Inferring Rationales from Choice: Identification for Rational Shortlist Methods

By Rohan Dutta and Sean Horan

American Economic Journal: Microeconomics, November 2015

A wide variety of choice behavior inconsistent with preference maximization can be explained by Manzini and Mariotti's Rational Shortlist Methods. Choices are made by sequentially applying a pair of asymmetric binary relations (rationales) to eliminate in...

Group Polarization in a Model of Information Aggregation

By Nicolas Roux and Joel Sobel

American Economic Journal: Microeconomics, November 2015

Experiments identify the empirical regularity that groups tend to make decisions that are more extreme, but in the same direction as the tendency of individual members of the group. We present a model of information aggregation consistent with these findi...

Beneficial Long Communication in the Multiplayer Electronic Mail Game

By Kris De Jaegher

American Economic Journal: Microeconomics, November 2015

In the two-player electronic mail game (EMG), as is well-known, the probability of collective action is lower the more confirmations and reconfirmations are made available to players. In the multiplayer EMG, however, we show players may coordinate on equi...

Mechanisms for Repeated Trade

By Andrzej Skrzypacz and Juuso Toikka

American Economic Journal: Microeconomics, November 2015

How does feasibility of efficient repeated trade depend on the features of the environment such as persistence of values, private information about their evolution, or trading frequency? We derive a necessary and sufficient condition for efficient, unsubs...

Bankruptcy: Is It Enough to Forgive or Must We Also Forget?

By Ronel Elul and Piero Gottardi

American Economic Journal: Microeconomics, November 2015

In many countries, lenders are restricted in their access to information about borrowers' past defaults. We study this provision in a model of repeated borrowing and lending with moral hazard and adverse selection. We analyze its effects on borrowers' inc...

Majority Rule and Utilitarian Welfare

By Vijay Krishna and John Morgan

American Economic Journal: Microeconomics, November 2015

We study the welfare properties of majority and supermajority rules when voting is costly and values, costs, and electorate sizes are all random. Unlike previous work, where the electorate size was either fixed or Poisson distributed, and exhibited no lim...

Front Matter

American Economic Journal: Microeconomics, November 2015

Only One Tree from Each Seed? Environmental Effectiveness and Poverty Alleviation in Mexico's Payments for Ecosystem Services Program

By Jennifer M. Alix-Garcia, Katharine R. E. Sims, and Patricia Yañez-Pagans

American Economic Journal: Economic Policy, November 2015

Environmental conditional cash transfers are popular but their impacts are not well understood. We evaluate land cover and wealth impacts of a federal program that pays landowners for protecting forest. Panel data for program beneficiaries and rejected ap...

The Effects of Medicare on Medical Expenditure Risk and Financial Strain

By Silvia Helena Barcellos and Mireille Jacobson

American Economic Journal: Economic Policy, November 2015

Medicare offers substantial protection from medical expenditure risk, protection that has increased in recent years. At age 65, out-of-pocket expenditures drop by 33 percent at the mean and 53 percent at the ninety-fifth percentile. Medical-related financ...

The Impact of Regulation on Mortgage Risk: Evidence from India

By John Y. Campbell, Tarun Ramadorai, and Benjamin Ranish

American Economic Journal: Economic Policy, November 2015

We employ loan-level data on over a million loans disbursed in India between 1995 and 2010 to understand how fast-changing regulation impacted mortgage lending and risk. Our paper uses changes in regulatory treatment discontinuities associated with loan s...

Identity-Based Policies and Identity Manipulation: Evidence from Colonial Punjab

By Guilhem Cassan

American Economic Journal: Economic Policy, November 2015

I study identity-marker based policies and demonstrate the existence of identity manipulation. I analyze the impact of the Punjab Alienation of Land Act (1901), a caste-based legislation, on identity manipulation. Using data from the colonial census, I sh...

Tax Compliance and Loss Aversion

By Per Engström, Katarina Nordblom, Henry Ohlsson, and Annika Persson

American Economic Journal: Economic Policy, November 2015

We study if taxpayers are loss averse when filing returns. Preliminary deficits might be viewed as losses assuming zero preliminary balances as reference points. Swedish taxpayers can to try to escape such losses by claiming deductions after receiving inf...

How Much Are Public School Teachers Willing to Pay for Their Retirement Benefits?

By Maria Donovan Fitzpatrick

American Economic Journal: Economic Policy, November 2015

Public sector employees receive large fractions of their lifetime income in the form of deferred compensation. The introduction of the opportunity provided to Illinois public school employees to purchase additional pension benefits allows me to estimate e...

Trade and Investment under Policy Uncertainty: Theory and Firm Evidence

By Kyle Handley and Nuno Limão

American Economic Journal: Economic Policy, November 2015

In a dynamic model with sunk export costs, a firm's export investment is lower under trade policy uncertainty, and credible preferential trade agreements (PTAs) increase trade even if current tariffs are low. Exploring Portugal's accession to the European...

Water Pollution Progress at Borders: The Role of Changes in China's Political Promotion Incentives

By Matthew E. Kahn, Pei Li, and Daxuan Zhao

American Economic Journal: Economic Policy, November 2015

At political boundaries, local leaders have weak incentives to reduce polluting activity because the social costs are borne by downstream neighbors. This paper exploits a natural experiment set in China in which the central government changed the local po...

Assessing the Welfare Effects of Unemployment Benefits Using the Regression Kink Design

By Camille Landais

American Economic Journal: Economic Policy, November 2015

I show how, in the tradition of the dynamic labor supply literature, one can identify the moral hazard effects and liquidity effects of unemployment insurance (UI) using variations along the time profile of unemployment benefits. I use this strategy to in...

The Best of Times, the Worst of Times: Understanding Pro-cyclical Mortality

By Ann H. Stevens, Douglas L. Miller, Marianne E. Page, and Mateusz Filipski

American Economic Journal: Economic Policy, November 2015

It is well-known that mortality rates are pro-cyclical. In this paper, we attempt to understand why. We find little evidence that cyclical changes in individuals' own employment-related behavior drives the relationship; own-group employment rates are not ...

Front Matter

American Economic Journal: Economic Policy, November 2015

On the Verges of Overconfidence

[Symposium: Overconfidence]

By Ulrike Malmendier and Timothy Taylor

Journal of Economic Perspectives, Fall 2015

This symposium provides several examples of overconfidence in certain economic contexts. Michael Grubb looks at "Overconfident Consumers in the Marketplace." Ulrike Malmendier and Geoffrey Tate consider "Behavioral CEOs: The Role of Managerial Overc...

Overconfident Consumers in the Marketplace

[Symposium: Overconfidence]

By Michael D. Grubb

Journal of Economic Perspectives, Fall 2015

The term overconfidence is used broadly in the psychology literature, referring to both overoptimism and overprecision. Overoptimistic individuals overestimate their own abilities or prospects. In contrast, overprecise individuals place overly narro...