A Fast Literature Search Engine based on top-quality journals, by Dr. Mingze Gao.

• Ohlendorf, S. (2009). Expectation Damages, Divisible Contracts, and Bilateral Investment. American Economic Review, 99, 1608–1618.

  This paper examines the efficiency of expectation damages as a breach remedy in a bilateral trade setting with renegotiation and relationship-specific investment by the buyer and the seller. As demonstrated by Edlin and Reichelstein (1996), no contract that specifies only a fixed quantity and a fixed per-unit price can induce efficient investment if marginal cost is constant and deterministic. We show that this result does not extend to more general payoff functions. If both parties face the risk of breaching, the first best becomes attainable with a simple price-quantity contract. (JEL D86, K12)

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• Palacios-Huerta, I., & Volij, O. (2009). Field Centipedes. American Economic Review, 99, 1619–1635.

  In the centipede game, all standard equilibrium concepts dictate that the player who decides first must stop the game immediately. There is vast experimental evidence, however, that this rarely occurs. We first conduct a field experiment in which highly ranked chess players play this game. Contrary to previous evidence, our results show that69 percent of chess players stop immediately. When we restrict attention to Grandmasters, this percentage escalates to 100 percent. We then conduct a laboratory experiment in which chess players and students are matched in different treatments. When students play against chess players, the outcome approaches the subgame-perfect equilibrium. (JEL C72, C93)

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• Pástor, L., & Veronesi, P. (2009). Technological Revolutions and Stock Prices. American Economic Review, 99, 1451–1483.

  We develop a general equilibrium model in which stock prices of innovativefirms exhibit "bubbles" during technological revolutions. In the model, theaverage productivity of a new technology is uncertain and subject to learning.During technological revolutions, the nature of this uncertainty changes fromidiosyncratic to systematic. The resulting bubbles in stock prices are observableex post but unpredictable ex ante, and they are most pronounced for technologiescharacterized by high uncertainty and fast adoption. We find empiricalsupport for the model's predictions in 1830-1861 and 1992-2005 when therailroad and Internet technologies spread in the United States. (JEL G12, L86,L92, N21, N22, N71, N72)

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• Rabin, M., & Weizsacker, G. (2009). Narrow Bracketing and Dominated Choices. American Economic Review, 99, 1508–1543.

  We show that any decision maker who "narrowly brackets" (evaluates decisionsseparately) and does not have constant-absolute-risk-averse preferenceswill make a first-order stochastically dominated combined choice in somesimple pair of independent binary decisions. We also characterize the preference-contingent monetary cost from this mistake. Empirically, in a real-stakeslaboratory experiment that replicates Tversky and Kahneman's (1981) experiment,28 percent of participants choose dominated combinations. In a representativesurvey eliciting hypothetical large-stakes choices, higher proportionsdo so. Violation rates vary little with personal characteristics. Average preferencesare prospect-theoretic, with an estimated 89 percent of people bracketingnarrowly.(JEL D12, D81)

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• Sialm, C. (2009). Tax Changes and Asset Pricing. American Economic Review, 99, 1356–1383.

  The tax burden on equity securities has varied substantially over time andremains a source of continuing policy debate. This paper investigates whetherinvestors were compensated for the tax burden of equity securities over theperiod between 1913 and 2006. Taxes on equity securities vary over time due tochanges in dividend and capital gains tax rates and due to changes in corporatepayout policies. Equity taxes also vary across firms due to persistent differencesin propensities to pay dividends. The results indicate an economically plausibleand statistically significant tax capitalization over time and cross-sectionally.(JEL G10, G12, H22, H24, N21, N22)

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• Beggs, A., & Graddy, K. (2009). Anchoring Effects: Evidence from Art Auctions. American Economic Review, 99, 1027–1039.

  This paper shows that the price of a painting sold at an art auction and the experts' pre-sale valuations are anchored on the price at which the painting previously sold at auction. We are able to separate anchoring from rational learning by using the identifying strategy that the unobservable component of quality for a particular painting remains constant between the last auction sale and the current auction sale. We interpret these results as anchoring on the part of the buyers, with the sellers and auctioneers either anticipating anchoring on the part of the buyers or exhibiting anchoring effects themselves. (JEL D44, Z11)

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• Bento, A. M., Goulder, L. H., Jacobsen, M. R., & von Haefen, R. H. (2009). Distributional and Efficiency Impacts of Increased US Gasoline Taxes. American Economic Review, 99, 667–699.

  We examine the impacts of increased US gasoline taxes in a model that linksthe markets for new, used, and scrapped vehicles and recognizes the considerableheterogeneity among households and cars. Household choice parametersderive from an estimation procedure that integrates individual choices for carownership and miles traveled. We find that each cent-per-gallon increase in theprice of gasoline reduces the equilibrium gasoline consumption by about 0.2percent. Taking account of revenue recycling, the impact of a 25-cent gasolinetax increase on the average household is about $30 per year (2001 dollars).Distributional impacts depend importantly on how additional revenues fromthe tax increase are recycled. (JEL D12, H22, H25, L62, L71)

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• Cai, H., Chen, Y., & Fang, H. (2009). Observational Learning: Evidence from a Randomized Natural Field Experiment. American Economic Review, 99, 864–882.

  We report results from a randomized natural field experiment conducted in arestaurant dining setting to distinguish the observational learning effect fromthe saliency effect. We find that, when customers are given ranking informationof the five most popular dishes, the demand for those dishes increases by 13 to20 percent. We do not find a significant saliency effect. We also find modestevidence that the observational learning effects are stronger among infrequentcustomers, and that dining satisfaction is increased when customers are presentedwith the information of the top five dishes, but not when presented withonly names of some sample dishes. (JEL C93, D83)

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• Camera, G., & Casari, M. (2009). Cooperation among Strangers under the Shadow of the Future. American Economic Review, 99, 979–1005.

  We study the emergence of norms of cooperation in experimental economiespopulated by strangers interacting indefinitely. Can these economies achievefull efficiency even without formal enforcement institutions? Which institutionsfor monitoring and enforcement facilitate cooperation? Finally, what classes ofstrategies do subjects employ? We find that, first, cooperation can be sustainedeven in anonymous settings; second, some type of monitoring and punishmentinstitutions significantly promote cooperation; and, third, subjects mostlyemploy strategies that are selective in punishment. (JEL C71, C73, D12, Z13)

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• Charness, G., & Villeval, M.-C. (2009). Cooperation and Competition in Intergenerational Experiments in the Field and the Laboratory. American Economic Review, 99, 956–978.

  There is economic pressure to postpone the retirement age, but employers arestill reluctant to employ older workers. We investigate the comparative behaviorof juniors and seniors in experiments conducted both onsite with the employeesof two large firms and in a conventional laboratory environment with studentsand retirees. We show that seniors are no more risk averse than juniors and aretypically more cooperative; both juniors and working seniors respond stronglyto competition. The implication is that it may be beneficial to define additionalincentives near the end of the career to motivate and retain older workers. (JELC90, J14, J26, M12, M51)

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