Money and matriculation

[News]

April 14, 2021

How do household decisions about sending kids to college change after winning the lottery?

AEA Member Announcements: Annual Elections and other Announcements

[News]

April 23, 2021

View member announcements from April 27, 2021.

Estimating Platform Market Power in Two-Sided Markets with an Application to Magazine Advertising

By Minjae Song

American Economic Journal: Microeconomics, May 2021

In two-sided markets, two groups of agents interact through platforms. Because agents' decision to join a platform is affected by the presence of agents on the other side, their interactions create indirect network externalities and make platforms' strate...

Crisis Management in Canada: Analyzing Default Risk and Liquidity Demand during Financial Stress

By Jason Allen, Ali Hortaçsu, and Jakub Kastl

American Economic Journal: Microeconomics, May 2021

Using detailed information from the Canadian interbank payments system and liquidity-providing facilities, we find that despite sustained increases in market-rate spreads, the increase in banks' willingness to pay for liquidity during the 2008–2009 fina...

Competition and Price Transparency in the Market for Lemons: Experimental Evidence

By Olivier Bochet and Simon Siegenthaler

American Economic Journal: Microeconomics, May 2021

In markets with asymmetric information, where equilibria are often inefficient, bargaining can help promote welfare. We design an experiment to examine the impact of competition and price transparency in such settings. Consistent with the theoretical pred...

Fair Utilitarianism

By Marc Fleurbaey and Stéphane Zuber

American Economic Journal: Microeconomics, May 2021

Utilitarianism plays a central role in economics, but there is a gap between theory, where utilitarianism is dominant, and applications, where monetary criteria are often used. For applications, a key difficulty is to define how utilities should be measur...

Revealing Naïveté and Sophistication from Procrastination and Preproperation

By David J. Freeman

American Economic Journal: Microeconomics, May 2021

This paper proposes a novel way of distinguishing whether a person is naive or sophisticated about her own dynamic inconsistency using only her task-completion behavior. It shows that adding an unused extra opportunity to complete a task can lead a naïve...

Exit, Tweets, and Loyalty

By Joshua S. Gans, Avi Goldfarb, and Mara Lederman

American Economic Journal: Microeconomics, May 2021

Hirschman's Exit, Voice, and Loyalty highlights the role of "voice" when individuals confront an unexpected deterioration in quality. Yet, voice has received little attention. To motivate our empirical analysis, we develop a simple model of voice...

Fees, Reputation, and Information Production in the Credit Rating Industry

By Jacopo Bizzotto and Adrien Vigier

American Economic Journal: Microeconomics, May 2021

We compare a credit rating agency's incentives to acquire costly information when it is only paid for giving favorable ratings to the corresponding incentives when the agency is paid up-front, i.e., irrespective of the ratings assigned. We show that, in t...

The Competitive Effects of Transmission Infrastructure in the Indian Electricity Market

By Nicholas Ryan

American Economic Journal: Microeconomics, May 2021

The integration of markets may improve efficiency by lowering costs or reducing local market power. India, seeking to reduce electricity shortages, set up a new power market, in which transmission constraints sharply limit trade between regions. During co...

Learning from Unrealized versus Realized Prices

By M. Kathleen Ngangoué and Georg Weizsäcker

American Economic Journal: Microeconomics, May 2021

Our experiments investigate the extent to which traders learn from the price, differentiating between situations where orders are submitted before versus after the price has realized. In simultaneous markets with bids that are conditional on the price, tr...

Coordinating Public Good Provision by Mediated Communication

By Maija Halonen-Akatwijuka and In-Uck Park

American Economic Journal: Microeconomics, May 2021

We examine a setup where two agents allocate a fixed budget between public goods in two areas. The agents may be biased to one area, which is their private information. Without communication, the funds are allocated inefficiently, resulting in gaps and du...

Common-Value Public Goods and Informational Social Dilemmas

By Caleb A. Cox and Brock Stoddard

American Economic Journal: Microeconomics, May 2021

We experimentally examine private information and communication in a public goods environment with uncertain returns. We consider a common-value public goods game in which the return to contribution is either high or low. Before contributing, three player...

Exponential Satisficing

By Christopher J. Tyson

American Economic Journal: Microeconomics, May 2021

We propose the exponential satisficing model of boundedly rational decision-making, a general-purpose tool designed for use in typical microeconomic applications. The model posits that the preferences perceived and acted upon by the agent are a stochastic...

Front Matter

American Economic Journal: Microeconomics, May 2021

Creating Africa’s own Green Revolution

[Research Highlight]

April 21, 2021

Dean Yang discusses how temporary farming subsidies in Mozambique are giving a massive boost to food production and economic well-being.

Subsidies and the African Green Revolution: Direct Effects and Social Network Spillovers of Randomized Input Subsidies in Mozambique

By Michael Carter, Rachid Laajaj, and Dean Yang

American Economic Journal: Applied Economics, April 2021

The Green Revolution, which bolstered agricultural yields and economic well-being in Asia and Latin America beginning in the 1960s, largely bypassed sub-Saharan Africa. We study the first randomized controlled trial of a government-implemented input subsi...

Auction Research Evolving: Theorems and Market Designs

By Paul Milgrom

American Economic Review, May 2021

Front Matter

American Economic Review, May 2021

Cross-Region Transfer Multipliers in a Monetary Union: Evidence from Social Security and Stimulus Payments

By Steven Pennings

American Economic Review, May 2021

US federal transfers to individuals are large, countercyclical, vary geographically, and are often credited with helping to stabilize regional economies. This paper estimates the short-run effects of these transfers using plausibly exogenous regional vari...