We show in two natural experiments that default rules in Medicare Part D have large, persistent effects on enrollment and drug utilization of low-income beneficiaries. The implications of this phenomenon for welfare and optimal policy depend on the sensitivity of passivity to the value of the default option. Using random assignment to default options, we show that beneficiary passivity is extremely

We examine multi-generational impacts of positive in utero health interventions using a new research design that exploits sharp increases in prenatal Medicaid eligibility that occurred in some states. Our analyses are based on U.S. Vital Statistics Natality files, which enables linkages between individuals' early life Medicaid exposure and the next generation's health at birth. We find evidence that

We develop new quasi-experimental tools to measure disparate impact, regardless of its source, in the context of bail decisions. We show that omitted variables bias in pretrial release rate comparisons can be purged by using the quasi-random assignment of judges to estimate average pretrial misconduct risk by race. We find that two-thirds of the release rate disparity between white and Black defendants

Workers' compensation insurance, which provides no-fault coverage for work-related injuries, is mandatory in nearly all states. We use administrative data from a unique market without a coverage mandate to estimate the demand for workers' compensation insurance, leveraging regulatory premium updates for identification. We find that a 1 percent increase in premiums leads to approximately a 0.3 percent

Laboratory evidence shows that when people have to argue for a given position, they persuade themselves about the position’s factual and moral superiority. Such self-persuasion limits the potential of communication to resolve conflict and reduce polarization. We test for this phenomenon in a field setting, at international debating competitions that randomly assign experienced and motivated debaters

We examine how strategic buyer behavior affects equilibrium outcomes in a model of dynamic price competition where sellers benefit from learning-by-doing by allowing each buyer to expect to capture a share of future buyer surplus. Many equilibria that exist when buyers consider only their immediate payoffs are eliminated when buyers expect to capture even a modest share of future surplus, and the equilibria

In 2020 the Environmental Protection Agency narrowed the definition of “waters of the United States,” significantly limiting wetland protection under the Clean Water Act. Current policy debates center on the uncertainty around wetland benefits. We estimate the value of wet-lands for flood mitigation across the United States using detailed flood claims and land use data. We find the average hectare

This paper documents that the earnings cost of job loss is concentrated among workers who find reemployment in lower-skill occupations, and that the cost and incidence of such occupation displacement is higher for workers who lose their job during a recession. I propose a model where hiring is endogenously more selective during recessions, leading some unemployed workers to optimally search for reemployment

We examine a new dataset of public procurement laws, practice, and outcomes in 187 countries. We measure regulation as restrictions on the discretion of the procuring entities. We find that laws and practice are highly correlated with each other across countries, and better practice is correlated with better outcomes, but laws themselves are not correlated with outcomes. A closer look shows that stricter

We measure the overall influence of contextual versus individual factors (e.g., voting rules and media as opposed to race and education) on voter behavior, and explore underlying mechanisms. Using a US-wide voter-level panel, 2008–2018, we examine voters who relocate across state and county lines, tracking changes in registration, turnout, and party affiliation to estimate location and individual fixed

A data broker sells market segmentations to a producer with private cost who sells a product to a unit mass of consumers. This paper characterizes the revenue-maximizing mechanisms for the data broker. Every optimal mechanism induces quasi-perfect price discrimination. All the consumers with values above a cost-dependent cutoff buy by paying their values while the rest of consumers do not buy. The

This paper studies employer incentives in designing health insurance provider networks and whether observed offerings reflect preferences that are aligned with employees. I estimate a model of supply and demand where I endogenize employer health plan offerings with respect to hospital and physician networks. I find that employers “overprovide” broad networks by overweighting the preferences of certain

This paper investigates the trade-offs between local elites and state agents as tax collectors in low-capacity states. We study a randomized policy experiment assigning neighborhoods of a large Congolese city to property tax collection by city chiefs or state agents. Chief collection raised tax compliance by 3.2 percentage points, increasing revenue by 44 percent. Chiefs collected more bribes but did

We design three field experiments to estimate how workers' social preferences toward their employer motivates their work effort. We vary the pay rates offered to workers, the return to the employer, and employer generosity demonstrated via unexpected gifts. Workers exert effort even without private incentives, but their effort is insensitive to the return to the employer. This is consistent with “warm

This paper examines race and police use of force using data on 1.6 million 911 calls in two cities, neither of which allows for discretion in officer dispatch. Results indicate White officers increase force much more than minority officers when dispatched to more minority neighborhoods. Estimates indicate Black (Hispanic) civilians are 55 (75) percent more likely to experience any force, and five times

