Do laboratory subjects correctly perceive the dynamics of a mean-reverting time series? In our experiment, subjects receive historical data and make forecasts at different horizons. The time series process that we use features short-run momentum and long-run partial mean reversion. Half of the subjects see a version of this process in which the momentum and partial mean reversion unfold over 10 periods ('fast'), while the other subjects see a version with dynamics that unfold over 50 periods ('slow'). Typical subjects recognize most of the mean reversion of the fast process and none of the mean reversion of the slow process.

We document variation in working conditions in the United States, present estimates of how workers value these conditions, and assess the impact of working conditions on estimates of wage inequality. We conduct a series of stated-preference experiments to estimate workers’ willingness to pay for a broad set of working conditions, which we validate with actual job choices. We find that working conditions vary substantially, play a significant role in job choice, and are central components of the compensation received by workers. We find that accounting for differences in preferences for working conditions often exacerbates wage differentials and intensifies measures of wage inequality.

We consider two classes of explanations for the rise in policy-related economic uncertainty in the United States since 1960. The first stresses growth in government spending, taxes, and regulation. A second stresses increased political polarization and its implications for the policymaking process and policy choices.

This paper examines the EPA's decision to cancel or continue the registrations of cancer-causing pesticides that went through the special review process between 1975 and 1989. Despite claims to the contrary, our analysis indicates that the EPA indeed balanced risks against benefits in regulating pesticides: Risks to human health or the environment increased the likelihood that a particular pesticide use was canceled by the EPA; at the same time, the larger the benefits associated with a particular use, the lower was the likelihood of cancellation. Intervention by special-interest groups was also important in the regulatory process. Comments by grower organizations significantly reduced the probability of cancellation, whereas comments by environmental advocacy groups increased the probability of cancellation. Our analysis suggests that the EPA is fully capable of weighing benefits and costs when regulating environmental hazards; however, the implicit value placed on health risks--$35 million per applicator cancer case avoided--may be considered high by some persons.

We study China’s export growth to the United States from 1950 to 2008, using a structural model to disentangle the effects of past tariff changes from the effects of changes in expectations of future tariffs. We find that the effects of China’s 1980 Normal Trade Relations (NTR) grant lasted past its 2001 accession to the World Trade Organization (WTO), and the likelihood of losing NTR status decreased significantly during 1986–92 but changed little thereafter. US manufacturing employment trends support our findings: industries more exposed to the 1980 reform have shed workers steadily since then without acceleration around China’s WTO accession.

Reviews various books related to accounting. "Advanced Accounting," 3rd ed., by Floyd A. Beams; "Three Degrees Above Zero: Bell Labs in the Information Age," by Jeremy Bernstein; "Wiley-Ronald Auditing Service," by D.R. Carmichael and Martin Benis; "Dictionary of Accounting Terms," by Derek French.

The relative merits of dealer versus auction markets have been a subject of significant and sometimes contentious debate. On January 20, 1997, the Securities and Exchange Commission began implementing reforms that would permit the public to compete directly with Nasdaq dealers by submitting binding limit orders. Additionally, superior quotes placed by Nasdaq dealers in private trading venues began to be displayed in the Nasdaq market. We measure the impact of these new rules on various measures of performance, including trading costs and depths. Our results indicate that quoted and effective spreads fell dramatically without adversely affecting market quality.

Across five experiments (N = 1,714), we test whether people engage in wishful thinking to alleviate anxiety about adverse future outcomes. Participants perform pattern recognition tasks in which some patterns may result in an electric shock or a monetary loss. Diagnostic of wishful thinking, participants are less likely to correctly identify patterns that are associated with a shock or loss. Wishful thinking is more pronounced under more ambiguous signals and only reduced by higher accuracy incentives when participants’ cognitive effort reduces ambiguity. Wishful thinking disappears in the domain of monetary gains, indicating that negative emotions are important drivers of the phenomenon.

We extend a standard model of parental investment and intergenerational mobility to include a fully specified genetic analysis of skill transmission. The model’s predictions differ substantially from the standard model’s. The coefficient of intergenerational income elasticity (IGE) may be larger than that in the standard model and depends on the distribution of the genotype. The distribution of genetic endowments may be stratified according to income. The model is tested on data, including genetic information, of twins and their parents, estimating how IGE is affected by genetic factors and how environment and genes interact. The effect of intelligence is substantially stronger than that of other traits.