Entrepreneurship as Experimentation

[Symposium: Entrepreneurship]

By William R. Kerr, Ramana Nanda, and Matthew Rhodes-Kropf

Journal of Economic Perspectives, Summer 2014

Entrepreneurship research is on the rise but many questions about the fundamental nature of entrepreneurship still exist. We argue that entrepreneurship is about experimentation; the probabilities of success are low, extremely skewed, and unknowable until...

Seeking the Roots of Entrepreneurship: Insights from Behavioral Economics

[Symposium: Entrepreneurship]

By Thomas Astebro, Holger Herz, Ramana Nanda, and Roberto A. Weber

Journal of Economic Perspectives, Summer 2014

There is a growing body of evidence that many entrepreneurs seem to enter and persist in entrepreneurship despite earning low risk-adjusted returns. This has lead to attempts to provide explanations—using both standard economic theory and behavioral...

The Lewis Model: A 60-Year Retrospective

[Symposium: Classic Ideas in Development]

By Douglas Gollin

Journal of Economic Perspectives, Summer 2014

The Lewis model has remained, for more than half a century, one of the dominant theories of development economics. This paper argues that the power of the model lies in the simplicity of its central insight: that poor countries contain enclaves of economi...

The Missing "Missing Middle"

[Symposium: Classic Ideas in Development]

By Chang-Tai Hsieh and Benjamin A. Olken

Journal of Economic Perspectives, Summer 2014

Although a large literature seeks to explain the "missing middle" of mid-sized firms in developing countries, there is surprisingly little empirical backing for existence of the missing middle. Using microdata on the full distribution of both formal and i...

Informality and Development

[Symposium: Classic Ideas in Development]

By Rafael La Porta and Andrei Shleifer

Journal of Economic Perspectives, Summer 2014

In developing countries, informal firms account for up to half of economic activity. They provide livelihood for billions of people. Yet their role in economic development remains controversial with some viewing informality as pent-up potential and others...

Do Poverty Traps Exist? Assessing the Evidence

[Symposium: Classic Ideas in Development]

By Aart Kraay and David McKenzie

Journal of Economic Perspectives, Summer 2014

A "poverty trap" can be understood as a set of self-reinforcing mechanisms whereby countries start poor and remain poor: poverty begets poverty, so that current poverty is itself a direct cause of poverty in the future. The idea of a poverty trap has this...

Page Limits on Economics Articles: Evidence from Two Journals

[Symposium: Academic Production]

By David Card and Stefano DellaVigna

Journal of Economic Perspectives, Summer 2014

Over the past four decades the median length of the papers published in the "top five" economic journals has grown by nearly 300 percent. We study the effects of a page limit policy introduced by the American Economic Review (AER) in mid...

What Policies Increase Prosocial Behavior? An Experiment with Referees at the Journal of Public Economics

[Symposium: Academic Production]

By Raj Chetty, Emmanuel Saez, and Laszlo Sandor

Journal of Economic Perspectives, Summer 2014

We evaluate policies to increase prosocial behavior using a field experiment with 1,500 referees at the Journal of Public Economics. We randomly assign referees to four groups: a control group with a six-week deadline to submit a referee report; ...

The Effects of an Anti-Grade-Inflation Policy at Wellesley College

[Symposium: Academic Production]

By Kristin F. Butcher, Patrick J. McEwan, and Akila Weerapana

Journal of Economic Perspectives, Summer 2014

Average grades in colleges and universities have risen markedly since the 1960s. Critics express concern that grade inflation erodes incentives for students to learn; gives students, employers, and graduate schools poor information on absolute and relativ...

The Research Productivity of New PhDs in Economics: The Surprisingly High Non-success of the Successful

[Symposium: Academic Production]

By John P. Conley and Ali Sina Önder

Journal of Economic Perspectives, Summer 2014

We study the research productivity of new graduates from North American PhD programs in economics from 1986 to 2000. We find that research productivity drops off very quickly with class rank at all departments, and that the rank of the graduate department...

The Economics of Fair Trade

By Raluca Dragusanu, Daniele Giovannucci, and Nathan Nunn

Journal of Economic Perspectives, Summer 2014

Fair Trade is a labeling initiative aimed at improving the lives of the poor in developing countries by offering better terms to producers and helping them to organize. Although Fair Trade-certified products still comprise a small share of the market&mdas...

Evaluating Counterterrorism Spending

By John Mueller and Mark G. Stewart

Journal of Economic Perspectives, Summer 2014

In this article, we present a simple back-of-the-envelope approach for evaluating whether counterterrorism security measures reduce risk sufficiently to justify their costs. The approach uses only four variables: the consequences of a successful attack, t...

Recommendations for Further Reading

By Timothy Taylor

Journal of Economic Perspectives, Summer 2014

Front Matter

Journal of Economic Perspectives, Summer 2014

Nonlinear Pricing of Storable Goods

By Igal Hendel, Alessandro Lizzeri, and Nikita Roketskiy

American Economic Journal: Microeconomics, August 2014

This paper develops a model of nonlinear pricing of storable goods. We show that storability imposes novel constraints on a monopolist's ability to extract surplus. We then show that the attempt to relax these constraints can generate cyclical patterns in...

Competitive Framing

By Ran Spiegler

American Economic Journal: Microeconomics, August 2014

I present a simple framework for modeling two-firm market competition when consumer choice is "frame-dependent", and firms use costless "marketing messages" to influence the consumer's frame. This framework embeds several recent models in the "behavioral ...

Asymmetric Contests with Head Starts and Nonmonotonic Costs

By Ron Siegel

American Economic Journal: Microeconomics, August 2014

This paper studies equilibrium behavior in a class of games that models asymmetric multiprize competitions in which players' costs need not be strictly increasing in their performance. Such costs accommodate various types of asymmetries, including head st...

Vertical Bargaining and Countervailing Power

By Alberto Iozzi and Tommaso Valletti

American Economic Journal: Microeconomics, August 2014

We study a set of bilateral Nash bargaining problems between an upstream input supplier and several differentiated but competing retailers. If one bilateral bargain fails, the supplier can sell to the other retailers. We show that, in a disagreement, the ...

Local Institutions and the Dynamics of Community Sorting

By Andrea Robbett

American Economic Journal: Microeconomics, August 2014

This paper studies the dynamics by which populations with heterogeneous preferences for public good provision sort themselves into communities. I conduct laboratory experiments to consider which institutions best facilitate efficient self-organization whe...

Selection into Trade and Wage Inequality

By Thomas Sampson

American Economic Journal: Microeconomics, August 2014

This paper analyzes how intra-industry trade affects the wage distribution when both workers and firms are heterogeneous. Positive assortative matching between worker skill and firm technology generates an employer size-wage premium and an exporter wage p...