Getting Permission

By Peicong Hu and Joel Sobel

American Economic Review: Insights, December 2022

A manager has access to expert advisers. The manager selects at most one project and can implement it only if one expert provides support. The game in which the manager consults experts simultaneously typically has multiple equilibria, including one in wh...

A Taste of Their Own Medicine: Guideline Adherence and Access to Expertise

By Amy Finkelstein, Petra Persson, Maria Polyakova, and Jesse M. Shapiro

American Economic Review: Insights, December 2022

We use administrative data from Sweden to study adherence to 63 medication-related guidelines. We compare the adherence of patients without personal access to medical expertise to that of patients with access, namely doctors and their close relatives. We ...

Unobserved-Offers Bargaining

By Alexander Wolitzky

American Economic Review, January 2023

I study ultimatum bargaining with imperfectly observed offers. Imperfectly observed offers must be rejected with positive probability, even when the players' preferences are common knowledge. Noisier observations imply a greater risk of rejection. In repe...

Signaling and Discrimination in Collaborative Projects

By Paula Onuchic ⓡ Debraj Ray

American Economic Review, January 2023

We study collaborative work in pairs when potential collaborators are motivated by the reputational implications of (joint or solo) projects. In equilibrium, individual collaboration strategies both influence and are influenced by the public assignment of...

Robust Predictions for DSGE Models with Incomplete Information

By Ryan Chahrour and Robert Ulbricht

American Economic Journal: Macroeconomics, January 2023

We provide predictions for DSGE models with incomplete information that are robust across information structures. Our approach maps an incomplete-information model into a full-information economy with time-varying expectation wedges and provides condition...

Enabling or Limiting Cognitive Flexibility? Evidence of Demand for Moral Commitment

By Silvia Saccardo and Marta Serra-Garcia

American Economic Review, February 2023

Moral behavior is more prevalent when individuals cannot easily distort their beliefs self-servingly. Do individuals seek to limit or enable their ability to distort beliefs? How do these choices affect behavior? Experiments with over 9,000 participants s...

Compatibility Choices, Switching Costs, and Data Portability

By Doh-Shin Jeon, Domenico Menicucci, and Nikrooz Nasr

American Economic Journal: Microeconomics, February 2023

We study mix-and-match compatibility choices of firms selling complementary products in a dynamic setting. Contrary to what happens in a static setting where symmetric firms choose compatibility (Matutes and Regibeau 1988), when switching costs are high a...

Misbehavior in Common Value Auctions: Bidding Rings and Shills

By Dan Levin and James Peck

American Economic Journal: Microeconomics, February 2023

We characterize the optimal misbehavior by bidding rings or an auctioneer in the ascending English auction with common values. We also show, in an extended game, that in equilibrium potential members join and truthfully reveal their signals. Under a separ...

Contest Design with Stochastic Performance

By René Kirkegaard

American Economic Journal: Microeconomics, February 2023

This paper studies optimal contest design in contests with noisy performance. Here, contest design is a team moral hazard problem that endogenizes the assignment rule that maps performance profiles into winning probabilities. The optimal design features e...

Two-Stage Contests with Private Information

By Greg Kubitz

American Economic Journal: Microeconomics, February 2023

In perfectly discriminating contests with private information, low-ability contestants prefer to appear strong, while high-ability contestants prefer to appear weak. In a two-stage contest, this leads to a unique symmetric equilibrium with partial pooling...

An Information Theory of Efficient Differential Treatment

By Emil Temnyalov

American Economic Journal: Microeconomics, February 2023

When are differential treatment policies—such as preferential treatment, affirmative action, and gender equity policies—justified by efficiency concerns? I propose a nonparametric assignment model where a policymaker assigns agents to different treatm...

Dynamic Information Design under Constrained Communication Rules

By Caio Lorecchio and Daniel Monte

American Economic Journal: Microeconomics, February 2023

An information designer wishes to persuade agents to invest in a project of unknown quality. To do so, she must induce investment and collect feedback from these investments. Motivated by data regulations and simplicity concerns, our designer faces commun...

Sequential Learning

By Yair Antler, Daniel Bird, and Santiago Oliveros

American Economic Journal: Microeconomics, February 2023

We develop a model in which two players sequentially and publicly examine a project. In our model the player who moves first can fabricate evidence to influence the second mover, which creates a moral hazard problem. We find that early strategic uncertain...

When Is a Contrarian Adviser Optimal?

By Robert Evans and Sönje Reiche

American Economic Journal: Microeconomics, February 2023

We compare contrarian to conformist advice, a contrarian expert being one whose preference bias is against the decision-maker's prior optimal decision. Optimality of an expert depends on characteristics of prior information and learning. If either the exp...

Censorship and Reputation

By Daniel N. Hauser

American Economic Journal: Microeconomics, February 2023

I study how a firm manages its reputation by both investing in the quality of its product and censoring, hiding bad news from consumers. Without censorship, the threat of bad news provides strong incentives for investment. I highlight discontinuities in t...

Implications of Unequal Discounting in Dynamic Contracting

By Ilia Krasikov, Rohit Lamba, and Thomas Mettral

American Economic Journal: Microeconomics, February 2023

This paper studies a canonical dynamic screening problem where the agent has Markovian private information and limited commitment and the principal and the agent have different discount factors. Unequal discounting captures unequal access to capital marke...

Moral Hazard and Efficiency in a Frictional Market

By Guillaume Roger and Benoît Julien

American Economic Journal: Microeconomics, February 2023

Principals seek to trade with homogeneous agents by posting incentive contracts, which direct their search. Search and moral hazard interact in equilibrium. If using transfers to compensate agents failing to contract, the equilibrium allocation is always ...

The Extension of Credit with Nonexclusive Contracts and Sequential Banking Externalities

By Giacomo De Giorgi, Andres Drenik, and Enrique Seira

American Economic Journal: Economic Policy, February 2023

Nonexclusive sequential borrowing can increase default and impose externalities on prior lenders. We document that sequential banking is pervasive with substantial effects. Using credit card applications from a large bank and data on the applicants' entir...

Robust Information Transmission

By Francesc Dilmé

American Economic Review: Insights, March 2023

This paper investigates robust information transmission between a sender and a receiver in the Crawford and Sobel (1982) model. We characterize behavior that remains equilibrium behavior independently of the form of a small communication cost. Under stand...

An Alternative Explanation for the "Fed Information Effect"

By Michael D. Bauer and Eric T. Swanson

American Economic Review, March 2023

Regressions of private-sector macroeconomic forecast revisions on monetary policy surprises often produce coefficients with signs opposite to standard macroeconomic models. The "Fed information effect" argues these puzzling results are due to monetary pol...