We adopt a definition of “rationality” as robustness to analysis: a mode of behavior is rational for a decision maker if she feels comfortable with it once it has been analyzed and explained to her. With this definition in mind, is it irrational to violate continuity axioms in one’s stated preferences? Specifically, does it make sense to avoid any positive probability of a negative outcome, not matter how small? Or, if a decision maker states such a “zero risk” policy, does she mean what she says? We propose to study this question axiomatically, asking which modes of behavior correspond to such statements. The baseline model evaluates a lottery by its expected utility and an extra additive term that measures the cost of deviating from a “zero risk” choice. A generalized version allows for multiple sets of principles, where the cost of risking a set of principles is added to the expected utility of a lottery. Stronger assumptions imply that the cost of violating a set of principles is additive in the individual costs. We develop a comparative behavioral analysis that allows to make interpersonal comparisons about the relative importance of principles.
{"title":"Rationality and Zero Risk","authors":"Itzhak Gilboa, Stefania Minardi, Fan Wang","doi":"10.1093/jeea/jvad071","DOIUrl":"https://doi.org/10.1093/jeea/jvad071","url":null,"abstract":"We adopt a definition of “rationality” as robustness to analysis: a mode of behavior is rational for a decision maker if she feels comfortable with it once it has been analyzed and explained to her. With this definition in mind, is it irrational to violate continuity axioms in one’s stated preferences? Specifically, does it make sense to avoid any positive probability of a negative outcome, not matter how small? Or, if a decision maker states such a “zero risk” policy, does she mean what she says? We propose to study this question axiomatically, asking which modes of behavior correspond to such statements. The baseline model evaluates a lottery by its expected utility and an extra additive term that measures the cost of deviating from a “zero risk” choice. A generalized version allows for multiple sets of principles, where the cost of risking a set of principles is added to the expected utility of a lottery. Stronger assumptions imply that the cost of violating a set of principles is additive in the individual costs. We develop a comparative behavioral analysis that allows to make interpersonal comparisons about the relative importance of principles.","PeriodicalId":48297,"journal":{"name":"Journal of the European Economic Association","volume":"24 S55","pages":""},"PeriodicalIF":3.6,"publicationDate":"2023-11-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"138494674","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Double marginalization is a robust phenomenon in procurement under asymmetric information when sophisticated contracts can be implemented. In this context, vertical integration causes merger-specific elimination of double marginalization but biases the make-or-buy decision against independent suppliers. If the buyer has full bargaining power over prices and quantities, a vertical merger benefits final consumers even when it results in the exclusion of efficient suppliers. If on the contrary the buyer’s bargaining power is reduced after she has committed to deal exclusively with a limited set of suppliers, exclusion of efficient suppliers may harm final consumers.
{"title":"Double marginalization, market foreclosure, and vertical integration","authors":"Philippe Choné, Laurent Linnemer, Thibaud Vergé","doi":"10.1093/jeea/jvad070","DOIUrl":"https://doi.org/10.1093/jeea/jvad070","url":null,"abstract":"Double marginalization is a robust phenomenon in procurement under asymmetric information when sophisticated contracts can be implemented. In this context, vertical integration causes merger-specific elimination of double marginalization but biases the make-or-buy decision against independent suppliers. If the buyer has full bargaining power over prices and quantities, a vertical merger benefits final consumers even when it results in the exclusion of efficient suppliers. If on the contrary the buyer’s bargaining power is reduced after she has committed to deal exclusively with a limited set of suppliers, exclusion of efficient suppliers may harm final consumers.","PeriodicalId":48297,"journal":{"name":"Journal of the European Economic Association","volume":"24 3‐4","pages":""},"PeriodicalIF":3.6,"publicationDate":"2023-11-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"138494673","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We consider the canonical trade model with heterogeneous firms, love for variety and trade costs, and integrate it in the consumption CAPM model. This yields a structural gravity equation that includes an additional factor related to risk premia. Empirical evidence based on firm-level data confirms the importance of cross-sectional heterogeneity in risk and time-varying risk premia to shape bilateral trade flows. The structural gravity model augmented to account for fluctuations in risk premia offers a compelling explanation for trade collapses during abrupt economic downturns.
{"title":"Risky Gravity","authors":"Luciana Juvenal, Paulo Santos Monteiro","doi":"10.1093/jeea/jvad060","DOIUrl":"https://doi.org/10.1093/jeea/jvad060","url":null,"abstract":"We consider the canonical trade model with heterogeneous firms, love for variety and trade costs, and integrate it in the consumption CAPM model. This yields a structural gravity equation that includes an additional factor related to risk premia. Empirical evidence based on firm-level data confirms the importance of cross-sectional heterogeneity in risk and time-varying risk premia to shape bilateral trade flows. The structural gravity model augmented to account for fluctuations in risk premia offers a compelling explanation for trade collapses during abrupt economic downturns.","PeriodicalId":48297,"journal":{"name":"Journal of the European Economic Association","volume":"24 S56","pages":""},"PeriodicalIF":3.6,"publicationDate":"2023-11-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"138494672","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Double marginalization is a robust phenomenon in procurement under asymmetric information when sophisticated contracts can be implemented. In this context, vertical integration causes merger-specific elimination of double marginalization but biases the make-or-buy decision against independent suppliers. If the buyer has full bargaining power over prices and quantities, a vertical merger benefits final consumers even when it results in the exclusion of efficient suppliers. If on the contrary the buyer’s bargaining power is reduced after she has committed to deal exclusively with a limited set of suppliers, exclusion of efficient suppliers may harm final consumers.
