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

• Epper, T., & Fehr-Duda, H. (2015). Risk Preferences Are Not Time Preferences: Balancing on a Budget Line: Comment. American Economic Review, 105, 2261–2271.

  In a recent experimental study of intertemporal risky decision making, Andreoni and Sprenger (2012) find that subjects exhibit a preference for intertemporal diversification, which is inconsistent with discounted expected utility theory. It was claimed that their results are also at odds with models involving probability weighting, such as rank-dependent utility and cumulative prospect theory. Here we demonstrate, however, that rank-dependent probability weighting explains intertemporal diversification if decision makers care about portfolio risk. Moreover, we provide a unified account of all of Andreoni and Sprenger's key findings. (JEL C91, D81, D91)

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• Fu, Q., Lu, J., & Pan, Y. (2015). Team Contests with Multiple Pairwise Battles. American Economic Review, 105, 2120–2140.

  We consider a multi-battle team contest in which players from two rival teams form pairwise matches to fight in distinct component battles, which are carried out sequentially or (partially) simultaneously. A team wins if and only if its players win a majority of battles. Each player benefits from his team's win, while he can also receive a private reward for winning his own battle. We find that the outcomes of past battles do not distort the outcomes of future battles. Neither the total expected effort nor the overall outcome of the contest depends on the contest's temporal structure or its feedback policy. (JEL C72, D72, D74, D82)

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• Gârleanu, N., Panageas, S., & Yu, J. (2015). Financial Entanglement: A Theory of Incomplete Integration, Leverage, Crashes, and Contagion. American Economic Review, 105, 1979–2010.

  We propose a unified model of limited market integration, asset-price determination, leveraging, and contagion. Investors and firms are located on a circle, and access to markets involves participation costs that increase with distance. Due to a complementarity between participation and leverage decisions, the equilibrium may exhibit diverse leverage and participation choices across investors, although investors are ex ante identical. Small changes in market-access costs can cause a change in the type of equilibrium, leading to discontinuous price changes, deleveraging, and portfolio-flow reversals. Moreover, the market is subject to contagion—an adverse shock to investors in some locations affects prices everywhere. (JEL D83, G11, G12, G32, G35)

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• Gertler, M., & Kiyotaki, N. (2015). Banking, Liquidity, and Bank Runs in an Infinite Horizon Economy. American Economic Review, 105, 2011–2043.

  We develop an infinite horizon macroeconomic model of banking that allows for liquidity mismatch and bank runs. Whether a bank run equilibrium exists depends on bank balance sheets and an endogenous liquidation price for bank assets. While in normal times a bank run equilibrium may not exist, the possibility can arise in recessions. A run leads to a significant contraction in intermediation and aggregate economic activity. Anticipations of a run have harmful effects on the economy even if the run does not occur. We illustrate how the model can shed light on some key aspects of the recent financial crisis. (JEL E23, E32, E44, G01, G21, G33)

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• Miao, B., & Zhong, S. (2015). Risk Preferences Are Not Time Preferences: Separating Risk and Time Preference: Comment. American Economic Review, 105, 2272–2286.

  Andreoni and Sprenger (2012a,b) observe that utility functions aredistinct for risk and time preferences, and show that their findingsare consistent with a preference for certainty. We revisit thisquestion in an enriched experimental setting in which subjects makeintertemporal decisions under different risk conditions. The observed choice behavior supports a separation between risk attitude and intertemporal substitution rather than a preference for certainty. We further show that several models, including Epstein and Zin (1989); Chew and Epstein (1990); and Halevy (2008) exhibit such a separation and can account for the overall experimental findings. (JEL C91, D81, D91)

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• Takahashi, Y. (2015). Estimating a War of Attrition: The Case of the US Movie Theater Industry. American Economic Review, 105, 2204–2241.

  This paper empirically studies firm's strategic exit decisions in an environment where demand is declining. Specifically, I quantify the extent to which the exit process generated by firms' strategic interactions deviates from the outcome that maximizes industry profits. I develop and estimate a dynamic exit game using data from the US movie theater industry in the 1950s, when the industry faced demand declines. Using the estimated model, I quantify the magnitude of strategic delays and find that strategic interactions cause an average delay of exit of 2.7 years. I calculate the relative importance of several components of these strategic delays. (JEL D92, L11, L82, N72)

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• Anderson, S., Francois, P., & Kotwal, A. (2015). Clientelism in Indian Villages. American Economic Review, 105, 1780–1816.

  We study the operation of local governments (Panchayats) in rural Maharashtra, India, using a survey that we designed for this end. Elections are freely contested, fairly tallied, highly participatory, non-coerced, and lead to appointment of representative politicians. However, beneath this veneer of ideal democracy we find evidence of deeply ingrained clientelist vote-trading structures maintained through extra-political means. Elite minorities undermine policies that would redistribute income toward the majority poor. We explore the means by which elites use their dominance of land ownership and traditional social superiority to achieve political control in light of successful majoritarian institutional reforms. (JEL D72, H23, I38, J15, O15, O17, O18)

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• Baudin, T., Gobbi, P. E., & de la Croix, D. (2015). Fertility and Childlessness in the United States. American Economic Review, 105, 1852–1882.

  We develop a theory of fertility, distinguishing its intensive margin from its extensive margin. The deep parameters are identified using facts from the 1990 US Census: (i) fertility of mothers decreases with education; (ii) childlessness exhibits a U-shaped relationship with education; (iii) the relationship between marriage rates and education is hump-shaped for women and increasing for men. We estimate that 2.5 percent of women were childless because of poverty and 8.1 percent because of high opportunity cost of childrearing. Over time, historical trends in total factor productivity and in education led to a U-shaped response in childlessness rates while fertility of mothers decreased. (JEL I20, J13, J16, N31, N32)

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• Bigio, S. (2015). Endogenous Liquidity and the Business Cycle. American Economic Review, 105, 1883–1927.

  I study an economy where asymmetric information about the quality of capital endogenously determines liquidity. Liquid funds are key to relaxing financial constraints on investment and employment. These funds are obtained by selling capital or using it as collateral. Liquidity is determined by balancing the costs of obtaining liquidity under asymmetric information against the benefits of relaxing financial constraints. Aggregate fluctuations follow increases in the dispersion of capital quality, which raise the cost of obtaining liquidity. An estimated version of the model can generate patterns for quantities and credit conditions similar to the Great Recession. (JEL D82, E22, E24, E32, E44, G01)

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• Bisin, A., Lizzeri, A., & Yariv, L. (2015). Government Policy with Time Inconsistent Voters. American Economic Review, 105, 1711–1737.

  Behavioral economics presents a "paternalistic" rationale for benevolent government intervention. This paper presents a model of public debt where voters have self-control problems and attempt to commit using illiquid assets. In equilibrium, government accumulates debt to respond to individuals' desire to undo their commitments, which leads individuals to rebalance their portfolio, in turn feeding into a demand for further debt accumulation. As a consequence, (i) large (and distortionary) government debt accumulation occurs, and (ii) banning illiquid assets could improve individuals' welfare. These results offer a new rationale for balanced budget rules in constitutions to restrain governments' responses to voters' self-control problems. (JEL D2, D72, D78, H62, H63)

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