The Origin of the Winner's Curse: A Laboratory Study

By Gary Charness and Dan Levin

American Economic Journal: Microeconomics, February 2009

The Winner's Curse (WC) is a robust and persistent deviation from theoretical predictions established in experimental economics and claimed to exist in field environments. Recent attempts to reconcile such deviation include "cursed equilibrium" and lev...

Reputational Incentives for Restaurant Hygiene

By Ginger Zhe Jin and Phillip Leslie

American Economic Journal: Microeconomics, February 2009

How can consumers be assured that firms will endeavor to provide good quality when quality is unobservable prior to purchase? We test the hypothesis that reputational incentives are effective at causing restaurants to maintain good hygiene quality. We ...

Front Matter

American Economic Journal: Microeconomics, February 2009

Editor's Note

By Alan J. Auerbach

American Economic Journal: Economic Policy, February 2009

Optimal Tax Design and Enforcement with an Informal Sector

By Robin Boadway and Motohiro Sato

American Economic Journal: Economic Policy, February 2009

An optimal commodity tax approach is taken to compare trade taxes and VATs when some commodities are produced informally. Trade taxes apply to all imports and exports, including intermediate goods, while the VAT applies only to sales by the formal sect...

A Theory of Urban Squatting and Land-Tenure Formalization in Developing Countries

By Jan K. Brueckner and Harris Selod

American Economic Journal: Economic Policy, February 2009

This paper offers a new theoretical approach to urban squatting, reflecting the view that squatters and formal residents compete for land within a city. The key implication is that squatters "squeeze" the formal market, raising the price paid by formal...

Technology's Edge: The Educational Benefits of Computer-Aided Instruction

By Lisa Barrow, Lisa Markman, and Cecilia Elena Rouse

American Economic Journal: Economic Policy, February 2009

We present results from a randomized study of a well-defined use of computers in schools, a popular instructional computer program for pre-algebra and algebra. We primarily assess the program using a test designed to target pre-algebra and algebra skil...

Housing, Health, and Happiness

By Matias D. Cattaneo, Sebastian Galiani, Paul J. Gertler, Sebastian Martinez, and Rocio Titiunik

American Economic Journal: Economic Policy, February 2009

We investigate the impact of a large-scale Mexican program to replace dirt floors with cement floors on child health and adult happiness. We find that replacing dirt floors with cement significantly improves the health of young children measured by dec...

Greenhouse Gas Reductions under Low Carbon Fuel Standards?

By Stephen P. Holland, Jonathan E. Hughes, and Christopher R. Knittel

American Economic Journal: Economic Policy, February 2009

A low carbon fuel standard (LCFS) seeks to reduce greenhouse gas emissions by limiting the carbon intensity of fuels. We show this decreases high carbon fuel production but increases low carbon fuel production, possibly increasing net carbon emissions....

An Empirical Framework for Large-Scale Policy Analysis, with an Application to School Finance Reform in Michigan

By Maria Marta Ferreyra

American Economic Journal: Economic Policy, February 2009

In this paper, I develop an empirical framework for the analysis of large-scale policies, and apply it to study the effects of school finance reform on the Detroit metropolitan area. Exploiting school finance reform in Michigan in 1994, I estimate a ge...

Domestic Effects of the Foreign Activities of US Multinationals

By Mihir A. Desai, C. Fritz Foley, and James R. Hines

American Economic Journal: Economic Policy, February 2009

Do firms investing abroad simultaneously reduce their domestic activity? This paper analyzes the relationship between the domestic and foreign operations of US manufacturing firms between 1982 and 2004 by instrumenting for changes in foreign operations...

Details Matter: The Impact of Presentation and Information on the Take-Up of Financial Incentives for Retirement Saving

By Emmanuel Saez

American Economic Journal: Economic Policy, February 2009

We examine the effects of presentation and information on the take-up of financial subsidies for retirement saving in a large randomized experiment carried out with H&R Block. The subsidies raise take-up and contributions with larger effects when the s...

Who Misvotes? The Effect of Differential Cognition Costs on Election Outcomes

By Kelly Shue and Erzo F. P. Luttmer

American Economic Journal: Economic Policy, February 2009

If voters have negligible cognition costs, ballot layout should not affect election outcomes. We explore deviations from rational voting using quasi-random variation in candidate name placement on ballots from the 2003 California recall election. We fi...

Altruism and the Child Cycle of Alumni Donations

By Jonathan Meer and Harvey S. Rosen

American Economic Journal: Economic Policy, February 2009

We study alumni contributions to an anonymous research university. If alumni believe donations will increase the likelihood of their child's admission, and if this belief helps motivate their giving, then the pattern of giving should vary systematicall...

Front Matter

American Economic Journal: Economic Policy, February 2009

Governance Institutions and Economic Activity

By Avinash Dixit

American Economic Review, March 2009

Taxing Capital? Not a Bad Idea after All!

By Juan Carlos Conesa, Sagiri Kitao, and Dirk Krueger

American Economic Review, March 2009

We quantitatively characterize the optimal capital and labor income tax in an overlapping generations model with idiosyncratic, uninsurable income shocks and permanent productivity differences of households. The optimal capital income tax rate is signi...

Liquidity Constraints and Imperfect Information in Subprime Lending

By William Adams, Liran Einav, and Jonathan Levin

American Economic Review, March 2009

We present new evidence on consumer liquidity constraints and the credit market conditions that might give rise to them. We analyze unique data from a large auto sales company serving the subprime market. Short-term liquidity appears to be a key driver...

Estate Taxation, Entrepreneurship, and Wealth

By Marco Cagetti and Mariacristina De Nardi

American Economic Review, March 2009

This paper studies the estate tax in a quantitative framework with business investment, borrowing constraints, estate transmission, and wealth inequality. We find that the estate tax has little effect on the saving and investment decisions of small bus...

Peers at Work

By Alexandre Mas and Enrico Moretti

American Economic Review, March 2009

We study peer effects in the workplace. Specifically, we investigate whether, how, and why the productivity of a worker depends on the productivity of coworkers in the same team. Using high-frequency data on worker productivity from a large supermarket...