Identifying high-growth microentrepreneurs in low-income countries remains a challenge due to a scarcity of verifiable information. With a cash grant experiment in India we demonstrate that community knowledge can help target high-growth microentrepreneurs; while the average marginal return to capital in our sample is 9.4 percent per month, microentrepreneurs reported in the top third of the community

We develop a dynamic model of political competition between two groups that differ in their subjective model of the data generating process for a common outcome. One group has a simpler model than the other group as they ignore some relevant policy variables. We show that policy cycles must arise and that simple world views—which can be interpreted as populist world views—imply extreme policy choices

This paper studies how the impact of monetary policy depends on the distribution of savings from refinancing mortgages. We show that the efficacy of monetary policy is state dependent, varying in a systematic way with the pool of potential savings from refinancing. We construct a quantitative dynamic life-cycle model that accounts for our findings and use it to study how the response of consumption

This paper evaluates an intervention in India that engaged adolescent girls and boys in classroom discussions about gender equality for two years, aiming to reduce their support for societal norms that restrict women's and girls' opportunities. Using a randomized controlled trial, we find that the program made attitudes more supportive of gender equality by 0.18 standard deviations, or, equivalently

Disadvantaged students perform differentially worse when randomly given a financially salient mathematics exam. For students with socioeconomic indicators below the national median, a 10 percentage point increase in the share of monetary themed questions depresses exam performance by 0.026 standard deviations, about 6 percent of their performance gap. Using question-level data, I confirm the role of

This paper develops a satellite account for the US health sector and measures productivity growth in health care for the elderly population between 1999 and 2012. We measure the change in medical spending and health outcomes for a comprehensive set of 80 conditions. Medical care has positive productivity growth over the time period, with aggregate productivity growth of 1.5 percent per year. However

Health insurers increasingly compete on their networks of medical providers. Using data from Massachusetts’s insurance exchange, I find substantial adverse selection against plans covering the most prestigious and expensive “star” hospitals. I highlight a theoretically distinct selection channel: consumers loyal to star hospitals incur high spending, conditional on their medical state, because they

We study how political turnover in mayoral elections in Brazil affects public service provision by local governments. Exploiting a regression discontinuity design for close elections, we find that municipalities with a new party in office experience upheavals in the municipal bureaucracy: new personnel are appointed across multiple service sectors, and at both managerial and non-managerial levels.

This paper studies competition between firms when consumers observe a private signal of their preferences over products. Within the class of signal structures that induce pure-strategy pricing equilibria, we derive signal structures that are optimal for firms and those that are optimal for consumers. The firm-optimal policy amplifies underlying product differentiation, thereby relaxing competition

We provide an incomplete information bargaining framework that captures the effects of differential bargaining power in markets with multiple buyers and multiple suppliers. The market is modeled as a mechanism that maximizes the expected weighted welfare of the firms, subject to the constraints of incentive compatibility, individual rationality, and no deficit. We show that, in this model, there is

What explains the central role of the dollar in world trade? Will the US currency retain its dominant status in the future? This paper develops a quantitative general equilibrium framework with endogenous currency choice that can address these questions. Complementarities in price setting and input-output linkages across firms generate complementarities in currency choice making exporters coordinate

We develop a model of political competition with endogenous turnout and endogenous platforms. Parties trade off incentivizing their supporters to vote and discouraging the supporters of the competing party from voting. We show that the latter objective is particularly pronounced for a party with an edge in the political race. Thus, an increase in political support for a party may lead to the adoption

This paper shows that racial composition shocks during the Great Migration (1940–1970) reduced the gains from growing up in the northern United States for Black families and can explain 27 percent of the region’s racial upward mobility gap today. I identify northern Black share increases by interacting pre-1940 Black migrants’ location choices with predicted southern county out-migration. Locational

This paper evaluates changes in electricity generation costs caused by the introduction of market mechanisms to determine production in the United States. I use the staggered transition to markets from 1999 to 2012 to estimate the causal impact of liberalization using a differences-in-difference design on a comprehensive hourly panel of electricity demand, generators’ costs, capacities, and output

We study the welfare effects of offering choice over coverage levels-"vertical choice"-in regulated health insurance markets. We emphasize that heterogeneity in efficient coverage level is not sufficient to motivate choice. When premiums cannot reflect individuals' costs, it may not be in consumers' best interest to select their efficient coverage level. We show that vertical choice is efficient only

