Knowledge that Transforms

We study social learning using experiments where two people independently learn relevant information and can share it to make accurate private decisions. Across three experiments, people are substantially less sensitive to information others discover than to equally-relevant information they discovered themselves. This holds when they must learn information from others through discussion; when the experimenter perfectly communicates the information; and even when participants observe others’ information with their own eyes. Our results therefore stem not from a failure to elicit information from others but a systematic tendency to underweight it relative to one’s own information. Our findings illustrate a powerful barrier to social learning that might underlie many documented cases of failure to learn from others.

This paper studies whether common leadership, defined as two firms sharing executives or board directors, contributes to collusion. Using an explicit measure of labor market collusion from unsealed court evidence, we find that the probability of collusion between two firms increases by 11 percentage points after the onset of common leadership, a ninefold increase over the baseline rate. These results are not driven by closeness of product or labor market competition. Our findings are consistent with the increasing attention toward common leadership under Clayton Act Section 8. Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.

Something is amiss in empirical economics. Despite the advances of the credibility revolution, published estimates tend to be inflated and overconfident. We argue that this stems from a weakness in the dominant econometric framework: treating the researcher like a calculator that mechanically implements the econometric method. We use several examples to show how properties of estimators change dramatically with humans-in-the-loop. Under plausible assumptions on researcher behavior, low-power estimators such as instrumental variables exhibit high degrees of bias, even with a first-stage F-statistic of 200. Threshold testing on the first-stage F-statistic can reduce bias, contrary to Angrist and Kolesár (2024). And standard errors understate uncertainty, since they ignore variation due to researchers' subjective choices. Ignoring the role of humans "in the research loop" can lead to highly biased and unreliable findings. Modifying econometric practices to address the human factor is a critical frontier of the credibility revolution.

Anti-recharacterization laws significantly increase the rights of securitization creditors by allowing the buyers of securitized assets to exclusively and immediately seize collateral in bankruptcy. However, strengthening the rights of securitization creditors can limit other creditors’ ability to recover loans. We find that, after a state adopts an anti-recharacterization law, local banks operating in the same state accrue more loan loss provisions, tighten their loan contracts, and incur higher future loan charge-offs. These findings are consistent with the argument that a safe harbor for securitization transactions advantages Wall Street-style structured finance at the expense of Main Street-style lending.

Digital platforms reduce geographic frictions, enabling better matching between service providers and users. I quantify reallocation gains in Swedish online health care, using nationwide time-conditional random assignment between patients and physicians. Matching high-risk patients with doctors effective at reducing Emergency Room visits lowers such visits by 4.4 percent (SE 1.3); reallocations also reduce Counter-Guideline antibiotics by 3.1 percent (1.4). I find limited trade-offs in matching; horizontal differentiation among doctors and varied patient needs allow improvement in multiple outcomes simultaneously. Efficiency-enhancing reallocations also affect equity. The findings highlight the potential for care reorganization aligning provider heterogeneity with patient needs when geographic constraints are lifted.

We study the effects of the largest corporate income tax cut in U.S. history on firms and workers. To identify causal effects, we use employer-employee matched tax records and event studies comparing similarly sized firms in the same industry that faced divergent tax changes due to their pre-existing legal status. Tax cuts cause increases in firms' investment, sales, profits, employment, and payrolls, with earnings gains concentrated among highly paid workers. In the short-run, 87% of private income gains flow to the top 10% of the income distribution.

Designing public transport networks involves trade-offs between coverage, service frequency, and direct service. We use the expansion of the bus system in Jakarta, Indonesia, to study these trade-offs. We analyze how new direct connections, changes in bus travel time, and wait-time reductions affect bus ridership and aggregate flows and estimate a transit network demand model by matching the route launch events. Commuters in Jakarta are 2–3 times more sensitive to wait time than bus time and inattentive to long routes. We develop a flexible framework to characterize optimal networks. A less concentrated network would increase ridership and commuter welfare.

This paper studies how municipal governments jointly manage spending, credit market borrowing, and a public employee pension system. I model governments as levered investors who must meet non-defaultable pension obligations and may value government spending more than citizens. I quantify the model using data on California cities, including a new record of fiscal emergencies, tax increases required to maintain essential city services. After the financial crisis depleted pension funds, cities engaged in excessive risk-taking: the fiscal emergency option encouraged gambling for resurrection that kept cities vulnerable to shocks well into the recovery. To correct this problem, a savings requirement works better than a restriction on risk-taking or a pension funding requirement. The policy experiments emphasize that effective policies need to target the combined pension and bond finances, as policies that only target one, such as a pension funding requirement, are undermined by endogenous changes to the other.