Excessive Financing Costs in a Representative Agent Framework

By Maya Eden

American Economic Journal: Macroeconomics, April 2016

This paper highlights a pecuniary externality that results in excessive financing costs. Firms borrow to finance purchases of an inelastically supplied input, bidding up its price. Since higher input prices necessitate more debt obligations, this leads to...

Front Matter

American Economic Journal: Macroeconomics, April 2016

Front Matter

American Economic Journal: Microeconomics, May 2016

Detecting Bidders Groups in Collusive Auctions

By Timothy G. Conley and Francesco Decarolis

American Economic Journal: Microeconomics, May 2016

We study entry and bidding in procurement auctions where contracts are awarded to the bid closest to a trimmed average bid. These auctions, common in public procurement, create incentives to coordinate bids to manipulate the bid distribution. We presen...

Separating Bayesian Updating from Non-Probabilistic Reasoning: An Experimental Investigation

By Dan Levin, James Peck, and Asen Ivanov

American Economic Journal: Microeconomics, May 2016

Through a series of decision tasks involving colored cards, we provide separate measures of Bayesian updating and non-probabilistic reasoning skills. We apply these measures to (and are the first to study) a common-value Dutch auction. This format is m...

Flip-Flopping, Primary Visibility, and the Selection of Candidates

By Marina Agranov

American Economic Journal: Microeconomics, May 2016

We present an incomplete information model of two-stage elections in which candidates can choose different platforms in primaries and general elections. Voters do not directly observe the chosen platforms, but infer the candidates’ ideologies from ob...

Generalized Systematic Risk

By Ohad Kadan, Fang Liu, and Suying Liu

American Economic Journal: Microeconomics, May 2016

We generalize the concept of "systematic risk" to a broad class of risk measures potentially accounting for high distribution moments, downside risk, rare disasters, as well as other risk attributes. We offer two different approaches. First is an equil...

Unpacking the Long-Run Effects of Tariff Shocks: New Structural Implications from Firm Heterogeneity Models

By Alan Spearot

American Economic Journal: Microeconomics, May 2016

I derive a novel solution for the general equilibrium effects of tariffs that is robust to heterogeneity across industries and countries, and is a function of only aggregate trade data and country-by-industry Pareto shape parameters. Using the model to...

Entry Deterrence in Dynamic Second-Price Auctions

By Xiaogang Che and Tilman Klumpp

American Economic Journal: Microeconomics, May 2016

We examine a dynamic second-price auction with independent private values and sequential costly entry. We show that delayed revelation equilibria exist in which some buyers place coordinated low early bids. These buyers revise their bids to reflect the...

Manipulability of Stable Mechanisms

By Peter Chen, Michael Egesdal, Marek Pycia, and M. Bumin Yenmez

American Economic Journal: Microeconomics, May 2016

We study the manipulability of stable matching mechanisms and show that manipulability comparisons are equivalent to preference comparisons: for any agent, a mechanism is more manipulable than another if and only if this agent prefers the latter to the...

Affirmative Action: One Size Does Not Fit All

By Kala Krishna and Alexander Tarasov

American Economic Journal: Microeconomics, May 2016

This paper identifies a new reason for giving preferences to the disadvantaged using a model of contests. There are two forces at work: the effort effect working against giving preferences and the selection effect working in favor of them. When educati...

Team versus Individual Play in Finitely Repeated Prisoner Dilemma Games

By John H. Kagel and Peter McGee

American Economic Journal: Microeconomics, May 2016

In finitely repeated prisoner dilemma games, two-person teams start with significantly less cooperation than individuals, consistent with results from the psychology literature. This quickly gives way to teams cooperating more than individuals. Team di...

Character Endorsements and Electoral Competition

By Archishman Chakraborty and Parikshit Ghosh

American Economic Journal: Microeconomics, May 2016

When an elite-controlled media strategically endorses candidates in order to promote its own ideological agenda, office-seeking parties may completely pander to the media, under moderate ideological conflict between voters and the elite. Larger ideolog...

Front Matter

American Economic Journal: Economic Policy, May 2016

Do Cash Transfers Improve Birth Outcomes? Evidence from Matched Vital Statistics, Program, and Social Security Data

By Verónica Amarante, Marco Manacorda, Edward Miguel, and Andrea Vigorito

American Economic Journal: Economic Policy, May 2016

There is limited empirical evidence on whether cash transfers to poor pregnant women improve children's birth outcomes and potentially help weaken the cycle of intergenerational poverty. Using a unique array of program and social security administrativ...

The Impact of Insurance Provision on Household Production and Financial Decisions

By Jing Cai

American Economic Journal: Economic Policy, May 2016

This paper uses a natural experiment to study the impact of an agricultural insurance program on household production, borrowing, and saving behavior. The empirical strategy includes difference-in-differences and triple difference estimations. The resu...

Why Is Infant Mortality Higher in the United States Than in Europe?

By Alice Chen, Emily Oster, and Heidi Williams

American Economic Journal: Economic Policy, May 2016

The United States has higher infant mortality than peer countries. In this paper, we combine microdata from the United States with similar data from four European countries to investigate this US infant mortality disadvantage. The US disadvantage persi...

Friendship at Work: Can Peer Effects Catalyze Female Entrepreneurship?

By Erica Field, Seema Jayachandran, Rohini Pande, and Natalia Rigol

American Economic Journal: Economic Policy, May 2016

Does the lack of peers contribute to the observed gender gap in entrepreneurial success? A random sample of customers of India’s largest women's bank was offered two days of business counseling, and a random subsample was invited to attend with a fri...

Capacity and Utilization in Health Care: The Effect of Empty Beds on Neonatal Intensive Care Admission

By Seth Freedman

American Economic Journal: Economic Policy, May 2016

Because geographic variation in medical care utilization is jointly determined by both supply and demand, it is difficult to empirically estimate whether capacity itself has a causal impact on utilization in health care. In this paper, I exploit short-...