Communities, Co-ops, and Clubs: Social Capital and Incentives in Large Collective Organizations

By Joshua A. Jacobs, Aaron M. Kolb, and Curtis R. Taylor

American Economic Journal: Microeconomics, August 2021

We study a continuous-time organization design problem. Each member's output is an imperfect signal of his underlying effort, and each member's utility from remaining in the organization is endogenous to other members' efforts. Monetary transfers are assu...

Information Redundancy Neglect versus Overconfidence: A Social Learning Experiment

By Marco Angrisani, Antonio Guarino, Philippe Jehiel, and Toru Kitagawa

American Economic Journal: Microeconomics, August 2021

We study social learning in a continuous action space experiment. Subjects, acting in sequence, state their beliefs about the value of a good after observing their predecessors' statements and a private signal. We compare the behavior in the laboratory wi...

Russian Retrospectives on Reforms from Yeltsin to Putin

[Symposium: The Economy of Russia]

By Padma Desai

Journal of Economic Perspectives, Winter 2005

The kamikaze crew of liberal reformers, picked by former President Boris Yeltsin in the early 1990s, succeeded in overturning the planned economy and the authoritarian political arrangements of seven decades of Soviet Communism. However, the resulting bre...

Government Financing of R&D: A Mechanism Design Approach

By Saul Lach, Zvika Neeman, and Mark Schankerman

American Economic Journal: Microeconomics, August 2021

We study how to design an optimal government loan program for risky R&D projects with positive externalities. With adverse selection, the optimal government contract involves a high interest rate but nearly zero cofinancing by the entrepreneur. This contr...

Entry-Proofness and Discriminatory Pricing under Adverse Selection

By Andrea Attar, Thomas Mariotti, and François Salanié

American Economic Review, August 2021

This paper studies competitive allocations under adverse selection. We first provide a general necessary and sufficient condition for entry on an inactive market to be unprofitable. We then use this result to characterize, for an active market, a unique b...

Informal Labor and the Efficiency Cost of Social Programs: Evidence from Unemployment Insurance in Brazil

By François Gerard and Gustavo Gonzaga

American Economic Journal: Economic Policy, August 2021

It is widely believed that the presence of a large informal sector increases the efficiency cost of social programs in developing countries. We evaluate such claims for the case of unemployment insurance (UI) by combining an optimal UI framework with co...

Data Watch: The American Time Use Survey

By Daniel S. Hamermesh, Harley Frazis, and Jay Stewart

Journal of Economic Perspectives, Winter 2005

We discuss the new American Time Use Survey (ATUS), an on-going household survey of roughly 1,200 Americans per month (1,800 per month in the first year, 2003) that collects time diaries as well as demographic interview information from respondents who ha...

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Journal of Economic Perspectives, Winter 2005

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Journal of Economic Perspectives, Winter 2005

Justified Communication Equilibrium

By Daniel Clark and Drew Fudenberg

American Economic Review, September 2021

Justified communication equilibrium (JCE) is an equilibrium refinement for signaling games with cheap-talk communication. A strategy profile must be a JCE to be a stable outcome of nonequilibrium learning when receivers are initially trusting and senders ...

The Challenges of Universal Health Insurance in Developing Countries: Experimental Evidence from Indonesia's National Health Insurance

By Abhijit Banerjee, Amy Finkelstein, Rema Hanna, Benjamin A. Olken, Arianna Ornaghi, and Sudarno Sumarto

American Economic Review, September 2021

To investigate barriers to universal health insurance in developing countries, we designed a randomized experiment involving about 6,000 households in Indonesia who are subject to a government health insurance program with a weakly enforced mandate. Time-...

Different Strokes for Different Folks? Experimental Evidence on the Effectiveness of Input and Output Incentive Contracts for Health Care Providers with Varying Skills

By Manoj Mohanan, Katherine Donato, Grant Miller, Yulya Truskinovsky, and Marcos Vera-Hernández

American Economic Journal: Applied Economics, October 2021

A central issue in designing incentive contracts is the decision to reward agents' input use versus outputs. The trade-off between risk and return to innovation in production can also lead agents with varying skill levels to perform differentially under d...

Financial Risk Capacity

By Saki Bigio and Adrien d'Avernas

American Economic Journal: Macroeconomics, October 2021

Financial crises are particularly severe and lengthy when banks fail to recapitalize after bearing large losses. We present a model that explains the slow recovery of bank capital and economic activity. Banks provide intermediation in markets with informa...

Neighborhood-Based Information Costs

By Benjamin Hébert and Michael Woodford

American Economic Review, October 2021

We derive a new cost of information in rational inattention problems, the neighborhood-based cost functions, starting from the observation that many settings involve exogenous states with a topological structure. These cost functions are uniformly posteri...

Projection of Private Values in Auctions

By Tristan Gagnon-Bartsch, Marco Pagnozzi, and Antonio Rosato

American Economic Review, October 2021

We explore how taste projection—the tendency to overestimate how similar others' tastes are to one's own—affects bidding in auctions. In first-price auctions with private values, taste projection leads bidders to exaggerate the intensity of competitio...

Bargaining under the Illusion of Transparency

By Kristóf Madarász

American Economic Review, November 2021

This paper studies bargaining with noncommon priors where the buyer projects and exaggerates the probability that her private information may leak to the seller. Letting the buyer name her price first, raises the seller's payoff above his payoff from post...

The Times They Are A-Changing: Experimenting with Dynamic Adverse Selection

By Felipe A. Araujo, Stephanie W. Wang, and Alistair J. Wilson

American Economic Journal: Microeconomics, November 2021

We examine a common value dynamic matching environment where adverse selection accrues slowly over time. Theoretical best responses are therefore time varying, and the prior experimental literature suggests that sequential environments might lead to great...

Dynamic Evaluation Design

By Alex Smolin

American Economic Journal: Microeconomics, November 2021

A principal owns a firm, hires an agent of uncertain productivity, and designs a dynamic policy for evaluating his performance. The agent observes ongoing evaluations and decides when to quit. When not quitting, the agent is paid a wage that is linear in ...

A Delegation-Based Theory of Expertise

By Attila Ambrus, Volodymyr Baranovskyi, and Aaron Kolb

American Economic Journal: Microeconomics, November 2021

We investigate information aggregation and competition in a delegation framework. An uninformed principal is unable to perform a task herself and must choose between one of two biased and imperfectly informed experts. In the focal equilibrium, experts exa...

Orchestrating Information Acquisition

By Jingfeng Lu, Lixin Ye, and Xin Feng

American Economic Journal: Microeconomics, November 2021

We study how to orchestrate information acquisition in an environment where bidders endowed with original estimates ("types") about their private values can acquire further information by incurring a cost. We consider both single-round and fully sequentia...