How do social interactions shape collective action, and how are they mediated by networked information technologies? We answer these questions studying the Temperance Crusade, a wave of anti-liquor protest activity spreading across 29 states between 1873 and 1874. Relying on exogenous variation in network links generated by railroad accidents, we provide causal evidence of social interactions driving

We describe a methodology for making counterfactual predictions in settings where the information held by strategic agents and the distribution of payoff-relevant states of the world are unknown. The analyst observes behavior assumed to be rationalized by a Bayesian model, in which agents maximize expected utility, given partial and differential information about the state. A counterfactual prediction

This paper aims to improve the practical applicability of the classic theory of incentive contracts under moral hazard. We establish conditions under which the information provided by an A/B test of incentive contracts is sufficient for answering the question of how best to improve a status quo incentive contract, given a priori knowledge of the agent’s monetary preferences. We assess the empirical

In a field experiment that constructs a randomized credit limit shock, participants borrow to spend 11 cents on the dollar in the first quarter and 28 cents by the third year. Effects extend to those far from the limit, those who had the new limits as available credit, and those with a liquid asset buffer. In the short-run, flexible and installment contracts are used in tandem, with unconstrained using

This paper evaluates the role of rising income inequality in explaining observed growth in college tuition. We develop a competitive model of the college market, in which college quality depends on instructional expenditure and the average ability of admitted students. An innovative feature of our model is that it allows for a continuous distribution of college quality. We find that observed increases

This paper builds a new microdatabase that covers 100 countries at all income levels and long-run time series in the United States (1870–2010) and Mexico ( 1960–2010) to document how the modern tax system arises over development. I establish a new set of stylized facts, which show that the income tax exemption threshold decreases in the income distribution as a country develops, tracking growth in

We quantify the importance of imperfect competition in the US labor market by estimating the size of labor market rents earned by American firms and workers. We construct a matched employer-employee panel dataset by combining the universe of US business and worker tax records for the period 2001–2015. Using this panel data, we identify and estimate an equilibrium model of the labor market with two-sided

Public recognition is frequently used to motivate desirable behavior, yet its welfare effects—such as costs of shame or gains from pride— are rarely measured. We develop a portable empirical methodology for measuring and monetizing social image utility, and we deploy it in experiments on exercise and charitable behavior. In all experiments, public recognition motivates desirable behavior but creates

We study the welfare effects of offering choice over coverage levels—“vertical choice”—in regulated health insurance markets. We emphasize that heterogeneity in efficient coverage level is not sufficient to motivate choice. When premiums cannot reflect individuals’ costs, it may not be in consumers’ best interest to select their efficient coverage level. We show that vertical choice is efficient only

I study how the relative efficiency of high- and low-skill labor varies across countries. Using microdata for countries at different stages of development, I document that differences in relative quantities and wages are consistent with high-skill workers being relatively more productive in rich countries. I exploit variation in the skill premia of foreign-educated migrants to discriminate between

We introduce a set-valued solution concept, M equilibrium, to capture empirical regularities from over half a century of game theory experiments. We show M equilibrium serves as a meta theory for various models that hitherto were considered unrelated. M equilibrium is empirically robust and, despite being set-valued, falsifiable. Results from a series of experiments that compare M equilibrium to leading

We explore how firms grow by adding products. We leverage detailed data from Japan’s cotton spinning industry at the turn of the last century to do so. This setting allows us to fully characterize the type of differentiation (vertical or horizontal) of new product introductions as well as whether the product is within or outside of the firm’s prior technological capabilities. We find that trying to

This paper studies whether team members’ past collaboration creates team-specific human capital and influences current team performance. Using administrative Medicare claims for two heart procedures, I find that shared work experience between the doctor who performs the procedure (“proceduralist”) and the doctors who provide care to the patient during the hospital stay for the procedure (“physicians”)

We formalize the editorial role of news media in a multisector economy and show that media can be an independent source of business cycle fluctuations, even when they report accurate information. Public reporting about a subset of sectoral developments that are newsworthy but unrepresentative causes firms across all sectors to hire too much or too little labor. We construct historical measures of US

We present a new estimator for causal effects with panel data that builds on insights behind the widely used difference-in-differences and synthetic control methods. Relative to these methods we find, both theoretically and empirically, that this “synthetic difference-in-differences” estimator has desirable robustness properties, and that it performs well in settings where the conventional estimators

A proposer requires a veto player’s approval to change a status quo. Proposer is uncertain about Vetoer’s preferences. We show that Vetoer is typically given a non-singleton menu, or delegation set, of options to pick from. The optimal set balances the extent of compromise with the risk of a veto. We identify conditions for certain delegation sets to emerge, including “full delegation”: Vetoer can

