Knowledge that Transforms

[We compare a contracting model and a labor supply model. One test is whether earnings changes are more variable than hours changes, as predicted by the labor supply model, or less variable, as predicted by the contracting model. We apply this test to two longitudinal surveys and find that earnings are somewhat more variable than hours for men who never change employers. The estimates suggest that changes in earnings and hours not associated with measurement error occur at fixed wage rates.]

[This paper examines the importance of specific relationship investments in determining the duration of coal contracts negotiated between coal suppliers and electric utilities. Data for 277 coal contracts are used to perform the analysis. The results provide strong support for the view that buyers and sellers make longer commitments to the terms of future trade at the contract execution stage, and rely less on repeated bargaining, when relationship-specific investments are more important.]

The practical problems associated with accurately measuring the value of a public good in an applied setting are considered. We compare and contrast the values obtained from hypothetical elicitation procedures with those obtained in a marketplace. When hypothetical measurements are elicited in the field, buying-selling discrepancies similar to those predicted by psychological models of behavior are observed. These discrepancies decrease greatly when a market with appropriate incentives for accurate relevation is used to elicit the value for the public good.