Knowledge that Transforms

We examine the evolution of the decentralized clearinghouse mechanisms that were in use throughout Europe from the thirteenth century to the eighteenth century; in particular, we explore the clearing of nontradable or limited-tradable debts such as bills of exchange. We construct a theoretical model of these clearinghouse mechanisms and show that the specific decentralized multilateral clearing algorithms known as rescontre, skontrieren, or virement des parties, used by merchants in this period, were efficient in specific historical contexts. Our analysis contributes to the understanding of these mechanisms during late medieval and early modern fairs and their robustness during the seventeenth and eighteenth centuries.

Electronically published December 16, 2016

We analyze Medicare's influence on private insurers' payments for physicians' services. Using a large administrative change in reimbursements for surgical versus medical care, we find that private prices follow Medicare's lead. A $1.00 increase in Medicare's fees increases corresponding private prices by $1.16. A second set of Medicare fee changes, which generates area-specific payment shocks, has a similar effect on private reimbursements. Medicare's influence is strongest in areas with concentrated insurers and competitive physician markets, consistent with insurer-doctor bargaining. By echoing Medicare's pricing changes, these payment spillovers amplify Medicare's impact on specialty choice and other welfare-relevant aspects of physician practices.

We analyze high-frequency micro panel data on customers of a major Korean credit card company before and after the 2003 Korean credit crisis and find evidence of pervasive precommitment behavior that is difficult to explain using standard economic theories: (1) customers voluntarily reduce their credit card borrowing limits without any compensation, (2) customers turn down interest-free installment loan offers with high probability, and (3) of the small fraction of customers who do accept interest-free loan offers, most precommit to pay off the loan over a shorter term than the maximum allowed term under the offer.

We conducted a field experiment to study social influences on partisan political participation. We sent letters to 92,000 contributors during the 2012 presidential election campaign. We randomized features of the letters and measured the effects of these variations on the recipients’ subsequent contributions. We find that making an individual’s contributions more visible to her neighbors increases the contributions of supporters of the local majority party and decreases those of supporters of the minority party. Individuals contribute more when they perceive higher average contributions from own-party supporters in their area and contribute less if there is a higher share of own-party contributors.