Zone Pricing in Retail Oligopoly

By Brian Adams and Kevin R. Williams

American Economic Journal: Microeconomics, February 2019

We quantify the welfare effects of zone pricing, or setting common prices across distinct markets, in retail oligopoly. Although monopolists can only increase profits by price discriminating, this need not be true when firms face competition. With novel...

Strategic Patient Discharge: The Case of Long-Term Care Hospitals

By Paul J. Eliason, Paul L. E. Grieco, Ryan C. McDevitt, and James W. Roberts

American Economic Review, November 2018

Medicare's prospective payment system for long-term acute-care hospitals (LTCHs) provides modest reimbursements at the beginning of a patient's stay before jumping discontinuously to a large lump-sum payment after a prespecified number of days. We show th...

Does Simple Information Provision Lead to More Diverse Classrooms? Evidence from a Field Experiment on Undergraduate Economics

By Amanda Bayer, Syon P. Bhanot, and Fernando Lozano

AEA Papers and Proceedings, May 2019

This paper reports the results of a field experiment involving 2,710 students across nine US colleges, in which faculty provided incoming women and URM students with information about economics. We randomly assign students to one of three conditions: a co...

Rational Inattention in Hiring Decisions

By Sushant Acharya and Shu Lin Wee

American Economic Journal: Macroeconomics, January 2020

We provide an information-based theory of matching efficiency fluctuations. Rationally inattentive firms have limited capacity to process information and cannot perfectly identify suitable applicants. During recessions, higher losses from hiring unsuitabl...

Diffusing Coordination Risk

By Deepal Basak and Zhen Zhou

American Economic Review, January 2020

In a regime change game, privately informed agents sequentially decide whether to attack without observing others' previous actions. To dissuade them from attacking, a principal adopts a dynamic information disclosure policy, frequent viability tests. A v...

Peer Preferences, School Competition, and the Effects of Public School Choice

By Levon Barseghyan, Damon Clark, and Stephen Coate

American Economic Journal: Economic Policy, November 2019

This paper develops a new economic model of public school choice. The key innovation is to model competition between schools in an environment in which parents have peer preferences. The analysis yields three main findings. First, peer preferences dampen ...

Impressionable Voters

By Costel Andonie and Daniel Diermeier

American Economic Journal: Microeconomics, February 2019

We propose a model of impressionable voters. Impressionable voters vote based on impressions rather than maximizing expected utility. We apply our model to elections with multiple candidates and solve for the stationary distributions of the implied stocha...

The Risk of Failure: Trial and Error Learning and Long-Run Performance

By Steven Callander and Niko Matouschek

American Economic Journal: Microeconomics, February 2019

Innovation is often the key to sustained progress, yet innovation itself is difficult and highly risky. Success is not guaranteed as breakthroughs are mixed with setbacks and the path of learning is typically far from smooth. How decision makers learn by ...

Self-Fulfilling Debt Crises: A Quantitative Analysis

By Luigi Bocola and Alessandro Dovis

American Economic Review, December 2019

This paper investigates the role of self-fulfilling expectations in sovereign bond markets. We consider a model of sovereign borrowing featuring endogenous debt maturity, risk-averse lenders, and self-fulfilling crises à la Cole and Kehoe (2000). In this...

Firm Uncertainty Cycles and the Propagation of Nominal Shocks

By Isaac Baley and Andrés Blanco

American Economic Journal: Macroeconomics, January 2019

We develop a framework to study the impact of idiosyncratic uncertainty on aggregate economic outcomes. Agents learn about individual characteristics, which receive infrequent, large, and persistent shocks. In this environment, idiosyncratic uncertainty m...

Maimonides' Rule Redux

By Joshua D. Angrist, Victor Lavy, Jetson Leder-Luis, and Adi Shany

American Economic Review: Insights, December 2019

We use Maimonides' rule as an instrument for class size in large Israeli samples from 2002–2011. In contrast with Angrist and Lavy (1999), newer estimates show no evidence of class size effects. The new data also reveal enrollment manipulation near Maim...

Front Matter

American Economic Journal: Applied Economics, October 2018

Did Unconventional Interventions Unfreeze the Credit Market?

By Hui Tong and Shang-Jin Wei

American Economic Journal: Macroeconomics, April 2020

This paper investigates whether and how unconventional interventions in 2008–2010 unfroze the credit market. We construct a dataset of 198 interventions for 16 countries during 2008–2010 and examine heterogeneous responses in stock prices to the inter...

Contracts with Framing

By Yuval Salant and Ron Siegel

American Economic Journal: Microeconomics, August 2018

We study a model of contracts in which a profit-maximizing seller uses framing to influence buyers' purchasing behavior. Framing temporarily affects how buyers evaluate different products, and buyers can renege on their purchases after the framing effect ...

Employed for Higher Pay? How Medicare Payment Rules Affect Hospital Employment of Physicians

By David Dranove and Christopher Ody

American Economic Journal: Economic Policy, November 2019

Hospitals employ an increasing number of physicians and bill for a growing share of outpatient procedures. We exploit a plausibly exogenous increase in Medicare prices for hospital-employed physicians relative to Medicare prices for other physicians to sh...

Minutes of the Meeting of the Executive Committee, Chicago, IL, April 20, 2018

By Peter L. Rousseau

AEA Papers and Proceedings, May 2019

Retrospectives: On the Genius Behind David Ricardo's 1817 Formulation of Comparative Advantage

By Daniel M. Bernhofen and John C. Brown

Journal of Economic Perspectives, Fall 2018

Last year marked the 200th anniversary of Ricardo's famous "four numbers" paragraph on comparative advantage, which is one of the oldest analytical results in economics. Following the lead of James Mill (1821), these four numbers have been interpreted as ...

Maternal Depression, Women's Empowerment, and Parental Investment: Evidence from a Randomized Controlled Trial

By Victoria Baranov, Sonia Bhalotra, Pietro Biroli, and Joanna Maselko

American Economic Review, March 2020

We evaluate the medium-term impacts of treating maternal depression on women's mental health, financial empowerment, and parenting decisions. We leverage variation induced by a cluster-randomized controlled trial that provided psychotherapy to 903 prenata...

Financial Incentives and the Fertility-Sex Ratio Trade-Off

By S Anukriti

American Economic Journal: Applied Economics, April 2018

Can financial incentives resolve the fertility-sex ratio trade-off faced by countries with persistent son preference and easy access to sex-selection technology? An Indian program, Devi Rupak, that seeks to lower fertility and the sex ratio is unable to d...

Commuting, Migration, and Local Employment Elasticities

By Ferdinando Monte, Stephen J. Redding, and Esteban Rossi-Hansberg

American Economic Review, December 2018

We provide theory and evidence that the elasticity of local employment to a labor demand shock is heterogeneous depending on the commuting openness of the local labor market. We develop a quantitative general equilibrium model that incorporates spatial li...