Collusion and the Organization of the Firm

By Alfredo Burlando and Alberto Motta

American Economic Journal: Microeconomics, August 2015

This paper shows that the threat of collusion between a productive agent and the auditor in charge of monitoring production can influence a number of organizational dimensions of the firm, including outsourcing decisions and the allocation of productio...

Referrals: Peer Screening and Enforcement in a Consumer Credit Field Experiment

By Gharad Bryan, Dean Karlan, and Jonathan Zinman

American Economic Journal: Microeconomics, August 2015

Empirical evidence on peer intermediation lags behind both theory and practice in which lenders use peers to mitigate adverse selection and moral hazard. Using a referral incentive under individual liability, we develop a two-stage field experiment that p...

Two-Sided Matching with Endogenous Preferences

By Yair Antler

American Economic Journal: Microeconomics, August 2015

We modify the stable matching problem by allowing agents' preferences to depend on the endogenous actions of agents on the other side of the market. Conventional matching theory results break down in the modified setup. In particular, every game that is i...

Learning from Failure: A Review of Peter Schuck's Why Government Fails So Often: And How It Can Do Better

By David M. Levy and Sandra J. Peart

Journal of Economic Literature, September 2015

Peter Schuck catalogs an overwhelming list of US government failures. He points to both structural problems (culture and institutions) and incentives. Despairing of cultural change, Schuck focuses on incentives. He relies on Charles Wolf's theory of nonma...

Checklists and Worker Behavior: A Field Experiment

By C. Kirabo Jackson and Henry S. Schneider

American Economic Journal: Applied Economics, October 2015

We analyze data from a field experiment in which an auto repair firm provided checklists to mechanics and monitored their use. Revenue was 20 percent higher during the experiment, and the effect is equivalent to that of a 1.6 percentage point (10 percent)...

Non-Optimal Mechanism Design

By Jason D. Hartline and Brendan Lucier

American Economic Review, October 2015

The optimal allocation of resources in complex environments—like allocation of dynamic wireless spectrum, cloud computing services, and Internet advertising—is computationally challenging even given the true preferences of the participants. In...

Optimal Annuitization with Stochastic Mortality and Correlated Medical Costs

By Felix Reichling and Kent Smetters

American Economic Review, November 2015

The conventional wisdom since Yaari (1965) is that households without a bequest motive should fully annuitize their investments. Numerous frictions do not break this sharp result. We modify the Yaari framework by allowing a household's mortality risk itse...

Exclusive Contracts and Market Dominance

By Giacomo Calzolari and Vincenzo Denicolò

American Economic Review, November 2015

We propose a new theory of exclusive dealing. The theory is based on the assumption that a dominant firm has a competitive advantage over its rivals, and that the buyers' willingness to pay for the product is private information. In this setting, the domi...

Market Structure, Reputation, and the Value of Quality Certification

By Daniel W. Elfenbein, Raymond Fisman, and Brian McManus

American Economic Journal: Microeconomics, November 2015

Quality certification programs help consumers identify high-quality products or sellers in markets with information asymmetries. Using data from eBay UK's online marketplace, we study how certification's impact on demand varies with market- and seller- le...

Learning from Others? Decision Rights, Strategic Communication, and Reputational Concerns

By Otto H. Swank and Bauke Visser

American Economic Journal: Microeconomics, November 2015

We examine centralized versus decentralized decision making when experience of agents is private information and communication is necessary to learn from others. An agent has reputational concerns and his market may or may not observe what the other agent...

Beneficial Long Communication in the Multiplayer Electronic Mail Game

By Kris De Jaegher

American Economic Journal: Microeconomics, November 2015

In the two-player electronic mail game (EMG), as is well-known, the probability of collective action is lower the more confirmations and reconfirmations are made available to players. In the multiplayer EMG, however, we show players may coordinate on equi...

Mechanisms for Repeated Trade

By Andrzej Skrzypacz and Juuso Toikka

American Economic Journal: Microeconomics, November 2015

How does feasibility of efficient repeated trade depend on the features of the environment such as persistence of values, private information about their evolution, or trading frequency? We derive a necessary and sufficient condition for efficient, unsubs...

Bankruptcy: Is It Enough to Forgive or Must We Also Forget?

By Ronel Elul and Piero Gottardi

American Economic Journal: Microeconomics, November 2015

In many countries, lenders are restricted in their access to information about borrowers' past defaults. We study this provision in a model of repeated borrowing and lending with moral hazard and adverse selection. We analyze its effects on borrowers' inc...

Assessing the Welfare Effects of Unemployment Benefits Using the Regression Kink Design

By Camille Landais

American Economic Journal: Economic Policy, November 2015

I show how, in the tradition of the dynamic labor supply literature, one can identify the moral hazard effects and liquidity effects of unemployment insurance (UI) using variations along the time profile of unemployment benefits. I use this strategy to in...

A Long Way Coming: Designing Centralized Markets with Privately Informed Buyers and Sellers

By Simon Loertscher, Leslie M. Marx, and Tom Wilkening

Journal of Economic Literature, December 2015

We discuss the economics literature relevant to the design of centralized two-sided market mechanisms for environments in which both buyers and sellers have private information. The existing literature and the history of spectrum auctions, including the i...

Optimal Intermediary Rents

By Josef Schroth

American Economic Journal: Macroeconomics, January 2016

This paper studies a dynamic production economy with financial intermediation. It is assumed that claims held on intermediaries cannot be fully enforced such that intermediation is subject to intermediary equity requirements. It is shown that competitive ...

Real Rigidity, Nominal Rigidity, and the Social Value of Information

By George-Marios Angeletos, Luigi Iovino, and Jennifer La'O

American Economic Review, January 2016

Does welfare improve when firms are better informed about the state of the economy and can thus better coordinate their production and pricing decisions? We address this question in an elementary business-cycle model that highlights how the dispersion of ...

Dynamic Signaling with Dropout Risk

By Francesc Dilmé and Fei Li

American Economic Journal: Microeconomics, February 2016

We study the role of dropout risk in dynamic signaling. A seller privately knows the quality of an indivisible good and decides when to trade. In each period, he may draw a dropout shock that forces him to trade immediately. To avoid costly delay, the sel...

Don't Demotivate, Discriminate

By Jurjen J. A. Kamphorst and Otto H. Swank

American Economic Journal: Microeconomics, February 2016

This paper offers a new theory of discrimination in the workplace. We consider a manager who has to assign two tasks to two employees. The manager has superior information about the employees' abilities. We show that besides an equilibrium where the manag...

Anatomy of a Contract Change

By Rajshri Jayaraman, Debraj Ray, and Francis de Véricourt

American Economic Review, February 2016

We study a contract change for tea pluckers on an Indian plantation, with a higher government-stipulated baseline wage. Incentive piece rates were lowered or kept unchanged. Yet, in the following month, output increased by 20 to 80 percent. This response ...