Communication and Cooperation in Markets

By S. Nageeb Ali and David A. Miller

American Economic Journal: Microeconomics, November 2022

Many markets rely on traders truthfully communicating who has cheated in the past and ostracizing those traders from future trade. This paper investigates when truthful communication is incentive compatible. We find that if each side has a myopic incentiv...

Coordination and Organization Design: Theory and Micro-Evidence

By Wouter Dessein, Desmond (Ho-Fu) Lo, and Chieko Minami

American Economic Journal: Microeconomics, November 2022

We explore the relationship between the volatility of a firm's local environment and its organizational structure. Using micro-level data on managers working for a large retailer, we empirically test and provide support for our theory that a more volatile...

Rational Inattention in the Infield

By Vivek Bhattacharya and Greg Howard

American Economic Journal: Microeconomics, November 2022

This paper provides evidence of rational inattention by experienced professionals in strategic interactions. We add rational inattention to a game of matching pennies with state-dependent payoffs. Unlike the full-information, mixed-strategy Nash equilibri...

Making Elections Work: Accountability with Selection and Control

By Vincent Anesi and Peter Buisseret

American Economic Journal: Microeconomics, November 2022

We study the limits of dynamic electoral accountability when voters are uncertain about politicians' characteristics (adverse selection) and their actions (moral hazard). Existing work argues that voters cannot achieve their first-best payoff. This is att...

Crime Chains

By Mehmet Bac

American Economic Journal: Microeconomics, November 2022

How should law enforcement resources be allocated to minimize the harms from flexible, chain-form trafficking organizations? I show that optimal interventions focus on one target, the feeding source (decapitation) or the revenue-generating tail (amputatio...

Crime, Broken Families, and Punishment

By Emeline Bezin, Thierry Verdier, and Yves Zenou

American Economic Journal: Microeconomics, November 2022

We develop a two-period overlapping generations model in which both the family structure and the decision to commit crime are endogenous and the dynamics of moral norms of good conduct is transmitted intergenerationally by families and peers. By "destroyi...

Games Played by Teams of Players

By Jeongbin Kim, Thomas R. Palfrey, and Jeffrey R. Zeidel

American Economic Journal: Microeconomics, November 2022

We develop a general framework for analyzing games where each player is a team and members of the same team all receive the same payoff. The framework combines noncooperative game theory with collective choice theory, and is developed for both strategic f...

Reaping the Informational Surplus in Bayesian Persuasion

By Ronen Gradwohl, Niklas Hahn, Martin Hoefer, and Rann Smorodinsky

American Economic Journal: Microeconomics, November 2022

The Bayesian persuasion model studies communication between an informed sender and a receiver with a payoff-relevant action, emphasizing the ability of a sender to extract maximal surplus from his informational advantage. In this paper, we study a setting...

License Complementarity and Package Bidding: US Spectrum Auctions

By Mo Xiao and Zhe Yuan

American Economic Journal: Microeconomics, November 2022

US spectrum licenses cover geographically distinct areas and often complement each other. A bidder seeking to acquire multiple licenses is exposed to the risk of winning only isolated patches. Using Auction 73 data, we model the bidding process as an entr...

Sequential Screening with Type-Enhancing Investment

By Bin Liu and Jingfeng Lu

American Economic Journal: Microeconomics, November 2022

Due to the well-known efficiency–rent extraction trade-off, the optimal mechanism in a pure screening environment (e.g., revenue maximization in auctions or cost minimization in procurement) typically calls for distortions in allocative efficiency when ...

Call for Proposals: Hong Kong Institute of Monetary and Financial Research - Open-bid Applied Research Programme

[News]

November 12, 2020

Deadline for submissions is January 15, 2023.

14th International Conference "Challenges of Europe"

[News]

October 27, 2022

The conference will be held May 17-19, 2023 in Croatia.

Front Matter

American Economic Journal: Economic Policy, November 2022

Gerrymandering in State Legislatures: Frictions from Axiomatic Bargaining

By Hisam Sabouni and Cameron A. Shelton

American Economic Journal: Economic Policy, November 2022

Theories of partisan redistricting postulate unitary actors maximizing their party's expected seat share. Yet, the partition of a fixed supply of friendly voters necessarily implies a tragedy of the commons. We recast partisan redistricting as a bargainin...

Enhancing the Efficacy of Teacher Incentives through Framing: A Field Experiment

By Roland G. Fryer, Jr., Steven D. Levitt, John List, and Sally Sadoff

American Economic Journal: Economic Policy, November 2022

In a field experiment, we provide financial incentives to teachers framed either as gains, received at the end of the year, or as losses, in which teachers receive up-front bonuses that must be paid back if their students do not improve sufficiently. Pool...

Health Care Rationing in Public Insurance Programs: Evidence from Medicaid

By Timothy J. Layton, Nicole Maestas, Daniel Prinz, and Boris Vabson

American Economic Journal: Economic Policy, November 2022

We study two mechanisms used by public health insurance programs for rationing health care: outsourcing to private managed care plans and quantity limits for prescription drugs. Leveraging a natural experiment in Texas's Medicaid program, we find that the...

Do Two Electricity Pricing Wrongs Make a Right? Cost Recovery, Externalities, and Efficiency

By Severin Borenstein and James B. Bushnell

American Economic Journal: Economic Policy, November 2022

Economists favor pricing pollution in part so that consumers face the full social marginal cost (SMC) of goods and services. But even absent externalities, retail electricity prices typically exceed private marginal cost, due to a utility's need to cover ...

Multinationals' Sales and Profit Shifting in Tax Havens

By Sébastien Laffitte and Farid Toubal

American Economic Journal: Economic Policy, November 2022

We show that US multinationals record sales and the profits from these sales in tax havens while their goods and services are physically sold in other countries. We propose a framework illustrating the strategy of sales shifting. Our results reveal the im...

Behavioral Responses to Wealth Taxes: Evidence from Switzerland

By Marius Brülhart, Jonathan Gruber, Matthias Krapf, and Kurt Schmidheiny

American Economic Journal: Economic Policy, November 2022

We study how declared wealth responds to changes in wealth tax rates. Exploiting rich intranational variation in Switzerland, we find a 1 percentage point drop in a canton's wealth tax rate raises reported taxable wealth by at least 43 percent after 6 yea...

The Hazards of Unwinding the Prescription Opioid Epidemic: Implications for Child Maltreatment

By Mary F. Evans, Matthew C. Harris, and Lawrence M. Kessler

American Economic Journal: Economic Policy, November 2022

Child maltreatment has significant and long-lasting consequences. We examine how two interventions designed to curtail prescription opioid misuse, the reformulation of OxyContin and the implementation of must-access prescription drug monitoring programs (...