Class Actions and Private Antitrust Litigation

By Albert H. Choi and Kathryn E. Spier

American Economic Journal: Microeconomics, August 2022

When firms collude and charge supracompetitive prices, consumers can bring antitrust lawsuits against the firms. When the litigation cost is low, firms accept the cost as just another cost of doing business, whereas when the cost is high, the firms lower ...

Experience Goods and Consumer Search

By Yongmin Chen, Zhuozheng Li, and Tianle Zhang

American Economic Journal: Microeconomics, August 2022

We introduce a search model where products differ in horizontal attributes and unobserved quality ("experience goods"), and firms can establish quality reputation. We show that the inability of consumers to observe quality before purchase significantly ch...

Adviser Compensation, Endogenous Entry, and the Advice Gap

By Jurre H. Thiel

American Economic Journal: Microeconomics, August 2022

To prevent biased advice, regulators increasingly ban commission payments to financial advisers. Such bans are associated with "advice gaps," meaning that advice becomes less accessible. To understand the trade-off between the quality and accessibility of...

Learning in Games and the Interpretation of Natural Experiments

By Drew Fudenberg and David K. Levine

American Economic Journal: Microeconomics, August 2022

We show that the treatment effect estimated by standard methods such as regression discontinuity analysis or difference-in-differences may contain a transient "learning effect" that is entangled with the long-term effect of the treatment. This learning ef...

The Focal Luce Model

By Matthew Kovach and Gerelt Tserenjigmid

American Economic Journal: Microeconomics, August 2022

We introduce the Focal Luce Model (FLM), a random choice model that generalizes Luce's (1959) model (multinomial logit) to account for menu-dependent focality of alternatives. In the FLM, focal alternatives are relatively more likely to be chosen even aft...

Substitution Effects in Intertemporal Problems

By Davide Dragone and Paolo Vanin

American Economic Journal: Microeconomics, August 2022

We consider a broad class of intertemporal economic problems and characterize the short-run and long-run responses of the demand for a good to a permanent increase in its market price. Depending on the interplay between self-productivity and time discount...

Contract Duration and the Costs of Market Transactions

By Alexander MacKay

American Economic Journal: Microeconomics, August 2022

The optimal duration of a supply contract balances the costs of re-selecting a supplier against the costs of being matched to an inefficient supplier when the contract lasts too long. I develop a structural model of contract duration that captures this tr...

Stability of Experimental Results: Forecasts and Evidence

By Stefano DellaVigna and Devin Pope

American Economic Journal: Microeconomics, August 2022

How robust are experimental results to changes in design? And can researchers anticipate which changes matter most? We consider a real-effort task with multiple behavioral treatments and examine the stability along six dimensions: (i) pure replication, (i...

Attention Oligopoly

By Andrea Prat and Tommaso Valletti

American Economic Journal: Microeconomics, August 2022

We model digital platforms as attention brokers that have proprietary information about their users' product preferences and sell targeted ad space to retail product industries. Retail producers—incumbents or entrants—compete for access to this attent...

Investment and Information Acquisition

By Dimitri Migrow and Sergei Severinov

American Economic Journal: Microeconomics, August 2022

We study the interaction between productive investment and persuasion activities in a principal–agent setting with strategic disclosure. In an attempt to persuade the principal, the agent diverts substantial resources from productive activities to info...

AEA Member Announcements: 2022 Annual Election

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July 15, 2022

View member announcement from July 27, 2022.

Front Matter

American Economic Review, August 2022

Community Colleges and Upward Mobility

By Jack Mountjoy

American Economic Review, August 2022

Two-year community colleges enroll nearly half of all first-time undergraduates in the United States, but to ambiguous effect: low persistence rates and the potential for diverting students from four-year institutions cast ambiguity over two-year colleges...

The Impact of Childhood Social Skills and Self-Control Training on Economic and Noneconomic Outcomes: Evidence from a Randomized Experiment Using Administrative Data

By Yann Algan, Elizabeth Beasley, Sylvana Côté, Jungwee Park, Richard E. Tremblay, and Frank Vitaro

American Economic Review, August 2022

A childhood intervention to improve the social skills and self-control of at-risk kindergarten boys in the 1980s had positive impacts over the life course: higher trust and self-control as adolescents; increased social group membership, education, and red...

Sentiment and Speculation in a Market with Heterogeneous Beliefs

By Ian W. R. Martin and Dimitris Papadimitriou

American Economic Review, August 2022

We present a model featuring risk-averse investors with heterogeneous beliefs. Individuals who are correct in hindsight—whether through luck or judgment—get rich, so sentiment is bullish following good news and bearish following bad news. Sentiment ma...

The Economic Effects of Mafia: Firm Level Evidence

By Litterio Mirenda, Sauro Mocetti, and Lucia Rizzica

American Economic Review, August 2022

We analyze the effects of Mafia infiltration in the legal economy. Combining information from investigative records with panel data on firms' governance and balance sheets, we build an indicator of infiltration in firms located in an area with no traditio...

The Human Side of Structural Transformation

By Tommaso Porzio, Federico Rossi, and Gabriella Santangelo

American Economic Review, August 2022

We document that nearly half of the global decline in agricultural employment was driven by new cohorts entering the labor market. A new dataset of policy reforms supports an interpretation of these cohort effects as human capital. Using a model of fricti...

Capital Gains Taxes and Real Corporate Investment: Evidence from Korea

By Terry S. Moon

American Economic Review, August 2022

This paper assesses the effects of capital gains taxes on investment in the Republic of Korea (hereafter, Korea), where capital gains tax rates vary at the firm level by firm size. Following a reform in 2014, firms with a tax cut increased investment by 3...

Dynamic Oligopoly and Price Stickiness

By Olivier Wang and Iván Werning

American Economic Review, August 2022

How does market concentration affect the potency of monetary policy? To address this question we embed a dynamic oligopolistic game into a general-equilibrium macroeconomic model. We provide a sufficient-statistic formula for the response to monetary shoc...

Market Access and Quality Upgrading: Evidence from Four Field Experiments

By Tessa Bold, Selene Ghisolfi, Frances Nsonzi, and Jakob Svensson

American Economic Review, August 2022

Smallholder farming in many developing countries is characterized by low productivity and low-quality output. Low quality limits the price farmers can command and their potential income. We conduct a series of experiments among maize farmers in Uganda to ...