Quantifying the Supply Response of Private Schools to Public Policies

By Michael Dinerstein and Troy D. Smith

American Economic Review, October 2021

School policies that cause a large demand shift between public and private schooling may cause some private schools to enter or exit the market. We study how the policy effects differ under a fixed versus changing market structure in the context of a publ...

How public policy affects private schools

[Research Highlight]

October 07, 2021

Reforms in funding for New York City’s public schools had consequences for the private school sector.

CSMGEP Profiles: Nina Banks

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The persistence of poverty and insecurity

[Research Highlight]

June 08, 2020

The AEA interviews 2020 John Bates Clark Medalist Melissa Dell.

Front Matter

American Economic Review, November 2021

Bargaining under the Illusion of Transparency

By Kristóf Madarász

American Economic Review, November 2021

This paper studies bargaining with noncommon priors where the buyer projects and exaggerates the probability that her private information may leak to the seller. Letting the buyer name her price first, raises the seller's payoff above his payoff from post...

Incentive Constrained Risk Sharing, Segmentation, and Asset Pricing

By Bruno Biais, Johan Hombert, and Pierre-Olivier Weill

American Economic Review, November 2021

Incentive problems make securities' payoffs imperfectly pledgeable, limiting agents' ability to issue liabilities. We analyze the equilibrium consequences of such endogenous incompleteness in a dynamic exchange economy. Because markets are endogenously in...

Venting Out: Exports during a Domestic Slump

By Miguel Almunia, Pol Antràs, David Lopez-Rodriguez, and Eduardo Morales

American Economic Review, November 2021

We study the relationship between domestic-demand shocks and exports using data for Spanish manufacturing firms in 2002–2013. Exploiting plausibly exogenous geographical variation caused by the Great Recession, we find that firms whose domestic sales de...

The Causal Interpretation of Two-Stage Least Squares with Multiple Instrumental Variables

By Magne Mogstad, Alexander Torgovitsky, and Christopher R. Walters

American Economic Review, November 2021

Empirical researchers often combine multiple instrumental variables (IVs) for a single treatment using two-stage least squares (2SLS). When treatment effects are heterogeneous, a common justification for including multiple IVs is that the 2SLS estimand ...

Labor Supply Responses to Learning the Tax and Benefit Schedule

By Andreas R. Kostøl and Andreas S. Myhre

American Economic Review, November 2021

Despite the implications for policy, empirical evidence on the relative importance of factors that shape labor supply responses is missing. This paper helps fill this gap and quantifies the role of information frictions versus other frictions by combining...

Naïve Learning with Uninformed Agents

By Abhijit Banerjee, Emily Breza, Arun G. Chandrasekhar, and Markus Mobius

American Economic Review, November 2021

The DeGroot model has emerged as a credible alternative to the standard Bayesian model for studying learning on networks, offering a natural way to model naïve learning in a complex setting. One unattractive aspect of this model is the assumption that ...

Constrained Pseudo-Market Equilibrium

By Federico Echenique, Antonio Miralles, and Jun Zhang

American Economic Review, November 2021

We propose a pseudo-market solution to resource allocation problems subject to constraints. Our treatment of constraints is general: including bihierarchical constraints due to considerations of diversity in school choice, or scheduling in course allocati...

Deterring crime with DNA databases

[Research Highlight]

October 26, 2021

Jennifer Doleac discusses the impact of DNA databases on the reduction of recidivism.

The Effects of DNA Databases on the Deterrence and Detection of Offenders

By Anne Sofie Tegner Anker, Jennifer L. Doleac, and Rasmus Landersø

American Economic Journal: Applied Economics, October 2021

This paper studies the effects of adding criminal offenders to a DNA database. Using a large expansion of Denmark's DNA database, we find that DNA registration reduces recidivism within the following year by up to 42 percent. It also increases the probabi...

Front Matter

American Economic Journal: Microeconomics, November 2021

Dynamic Evaluation Design

By Alex Smolin

American Economic Journal: Microeconomics, November 2021

A principal owns a firm, hires an agent of uncertain productivity, and designs a dynamic policy for evaluating his performance. The agent observes ongoing evaluations and decides when to quit. When not quitting, the agent is paid a wage that is linear in ...

Optimal Financial Exclusion

By Cyril Monnet and Erwan Quintin

American Economic Journal: Microeconomics, November 2021

We study efficient exclusion policies in a canonical credit model that features both exogenous and strategic default along the equilibrium path. Policies that maximize welfare in a stationary equilibrium implement exclusion for a finite and deterministic ...

A Delegation-Based Theory of Expertise

By Attila Ambrus, Volodymyr Baranovskyi, and Aaron Kolb

American Economic Journal: Microeconomics, November 2021

We investigate information aggregation and competition in a delegation framework. An uninformed principal is unable to perform a task herself and must choose between one of two biased and imperfectly informed experts. In the focal equilibrium, experts exa...

A Simple Method for Bounding the Elasticity of Growing Demand with Applications to the Analysis of Historic Antitrust Cases

By Wallace P. Mullin and Christopher M. Snyder

American Economic Journal: Microeconomics, November 2021

We propose a simple method, requiring only minimal data, for bounding demand elasticities in growing, homogeneous-product markets. Since growing demand curves cannot cross, shifts in market equilibrium over time can be used to "funnel" the demand curve in...