Asset-Based Microfinance for Microenterprises: Evidence from Pakistan

By Faisal Bari ⓡ Kashif Malik ⓡ Muhammad Meki ⓡ Simon Quinn

American Economic Review, February 2024

We run a field experiment offering graduated microcredit clients the opportunity to finance a business asset worth four times their usual borrowing limit. We implement this using a hire-purchase contract; our control group is offered a zero interest loan ...

Gender Differences in Medical Evaluations: Evidence from Randomly Assigned Doctors

By Marika Cabral and Marcus Dillender

American Economic Review, February 2024

Little is known about what drives gender disparities in health care and related social insurance benefits. Using data and variation from the Texas workers' compensation program, we study the impact of gender match between doctors and patients on medical e...

The Nurture of Nature and the Nature of Nurture: How Genes and Investments Interact in the Formation of Skills

By Mikkel Aagaard Houmark, Victor Ronda, and Michael Rosholm

American Economic Review, February 2024

This paper studies the interplay between genetics and family investments in the process of skill formation. We model and estimate the joint evolution of skills and parental investments throughout early childhood. We document three genetic mechanisms: the ...

Old Age Risks, Consumption, and Insurance

By Richard Blundell, Margherita Borella, Jeanne Commault, and Mariacristina De Nardi

American Economic Review, February 2024

In the United States, after age 65, households face income and health risks, and a large fraction of these risks are transitory. While consumption significantly responds to transitory income shocks, out-of-pocket medical expenses do not. In contrast, both...

Pricing Power in Advertising Markets: Theory and Evidence

By Matthew Gentzkow, Jesse M. Shapiro, Frank Yang, and Ali Yurukoglu

American Economic Review, February 2024

Existing theories of media competition imply that advertisers will pay a lower price in equilibrium to reach consumers who multi-home across competing outlets. We generalize and extend this theoretical result and test it using data from television and soc...

Prolonged Learning and Hasty Stopping: The Wald Problem with Ambiguity

By Sarah Auster, Yeon-Koo Che, and Konrad Mierendorff

American Economic Review, February 2024

This paper studies sequential information acquisition by an ambiguity-averse decision-maker (DM), who decides how long to collect information before taking an irreversible action. The agent optimizes against the worst-case belief and updates prior by prio...

Distinguishing Common Ratio Preferences from Common Ratio Effects Using Paired Valuation Tasks

By Christina McGranaghan, Kirby Nielsen, Ted O'Donoghue, Jason Somerville, and Charles D. Sprenger

American Economic Review, February 2024

Without strong assumptions about how noise manifests in choices, we can infer little from existing empirical observations of the common ratio effect (CRE) about whether there exists an underlying common ratio preference (CRP). We propose to solve this inf...

Expanding markets

[Research Highlight]

January 24, 2024

What happens to incumbents when more sellers are added to online platforms?

Smaller Slices of a Growing Pie: The Effects of Entry in Platform Markets

By Oren Reshef

American Economic Journal: Microeconomics, November 2023

Entry of new firms onto a platform has an ambivalent effect on the incumbent firms operating on the platform: the main tension lies between the negative effects of increased competitive pressure and positive indirect network effects. This paper empiricall...

The Immigrant Next Door

By Leonardo Bursztyn, Thomas Chaney, Tarek A. Hassan, and Aakaash Rao

American Economic Review, February 2024

We study how decades-long exposure to individuals of a given foreign descent shapes natives' attitudes and behavior toward that group. Using individualized donations data, we show that long-term exposure to a given foreign ancestry leads to more generous ...

Front Matter

American Economic Journal: Microeconomics, February 2024

Exit Dilemma: The Role of Private Learning on Firm Survival

By Doruk Cetemen and Chiara Margaria

American Economic Journal: Microeconomics, February 2024

We study the exit of duopolists from a stochastically declining market. Firms privately learn about the market conditions from observing the stochastic arrival of customers, while exit decisions are publicly observed. A larger firm is more likely to have ...

Social Connectedness and Information Markets

By Rachel Kranton and David McAdams

American Economic Journal: Microeconomics, February 2024

This paper investigates information quality in a simple model of socially connected information markets. Suppliers' payoffs derive from the fraction of consumers who see their stories. Consumers prefer to share and act only on high-quality information. Qu...

A Random Reference Model

By Özgür Kibris, Yusufcan Masatlioglu, and Elchin Suleymanov

American Economic Journal: Microeconomics, February 2024

We provide two nested models of random reference-dependent choice in which the reference point is endogenously determined by random processes. Random choice behavior is due to random reference points, even though, from the decision-maker's viewpoint, choi...

Constructive versus Toxic Argumentation in Debates

By Tymofiy Mylovanov and Andriy Zapechelnyuk

American Economic Journal: Microeconomics, February 2024

Two debaters address an audience by sequentially choosing their information strategies. We compare the setting where the second mover reveals additional information (constructive argumentation) with the setting where the second mover obfuscates the first ...

Innovation in Decentralized Markets: Technology versus Synthetic Products

By Marzena Rostek and Ji Hee Yoon

American Economic Journal: Microeconomics, February 2024

Advances in market-clearing technology for multiple assets and synthetic products present alternative ways to leverage complementarities and substitutabilities in asset payoffs. This paper compares their equilibrium and welfare effects. In competitive mar...

Predicting Cooperation with Learning Models

By Drew Fudenberg and Gustav Karreskog Rehbinder

American Economic Journal: Microeconomics, February 2024

We use simulations of a simple learning model to predict cooperation rates in the experimental play of the indefinitely repeated prisoner's dilemma. We suppose that learning and the game parameters only influence play in the initial round of each supergam...

Coordination in the Fight against Collusion

By Elisabetta Iossa, Simon Loertscher, Leslie M. Marx, and Patrick Rey

American Economic Journal: Microeconomics, February 2024

While antitrust authorities strive to detect, prosecute, and thereby deter collusive conduct, entities harmed by that conduct are also advised to pursue their own strategies to deter collusion. The implications of such delegation of deterrence have largel...

Weighted Utility and Optimism/Pessimism: A Decision-Theoretic Foundation of Various Stochastic Dominance Orders

By Tao Wang and Ehud Lehrer

American Economic Journal: Microeconomics, February 2024

We show that a probability distribution likelihood ratio dominates another distribution if and only if, for every weighted utility function, the former is preferred over the latter. Likewise, a probability distribution hazard rate (or reverse hazard rate)...

Anticompetitive Bundling When Buyers Compete

By Alexandre de Cornière and Greg Taylor

American Economic Journal: Microeconomics, February 2024

We study the profitability of bundling by an upstream firm that licenses technologies to downstream competitors and that faces competition for one of its technologies. In an otherwise standard "Chicago-style" model, the existence of downstream competition...