Service: Evidence from India

By Rema Hanna and Shing-Yi Wang

American Economic Journal: Economic Policy, August 2017

Students in India who cheat on a simple laboratory task are more likely to prefer public sector jobs. This paper shows that cheating on this task predicts corrupt behavior by civil servants, implying that it is a meaningful predictor of future corruption....

Peacekeeping Force: Effects of Providing Tactical Equipment to Local Law Enforcement

By Matthew C. Harris, Jinseong Park, Donald J. Bruce, and Matthew N. Murray

American Economic Journal: Economic Policy, August 2017

We provide the first local level empirical analysis of the causal effects of providing military equipment to local police. Employing a novel combination of publicly available county-year panel data matched to hand-collected data on citizen complaints, we ...

High Frequency Evidence on the Demand for Gasoline

By Laurence Levin, Matthew S. Lewis, and Frank A. Wolak

American Economic Journal: Economic Policy, August 2017

Daily city-level expenditures and prices are used to estimate the price responsiveness of gasoline demand in the United States. Using a frequency of purchase model that explicitly acknowledges the distinction between gasoline demand and gasoline expenditu...