Bankruptcy Rates among NFL Players with Short-Lived Income Spikes

By Kyle Carlson, Joshua Kim, Annamaria Lusardi, and Colin F. Camerer

American Economic Review, May 2015

We test for consumption smoothing using bankruptcy data on players in the National Football League (NFL), who typically earn several million dollars during an income spike that lasts a few years. The life-cycle hypothesis predicts that players should save...

Principles of (Behavioral) Economics

By David Laibson and John A. List

American Economic Review, May 2015

Behavioral economics has become an important and integrated component of modern economics. Behavioral economists embrace the core principles of economics—optimization and equilibrium—and seek to develop and extend those ideas to make them more...

Teaching a Behavioral Economics Elective: Highlighting the Science of Economics

By Ted O'Donoghue

American Economic Review, May 2015

In this paper, I provide an overview of how one might teach an advanced undergraduate elective on Behavioral Economics. While I focus on the structure and themes from my own course, I also attempt to highlight ways in which instructors might choose an alt...

Behavioral Economics and Public Policy 102: Beyond Nudging

By Saurabh Bhargava and George Loewenstein

American Economic Review, May 2015

Policymakers have recently embraced Behavioral Economics as an alternative approach which recognizes the limits and consequences of human decision-making. Early applications of BE ("nudges") produced notable successes and helped to set the stage for more...

Standing United or Falling Divided? High Stakes Bargaining in a TV Game Show

By Dennie van Dolder, Martijn J. van den Assem, Colin F. Camerer, and Richard H. Thaler

American Economic Review, May 2015

We examine high stakes three-person bargaining in a game show where contestants bargain over a large money amount that is split into three unequal shares. We find that individual behavior and outcomes are strongly influenced by equity concerns: those who ...

Cooperation in a Dynamic Fishing Game: A Framed Field Experiment

By Charles N. Noussair, Daan van Soest, and Jan Stoop

American Economic Review, May 2015

We derive a dynamic theoretical model of renewable resource extraction. In the social optimum, maximum extraction occurs in the last period only, while in the unique subgame perfect Nash equilibrium, the resource is depleted immediately. The predictions a...

I Take Care of My Own: A Field Study on How Leadership Handles Conflict between Individual and Collective Incentives

By Romain Gauriot and Lionel Page

American Economic Review, May 2015

In most collective actions, individuals' incentives are not perfectly aligned with the goals of the group/team they are part of. We investigate how individual specific incentives affect both individuals and team leaders' strategies in a natural setting. W...

Liquidity in Retirement Savings Systems: An International Comparison

By John Beshears, James J. Choi, Joshua Hurwitz, David Laibson, and Brigitte C. Madrian

American Economic Review, May 2015

We compare the liquidity that six developed countries have built into their employer-based defined contribution (DC) retirement schemes. In Germany, Singapore, and the UK, withdrawals are essentially banned no matter what kind of transitory income shock t...

The Composition Effect of Consumption around Retirement: Evidence from Singapore

By Sumit Agarwal, Jessica Pan, and Wenlan Qian

American Economic Review, May 2015

It is well established that consumption is "hump" shaped over an individual's lifecycle, peaking in middle age and then declining in the years that follow. Prior research has documented that consumption declines at retirement, which is inconsistent with t...

Defined Contribution Pension Plans: Mutual Fund Asset Allocation Changes

By Clemens Sialm, Laura Starks, and Hanjiang Zhang

American Economic Review, May 2015

In this paper we compare changes in asset allocations between mutual funds held in defined contribution pension plans and funds held by other investors. We investigate how flows into equity and fixed income mutual funds depend on macroeconomic conditions....

The Retirement Consumption Puzzle in China

By Hongbin Li, Xinzheng Shi, and Binzhen Wu

American Economic Review, May 2015

Using data from China's Urban Household Survey and exploiting China's mandatory retirement policy, we use the regression discontinuity approach to estimate the impact of retirement on household expenditures. Retirement reduces total non-durable expenditur...

Do Private Equity Owned Firms Have Better Management Practices?

By Nicholas Bloom, Raffaella Sadun, and John Van Reenen

American Economic Review, May 2015

Using an innovative survey measure of management practices on over 15,000 firms, we find private equity firms are better managed than government, family, and privately owned firms, and have similar management to publicly listed firms. This is true both in...

Formal Measures in Informal Management: Can a Balanced Scorecard Change a Culture?

By Robert Gibbons and Robert S. Kaplan

American Economic Review, May 2015

We extend traditional agency theory by exploring the roles for formal measures when managerial behavior is not governed by rules, formulas, or contracts. Part I describes relational incentive contracts with informal weights on formal performance measures....

The Real Effects of Relational Contracts

By Steven Blader, Claudine Gartenberg, Rebecca Henderson, and Andrea Prat

American Economic Review, May 2015

Does the "soft side" of management matter? Many managers assert that "firm culture" is strongly correlated with productivity, but there are few robust tests of this assertion. In a set of field experiments, we study driver productivity within a large US l...

The Impact of Ethnic Diversity in Bureaucracies: Evidence from the Nigerian Civil Service

By Imran Rasul and Daniel Rogger

American Economic Review, May 2015

We document the correlation between the workplace diversity in bureaucratic organizations and public service delivery. We do so in the context of Nigeria, where ethnicity is a salient form of self-identity. We thus expand the empirical management literatu...

Do Natural Field Experiments Afford Researchers More or Less Control Than Laboratory Experiments?

By Omar Al-Ubaydli and John A. List

American Economic Review, May 2015

A commonly held view is that laboratory experiments provide researchers with more "control" than natural field experiments. This paper explores how natural field experiments can provide researchers with more control than laboratory experiments. While labo...

Heterogeneous Treatment Effects in Impact Evaluation

By Eva Vivalt

American Economic Review, May 2015

It is very important to know how much we can extrapolate from a study's results. This paper examines the issue using data from impact evaluations in development.

Learning from Experiments When Context Matters

By Lant Pritchett and Justin Sandefur

American Economic Review, May 2015

Suppose a policymaker is interested in the impact of an existing social program. Impact estimates using observational data suffer potential bias, while unbiased experimental estimates are often limited to other contexts. This creates a practical trade-off...

A Measure of Robustness to Misspecification

By Susan Athey and Guido Imbens

American Economic Review, May 2015

Researchers often report estimates and standard errors for the object of interest (such as a treatment effect) based on a single specification of a statistical model. We propose a systematic approach to assessing sensitivity to specification. We construct...

Machine Learning Methods for Demand Estimation

By Patrick Bajari, Denis Nekipelov, Stephen P. Ryan, and Miaoyu Yang

American Economic Review, May 2015

We survey and apply several techniques from the statistical and computer science literature to the problem of demand estimation. To improve out-of-sample prediction accuracy, we propose a method of combining the underlying models via linear regression. Ou...