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

• Galeotti, A., & Goyal, S. (2010). The Law of the Few. American Economic Review, 100, 1468–1492.

  Empirical work shows that a large majority of individuals get most of their information from a very small subset of the group, viz., the influencers; moreover, there exist only minor differences between the observable characteristics of the influencers and the others. We refer to these empirical findings as the Law of the Few. This paper develops a model where players personally acquire information and form connections with others to access their information. Every (robust) equilibrium of this model exhibits the law of the few. (JEL D83, D85, Z13)

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• Greenwood, J., Sanchez, J. M., & Wang, C. (2010). Financing Development: The Role of Information Costs. American Economic Review, 100, 1875–1891.

  To address how technological progress in financial intermediation affects the economy, a costly-state verification framework is embedded into the standard growth model. The framework has two novel ingredients. First, firms differ in the risk/return combinations that they offer. Second, the efficacy of monitoring depends upon the amount of resources invested in the activity. A financial theory of firm size results. Undeserving firms are over-financed, deserving ones under-funded. Technological advance in intermediation leads to more capital accumulation and a redirection of funds away from unproductive firms toward productive ones. With continued progress, the economy approaches its first-best equilibrium. (JEL G21, G31, O16, O33, O41)

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• Gul, F., & Pesendorfer, W. (2010). Strategic Redistricting. American Economic Review, 100, 1616–1641.

  Two parties choose redistricting plans to maximize their probability of winninga majority in the House of Representatives. In the unique equilibrium, parties maximally segregate their opponents' supporters but pool their own supporters into uniform districts. Ceteris paribus, the stronger party segregates more than the weaker one, and the election outcome is biased in the stronger party's favor and against the party whose supporters are easier to identify. We incorporate policy choice into our redistricting game and find that when one party controls redistricting, the equilibrium policy is biased towards the preferences of the redistricting party's supporters. (JEL C72, D72)

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• Hamman, J. R., Loewenstein, G., & Weber, R. A. (2010). Self-Interest through Delegation: An Additional Rationale for the Principal-Agent Relationship. American Economic Review, 100, 1826–1846.

  Principal-agent relationships are typically assumed to be motivated by efficiency gains from comparative advantage. However, principals may also delegate tasks to avoid taking direct responsibility for selfish or unethical behavior. We report three laboratory experiments in which principals repeatedly either decide how much money to share with a recipient or hire agents to make sharing decisions on their behalf. Across several experimental treatments, recipients receive significantly less, and in many cases close to nothing, when allocation decisions are made by agents. (JEL D82)

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• Jacoby, H. G., & Mansuri, G. (2010). Watta Satta: Bride Exchange and Women’s Welfare in Rural Pakistan. American Economic Review, 100, 1804–1825.

  Can marriage institutions limit marital inefficiency? We study the pervasive custom of watta satta in rural Pakistan, a bride exchange between families coupled with a mutual threat of retaliation. Watta satta can be seen as a mechanism for coordinating the actions of two sets of parents, each wishing to restrain their son-in-law. We find that marital discord, as measured by estrangement, domestic abuse, and wife's mental health, is indeed significantly lower in watta satta versus "conventional" marriage, but only after accounting for selection bias. These benefitscannot be explained by endogamy, a marriage pattern associated with watta satta. (JEL J12, J16, O15, O18, Z13)

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• León-Ledesma, M. A., McAdam, P., & Willman, A. (2010). Identifying the Elasticity of Substitution with Biased Technical Change. American Economic Review, 100, 1330–1357.

  The capital-labor substitution elasticity and technical biases in production are critical parameters. The received wisdom claims their joint identification is infeasible. We challenge that interpretation. Putting the new approach of "normalized"production functions at the heart of a Monte Carlo analysis we identify the conditions under which identification is feasible and robust. The key result is that jointly modeling the production function and first-order conditions is superior to single-equation approaches especially when merged with "normalization." Our results will have fundamental implications for production-function estimation under non-neutral technical change, for understanding the empirical relevance of normalization and variability underlying past empirical studies. (JEL E22, O33, O41)

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• Low, H., Meghir, C., & Pistaferri, L. (2010). Wage Risk and Employment Risk over the Life Cycle. American Economic Review, 100, 1432–1467.

  We specify a life-cycle model of consumption, labor supply and job mobility in an economy with search frictions. We distinguish different sources of risk, including shocks to productivity, job arrival, and job destruction. Allowing for job mobility has a large effect on the estimate of productivity risk. Increases in the latter impose a considerable welfare loss. Increases in employment risk have large effects on output and, primarily through this channel, affect welfare. The welfare value of programs such as Food Stamps, partially insuring productivity risk, is greater than the value of unemployment insurance which provides (partial) insurance against employment risk. (JEL D91, J22, J31, J61, J64, J65)

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• McGrattan, E. R., & Prescott, E. C. (2010). Technology Capital and the US Current Account. American Economic Review, 100, 1493–1522.

  The US Bureau of Economic Analysis (BEA) estimates that the return on investments of foreign subsidiaries of US multinational companies over the period 1982-2006 averaged 9.4 percent annually after taxes; US subsidiaries of foreign multinationals averaged only 3.2 percent. BEA returns on foreign direct investment (FDI) are distorted because most intangible investments made by multinationals are expensed. We develop a multicountry general equilibrium model with an essential role for FDI and apply the BEA's methodology to construct economic statistics for the model economy. We estimate that mismeasurement of intangible investments accounts for over 60 percent of the difference in BEA returns. (JEL F23, F32)

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• Östling, R., & Ellingsen, T. (2010). When Does Communication Improve Coordination? American Economic Review, 100, 1695–1724.

  We study costless pre-play communication of intentions among inexperienced players. Using the level-k model of strategic thinking to describe players' beliefs, we fully characterize the effects of preplay communication in symmetric 2x2 games. One-way communication weakly increases coordination on Nash equilibrium outcomes, although average payoffs sometimes decrease. Two-way communication further improves payoffs in some games but is detrimental in others. Moving beyond the class of symmetric 2x2 games, we find that communication facilitates coordination in common interest games with positive spillovers and strategic complementarities, but there are also games in which any type of communication hampers coordination. (JEL C72, D83)

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• Weyl, E. G. (2010). A Price Theory of Multi-sided Platforms. American Economic Review, 100, 1642–1672.

  I develop a general theory of monopoly pricing of networks. Platforms use insulating tariffs to avoid coordination failure, implementing any desired allocation. Profit maximization distorts in the spirit of A. Michael Spence (1975) by internalizing only network externalities to marginal users. Thus the empirical and prescriptive content of the popular Jean-Charles Rochet and Jean Tirole(2006) model of two-sided markets turns on the nature of user heterogeneity. I propose a more plausible, yet equally tractable, model of heterogeneity in which users differ in their income or scale. My approach provides a general measure of market power and helps predict the effect of price regulation and mergers. (JEL D42, D85, L14)

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