Markets: Continuity and Change in the International Diamond Market

By Debora L. Spar

Journal of Economic Perspectives, Summer 2006

The international diamond cartel, which presides over the production side of the industry, may be the most successful and longest-lasting cartel in the world. The dominant company in the industry, DeBeers, has been around since 1880 and has been controlle...

Recommendations for Further Reading

By Timothy Taylor

Journal of Economic Perspectives, Summer 2006

Notes

Journal of Economic Perspectives, Summer 2006

Trade, FDI, and the Organization of Firms

By Elhanan Helpman

Journal of Economic Literature, September 2006

New developments in the world economy have triggered research designed to better understand the changes in trade and investment patterns, and the reorganization of production across national borders. Although traditional trade theory has much to offer ...

Extending the Bounds of Rationality: Evidence and Theories of Preferential Choice

By Jörg Rieskamp, Jerome R. Busemeyer, and Barbara A. Mellers

Journal of Economic Literature, September 2006

Most economists define rationality in terms of consistency principles. These principles place “bounds” on rationality—bounds that range from perfect consistency to weak stochastic transitivity. Several decades of research on preferential choice has d...

Reviews of the 2006 Economic Report of the President

By Alan Auerbach, Rebecca Blank, Martin Feldstein, Michael Katz, and Kenneth Rogoff

Journal of Economic Literature, September 2006

The Journal of Economic Literature regularly reviews books of interest to the economics profession. The 2006 Economic Report of the President (ERP) falls under that purview. In the reviews that follow, Martin Feldstein reviews the overview c...

Advancing Beyond Advances in Behavioral Economics

By Drew Fudenberg

Journal of Economic Literature, September 2006

This essay discusses the field of behavioral economics, with a focus on the papers in Advances in Behavioral Economics. These papers show that there is a body of “behavioral facts” that is both economically significant and regular enough to be ...

Behavioral Economics Comes of Age: A Review Essay on Advances in Behavioral Economics

By Wolfgang Pesendorfer

Journal of Economic Literature, September 2006

Advances in Behavioral Economics contains influential second-generation contributions to behavioral economics. Building on the seminal work by Kahnemann, Strotz, Thaler, Tversky, and others, these contributions have established behavioral economi...

Book Reviews

Journal of Economic Literature, September 2006

Annotated Listing of New Books

Journal of Economic Literature, September 2006

JEL Classification System

Journal of Economic Literature, September 2006

An Astonishing Sixty Years: The Legacy of Hiroshima

By Thomas C. Schelling

American Economic Review, September 2006

Multiple Dimensions of Private Information: Evidence from the Long-Term Care Insurance Market

By Amy Finkelstein and Kathleen McGarry

American Economic Review, September 2006

We demonstrate the existence of multiple dimensions of private information in the long-term care insurance market. Two types of people purchase insurance: individuals with private information that they are high risk and individuals with private informa...

Higher-Education Policies and the College Wage Premium: Cross-State Evidence from the 1990s

By Nicole M. Fortin

American Economic Review, September 2006

Exploiting differences across U.S. states, this paper demonstrates that there is a tight link between higher education policies, past enrollment rates, and recent changes in the college wage premium among labor market entrants. The analysis reveals, ho...

What Mean Impacts Miss: Distributional Effects of Welfare Reform Experiments

By Marianne P. Bitler, Jonah B. Gelbach, and Hilary W. Hoynes

American Economic Review, September 2006

Labor supply theory predicts systematic heterogeneity in the impact of recent welfare reforms on earnings, transfers, and income. Yet most welfare reform research focuses on mean impacts. We investigate the importance of heterogeneity using randomassign...

Taxes, Cigarette Consumption, and Smoking Intensity

By Jérôme Adda and Francesca Cornaglia

American Economic Review, September 2006

This paper analyses the compensatory behavior of smokers. Exploiting data on cotinine concentration—a metabolite of nicotine—measured in a large population of smokers over time, we show that smokers compensate for tax hikes by extracting more nicotin...

The Speed of Learning in Noisy Games: Partial Reinforcement and the Sustainability of Cooperation

By Yoella Bereby-Meyer and Alvin E. Roth

American Economic Review, September 2006

In an experiment, players' ability to learn to cooperate in the repeated prisoner's dilemma was substantially diminished when the payoffs were noisy, even though players could monitor one another’s past actions perfectly. In contrast, in one-time play...

Costly Information Acquisition: Experimental Analysis of a Boundedly Rational Model

By Xavier Gabaix, David Laibson, Guillermo Moloche, and Stephen Weinberg

American Economic Review, September 2006

The directed cognition model assumes that agents use partially myopic option-value calculations to select their next cognitive operation. The current paper tests this model by studying information acquisition in two experiments. In the first experiment,...

Individual Preferences, Monetary Gambles, and Stock Market Participation: A Case for Narrow Framing

By Nicholas Barberis, Ming Huang, and Richard H. Thaler

American Economic Review, September 2006

We argue that “narrow framing,” whereby an agent who is offered a new gamble evaluates that gamble in isolation, may be a more important feature of decisionmaking than previously realized. Our starting point is the evidence that people are often aver...

A Model of Forum Shopping

By Josh Lerner and Jean Tirole

American Economic Review, September 2006

Owners of intellectual property or mere sponsors of an idea (e.g., authors, security issuers, sponsors of standards) resort to more or less independent certifiers to persuade potential users (buyers or adopters) of the worth of their property or idea. W...