From Peer Pressure to Biased Norms

By Moti Michaeli and Daniel Spiro

American Economic Journal: Microeconomics, February 2017

This paper studies a coordination game between a continuum of players with heterogeneous tastes who perceive peer pressure when behaving differently from each other. It characterizes the conditions under which a social norm--a mode of behavior followed by...

Power Dynamics in Organizations

By Jin Li, Niko Matouschek, and Michael Powell

American Economic Journal: Microeconomics, February 2017

We examine an infinitely repeated game between a principal, who has the formal authority to decide on a project, and a biased agent, who is privately informed about what projects are available. The optimal relational contract speaks to how power is earned...

Incentives for Quality in Friendly and Hostile Informational Environments

By Pierre Fleckinger, Matthieu Glachant, and Gabrielle Moineville

American Economic Journal: Microeconomics, February 2017

We develop a model of costly quality provision under biased disclosure. We define as friendly an environment in which the disclosure probability increases with quality, and as hostile an environment in which the opposite holds. Hostile environments produc...

Discrimination via Symmetric Auctions

By Rahul Deb and Mallesh M. Pai

American Economic Journal: Microeconomics, February 2017

Discrimination (for instance, along the lines of race or gender) is often prohibited in auctions. This is legally enforced by preventing the seller from explicitly biasing the rules in favor of bidders from certain groups (for example, by subsidizing thei...

A Theory of Patent Portfolios

By Jay Pil Choi and Heiko Gerlach

American Economic Journal: Microeconomics, February 2017

This paper develops a theory of patent portfolios in which firms accumulate an enormous amount of related patents, which makes it impractical to develop new products that avoid inadvertent infringement. We show that patent peace arises if product market c...

Matching Patterns When Group Size Exceeds Two

By Christian Ahlin

American Economic Journal: Microeconomics, February 2017

We study one-sided matching when groups with n > 2 members are being formed. Type-complementarity rules out all but the rank-ordered grouping. Type-substitutability (for example, matching to share risk) rules out much less. It requires that every two g...

Front Matter

American Economic Journal: Economic Policy, February 2017

When Labor Disputes Bring Cities to a Standstill: The Impact of Public Transit Strikes on Traffic, Accidents, Air Pollution, and Health

By Stefan Bauernschuster, Timo Hener, and Helmut Rainer

American Economic Journal: Economic Policy, February 2017

Many governments have banned strikes in public transportation. Whether this can be justified depends on whether strikes endanger public safety or health. We use time-series and cross-sectional variation in powerful registry data to quantify the effects of...

Technological Change and Risk Adjustment: Benefit Design Incentives in Medicare Part D

By Colleen Carey

American Economic Journal: Economic Policy, February 2017

Subsidized health insurance markets use diagnosis-based risk adjustment to induce insurers to offer an equitable benefit to individuals of varying expected cost. I demonstrate that technological change after risk adjustment calibration--new drug entry and...

Housing Supply Elasticity and Rent Extraction by State and Local Governments

By Rebecca Diamond

American Economic Journal: Economic Policy, February 2017

Governments may extract rent from private citizens by inflating taxes and spending on projects benefiting special interests. Using a spatial equilibrium model, I show that less elastic housing supplies increase governments' abilities to extract rents. Ine...

Gridlock: Ethnic Diversity in Government and the Provision of Public Goods

By Brian Beach and Daniel B. Jones

American Economic Journal: Economic Policy, February 2017

How does ethnic diversity in government impact public good provision? We construct a novel dataset linking the ethnicity of California city council candidates to election outcomes and expenditure decisions. Using a regression discontinuity approach, we fi...

Understanding Consumption Behavior: Evidence from Consumers' Reaction to Shopping Vouchers

By Kamhon Kan, Shin-Kun Peng, and Ping Wang

American Economic Journal: Economic Policy, February 2017

This paper advances our understanding of consumption behavior using the 2009 Taiwan Shopping Voucher Program. This program was universal and well publicized, and its payment to each individual was medium-sized. Based on survey data, it is found that the m...

Does It Pay to Know Prices in Health Care?

By Ethan M. J. Lieber

American Economic Journal: Economic Policy, February 2017

Consumers rarely know the price of medical care before they consume it. I use variation in the timing of access to a new source of price information to show how access to and search for price information leads consumers to pay significantly less for care....

Fighting Corruption in Education: What Works and Who Benefits?

By Oana Borcan, Mikael Lindahl, and Andreea Mitrut

American Economic Journal: Economic Policy, February 2017

We investigate the distributional consequences of a corruption-fighting initiative in Romania targeting the endemic fraud in a high-stakes high school exit exam, which introduced CCTV monitoring of the exam and credible punishment threats for teachers and...

The Interest Rate Elasticity of Mortgage Demand: Evidence from Bunching at the Conforming Loan Limit

By Anthony A. DeFusco and Andrew Paciorek

American Economic Journal: Economic Policy, February 2017

This paper provides novel estimates of the interest rate elasticity of mortgage demand by measuring the degree of bunching in response to a discrete jump in interest rates at the conforming loan limit--the maximum loan size eligible for purchase by Fannie...

Eligibility Recertification and Dynamic Opt-In Incentives in Income-Tested Social Programs: Evidence from Medicaid/CHIP

By Zhuan Pei

American Economic Journal: Economic Policy, February 2017

Conventional labor supply studies assume constant eligibility monitoring of income-tested program participants, but the time between two consecutive eligibility certifications (the "recertification period") can be as long as a year for Medicaid/CHIP recip...

Are Information Disclosures Effective? Evidence from the Credit Card Market

By Enrique Seira, Alan Elizondo, and Eduardo Laguna-Müggenburg

American Economic Journal: Economic Policy, February 2017

Consumer protection in financial markets in the form of information disclosure is high on government agendas, even though there is little evidence of its effectiveness. We implement a randomized control trial in the credit card market for a large populati...

Heterogeneity, Demand for Insurance, and Adverse Selection

By Johannes Spinnewijn

American Economic Journal: Economic Policy, February 2017

Recent evidence underlines the importance of demand frictions distorting insurance choices. Heterogeneous frictions cause the willingness to pay for insurance to be biased upward (relative to value) for those purchasing insurance, but downward for those w...

The Vulnerability of Minority Homeowners in the Housing Boom and Bust: Corrigendum

By Patrick Bayer, Fernando Ferreira, and Stephen L. Ross

American Economic Journal: Economic Policy, February 2017

Front Matter

Journal of Economic Perspectives, Winter 2017