Testing Game Theory in the Field: Swedish LUPI Lottery Games

By Robert Östling, Joseph Tao-yi Wang, Eileen Y. Chou, and Colin F. Camerer

American Economic Journal: Microeconomics, August 2011

Game theory is usually difficult to test in the field because predictions typically depend sensitively on features that are not controlled or observed. We conduct one such test using both laboratory and field data from the Swedish lowest unique positive ...

Amplification and Asymmetric Effects without Collateral Constraints

By Dan Cao and Guangyu Nie

American Economic Journal: Macroeconomics, July 2017

The seminal contribution by Kiyotaki and Moore (1997) has spurred a vast literature on the importance of collateral constraints in propagating and amplifying shocks to the economy. However, most papers in the literature using collateral constraints assume...

Truth in Consequentiality: Theory and Field Evidence on Discrete Choice Experiments

By Christian A. Vossler, Maurice Doyon, and Daniel Rondeau

American Economic Journal: Microeconomics, November 2012

This paper explores methodological issues surrounding the use of discrete choice experiments to elicit values for public goods. We develop an explicit game theoretic model of individual decisions, providing conditions under which surveys with a single bi...

Ontology, Methodological Individualism, and the Foundations of the Social Sciences

By Robert Sugden

Journal of Economic Literature, December 2016

This is a review essay based on a critical assessment of The Ant Trap: Rebuilding the Foundations of the Social Sciences by Brian Epstein. Epstein argues that models in the social sciences are inadequate because they are based on a false ontology o...

The Lengthening of Childhood

[Symposium: Investment in Children]

By David Deming and Susan Dynarski

Journal of Economic Perspectives, Summer 2008

Over the past 40 years, the age at which children enter first grade has slowly drifted upward. In the fall of 1968, 96 percent of six-year-old children were enrolled in first grade or above. By 2005, the proportion had dropped to 84 percent, mainly becaus...

Global Financial Instability: Framework, Events, Issues

[Symposium: Global Financial Instability]

By Frederic S. Mishkin

Journal of Economic Perspectives, Fall 1999

Two of the key questions facing policymakers today are how to reduce the risk of global financial instability and how to cope with it when it occurs. This paper starts by defining financial instability and then showing how it harms economic activity. It t...

Risk-Taking and Risk-Sharing Incentives under Moral Hazard

By Mohamed Belhaj, Renaud Bourlès, and Frédéric Deroïan

American Economic Journal: Microeconomics, February 2014

This paper explores the effect of moral hazard on both risk-taking and informal risk-sharing incentives. Two agents invest in their own project, each choosing a level of risk and effort, and share risk through transfers. This can correspond to farmers in...

Competition and the Use of Foggy Pricing

By Eugenio J. Miravete

American Economic Journal: Microeconomics, February 2013

Firms engage in foggy pricing when the menu of tariff options aims at profiting from consumer mistakes. The analysis of this paper concludes that the transition from monopoly to competition in the early US cellular telephone industry does not generally...

A Theory of Occupational Choice with Endogenous Fertility

By Dilip Mookherjee, Silvia Prina, and Debraj Ray

American Economic Journal: Microeconomics, November 2012

Theories based on partial equilibrium reasoning alone cannot explain the widespread negative cross-sectional correlation between parental wages and fertility, without restrictive assumptions on preferences and childcare costs. We argue that incorporating ...

Endogenous Lobby Formation and Endogenous Protection: A Long-Run Model of Trade Policy Determination

By Devashish Mitra

American Economic Review, December 1999

This paper provides a theory of lobby formation within a framework in which trade policy is determined through political contributions. Under certain conditions, free trade turns out to be an equilibrium outcome either when the government has a high affin...

Legal Reform and Loan Repayment: The Microeconomic Impact of Debt Recovery Tribunals in India

By Sujata Visaria

American Economic Journal: Applied Economics, July 2009

In 1993, the Indian government introduced debt recovery tribunals to speed up the resolution of debt recovery claims larger than a threshold. This paper exploits the staggered introduction of tribunals across states and the link between overdues and cl...

Recommendations for Further Reading

By Bernard Saffran

Journal of Economic Perspectives, Summer 1989

Behavioral CEOs: The Role of Managerial Overconfidence

[Symposium: Overconfidence]

By Ulrike Malmendier and Geoffrey Tate

Journal of Economic Perspectives, Fall 2015

In this paper, we provide a theoretical and empirical framework that allows us to synthesize and assess the burgeoning literature on CEO overconfidence. We also provide novel empirical evidence that overconfidence matters for corporate investment de...

Time Allocation and Task Juggling

By Decio Coviello, Andrea Ichino, and Nicola Persico

American Economic Review, February 2014

A single worker allocates her time among different projects which are progressively assigned. When the worker works on too many projects at the same time, the output rate decreases and completion time increases according to a law which we derive. We call...

Secession and the Limits of Taxation: Toward a Theory of Internal Exit: Comment

By Grégoire Rota Graziosi

American Economic Review, March 2007

Economic Incentives and Social Preferences: Substitutes or Complements?

By Samuel Bowles and Sandra Polania-Reyes

Journal of Economic Literature, June 2012

Explicit economic incentives designed to increase contributions to public goods and to promote other pro-social behavior sometimes are counterproductive or less effective than would be predicted among entirely self-interested individuals. This may occur ...

Risk Matters: The Real Effects of Volatility Shocks: Comment

By Benjamin Born and Johannes Pfeifer

American Economic Review, December 2014

We show that the risk-shock business cycle model of Fernández-Villaverde et al. (2011) must be recalibrated because it underpredicts the targeted business cycle moments by a factor of three once a time aggregation error is corrected. Recalibrating the co...

Recommendations for Further Reading

By Bernard Saffran

Journal of Economic Perspectives, Winter 1993

How Much Would You Pay to Resolve Long-Run Risk?

By Larry G. Epstein, Emmanuel Farhi, and Tomasz Strzalecki

American Economic Review, September 2014

Though risk aversion and the elasticity of intertemporal substitution have been the subjects of careful scrutiny, the long-run risks literature as well as the broader literature using recursive utility to address asset pricing puzzles have ignored the ful...

What Do (and Don't) We Know about the Value Added Tax? A Review of Richard M. Bird and Pierre-Pascal Gendron's The VAT in Developing and Transitional Countries

By Michael Keen

Journal of Economic Literature, March 2009

The VAT has taken the tax world by storm over the last fifty years, but left little trace in the academic literature. Bird and Gendron provide an impressively informed and informative account of the VAT experience in lower income countries, largely vind...