We study merger policy in a dynamic computational model in which firms can reduce costs through investment or through mergers. Firms invest or propose mergers according to the profitability of these strategies. An antitrust authority can block mergers at some cost. We examine the optimal policy for an antitrust authority that cannot commit to its future policy and approves mergers as they are proposed. We find that the optimal policy can differ substantially from a policy based on static welfare. In general, antitrust policy can greatly affect firms’ investment behavior, and firms’ investment behavior can greatly affect the optimal antitrust policy.

Older wealth holders spend down assets much more slowly than predicted by classic life-cycle models. This paper introduces health-dependent utility into a model with incomplete markets in which preferences for bequests, expenditures when in need of long-term care, and ordinary consumption combine with health and longevity uncertainty to explain saving behavior. To sharply identify motives, it develops strategic survey questions (SSQs) that elicit stated preferences. The model is estimated using these SSQs and wealth data from the Vanguard Research Initiative. The desire to self-insure against long-term-care risk explains a substantial fraction of the wealth holding of many older Americans.

Increasing evidence indicates the importance of management in determining firms' productivity. Yet causal evidence regarding the effectiveness of management practices is scarce, especially for skilled labor in the developed world. In a field experiment measuring commercial airline captains’ productivity, we test four distinct management practices: performance monitoring, performance feedback, target setting, and prosocial incentives. These practices—particularly monitoring and target setting—significantly increase captains' productivity on the targeted fuel-saving dimensions, with positive spillovers on job satisfaction and CO2 emissions. The study reveals an uncharted research opportunity to delve into the black box of firms to examine the determinants of productivity among skilled labor.

This paper illustrates how one can deduce preference from observed choices when attention is both limited and random. We introduce a random attention model where we abstain from any particular attention formation and instead consider a large class of nonparametric random attention rules. Our intuitive condition, monotonic attention, captures the idea that each consideration set competes for the decision maker’s attention. We then develop a revealed preference theory and obtain testable implications. We propose econometric methods for identification, estimation, and inference for the revealed preferences. Finally, we provide a general-purpose software implementation of our estimation and inference results and simulation evidence.

Exploiting variation across states and municipalities in the timing and details of midwifery laws introduced during the period 1900–1940 and using data assembled from various primary sources, we find that requiring midwives to be licensed reduced maternal mortality by 7%–8% and may have led to modest reductions in infant mortality. These estimates represent the strongest evidence to date that licensing restrictions can improve the health of consumers and are directly relevant to ongoing policy debates on the merits of licensing midwives.