Do Women Supply More Public Goods Than Men? Preliminary Experimental Evidence from Matrilineal and Patriarchal Societies by Steffen Andersen, Erwin Bulte, Uri Gneezy and John A. List. Published in volume 98, issue 2, pages 376-81 of American Economic Review, May 2008
We construct a model to study the implications of changes in political institutions for economic institutions. A change in political institutions alters the distribution of de jure political power, but creates incentives for investments in de facto political power to partially or even fully offset change in de jure power. The model can imply a pattern of captured democracy, whereby a democratic regime may survive but choose economic institutions favoring an elite. The model provides conditions under which economic or policy outcomes will be invariant to changes in political institutions, and economic institutions themselves will persist over time. (JEL D02, D72) The domination of an organized minority … over the unorganized majority is inevitable. The power of any minority is irresistible as against each single individual in the majority, who stands alone before the totality of the organized minority. At the same time, the minority is organized for the very reason that it is a minority. —Gaetano Mosca (1939, 53).
We show that the week after selling a large-prize Texas Lotto winning ticket, a retailer experiences a 12 to 38 percent relative increase in ticket sales. Some increase persists for up to 40 weeks. We document that the sales response increases with jackpot size and is larger in areas with more economically disadvantaged populations. Sales patterns across games and across retailers are not consistent with most advertising explanations. Furthermore, response patterns are not consistent with representativeness-based explanations for the hot hand or gambler's fallacy; we suggest an alternative explanation for the observed "lucky store" effect. (JEL H27, H71)
Economics has traditionally relied on revealed preferences (and, occasionally, on verbal reports) to understand the desires of people. Another source of information has been developed in recent years: the direct observation of choice processes. This mechanism, possible thanks to the improvements in the designs and techniques to measure brain activity, is explored in the bur geoning field of experimental neuroeconom ics (see Paul W. Glimcher and Aldo Rustichini (2004) and Colin Camerer, George Loewenstein, and Drazen Prelec (2005) for recent surveys). In this article, we argue that the evidence on brain activity can also be used to build theo retical models that help us understand choices and predict behaviors. We label this research “Neuroeconomic Theory.” In Section I, we describe the procedure, discuss some advan tages over traditional methodologies, and estab lish some facts that motivate our approach. In Section II, we illustrate the methodology with two brain-based models of decision making. I. What is “Neuroeconomic Theory”? Neuroeconomic theory is an interdisciplin ary line of investigation that combines research from neuroscience, neurobiology, and econom ics. Experimental neuroscience and neurobiology provide detailed evidence of the functionality, interconnectivity, and physiological constraints of the brain systems involved in decision making. Microeconomic theory supplies the toolkit to build simple optimization models that incorporate these network interactions and well-defined con straints into the mechanisms of choice.
Beyond DSGE Models: Toward an Empirically Based Macroeconomics by David Colander, Peter Howitt, Alan Kirman, Axel Leijonhufvud and Perry Mehrling. Published in volume 98, issue 2, pages 236-40 of American Economic Review, May 2008
Policymakers often prescribe that microfinance institutions increase interest rates to eliminate their reliance on subsidies. This strategy makes sense if the poor are rate insensitive: then microlenders increase profitability (or achieve sustainability) without reducing the poor's access to credit. We test the assumption of price inelastic demand using randomized trials conducted by a consumer lender in South Africa. The demand curves are downward sloping, and steeper for price increases relative to the lender's standard rates. We also find that loan size is far more responsive to changes in loan maturity than to changes in interest rates, which is consistent with binding liquidity constraints. (JEL G21, O16)
This article examines the stock market's changing valuation of corporate patentable assets between 1910 and 1939. It shows that the value of knowledge capital increased significantly during the 1920s compared to the 1910s as investors responded to the quality of technological inventions. Innovation was an important driver of the late 1920s stock market runup, and the Great Crash did not reflect a significant revaluation of knowledge capital relative to physical capital. Although substantial quantities of influential patents were accumulated during the post-crash recovery, high technology firms did not earn significant excess returns over low technology firms for most of the 1930s. (JEL G14, N12, N22, O30)
Twenty years ago, Thomas A. Rietz (1988) showed that infrequent, large drops in consumption make the theoretical equity premium large. Recent research has resurrected this ‘disaster’explanation of the equity premium puzzle. Robert J. Barro (2006) measures disasters during the XXth century, and …nds that they are frequent and large enough, and stock returns low enough relative
Standard intuitions for optimal gerrymandering involve concentrating one's extreme opponents in “unwinnable” districts (“packing”) and spreading one's supporters evenly over “winnable” districts (“cracking”). These intuitions come from models with either no uncertainty about voter preferences or only two voter types. In contrast, we characterize the solution to a problem in which a gerrymanderer observes a noisy signal of voter preferences from a continuous distribution and creates N districts of equal size to maximize the expected number of districts she wins. Under mild regularity conditions, we show that cracking is never optimal—one's most ardent supporters should be grouped together. Moreover, for sufficiently precise signals, the optimal solution involves creating a district that matches extreme “Republicans” with extreme “Democrats,” and then continuing to match toward the center of the signal distribution. (JEL D72)
When a job-seeker and an employer meet, find a prospective joint surplus, and bargain over the wage, conditions in the outside labor market, including especially unemployment, may have limited influence. The job-seeker's only credible threat during bargaining is to hold out for a better deal. The employer's threat is to delay bargaining. Consequently, the outcome of the bargain depends on the relative costs of delays to the parties, rather than on the payoffs that result from exiting negotiations. Modeling bargaining in this way makes wages less responsive to unemployment. A stochastic model of the labor market with credible bargaining and reasonable parameter values yields larger employment fluctuations than does the standard Mortensen-Pissarides model. (JEL J22, J23, J31, J64)