The Design and Price of Information

By Dirk Bergemann, Alessandro Bonatti, and Alex Smolin

American Economic Review, January 2018

A data buyer faces a decision problem under uncertainty. He can augment his initial private information with supplemental data from a data seller. His willingness to pay for supplemental data is determined by the quality of his initial private information...

Sustainable Shadow Banking

By Guillermo Ordoñez

American Economic Journal: Macroeconomics, January 2018

Banking regulation is beneficial because it constrains banks' portfolios to prevent excessive risk taking. But given that regulators usually know less than a bank about its investment opportunities, regulation comes at the cost of foregoing profitable inv...

Incomplete Disclosure: Evidence of Signaling and Countersignaling

By Benjamin B. Bederson, Ginger Zhe Jin, Phillip Leslie, Alexander J. Quinn, and Ben Zou

American Economic Journal: Microeconomics, February 2018

In 2011, Maricopa County adopted voluntary restaurant hygiene grade cards (A, B, C, D). Using inspection results between 2007 and 2013, we show that only 58 percent of the subsequent inspections led to online grade posting. Although the disclosure rate in...

How Transparency Kills Information Aggregation: Theory and Experiment

By Sebastian Fehrler and Niall Hughes

American Economic Journal: Microeconomics, February 2018

We investigate the potential of transparency to influence committee decision-making. We present a model in which career concerned committee members receive private information of different type-dependent accuracy, deliberate, and vote. We study three leve...

Honest Equilibria in Reputation Games: The Role of Time Preferences

By Melis Kartal

American Economic Journal: Microeconomics, February 2018

New relationships are often plagued with uncertainty because one of the players has some private information about her "type." The reputation literature has shown that equilibria that reveal this private information typically involve breach of trust and c...

Identifying the Harm of Manipulable School-Choice Mechanisms

By Umut Dur, Robert G. Hammond, and Thayer Morrill

American Economic Journal: Economic Policy, February 2018

An important but under-explored issue in student assignment procedures is heterogeneity in the level of strategic sophistication among students. Our work provides the first direct measure of which students rank schools following their true preference orde...

Asymmetric Information and Remittances: Evidence from Matched Administrative Data

By Thomas Joseph, Yaw Nyarko, and Shing-Yi Wang

American Economic Journal: Applied Economics, April 2018

Using new large-scale, administrative data matching remittances and monthly payroll disbursals, we demonstrate how migrants' earnings in the United Arab Emirates affect their remittances. We consider several types of income changes: Ramadan, weather shock...

The Optimal Timing of Unemployment Benefits: Theory and Evidence from Sweden

By Jonas Kolsrud, Camille Landais, Peter Nilsson, and Johannes Spinnewijn

American Economic Review, April 2018

This paper provides a simple, yet robust framework to evaluate the time profile of benefits paid during an unemployment spell. We derive sufficient-statistics formulae capturing the marginal insurance value and incentive costs of unemployment benefits p...

Dynamic Noisy Signaling

By Sander Heinsalu

American Economic Journal: Microeconomics, May 2018

This article studies costly signaling. The signaling effort is chosen in multiple periods and observed with noise. The signaler benefits from the belief of the market, not directly from the effort or the signal. Optimal signaling behavior in time-varying ...

Markets with Multidimensional Private Information

By Veronica Guerrieri and Robert Shimer

American Economic Journal: Microeconomics, May 2018

This paper explores price formation when sellers are privately informed about their preferences and the quality of their asset. There are many equilibria, including a semi-separating one in which each seller's price depends on a one-dimensional index of h...

A Mechanism for Eliciting Second-Order Beliefs and the Inclination to Choose

By Edi Karni

American Economic Journal: Microeconomics, May 2018

This paper describes a direct revelation mechanism for eliciting decision makers' introspective beliefs on sets of subjective prior or posterior probabilities. The proposed scheme constitutes a revealed-preference procedure for measuring the inclination o...

Quadratic Voting: How Mechanism Design Can Radicalize Democracy

By Steven P. Lalley and E. Glen Weyl

AEA Papers and Proceedings, May 2018

Can mechanism design save democracy? We propose a simple design that offers a chance: individuals pay for as many votes as they wish using a number of "voice credits" in the votes they buy. Only quadratic cost induces marginal costs linear in votes purcha...

What Matters for the Productivity of Kidney Exchange?

By Nikhil Agarwal, Itai Ashlagi, Eduardo Azevedo, Clayton Featherstone, and Ömer Karaduman

AEA Papers and Proceedings, May 2018

Kidney exchange platforms serve patients who need a kidney transplant and who have a willing, but incompatible, donor. These platforms match patients and donors to produce transplants. This paper documents operational details of the three largest platform...

Dynamic Incentives in Wait List Mechanisms

By Nikhil Agarwal, Itai Ashlagi, Paulo Somaini, and Daniel Waldinger

AEA Papers and Proceedings, May 2018

Many scarce public resources are allocated through wait lists that use priorities for individual agents. A new priority system for allocating deceased donor kidneys was adopted in 2014. This redesign was guided by simulations that held decision-rules fixe...

Investment Strategy and Selection Bias: An Equilibrium Perspective on Overoptimism

By Philippe Jehiel

American Economic Review, June 2018

Investors implement projects based on idiosyncratic signal observations, without knowing how signals and returns are jointly distributed. The following heuristic is studied: investors collect information on previously implemented projects with the same si...

Estimating Risk Preferences in the Field

By Levon Barseghyan, Francesca Molinari, Ted O'Donoghue, and Joshua C. Teitelbaum

Journal of Economic Literature, June 2018

We survey the literature on estimating risk preferences using field data. We concentrate our attention on studies in which risk preferences are the focal object and estimating their structure is the core enterprise. We review a number of models of risk ...

Asymmetric Information and Imperfect Competition in Lending Markets

By Gregory S. Crawford, Nicola Pavanini, and Fabiano Schivardi

American Economic Review, July 2018

We study the effects of asymmetric information and imperfect competition in the market for small business lines of credit. We estimate a structural model of credit demand, loan use, pricing, and firm default using matched firm-bank data from Italy. We fin...

Backward Induction in the Wild? Evidence from Sequential Voting in the US Senate

By Jörg L. Spenkuch, B. Pablo Montagnes, and Daniel B. Magleby

American Economic Review, July 2018

In the US Senate, roll calls are held in alphabetical order. We document that senators early in the order are less likely to vote with the majority of their own party than those whose last name places them at the end of the alphabet. To speak to the mecha...

Matching with Moral Hazard: Assigning Attorneys to Poor Defendants

By Behrang Kamali Shahdadi

American Economic Journal: Microeconomics, August 2018

We model the problem of assigning counsel to poor defendants as a matching problem. A novel aspect of this matching problem is the moral hazard component on the part of counsel. Within the model, we show that holding the total expenditure for counsel fixe...

Electoral Accountability and Interdistrict Competition

By Galina Zudenkova

American Economic Journal: Microeconomics, August 2018

This paper analyzes a multidistrict game of electoral accountability in which constituencies compete over scarce resources by setting expectations for targeted spending. I build a political agency model in which a vote-maximizing politician is subject to ...