Knowledge that Transforms

Ausubel (2004) introduces a new ascending-bid auction rule for multiple homogeneous objects, called the Ausubel auction, which is a dynamic counterpart of the Vickrey auction. He claims that in the Ausubel auction with private values, sincere bidding by all bidders is an ex post perfect equilibrium. However, we show that this claim does not hold in general by providing a counterexample. We then modify the Ausubel auction so that sincere bidding by all bidders is an ex post perfect equilibrium.

This paper exploits a unique historical experiment to estimate how information frictions distort international trade: the establishment of the transatlantic telegraph in 1866. I use newly collected data on cotton prices, trade, and information flows from historical newspapers and find that the average and volatility of the transatlantic price difference fell after the telegraph, while average trade flows increased and became more volatile. Using a trade model in which exporters use the latest news about a foreign market to forecast expected prices, I estimate the efficiency gains of the telegraph to be equivalent to 8 percent of export value.

This paper provides the first estimate of the effect of door-to-door canvassing on actual electoral outcomes, via a countrywide experiment embedded in François Hollande's campaign in the 2012 French presidential election. While existing experiments randomized door-to-door visits at the individual level, the scale of this campaign (five million doors knocked) enabled randomization by precinct, the level at which vote shares are recorded administratively. Visits did not affect turnout, but increased Hollande's vote share in the first round and accounted for one-fourth of his victory margin in the second. Visits' impact persisted in later elections, suggesting a lasting persuasion effect.

This paper develops and estimates an equilibrium model where heterogeneous firms can exploit two margins of informality: (i) not register their business, the extensive margin; and (ii) hire workers “off the books,” the intensive margin. The model encompasses the main competing frameworks for understanding informality and provides a natural setting to infer their empirical relevance. The counterfactual analysis shows that once the intensive margin is accounted for, firm and labor informality need not move in the same direction as a result of policy changes. Lower informality can be, but is not necessarily associated with higher output, TFP, or welfare.

We survey New Zealand firms and document novel facts about their macroeconomic beliefs. There is widespread dispersion in beliefs about past and future macroeconomic conditions, especially inflation. This dispersion in beliefs is consistent with firms’ incentives to collect and process information. Using experimental methods, we find that firms update their beliefs in a Bayesian manner when presented with new information about the economy and that changes in their beliefs affect their decisions. Inflation is not generally perceived as being important to business decisions so firms devote few resources to collecting and processing information about inflation.

I conducted a randomized field experiment in traditional public elementary schools in Houston, Texas designed to test the potential productivity benefits of teacher specialization. The average impact of encouraging schools to specialize their teachers on student achievement is −0.11 standard deviations per year on a combined index of math and reading test scores. I argue that the results are consistent with a model in which the benefits of specialization driven by sorting teachers into a subset of subjects based on comparative advantage is outweighed by inefficient pedagogy due to having fewer interactions with each student, though other mechanisms are possible.

This paper studies the impact of unemployment insurance (UI) on the housing market. Exploiting heterogeneity in UI generosity across US states and over time, we find that UI helps the unemployed avoid mortgage default. We estimate that UI expansions during the Great Recession prevented more than 1.3 million foreclosures and insulated home values from labor market shocks. The results suggest that policies that make mortgages more affordable can reduce foreclosures even when borrowers are severely underwater. An optimal UI policy during housing downturns would weigh, among other benefits and costs, the deadweight losses avoided from preventing mortgage defaults.

More than one-half of all people living with HIV are women and 80 percent of all HIV-positive women in the world live in sub- Saharan Africa. This paper demonstrates that the legal origins of these formerly colonized countries significantly determine current-day female HIV rates. In particular, female HIV rates are significantly higher in common law sub- Saharan African countries compared to civil law ones. This paper explains this relationship by focusing on differences in female property rights under the two codes of law. In sub- Saharan Africa, common law is associated with weaker female marital property laws. As a result, women in these common law countries have lower bargaining power within the household and are less able to negotiate safe sex practices and are thus more vulnerable to HIV, compared to their civil law counterparts. Exploiting the fact that some ethnic groups in sub- Saharan Africa cross country borders with different legal systems, we are able to include ethnicity fixed effects into a regression discontinuity approach. This allows us to control for a large set of cultural, geographical, and environmental factors that could be confounding the estimates. The results of this paper are consistent with gender inequality (the "feminization" of AIDS), explaining much of its prevalence in sub- Saharan Africa.

We document the evolution of the new market for frequency response within the UK electricity system over a six-year period. Firms competed in price while facing considerable initial uncertainty about demand and rival behavior. We show that prices stabilized over time, converging to a rest point that is consistent with equilibrium play. We draw on models of fictitious play and adaptive learning to analyze how this convergence occurs and show that these models predict behavior better than an equilibrium model prior to convergence.

We examine the impact of mismatch on entry wages, separations, and wage growth using unique data on worker talents. We show that workers are sorted on comparative advantage across jobs within occupations. The starting wages of inexperienced workers are unrelated to mismatch. For experienced workers, on the other hand, mismatch is negatively priced into their starting wages. Separations and wage growth are more strongly related to mismatch among inexperienced workers than among experienced workers. These findings are consistent with models of information updating, where less information is available about the quality of matches involving inexperienced workers.