An Efficient Ascending-Bid Auction for Multiple Objects

By Lawrence M. Ausubel

American Economic Review, December 2004

When bidders exhibit multi-unit demands, standard auction methods generally yield inefficient outcomes. This article proposes a new ascending-bid auction for homogeneous goods, such as Treasury bills or telecommunications spectrum. The auctioneer announce...

A Group Rule-Utilitarian Approach to Voter Turnout: Theory and Evidence

By Stephen Coate and Michael Conlin

American Economic Review, December 2004

This paper explores a group rule–utilitarian approach to understanding voter turnout, inspired by the theoretical work of John C. Harsanyi (1980) and Timothy J. Feddersen and Alvaro Sandroni (2002). It develops a model based on this approach and studies...

When Does Learning in Games Generate Convergence to Nash Equilibria? The Role of Supermodularity in an Experimental Setting

By Yan Chen and Robert Gazzale

American Economic Review, December 2004

This study clarifies the conditions under which learning in games produces convergence to Nash equilibria in practice. We experimentally investigate the role of supermodularity, which is closely related to the more familiar concept of strategic complement...

Confidence-Enhanced Performance

By Olivier Compte and Andrew Postlewaite

American Economic Review, December 2004

There is ample evidence that emotions affect performance. Positive emotions can improve performance, while negative ones can diminish it. For example, the fears induced by the possibility of failure or of negative evaluations have physiological consequenc...

Addiction and Cue-Triggered Decision Processes

By B. Douglas Bernheim and Antonio Rangel

American Economic Review, December 2004

We propose a model of addiction based on three premises: (i) use among addicts is frequently a mistake; (ii) experience sensitizes an individual to environmental cues that trigger mistaken usage; (iii) addicts understand and manage their susceptibilities....

Capturing Knowledge within and across Firm Boundaries: Evidence from Clinical Development

By Pierre Azoulay

American Economic Review, December 2004

How do firm boundaries influence employees' acquisition of information? Using detailed project-level data and qualitative evidence, I document that pharmaceutical firms are more likely to outsource the coordination of data-intensive clinical trials, while...

Does School Integration Generate Peer Effects? Evidence from Boston's Metco Program

By Joshua D. Angrist and Kevin Lang

American Economic Review, December 2004

The Metropolitan Council for Educational Opportunity (Metco) is a desegregation program that sends students from Boston schools to more affluent suburbs. Metco increases the number of blacks and reduces test scores in receiving districts. School-level dat...

International Protection of Intellectual Property

By Gene M. Grossman and Edwin L.-C. Lai

American Economic Review, December 2004

We study the incentives that governments have to protect intellectual property in a trading world economy. We consider a world economy with ongoing innovation in two countries that differ in market size and in their capacity for innovation. After describi...

Riding the South Sea Bubble

By Peter Temin and Hans-Joachim Voth

American Economic Review, December 2004

This paper presents a case study of a well-informed investor in the South Sea bubble. We argue that Hoare's Bank, a fledgling West End London bank, knew that a bubble was in progress and nonetheless invested in the stock: it was profitable to "ride the bu...

Why Parents Play Favorites: Explanations for Unequal Bequests

By Audrey Light and Kathleen McGarry

American Economic Review, December 2004

Partnership Firms, Reputation, and Human Capital

By Alan D. Morrison and William J. Wilhelm Jr

American Economic Review, December 2004

The Effect of Health Risk on Housing Values: Evidence from a Cancer Cluster

By Lucas W. Davis

American Economic Review, December 2004

Progressive Taxation and Long-Run Growth

By Li Wenli and Pierre-Daniel Sarte

American Economic Review, December 2004

Social Comparisons and Pro-social Behavior: Testing "Conditional Cooperation" in a Field Experiment

By Bruno S. Frey and Stephan Meier

American Economic Review, December 2004

Rethinking Social Insurance

By Martin Feldstein

American Economic Review, March 2005

The Cyclical Behavior of Equilibrium Unemployment and Vacancies

By Robert Shimer

American Economic Review, March 2005

This paper argues that the textbook search and matching model cannot generate the observed business-cycle-frequency fluctuations in unemployment and job vacancies in response to shocks of a plausible magnitude. In the United States, the standard deviation...

Employment Fluctuations with Equilibrium Wage Stickiness

By Robert E. Hall

American Economic Review, March 2005

Following a recession, the aggregate labor market is slack–employment remains below normal and recruiting efforts of employers, as measured by help-wanted advertising and vacancies, are low. A model of matching friction explains the qualitative response...

Financial Reform: What Shakes It? What Shapes It?

By Abdul Abiad and Ashoka Mody

American Economic Review, March 2005

What accounts for the worldwide advance of financial reforms in the last quarter century? Using a new index of financial liberalization, we find that influential events shook the policy status quo. Balance-of-payments crises spurred reforms, but banking c...

Optimal Monetary Policy with Relative Price Distortions

By Tack Yun

American Economic Review, March 2005

This paper analyzes optimal monetary policy in a sticky price model with Calvo-type staggered price-setting. In the paper, the optimal monetary policy maximizes the expected utility of a representative household without having to rely on a set of linearly...

The Case for Open-Market Purchases in a Liquidity Trap

By Alan J. Auerbach and Maurice Obstfeld

American Economic Review, March 2005

Prevalent thinking about liquidity traps suggests that the perfect substitutability of money and bonds at a zero short-term nominal interest rate renders open-market operations ineffective for achieving macroeconomic stabilization goals. We show that even...