This paper evaluates the long-run effects of Head Start using large-scale, restricted administrative data. Using the county roll-out of Head Start between 1965 and 1980 and age-eligibility cutoffs for school entry, we find that Head Start generated large increases in adult human capital and economic self-sufficiency, including a 0. 65-year increase in schooling, a 2.7 percent increase in high school

Incentive problems make securities’ payoffs imperfectly pledgeable, limiting agents’ ability to issue liabilities. We analyze the equilibrium consequences of such endogenous incompleteness in a dynamic exchange economy. Because markets are endogenously incomplete, agents have different intertemporal marginal rates of substitution, so that they value assets differently. Consequently, agents hold different

We study the relationship between domestic-demand shocks and exports using data for Spanish manufacturing firms in 2002–2013. Exploiting plausibly exogenous geographical variation caused by the Great Recession, we find that firms whose domestic sales declined by more experienced a larger increase in export flows, controlling for firms’ supply determinants. This result illustrates the capacity of export

We propose a pseudo-market solution to resource allocation problems subject to constraints. Our treatment of constraints is general: including bihierarchical constraints due to considerations of diversity in school choice, or scheduling in course allocation; and other forms of constraints needed to model, for example, the market for roommates, combinatorial assignment problems, and knapsack constraints

The DeGroot model has emerged as a credible alternative to the standard Bayesian model for studying learning on networks, offering a natural way to model naïve learning in a complex setting. One unattractive aspect of this model is the assumption that the process starts with every node in the network having a signal. We study a natural extension of the DeGroot model that can deal with sparse initial

This paper studies bargaining with noncommon priors where the buyer projects and exaggerates the probability that her private information may leak to the seller. Letting the buyer name her price first, raises the seller’s payoff above his payoff from posting a price. In seller-offer bargaining, projection implies a partial reversal of classic Coasian comparative static results. Weakening price commitment

The nullification of slave wealth after the US Civil War (1861–1865) was one of the largest episodes of wealth compression in history. We document that White Southern households that owned more slaves in 1860 lost substantially more wealth by 1870, relative to Southern households that had been equally wealthy before the war. Yet, their sons almost entirely recovered from this wealth shock by 1900,

We study a major new entry in the French mobile telecommunications market, followed by the introduction of fighting brands by the three incumbents. Using an empirical oligopoly model, we find that the incumbents’ fighting brand strategies are difficult to rationalize as unilateral best responses. Instead, their strategies are consistent with a breakdown of tacit semi-collusion: before entry, the incumbents

Empirical researchers often combine multiple instrumental variables (IVs) for a single treatment using two-stage least squares (2SLS). When treatment effects are heterogeneous, a common justification for including multiple IVs is that the 2SLS estimand can be given a causal interpretation as a positively weighted average of local average treatment effects (LATEs). This justification requires the well-known

Despite the implications for policy, empirical evidence on the relative importance of factors that shape labor supply responses is missing. This paper helps fill this gap and quantifies the role of information frictions versus other frictions by combining notches in the Norwegian welfare system and quasi-experimental variation in access to information about the slope and location of kinks. While we

We explore how taste projection—the tendency to overestimate how similar others’ tastes are to one’s own—affects bidding in auctions. In first-price auctions with private values, taste projection leads bidders to exaggerate the intensity of competition and, consequently, to overbid—irrespective of whether values are independent, affiliated, or (a)symmetric. Moreover, the optimal reserve price is lower

School policies that cause a large demand shift between public and private schooling may cause some private schools to enter or exit the market. We study how the policy effects differ under a fixed versus changing market structure in the context of a public school funding reform in New York City. We find evidence of a reduction in private schools in response to the reform. Using a model of demand for

The high-tech sector is concentrated in a small number of cities. The ten largest clusters in computer science, semiconductors, and biology account for 69 percent, 77 percent, and 59 percent of all US inventors, respectively. Using longitudinal data on 109,846 inventors, I find that geographical agglomeration results in significant productivity gains. When an inventor moves to a city with a large cluster

We measure the effects of firm policies on racial pay differences in Brazil. Non-Whites are less likely to be hired by high-wage firms, explaining about 20 percent of the racial wage gap for both genders. Firm-specific pay premiums for non-Whites are also compressed relative to Whites, contributing another 5 percent for that gap. A counterfactual analysis reveals that about two-thirds of the underrepresentation