Happiness and Time Preference: The Effect of Positive Affect in a Random-Assignment Experiment

By John Ifcher and Homa Zarghamee

American Economic Review, December 2011

We conduct a random-assignment experiment to investigate whether positive affect impacts time preference, where time preference denotes a preference for present over future utility. Our result indicates that, compared to neutral affect, mild positive affe...

Who Thinks about the Competition? Managerial Ability and Strategic Entry in US Local Telephone Markets

By Avi Goldfarb and Mo Xiao

American Economic Review, December 2011

We examine US local telephone markets shortly after the Telecommunications Act of 1996. The data suggest that more experienced, better-educated managers tend to enter markets with fewer competitors. This motivates a structural econometric model based on ...

Buffalo Hunt: International Trade and the Virtual Extinction of the North American Bison

By M. Scott Taylor

American Economic Review, December 2011

In the sixteenth century, North America contained 25 to 30 million buffalo; by the late nineteenth century fewer than 100 remained. While removing the buffalo east of the Mississippi took over 100 years, the remaining 10 to 15 million buffalo on the Great...

Extreme Walrasian Dynamics: The Gale Example in the Lab

By Sean Crockett, Ryan Oprea, and Charles Plott

American Economic Review, December 2011

We study David Gale's (1963) economy using laboratory markets. Tatonnement theory predicts prices will diverge from an equitable interior equilibrium toward infinity or zero depending only on initial prices. The inequitable equilibria determined by the...

The Slave Trade and the Origins of Mistrust in Africa

By Nathan Nunn and Leonard Wantchekon

American Economic Review, December 2011

We show that current differences in trust levels within Africa can be traced back to the transatlantic and Indian Ocean slave trades. Combining contemporary individual-level survey data with historical data on slave shipments by ethnic group, we find that...

Media and Political Persuasion: Evidence from Russia

By Ruben Enikolopov, Maria Petrova, and Ekaterina Zhuravskaya

American Economic Review, December 2011

This paper compares electoral outcomes of 1999 parliamentary elections in Russia among geographical areas with differential access to the only national TV channel independent from the government. It was available to three-quarters of Russia's population a...

The Consequences of Radical Reform: The French Revolution

By Daron Acemoglu, Davide Cantoni, Simon Johnson, and James A. Robinson

American Economic Review, December 2011

The French Revolution had a momentous impact on neighboring countries. It removed the legal and economic barriers protecting oligarchies, established the principle of equality before the law, and prepared economies for the new industrial opportunities of ...

Trends in Employment and Earnings of Allowed and Rejected Applicants to the Social Security Disability Insurance Program

By Till von Wachter, Jae Song, and Joyce Manchester

American Economic Review, December 2011

Longitudinal administrative data show that rejected male applicants to the Disability Insurance (DI) program who are younger or have low-mortality impairments such as back pain and mental health problems exhibit substantial labor force attachment. While w...

Relative Earnings and Giving in a Real-Effort Experiment

By Nisvan Erkal, Lata Gangadharan, and Nikos Nikiforakis

American Economic Review, December 2011

This paper investigates the relationship between relative earnings and giving in a two-stage, real-effort experiment. In the first stage, four players compete in a tournament that determines their earnings. In the second stage, they decide whether to make...

Relational Contracts and the Value of Loyalty

By Simon Board

American Economic Review, December 2011

This paper characterizes the optimal contract for a principal who repeatedly chooses among N potential agents under the threat of holdup. Over time, the principal would like to trade with different agents; however, the possibility of ex-post opportunism a...

Automobiles on Steroids: Product Attribute Trade-Offs and Technological Progress in the Automobile Sector

By Christopher R. Knittel

American Economic Review, December 2011

This paper estimates the technological progress that has occurred since 1980 in the automobile industry and the trade-offs faced when choosing between fuel economy, weight, and engine power characteristics. The results suggest that if weight, horsepower, ...

Overborrowing and Systemic Externalities in the Business Cycle

By Javier Bianchi

American Economic Review, December 2011

Credit constraints linking debt to market-determined prices embody a systemic credit externality that drives a wedge between competitive and constrained socially optimal equilibria, inducing private agents to overborrow. This externality arises because pr...

Stakes Matter in Ultimatum Games

By Steffen Andersen, Seda Ertaç, Uri Gneezy, Moshe Hoffman, and John A. List

American Economic Review, December 2011

One of the most robust findings in experimental economics is that individuals in one-shot ultimatum games reject unfair offers. Puzzlingly, rejections have been found robust to substantial increases in stakes. By using a novel experimental design that eli...

US International Equity Investment and Past and Prospective Returns

By Stephanie E. Curcuru, Charles P. Thomas, Francis E. Warnock, and Jon Wongswan

American Economic Review, December 2011

Counter to extant stylized facts, using newly available data on country allocations in US investors' foreign equity portfolios we find that (i) US investors do not exhibit returns-chasing behavior, but, consistent with partial portfolio rebalancing, tend ...

The Cross Section of Foreign Currency Risk Premia and Consumption Growth Risk: Comment

By Craig Burnside

American Economic Review, December 2011

Lustig and Verdelhan (2007) argue that the excess returns to borrowing US dollars and lending in foreign currency "compensate US investors for taking on more US consumption growth risk," yet the stochastic discount factor corresponding to their benchmark ...

The Cross-Section of Foreign Currency Risk Premia and Consumption Growth Risk: Reply

By Hanno Lustig and Adrien Verdelhan

American Economic Review, December 2011

The consumption growth beta of an investment strategy that goes long in high interest rate currencies and short in low interest rate currencies is large and significant. Consumption risk price differs significantly from zero, even after accounting for the...

Front Matter

Journal of Economic Literature, December 2011

Nonlinear Models of Measurement Errors

By Xiaohong Chen, Han Hong, and Denis Nekipelov

Journal of Economic Literature, December 2011

Measurement errors in economic data are pervasive and nontrivial in size. The presence of measurement errors causes biased and inconsistent parameter estimates and leads to erroneous conclusions to various degrees in economic analysis. While linear errors...

Sign Restrictions in Structural Vector Autoregressions: A Critical Review

By Renée Fry and Adrian Pagan

Journal of Economic Literature, December 2011

The paper provides a review of the estimation of structural vector autoregressions with sign restrictions. It is shown how sign restrictions solve the parametric identification problem present in structural systems but leaves the model identification prob...

Labor Supply and Taxes: A Survey

By Michael P. Keane

Journal of Economic Literature, December 2011

I survey the male and female labor supply literatures, focusing on implications for effects of wages and taxes. For males, I describe and contrast results from three basic types of model: static models (especially those that account for nonlinear taxes), ...