Risk-Based Selection in Unemployment Insurance: Evidence and Implications

By Camille Landais, Arash Nekoei, Peter Nilsson, David Seim, and Johannes Spinnewijn

American Economic Review, April 2021

This paper studies whether adverse selection can rationalize a universal mandate for unemployment insurance (UI). Building on a unique feature of the unemployment policy in Sweden, where workers can opt for supplemental UI coverage above a minimum manda...

Fees, Reputation, and Information Production in the Credit Rating Industry

By Jacopo Bizzotto and Adrien Vigier

American Economic Journal: Microeconomics, May 2021

We compare a credit rating agency's incentives to acquire costly information when it is only paid for giving favorable ratings to the corresponding incentives when the agency is paid up-front, i.e., irrespective of the ratings assigned. We show that, in t...

Competition and Price Transparency in the Market for Lemons: Experimental Evidence

By Olivier Bochet and Simon Siegenthaler

American Economic Journal: Microeconomics, May 2021

In markets with asymmetric information, where equilibria are often inefficient, bargaining can help promote welfare. We design an experiment to examine the impact of competition and price transparency in such settings. Consistent with the theoretical pred...

Is No News (Perceived As) Bad News? An Experimental Investigation of Information Disclosure

By Ginger Zhe Jin, Michael Luca, and Daniel Martin

American Economic Journal: Microeconomics, May 2021

This paper uses laboratory experiments to directly test a central prediction of disclosure theory: that strategic forces can lead those who possess private information to voluntarily provide it. In a simple sender-receiver game, we find that senders discl...

Learning from Unrealized versus Realized Prices

By M. Kathleen Ngangoué and Georg Weizsäcker

American Economic Journal: Microeconomics, May 2021

Our experiments investigate the extent to which traders learn from the price, differentiating between situations where orders are submitted before versus after the price has realized. In simultaneous markets with bids that are conditional on the price, tr...

Prospects in the Academic Labor Market for Economists

By Ronald G. Ehrenberg

Journal of Economic Perspectives, Spring 2004

This paper discussed what the academic labor market for economists is likely to look like in the years ahead. After tracing out trends in PhD production of new economists, including the increasing share of new PhDs who are foreign residents, it presents n...

Coordinating Public Good Provision by Mediated Communication

By Maija Halonen-Akatwijuka and In-Uck Park

American Economic Journal: Microeconomics, May 2021

We examine a setup where two agents allocate a fixed budget between public goods in two areas. The agents may be biased to one area, which is their private information. Without communication, the funds are allocated inefficiently, resulting in gaps and du...

Common-Value Public Goods and Informational Social Dilemmas

By Caleb A. Cox and Brock Stoddard

American Economic Journal: Microeconomics, May 2021

We experimentally examine private information and communication in a public goods environment with uncertain returns. We consider a common-value public goods game in which the return to contribution is either high or low. Before contributing, three player...

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Journal of Economic Perspectives, Spring 2004

The Capital Asset Pricing Model: Theory and Evidence

[Symposium: Fortieth Anniversary of CAPM]

By Eugene F. Fama and Kenneth R. French

Journal of Economic Perspectives, Summer 2004

The capital asset pricing model (CAPM) of William Sharpe (1964) and John Lintner (1965) marks the birth of asset pricing theory (resulting in a Nobel Prize for Sharpe in 1990). Before their breakthrough, there were no asset pricing models built from first...

Learning and Corruption on Monitoring Chains

By Bruno Strulovici

AEA Papers and Proceedings, May 2021

"But who will guard the guardians?" I revisit this age-old question under the following assumptions: (i) guardians are devoid of ethical motives and have quasilinear preferences, (ii) guardians monitor one another through a monitoring chain, and (iii) any...

Friend-Based Ranking in Practice

By Francis Bloch and Matthew Olckers

AEA Papers and Proceedings, May 2021

A planner aims to target individuals who exceed a threshold in a characteristic, such as wealth or ability. The individuals can rank their friends according to the characteristic. We study a strategy-proof mechanism for the planner to use the rankings for...

The Effects of Prize Structures on Innovative Performance

By Joshua Graff Zivin and Elizabeth Lyons

AEA Papers and Proceedings, May 2021

Successful innovation is essential for the survival and growth of organizations, but how best to incentivize innovation is poorly understood. We compare how two common incentive schemes affect innovative performance in a field experiment run in partnershi...

How to Subvert Democracy: Montesinos in Peru

By John Mcmillan and Pablo Zoido

Journal of Economic Perspectives, Fall 2004

Which of the democratic checks and balances--opposition parties, the judiciary, a free press--is the most forceful? Peru has the full set of democratic institutions. In the 1990s, the secret-police chief Montesinos systematically undermined them all with ...

Information Validates the Prior: A Theorem on Bayesian Updating and Applications

By Navin Kartik, Frances Xu Lee, and Wing Suen

American Economic Review: Insights, June 2021

We develop a result on expected posteriors for Bayesians with heterogenous priors, dubbed information validates the prior (IVP). Under familiar ordering requirements, Anne expects a (Blackwell) more informative experiment to bring Bob's posterior mean clo...

The Transmission of Monetary Policy Shocks

By Silvia Miranda-Agrippino and Giovanni Ricco

American Economic Journal: Macroeconomics, July 2021

Commonly used instruments for the identification of monetary policy disturbances are likely to combine the true policy shock with information about the state of the economy due to the information disclosed through the policy action. We show that this sign...

Adverse and Advantageous Selection in the Laboratory

By S. Nageeb Ali, Maximilian Mihm, Lucas Siga, and Chloe Tergiman

American Economic Review, July 2021

We study two-player games where one-sided asymmetric information can lead to either adverse or advantageous selection. We contrast behavior in these games with settings where both players are uninformed. We find stark differences, suggesting that subjects...

Market Fragmentation

By Daniel Chen and Darrell Duffie

American Economic Review, July 2021

We model a simple market setting in which fragmentation of trade of the same asset across multiple exchanges improves allocative efficiency. Fragmentation reduces the inhibiting effect of price-impact avoidance on order submission. Although fragmentation ...

Identity and the Economics of Organizations

[Symposium: Sociology and Economics]

By George A. Akerlof and Rachel E. Kranton

Journal of Economic Perspectives, Winter 2005

The economics of organizations is replete with the pitfalls of monetary rewards and punishments to motivate workers. If economic incentives do not work, what does? This paper proposes that workers' self-image as jobholders, coupled with their ideal as to ...

College Admission with Multidimensional Privileges: The Brazilian Affirmative Action Case

By Orhan Aygün and Inácio Bó

American Economic Journal: Microeconomics, August 2021

In 2012, Brazilian public universities were mandated to use affirmative action policies for candidates from racial and income minorities. We show that the policy makes the students' affirmative action status a strategic choice and may reject high-achievin...