Severance Pay in an Optimal Contract

By Borys Grochulski, Russell Wong, and Yuzhe Zhang

American Economic Journal: Microeconomics, May 2025

We study the incentive role of severance compensation. In a canonical principal-agent model, we introduce exogenous job destruction risk and show that compensation following job destruction can reduce overall incentive costs. To mitigate the risk of ineff...

Price and Choose

By Federico Echenique and Matías Núñez

American Economic Journal: Microeconomics, May 2025

We describe a sequential mechanism that fully implements the set of efficient outcomes in environments with quasi-linear utilities. The mechanism asks agents to take turns in defining prices for each outcome, with a final player choosing an outcome for al...

Optimal Contract Regulation in Selection Markets

By Yehuda John Levy and André Veiga

American Economic Journal: Microeconomics, May 2025

We model competitive insurance markets with continuous cost-types. A regulator sets minimum and maximum coverage levels and a fee for nonbuyers. Equilibrium is unique if the type distribution is log-concave. Increasing the nonpurchase fee increases welfar...

Free Entry in a Cournot Market with Overlapping Ownership

By Xavier Vives and Orestis Vravosinos

American Economic Journal: Microeconomics, May 2025

We examine the effects of overlapping ownership among existing firms deciding whether to enter a product market. We show that in most cases—and especially when overlapping ownership is already widespread—an increase in the extent of overlapping owners...

Aggressive Pivots and Entrepreneurial Skill

By Xuelin Li and Martin Szydlowski

American Economic Journal: Microeconomics, May 2025

We study pivots as signaling devices in a dynamic experimentation model. An entrepreneur receives funding from an investor and has private information about a project, which requires costly experimentation to succeed. The entrepreneur has a real option to...

Search Costs and Context Effects

By Heiko Karle, Florian Kerzenmacher, Heiner Schumacher, and Frank Verboven

American Economic Journal: Microeconomics, May 2025

Empirical search cost estimates are often large and increasing in the size of the transaction. We conduct an online search experiment in which we manipulate the price scale while keeping the physical search effort per price quote constant. Additionally, w...

Front Matter

American Economic Journal: Economic Policy, May 2025

The Effects of a Multifaceted Poverty Alleviation Program on Rural Income and Household Behavior in China

By Rui Li, Hong Song, Jun Zhang, and Junsen Zhang

American Economic Journal: Economic Policy, May 2025

This study examines the effects of a government-led, large-scale, multifaceted poverty alleviation program on rural income in China. We find that the program has a positive impact on national key poor counties, with a 10.9 percent increase in rural income...

Communicating Program Eligibility: A Supplemental Security Income (SSI) Field Experiment

By Jeffrey Hemmeter, John Phillips, Elana Safran, and Nicholas Wilson

American Economic Journal: Economic Policy, May 2025

We conducted a direct mail field experiment with 4,016,461 individuals to test several key hypotheses about why take-up of Supplemental Security Income among individuals age 65 and above is so low. Communicating likely eligibility in a basic letter genera...

A Machine Learning Approach to Analyze and Support Anticorruption Policy

By Elliott Ash, Sergio Galletta, and Tommaso Giommoni

American Economic Journal: Economic Policy, May 2025

Can machine learning support better governance? This study uses a tree-based, gradient-boosted classifier to predict corruption in Brazilian municipalities using budget data as predictors. The trained model offers a predictive measure of corruption, which...

Public and Private Provision of Information in Market-Based Public Programs: Evidence from Advertising in Health Insurance Marketplaces

By Naoki Aizawa and You Suk Kim

American Economic Journal: Economic Policy, May 2025

This paper studies government and private advertising in market-based public programs. In a model of advertising, we first examine when government advertising increases welfare. Then, we estimate the effects of advertising on consumer demand and assess th...

Physician Group Influences on Treatment Intensity and Health: Evidence from Physician Switchers

By Joseph J. Doyle and Becky Staiger

American Economic Journal: Economic Policy, May 2025

Treatment intensity varies remarkably across physicians, and physicians are increasingly working in groups. This paper tests whether group affiliation impacts physicians' treatment intensity and patient health. Using Medicare inpatient claims data, we foc...

Increasing Organ Donor Registration as a Means to Increase Transplantation: An Experiment with Actual Organ Donor Registrations

By Judd B. Kessler and Alvin E. Roth

American Economic Journal: Economic Policy, May 2025

The United States has a severe shortage of organs for transplant. Recently—inspired by research based on hypothetical choices—jurisdictions have tried to increase organ donor registrations by changing how the registration question is asked. We evaluat...

Pay Transparency and Gender Equality

By Jack Blundell, Emma Duchini, Ştefania Simion, and Arthur Turrell

American Economic Journal: Economic Policy, May 2025

Since 2018, UK firms with at least 250 employees have been mandated to publicly disclose gender equality indicators. Exploiting variations in this mandate across firm size and time, we show that pay transparency closes 19 percent of the gender pay gap by ...

Welfare Analysis of Changing Notches: Evidence from Bolsa Família

By Katy Bergstrom, William Dodds, and Juan Rios

American Economic Journal: Economic Policy, May 2025

We develop a framework to bound the welfare impacts of arbitrarily large reforms to notches using two sufficient statistics: the change in the number of households located below the new notch and the change in the number of households located below the ol...

Corporate Minimum Tax and the Elasticity of Taxable Income: Evidence from Administrative Tax Records

By Jaroslav Bukovina, Tomáš Lichard, Ján Palguta, and Branislav Žúdel

American Economic Journal: Economic Policy, May 2025

We examine business responses to a minimum tax (MT) that prescribed fixed floors on corporate tax liability while permitting MT credit carryforwards. Using 2010–2020 tax-return data on all Slovak corporations, we find that many companies immediately rel...

Dividend Taxation and Firm Performance with Heterogeneous Payout Responses

By Katarzyna Bilicka, İrem Güçeri, and Evangelos Koumanakos

American Economic Journal: Economic Policy, May 2025

We analyze the performance of firms that were differentially affected by an unexpected tax on dividends before the global financial crisis. We use exogenous policy variation for firms with different legal statuses and financial year-end dates to separatel...

Informing Mothers about the Benefits of Conversing with Infants: Experimental Evidence from Ghana

By Pascaline Dupas, Camille Falezan, Seema Jayachandran, and Mark Walsh

American Economic Journal: Economic Policy, May 2025

We evaluate a low-cost intervention designed to boost parents' verbal engagement with infants, which tends to be limited in developing countries. In our randomized experiment, recent or expectant mothers watched a three-minute informational video and rece...

Who Watches the Watchmen? Local News and Police Behavior in the United States

By Nicola Mastrorocco and Arianna Ornaghi

American Economic Journal: Economic Policy, May 2025

Do US municipal police departments respond to news coverage of local crime? We address this question exploiting an exogenous shock to local crime reporting induced by acquisitions of local TV stations by a large broadcast group, Sinclair. Using a unique d...

Buy Baits and Consumer Sophistication: Field Evidence from Instant Rebates

By Matthias Rodemeier

American Economic Journal: Economic Policy, May 2025

Are consumers in the marketplace aware of their cognitive limitations? I answer this question in the context of a ubiquitous form of price discrimination: instant rebates that require active redemption. In a large-scale field experiment with a major onlin...