Bidder Solicitation, Adverse Selection, and the Failure of Competition

By Stephan Lauermann and Asher Wolinsky

American Economic Review, June 2017

We study a common value, first-price auction in which the number of bidders is endogenous: the seller (auctioneer) knows the value and solicits bidders at a cost. The number of bidders, which is unobservable, may thus depend on the true value. Therefore, ...

Unpacking the Long-Run Effects of Tariff Shocks: New Structural Implications from Firm Heterogeneity Models

By Alan Spearot

American Economic Journal: Microeconomics, May 2016

I derive a novel solution for the general equilibrium effects of tariffs that is robust to heterogeneity across industries and countries, and is a function of only aggregate trade data and country-by-industry Pareto shape parameters. Using the model to...

The Nominal Share Price Puzzle

By William C. Weld, Roni Michaely, Richard H. Thaler, and Shlomo Benartzi

Journal of Economic Perspectives, Spring 2009

The average nominal share prices of common stocks traded on the New York Stock Exchange have remained constant at approximately $35 per share since the Great Depression as a result of stock splits. It is surprising that U.S. firms actively maintained cons...

Antitrust in Innovative Industries

By Ilya Segal and Michael D. Whinston

American Economic Review, December 2007

We study the effects of antitrust policy in industries with continual innovation. Antitrust policies that restrict incumbent behavior toward new entrants may have conflicting effects on innovation incentives, raising the profits of new entrants, but lo...

Tracking Decision Makers under Uncertainty

By Amos Arieli, Yaniv Ben-Ami, and Ariel Rubinstein

American Economic Journal: Microeconomics, November 2011

Eye tracking is used to investigate the procedures that participants employ in choosing between two lotteries. Eye movement patterns in problems where the deliberation process is clearly identified are used to substantiate an interpretation of the results...

Challenges from State-Federal Interactions in US Climate Change Policy

By Lawrence H. Goulder and Robert N. Stavins

American Economic Review, May 2011

With a focus on two sorts of regulation—renewable electricity and clean energy standards, and automobile fuel-economy standards—we analyze problematic interactions that arise when state policies are nested within the domain of Federal policy. ...

Immigration and the Diffusion of Technology: The Huguenot Diaspora in Prussia

By Erik Hornung

American Economic Review, January 2014

This paper analyzes long-term effects of skilled-worker immigration on productivity for the Huguenot migration to Prussia. In 1685, religiously persecuted French Huguenots settled in Brandenburg- Prussia and compensated for population losses due to pla...

The Long-Run Effects of Attending an Elite School: Evidence from the United Kingdom

By Damon Clark and Emilia Del Bono

American Economic Journal: Applied Economics, January 2016

This paper estimates the impact of elite school attendance on long-run outcomes including completed education, income, and fertility. Our data consist of individuals born in the 1950s and educated in a UK district that assigned students to either elite or...

Challenges to Mismeasurement Explanations for the US Productivity Slowdown

[Symposium: Are Measures of Economic Growth Biased?]

By Chad Syverson

Journal of Economic Perspectives, Spring 2017

The United States has been experiencing a slowdown in measured labor productivity growth since 2004. A number of commentators and researchers have suggested that this slowdown is at least in part illusory because real output data have failed to capture ...

Historical Presidential Betting Markets

[Symposium: Event Markets]

By Paul W. Rhode and Koleman S. Strumpf

Journal of Economic Perspectives, Spring 2004

This paper analyzes the large and often well-organized markets for betting on U.S. presidential elections that operated between 1868 and 1940. Four main points are addressed. First, we show that the market did a remarkable job forecasting elections in an ...

Children's Prospects and Children's Policy

By Robert Haveman and Barbara Wolfe

Journal of Economic Perspectives, Fall 1993

This paper offers some facts on trends in children's economic status in the United States as well as an economic perspective for thinking about public policy toward children. Throughout, we will attempt to make clear what is known and what is not known em...

Monetary Policy, Trend Inflation, and the Great Moderation: An Alternative Interpretation

By Olivier Coibion and Yuriy Gorodnichenko

American Economic Review, February 2011

With positive trend inflation, the Taylor principle does not guarantee a determinate equilibrium. We provide new theoretical results on determinacy in New Keynesian models with positive trend inflation and new empirical findings on the Federal Reserve's r...

Measuring Consumer Valuation of Limited Provider Networks

By Keith Marzilli Ericson and Amanda Starc

American Economic Review, May 2015

We measure the breadth of insurance networks in the Massachusetts health insurance exchange. Using our measures, we estimate consumer willingness-to-pay for broad and narrow networks. We find that consumers have a wide range of plans available with dramat...

Stocks as Lotteries: The Implications of Probability Weighting for Security Prices

By Nicholas Barberis and Ming Huang

American Economic Review, December 2008

We study the asset pricing implications of Tversky and Kahneman's (1992) cumulative prospect theory, with a particular focus on its probability weighting component. Our main result, derived from a novel equilibrium with nonunique global optima, is that...

Globalization and Emerging Markets: With or Without Crash?

By Philippe Martin and Hélène Rey

American Economic Review, December 2006

We analyze the effects of financial and trade globalization on the likelihood of financial crashes in emerging markets. While trade globalization always makes crashes less likely, financial globalization may make them more likely, especially when trade...

Trend Inflation, Indexation, and Inflation Persistence in the New Keynesian Phillips Curve

By Timothy Cogley and Argia M. Sbordone

American Economic Review, December 2008

Purely forward-looking versions of the New Keynesian Phillips curve (NKPC) generate too little inflation persistence. Some authors add ad hoc backwardlooking terms to address this shortcoming. We hypothesize that inflation persistence results mainly fr...

Protection for Sale: An Empirical Investigation

By Pinelopi Koujianou Goldberg and Giovanni Maggi

American Economic Review, December 1999

The Grossman-Helpman "Protection for Sale" model, concerning the political economy of trade protection, yields clear predictions for the cross-sectional structure of import barriers. Our objective is to check whether the predictions of the Grossman-Helpma...

Taxes, Cigarette Consumption, and Smoking Intensity

By Jérôme Adda and Francesca Cornaglia

American Economic Review, September 2006

This paper analyses the compensatory behavior of smokers. Exploiting data on cotinine concentration—a metabolite of nicotine—measured in a large population of smokers over time, we show that smokers compensate for tax hikes by extracting more nicotin...

The Effect of Medicare Part D on Pharmaceutical Prices and Utilization

By Mark Duggan and Fiona Scott Morton

American Economic Review, March 2010

Medicare Part D began coverage of prescription drugs in 2006. Rather than setting pharmaceutical prices, the government contracted with private insurers to provide drug coverage. Theory suggests that additional insured consumers will raise the optimal pri...

Principles of (Behavioral) Economics

By David Laibson and John A. List

American Economic Review, May 2015

Behavioral economics has become an important and integrated component of modern economics. Behavioral economists embrace the core principles of economics—optimization and equilibrium—and seek to develop and extend those ideas to make them more...