Knowledge that Transforms

A sender may communicate with a decision maker through intermediaries. In this model, an objective sender and intermediary pass on information truthfully, while biased ones favor a particular agenda but also have reputational concerns. I show that the biased sender and the biased intermediary's reporting truthfulness are strategic complements. The biased sender is less likely to use an intermediary than an objective sender if his reputational concerns are low, but more likely to do so if his reputational concerns are moderate. Moreover, the biased sender may be more likely to use an intermediary perceived to be more biased.

The past decade has seen the explosive emergence of online advertising as a major source of revenue for Internet publishers. Analyses of this phenomenon are mostly conducted in the sway of Google’s hugely successful search advertising program. In the early days of the Internet, before Google, virtually all advertising revenues were related to simple display ads. Yet by 2008 search advertising accounted for over $10.5 billion of the $23.4 billion in total online advertising, and pundits were forecasting continued growth at rates of 12 % per year over the next five years.1 Internet advertising markets have broken sharply from the advertising markets for traditional media. In the older media, every consumer that received a particular magazine, listened to a particular radio program, or watched a particular TV show would read, hear or see the same advertisement. An advertiser that wanted to reach an audience with particular characteristics could do so only within narrow limits. For example, a beer company might advertise on televised football games and a maker of fashion clothing might advertise in women's magazines. Although publications do some tailoring of their offerings, as when a newspaper has different local editions, audience mix is nevertheless

The real value of the US dollar has fluctuated widely during the global financial crisis and its aftermath. Beginning in early 2008 through early 2009, the dollar strengthened against most currencies but weakened considerably in the intervening months. We propose a decomposi tion of the forces driving the real exchange rate into a long run real interest rate component and a residual risk premium component. If real interest rates in the United States rise rela tive to its partners, the value of the dollar should strengthen. Likewise, if the level risk premium on foreign interest-bearing assets rises, the dol lar should also strengthen. We find that little of the recent movements in the dollar are directly attributable to the real interest component, sug gesting that most of the movements are due to the residual risk premium component. There is a large and diverse literature that affords a role to real interest differentials and to risk premiums in determining the real value of a currency. Our approach is almost purely definitional. The only assumptions we rely on are those of stationarity?of the real exchange rate and the US-foreign real interest differen tial. Specifically, let qt denote the log of the real exchange rate, defined as the foreign con sumer price level (converted into dollar terms

Disentangling the Effects of Health Reform in Massachusetts: How Important Are the Special Provisions for Young Adults? by Sharon K. Long, Alshadye Yemane and Karen Stockley. Published in volume 100, issue 2, pages 297-302 of American Economic Review, May 2010

Recent economic trends, like the growing prevalence of defined contribution retirement plans, have made individuals increasingly responsible for their own financial security. Financial security greatly depends on the ability to accumulate adequate wealth (Edward Wolff 1998). Wealth can be a significant source of retirement income for individuals less and less able to rely on Social Security and employerprovided defined benefit pension plans. One concern in the current economic climate is the persistent gap in wealth between men and women. Several papers—for example Lucie Schmidt and Purvi Sevak (2006)—have found that the gap is significant even after controlling for individual characteristics. This paper contributes to the literature by studying the role of risk preferences in addition to other characteristics. Specifically, it addresses the following research question: controlling for other factors, do gender differences in risk preferences contribute to the gender wealth gap at retirement? The underlying premise is that women are more risk averse than men, which is supported by previous research (for example, Robert B. Barsky et al. 1997). A simple theoretical model of household decision-making illustrates that retirement wealth is a function of income earned over the lifetime and risk aversion. The model is empirically tested using data from the Health and Retirement Study (HRS).1 Results show that the gender gap in wealth persists even when risk preferences are added to the set of controls. Thus the unexplained gap remains a cause for concern.

This paper investigates the role of social learning in the diffusion of a new agricultural technology in Ghana. We use unique data on farmers' communication patterns to define each individual's information neighborhood. Conditional on many potentially confounding variables, we find evidence that farmers adjust their inputs to align with those of their information neighbors who were surprisingly successful in previous periods. The relationship of these input adjustments to experience further indicates the presence of social learning. In addition, applying the same method to input choices for another crop, of known technology, correctly indicates an absence of social learning effects.

Three quarters of all violence against women is perpetrated by domestic partners. This study exploits exogenous changes in the demand for labor in female-dominated industries to estimate the impact of the male-female wage gap on domestic violence. Decreases in the wage gap reduce violence against women, consistent with a household bargaining model. These findings shed new light on the health production process as well as observed income gradients in health and suggest that in addition to addressing concerns of equity and efficiency, pay parity can also improve the health of American women via reductions in violence.

Debt Consolidation and Fiscal Stabilization of Deep Recessions by Giancarlo Corsetti, Keith Kuester, André Meier and Gernot J. Müller. Published in volume 100, issue 2, pages 41-45 of American Economic Review, May 2010

Learning to Cope: Voluntary Financial Education and Loan Performance during a Housing Crisis by Sumit Agarwal, Gene Amromin, Itzhak Ben-David, Souphala Chomsisengphet and Douglas D. Evanoff. Published in volume 100, issue 2, pages 495-500 of American Economic Review, May 2010

We analyze the existence of policy reversal, the phenomenon sometimes observed that a certain policy (say extreme left-wing) is implemented by the “unlikely” (right-wing) party. We formulate a Downsian signaling model where the incumbent government, through its choice of policy, reveals information both regarding own preferences and external circumstances that may call for a particular policy. We show that policy reversal may indeed exist as an equilibrium phenomenon. This is partly because the incumbent party has superior opportunities to reveal information, and partly because its reputation protects a left-wing incumbent when advertising a right-wing policy.