Trade with Correlation

By Nelson Lind and Natalia Ramondo

American Economic Review, February 2023

We develop a trade model with correlation in productivity across countries. The model spans the full class of generalized extreme value import demand systems and implies that countries with relatively dissimilar technology gain more from trade. In the con...

Enabling or Limiting Cognitive Flexibility? Evidence of Demand for Moral Commitment

By Silvia Saccardo and Marta Serra-Garcia

American Economic Review, February 2023

Moral behavior is more prevalent when individuals cannot easily distort their beliefs self-servingly. Do individuals seek to limit or enable their ability to distort beliefs? How do these choices affect behavior? Experiments with over 9,000 participants s...

Droughts, Deluges, and (River) Diversions: Valuing Market-Based Water Reallocation

By Will Rafey

American Economic Review, February 2023

This paper develops and applies a method to value water trading on a river network. The framework relies on regulatory variation in diversion caps to identify production functions for irrigated farms, then uses the estimated shadow values to assess the ma...

Technology Gaps, Trade, and Income

By Thomas Sampson

American Economic Review, February 2023

This paper quantifies the contribution of technology gaps to international income inequality. I develop an endogenous growth model where cross-country differences in R&D efficiency and cross-industry differences in innovation and adoption opportunities to...

Technological Change and the Consequences of Job Loss

By J. Carter Braxton and Bledi Taska

American Economic Review, February 2023

We examine the role of technological change in explaining the large and persistent decline in earnings following job loss. Using detailed skill requirements from the near universe of online vacancies, we estimate technological change by occupation and fin...

Electronic Food Vouchers: Evidence from an At-Scale Experiment in Indonesia

By Abhijit Banerjee, Rema Hanna, Benjamin A. Olken, Elan Satriawan, and Sudarno Sumarto

American Economic Review, February 2023

We compare how in-kind food assistance and an electronic voucher-based program affect the delivery of aid in practice. The Government of Indonesia randomized across 105 districts the transition from in-kind rice to approximately equivalent electronic vouc...

Constrained-Efficient Capital Reallocation

By Andrea Lanteri and Adriano A. Rampini

American Economic Review, February 2023

We characterize efficiency in an equilibrium model of investment and capital reallocation with heterogeneous firms facing collateral constraints. The model features two types of pecuniary externalities: collateral externalities, because the resale price o...

The Voice of Monetary Policy

By Yuriy Gorodnichenko, Tho Pham, and Oleksandr Talavera

American Economic Review, February 2023

We develop a deep learning model to detect emotions embedded in press conferences after the Federal Open Market Committee meetings and examine the influence of the detected emotions on financial markets. We find that, after controlling for the Federal Res...

War, trade, and social ties

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Does armed conflict reduce trade through the erosion of intergroup trust?

Front Matter

American Economic Journal: Microeconomics, February 2023

Alert the Inert? Switching Costs and Limited Awareness in Retail Electricity Markets

By Luisa Dressler and Stefan Weiergraeber

American Economic Journal: Microeconomics, February 2023

We quantify how switching costs and limited awareness affect consumer inertia in liberalized retail electricity markets by developing and estimating a structural demand model using a novel dataset on electricity contract choices in Belgium. Our data allow...

Two-Stage Contests with Private Information

By Greg Kubitz

American Economic Journal: Microeconomics, February 2023

In perfectly discriminating contests with private information, low-ability contestants prefer to appear strong, while high-ability contestants prefer to appear weak. In a two-stage contest, this leads to a unique symmetric equilibrium with partial pooling...

The Effects of Time Preferences on Cooperation: Experimental Evidence from Infinitely Repeated Games

By Jeongbin Kim

American Economic Journal: Microeconomics, February 2023

This paper studies the effects of time preferences on cooperation in an infinitely repeated prisoner's dilemma game experiment. Subjects play repeated games in the lab, all decisions at once, but stage game payoffs are paid over an extended period of time...

When Is a Contrarian Adviser Optimal?

By Robert Evans and Sönje Reiche

American Economic Journal: Microeconomics, February 2023

We compare contrarian to conformist advice, a contrarian expert being one whose preference bias is against the decision-maker's prior optimal decision. Optimality of an expert depends on characteristics of prior information and learning. If either the exp...

Censorship and Reputation

By Daniel N. Hauser

American Economic Journal: Microeconomics, February 2023

I study how a firm manages its reputation by both investing in the quality of its product and censoring, hiding bad news from consumers. Without censorship, the threat of bad news provides strong incentives for investment. I highlight discontinuities in t...

Ten Isn't Large! Group Size and Coordination in a Large-Scale Experiment

By Jasmina Arifovic, Cars Hommes, Anita Kopányi-Peuker, and Isabelle Salle

American Economic Journal: Microeconomics, February 2023

We provide experimental evidence on coordination within large groups that could proxy the atomistic nature of real-world markets. We use a bank run game where the two pure-strategy equilibria can be ranked by payoff and risk dominance and a sequence of pu...

Product Quality and Consumer Search

By José L. Moraga-González and Yajie Sun

American Economic Journal: Microeconomics, February 2023

An increase in quality shifts up the distribution of match utilities offered by firms and makes consumers pickier. The number of products that consumers inspect does not necessarily increase in quality. Higher search costs may lead to less quality investm...

Compatibility Choices, Switching Costs, and Data Portability

By Doh-Shin Jeon, Domenico Menicucci, and Nikrooz Nasr

American Economic Journal: Microeconomics, February 2023

We study mix-and-match compatibility choices of firms selling complementary products in a dynamic setting. Contrary to what happens in a static setting where symmetric firms choose compatibility (Matutes and Regibeau 1988), when switching costs are high a...

Price Transparency, Media, and Informative Advertising

By Itai Ater and Oren Rigbi

American Economic Journal: Microeconomics, February 2023

We study the effects of a price transparency regulation in Israeli supermarkets. Using price data collected before and after the regulation and a difference-in-difference research design, we show that price levels and price dispersion declined significant...

Sequential Learning

By Yair Antler, Daniel Bird, and Santiago Oliveros

American Economic Journal: Microeconomics, February 2023

We develop a model in which two players sequentially and publicly examine a project. In our model the player who moves first can fabricate evidence to influence the second mover, which creates a moral hazard problem. We find that early strategic uncertain...