How Do Patent Laws Influence Innovation? Evidence from Nineteenth-Century World's Fairs

By Petra Moser

American Economic Review, September 2005

Studies of innovation have focused on the effects of patent laws on the number of innovations, but have ignored effects on the direction of technological change. This paper introduces a new dataset of close to fifteen thousand innovations at the Crystal P...

The Central Role of Noise in Evaluating Interventions That Use Test Scores to Rank Schools

By Kenneth Y. Chay, Patrick J. McEwan, and Miguel Urquiola

American Economic Review, September 2005

Many programs reward or penalize schools based on students' average performance. Mean reversion is a potentially serious hindrance to the evaluation of such interventions. Chile's 900 Schools Program (P-900) allocated resources based on cutoffs in schools...

Effective Exchange Rates and the Classical Gold Standard Adjustment

By Luis A. V. Catão and Solomos N. Solomou

American Economic Review, September 2005

Using a new international dataset of trade-weighed exchange rates, this paper highlights a neglected adjustment mechanism in the classical gold standard literature. Since gold-pegged countries traded extensively with economies operating more flexible mone...

Does Britain or the United States Have the Right Gasoline Tax?

By Ian W. H. Parry and Kenneth A. Small

American Economic Review, September 2005

Uncertainty and Hyperbolic Discounting

By Partha Dasgupta and Eric Maskin

American Economic Review, September 2005

When Optimal Choices Feel Wrong: A Laboratory Study of Bayesian Updating, Complexity, and Affect

By Gary Charness and Dan Levin

American Economic Review, September 2005

Does School Choice Lead to Sorting? Evidence from Tiebout Variation

By Miguel Urquiola

American Economic Review, September 2005

Racial Discrimination in Labor Markets with Posted Wage Offers

By Kevin Lang, Michael Manove, and William T. Dickens

American Economic Review, September 2005

State "Currencies" and the Transition to the U.S. Dollar: Reply-Including a New View from Canada

By Farley W. Grubb

American Economic Review, September 2005

Meetings with Costly Participation: Comment

By Francesco De Sinopoli and Giovanna Iannantuoni

American Economic Review, September 2005

Meetings with Costly Participation: Reply

By Martin J. Osborne, Jeffrey S. Rosenthal, and Matthew A. Turner

American Economic Review, September 2005

Fact-Free Learning

By Enriqueta Aragones, Itzhak Gilboa, Andrew Postlewaite, and David Schmeidler

American Economic Review, December 2005

People may be surprised to notice certain regularities that hold in existing knowledge they have had for some time. That is, they may learn without getting new factual information. We argue that this can be partly explained by computational complexity. We...

Contracting on Time

By Sergei Guriev and Dmitriy Kvasov

American Economic Review, December 2005

The paper shows how time considerations, especially those concerning contract duration, affect incomplete contract theory. Time is not only a dimension along which the relationship unfolds, but also a continuous verifiable variable that can be included in...

A Model of Positive Self-Image in Subjective Assessments

By Luís Santos-Pinto and Joel Sobel

American Economic Review, December 2005

This paper suggests a mechanism that describes individuals' positive self-image in subjective assessments of their relative abilities. The mechanism assumes individuals have heterogeneous production functions that determine ability as a function of multip...

Herding and Contrarian Behavior in Financial Markets: An Internet Experiment

By Mathias Drehmann, Jörg Oechssler, and Andreas Roider

American Economic Review, December 2005

We report results of an Internet experiment designed to test the theory of informational cascades in financial markets (Christopher Avery and Peter Zemsky, 1998). More than 6,400 subjects, including a subsample of 267 consultants from an international con...

Herd Behavior in a Laboratory Financial Market

By Marco Cipriani and Antonio Guarino

American Economic Review, December 2005

We study herd behavior in a laboratory financial market. Subjects receive private information on the fundamental value of an asset and trade it in sequence with a market maker. The market maker updates the asset price according to the history of trades. T...

Services as Experience Goods: An Empirical Examination of Consumer Learning in Automobile Insurance

By Mark Israel

American Economic Review, December 2005

Theoretical work on experience goods sets out three empirical questions. How accurate is information at initial purchase? How rapidly do consumers learn from product experiences? And how much impact does learning have on purchase decisions? I answer these...

A Spatial Theory of Trade

By Esteban Rossi-Hansberg

American Economic Review, December 2005

The equilibrium relationship between trade and the spatial distribution of economic activity is fundamental to the analysis of national and regional trade patterns, as well as to the effect of trade frictions. We study this relationship using a trade mode...

The Macroeconomics of Child Labor Regulation

By Matthias Doepke and Fabrizio Zilibotti

American Economic Review, December 2005

We develop a positive theory of the adoption of child labor laws. Workers who compete with children in the labor market support a child labor ban, unless their own working children provide a large fraction of family income. Fertility decisions lock agents...

How Do Hospitals Respond to Price Changes?

By Leemore S. Dafny

American Economic Review, December 2005

This paper examines hospital responses to changes in diagnosis-specific prices by exploiting a 1988 policy reform that generated large price changes for 43 percent of Medicare admissions. I find hospitals responded primarily by "upcoding" patients to diag...