Knowledge that Transforms

The main difference in CG was the "discontinuous" effect of the cap.CG assumed c(x) = x for all x.When there was a cap equal to m, costs became c(x) = x for x ≤ m and c(x) = ∞ for x >

In an experiment, players’ ability to learn to cooperate in the repeated prisoner’s dilemma was substantially diminished when the payoffs were noisy, even though players could monitor one another's past actions perfectly. In contrast, in one-time play against a succession of opponents, noisy payoffs increased cooperation, by slowing the rate at which cooperation decays. These observations are consistent with the robust observation from the psychology literature that partial reinforcement (adding randomness to the link between an action and its consequences while holding expected payoffs constant) slows learning. This effect is magnified in the repeated game: When others are slow to learn to cooperate, the benefits of cooperation are reduced, which further hampers cooperation. These results show that a small change in the payoff environment, which changes the speed of individual learning, can have a large effect on collective behavior. And they show that there may be interesting comparative dynamics that can be derived from careful attention to the fact that at least some economic behavior is learned from experience.

Researchers in a variety of important economic literatures have assumed that current income variables as proxies for lifetime income variables follow the textbook errors-in-variables model.In an analysis of Social Security records containing nearly career-long earnings histories for the Health and Retirement Study sample, we find that the relationship between current and lifetime earnings departs substantially from the textbook model in ways that vary systematically over the life cycle.Our results can enable more appropriate analysis of and correction for errors-in-variables bias in a wide range of research that uses current earnings to proxy for lifetime earnings.

Information about 586 individuals who matriculated into 27 economics Ph.D. programs in Fall 2002 is used to estimate first and second year attrition rates. After two years, 26.5 percent of the initial cohort had left, equally divided between the first and second years. Attrition varies widely across individual programs. It is lower among the most highly rated 15 programs, for students with higher verbal and quantitative GRE scores, and for those on a research assistantship. Poor academic performance is the most cited reason for withdrawal. About 15 percent transfer to other economics programs because they are dissatisfied with some aspect of the particular program where they first enrolled. (This abstract was borrowed from another version of this item.)

Labor supply theory predicts systematic heterogeneity in the impact of recent welfare reforms on earnings, transfers, and income.Yet most welfare reform research focuses on mean impacts.We investigate the importance of heterogeneity using random-assignment data from Connecticut's Jobs First waiver, which features key elements of post-1996 welfare programs.Estimated quantile treatment effects exhibit the substantial heterogeneity predicted by labor supply theory.Thus mean impacts miss a great deal.Looking separately at dropouts and other women does not improve the performance of mean impacts.Evaluating Jobs First relative to AFDC using a class of social welfare functions, we find that Jobs First's performance depends on the degree of inequality aversion, the relative valuation of earnings and transfers, and whether one accounts for Jobs First's greater costs.We conclude that welfare reform's effects are likely both more varied and more extensive than has been recognized.

Survey responses from Ph.D. graduates and thesis advisors are used to estimate the time required for the class of 2001-02 to earn a degree. Median time to earn the Ph.D. is 5.5 years, up from 5.25 years for the class of 1996-97. The time required to write a dissertation is a little longer than the time required to complete comprehensive examinations and coursework. Graduates who had their first child while in a Ph.D. program are estimated to finish almost one year later than others. Those with predominantly fellowship support finished about six months faster than those funded predominantly by a teaching assistantship, as did those whose dissertation was a set of essays rather than a single topic treatise. Americans who did their undergraduate work at either a Top-50 U.S. liberal arts or other U.S. college or university that does not offer a Ph.D. in economics finished faster than their counterparts who earned a bachelor’s degree from a U.S. university that offers a Ph.D. in economics. International students from predominantly English speaking countries finished faster than other students studying in the U.S. on temporary visas.

A common view in macroeconomics is that business cycles can be meaningfully decomposed into fluctuations driven by demand shocks - which are shocks that have no short- or long-run effects on productivity - and fluctuations driven by unexpected changes in technology. In this Paper we propose a means of evaluating this view and we show that it is strongly at odds with the data. In contrast, we show that the data favours a view of business cycles driven primarily by a shock that does not affect productivity in the short run - therefore it looks like a demand shock - but affects productivity in the long run. The structural interpretation we suggest for this shock is that it represents news about future technological opportunities. We show that this shock explains about 50% of business cycle fluctuations and therefore deserves to be acknowledged and further understood by macroeconomists.