House Allocation with Overlapping Generations

By Morimitsu Kurino

American Economic Journal: Microeconomics, February 2014

Many real-life applications of house allocation problems are dynamic. For example, each year college freshmen move in and seniors move out of on-campus housing. Each student stays on campus for only a few years. A student is a "newcomer" in the beginning...

Financing Experimentation

By Mikhail Drugov and Rocco Macchiavello

American Economic Journal: Microeconomics, February 2014

Entrepreneurs must experiment to learn how good they are at a new activity. What happens when the experimentation is financed by a lender? Under common scenarios, i.e., when there is the opportunity to learn by "starting small" or when "noncompete" claus...

Paging Inspector Sands: The Costs of Public Information

By Sacha Kapoor and Arvind Magesan

American Economic Journal: Economic Policy, February 2014

We exploit the introduction of pedestrian countdown signals—timers that indicate when traffic lights will change—to evaluate a policy that improves the information of all market participants. We find that although countdown signals reduce the numbe...

Bidding for Incomplete Contracts: An Empirical Analysis of Adaptation Costs

By Patrick Bajari, Stephanie Houghton, and Steven Tadelis

American Economic Review, April 2014

Procurement contracts are often renegotiated because of changes that are required after their execution. Using highway paving contracts we show that renegotiation imposes significant adaptation costs. Reduced form regressions suggest that bidders respo...

Information Acquisition in a War of Attrition

By Kyungmin Kim and Frances Zhiyun Xu Lee

American Economic Journal: Microeconomics, May 2014

We consider a war of attrition where the players can learn about a state that determines their payoffs at stochastic deadline. We study how the incentives to acquire information depend on the (un)verifiability of information and its implications for ef...

Delay and Deadlines: Freeriding and Information Revelation in Partnerships

By Arthur Campbell, Florian Ederer, and Johannes Spinnewijn

American Economic Journal: Microeconomics, May 2014

We study two sources of delay in teams: freeriding and lack of communication. Partners contribute to the value of a common project, but have private information about the success of their own efforts. When the deadline is far away, unsuccessful partners...

The Market for Blood

By Robert Slonim, Carmen Wang, and Ellen Garbarino

Journal of Economic Perspectives, Spring 2014

Donating blood, "the gift of life," is among the noblest activities and it is performed worldwide nearly 100 million times annually. The economic perspective presented here shows how the gift of life, albeit noble and often motivated by altruism, is heavi...

Bundling Health Insurance and Microfinance in India: There Cannot Be Adverse Selection If There Is No Demand

By Abhijit Banerjee, Esther Duflo, and Richard Hornbeck

American Economic Review, May 2014

Microfinance institutions have started to bundle their basic loans with other financial services, such as health insurance. Using a randomized control trial in Karnataka, India, we evaluate the impact on loan renewal from mandating the purchase of actuari...

Mechanism Design in Large Games: Incentives and Privacy

By Michael Kearns, Mallesh M. Pai, Aaron Roth, and Jonathan Ullman

American Economic Review, May 2014

We study the design of mechanisms satisfying a novel desideratum: privacy. This requires the mechanism not reveal "much" about any agent's type to other agents. We propose the notion of joint differential privacy: a variant of differential privacy used in...

Investment Incentives in Labor Market Matching

By John William Hatfield, Fuhito Kojima, and Scott Duke Kominers

American Economic Review, May 2014

We provide an illustration of how the design of labor market clearing mechanisms can affect incentives for human capital acquisition. Specifically, we extend the labor market matching model (with discrete transfers) of Kelso and Crawford (1982) to incorpo...

Costly Persuasion

By Matthew Gentzkow and Emir Kamenica

American Economic Review, May 2014

We study the design of informational environments in settings where generating information is costly. We assume that the cost of a signal is proportional to the expected reduction in uncertainty. We show that Kamenica & Gentzkow's (2011) concavification a...

How Sharing Information Can Garble Experts' Advice

By Matthew Elliott, Benjamin Golub, and Andrei Kirilenko

American Economic Review, May 2014

We model the strategic provision of advice in environments where a principal's optimal action depends on an unobserved, binary state of interest. Experts receive signals about the state and each recommends an action. The principal and all experts dislike ...

Interim Bayesian Persuasion: First Steps

By Eduardo Perez-Richet

American Economic Review, May 2014

This paper makes a first attempt at building a theory of interim Bayesian persuasion. I work in a minimalist model where a low or high type sender seeks validation from a receiver who is willing to validate high types exclusively. After learning her type,...

Rational Attention and Adaptive Coding: A Puzzle and a Solution

By Camillo Padoa-Schioppa and Aldo Rustichini

American Economic Review, May 2014

Adaptive Coding is the property of the brain to adjust its response to statistical properties of the environment. Its effect is an improved discrimination among signals under the constraints on the dynamic range of its response. It can thus be considered ...

The Choice between Formal and Informal Intellectual Property: A Review

By Bronwyn Hall, Christian Helmers, Mark Rogers, and Vania Sena

Journal of Economic Literature, June 2014

We survey the economic literature, both theoretical and empirical, on the choice of intellectual property protection by firms. Our focus is on the trade-offs between using patents and disclosing versus the use of secrecy, although we also look briefly at ...

Dynamic Adverse Selection: A Theory of Illiquidity, Fire Sales, and Flight to Quality

By Veronica Guerrieri and Robert Shimer

American Economic Review, July 2014

We develop a dynamic equilibrium model of asset markets with adverse selection. There exists a unique equilibrium in which better quality assets trade at higher prices but with a lower price-dividend ratio in less liquid markets. Sellers of high-quality a...

Auctions, Actions, and the Failure of Information Aggregation

By Alp E. Atakan and Mehmet Ekmekci

American Economic Review, July 2014

We study a uniform-price auction where k identical common-value objects are allocated amongst z > k bidders who have imperfect signals about the state of the world. The common valuation is determined jointly by the state and an action that is chosen after...

Household Bargaining and Excess Fertility: An Experimental Study in Zambia

By Nava Ashraf, Erica Field, and Jean Lee

American Economic Review, July 2014

We posit that household decision-making over fertility is characterized by moral hazard since most contraception can only be perfectly observed by the woman. Using an experiment in Zambia that varied whether women were given access to contraceptives alone...

Public Communication and Information Acquisition

By Ryan Chahrour

American Economic Journal: Macroeconomics, July 2014

This paper models the tradeoff, perceived by central banks and other public actors, between providing the public with useful information and the risk of overwhelming it with excessive communication. An information authority chooses how many signals to pro...

Accounting for Crises

By Venky Nagar and Gwen Yu

American Economic Journal: Macroeconomics, July 2014

We provide among the first empirical evidence, consistent with recent macro global game crisis models, that shows that the precision of public signals can coordinate crises. In these models, self-fulfilling crises independent of fundamentals can occur onl...