{"title":"Double Marginalization, Market Foreclosure, and Vertical Integration","authors":"Philippe Choné, Laurent Linnemer, Thibaud Vergé","doi":"10.1093/jeea/jvad069","DOIUrl":"https://doi.org/10.1093/jeea/jvad069","url":null,"abstract":"Double marginalization is a robust phenomenon in procurement under asymmetric information when sophisticated contracts can be implemented. In this context, vertical integration causes merger-specific elimination of double marginalization but biases the make-or-buy decision against independent suppliers. If the buyer has full bargaining power over prices and quantities, a vertical merger benefits final consumers even when it results in the exclusion of efficient suppliers. If on the contrary the buyer’s bargaining power is reduced after she has committed to deal exclusively with a limited set of suppliers, exclusion of efficient suppliers may harm final consumers.","PeriodicalId":48297,"journal":{"name":"Journal of the European Economic Association","volume":"25 s57","pages":""},"PeriodicalIF":3.6,"publicationDate":"2023-11-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"138494671","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
A Stefano Caria, Grant Gordon, Maximilian Kasy, Simon Quinn, Soha Shami, Alexander Teytelboym
We introduce an adaptive targeted treatment assignment methodology for field experiments. Our Tempered Thompson Algorithm balances the goals of maximizing the precision of treatment effect estimates and maximizing the welfare of experimental participants. A hierarchical Bayesian model allows us to adaptively target treatments. We implement our methodology in Jordan, testing policies to help Syrian refugees and local jobseekers to find work. The immediate employment impacts of a small cash grant, information and psychological support are small, but targeting raises employment by 1 percentage-point (20%). After four months, cash has a sizable effect on employment and earnings of Syrians.
{"title":"An Adaptive Targeted Field Experiment: Job Search Assistance for Refugees in Jordan","authors":"A Stefano Caria, Grant Gordon, Maximilian Kasy, Simon Quinn, Soha Shami, Alexander Teytelboym","doi":"10.1093/jeea/jvad067","DOIUrl":"https://doi.org/10.1093/jeea/jvad067","url":null,"abstract":"We introduce an adaptive targeted treatment assignment methodology for field experiments. Our Tempered Thompson Algorithm balances the goals of maximizing the precision of treatment effect estimates and maximizing the welfare of experimental participants. A hierarchical Bayesian model allows us to adaptively target treatments. We implement our methodology in Jordan, testing policies to help Syrian refugees and local jobseekers to find work. The immediate employment impacts of a small cash grant, information and psychological support are small, but targeting raises employment by 1 percentage-point (20%). After four months, cash has a sizable effect on employment and earnings of Syrians.","PeriodicalId":48297,"journal":{"name":"Journal of the European Economic Association","volume":"25 s58","pages":""},"PeriodicalIF":3.6,"publicationDate":"2023-11-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"138494669","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
David de la Croix, Frédéric Docquier, Alice Fabre, Robert Stelter
We argue that market forces shaped the geographic distribution of upper-tail human capital across Europe during the Middle Ages, and contributed to bolstering universities at the dawn of the Humanistic and Scientific Revolutions. We build a unique database of thousands of scholars from university sources covering all of Europe, construct an index of their ability, and map the academic market in the medieval and early modern periods. We show that scholars tended to concentrate in the best universities (agglomeration), that better scholars were more sensitive to the quality of the university (positive sorting) and migrated over greater distances (positive selection). Agglomeration, selection and sorting patterns testify to an integrated academic market, made possible by the use of a common language (Latin).
{"title":"The Academic Market and the Rise of Universities in Medieval and Early Modern Europe (1000-1800)","authors":"David de la Croix, Frédéric Docquier, Alice Fabre, Robert Stelter","doi":"10.1093/jeea/jvad061","DOIUrl":"https://doi.org/10.1093/jeea/jvad061","url":null,"abstract":"We argue that market forces shaped the geographic distribution of upper-tail human capital across Europe during the Middle Ages, and contributed to bolstering universities at the dawn of the Humanistic and Scientific Revolutions. We build a unique database of thousands of scholars from university sources covering all of Europe, construct an index of their ability, and map the academic market in the medieval and early modern periods. We show that scholars tended to concentrate in the best universities (agglomeration), that better scholars were more sensitive to the quality of the university (positive sorting) and migrated over greater distances (positive selection). Agglomeration, selection and sorting patterns testify to an integrated academic market, made possible by the use of a common language (Latin).","PeriodicalId":48297,"journal":{"name":"Journal of the European Economic Association","volume":"25 1","pages":""},"PeriodicalIF":3.6,"publicationDate":"2023-11-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"138494670","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract Violence and delinquency levels in Central America are among the highest in the world and constrain human capital acquisition. We designed and conducted a randomized experiment in El Salvador to measure the impacts of an after-school program aimed at reducing school violence. The program combines a behavioral intervention with extracurricular activities for 10 to 16 year old students. We find the program reduced the participants’ violent behavior both inside and outside of school and indirectly improved their attendance, attitudes toward school and learning, and academic outcomes. Using state-of-the-art technology, we measured participant brain activity and show that the intervention fosters emotion regulation, enabling treated adolescents to remain calmer when faced with external stimuli.
{"title":"Preventing Violence in the Most Violent Contexts: Behavioral and Neurophysiological Evidence from El Salvador","authors":"Lelys Dinarte-Diaz, Pablo Egana-delSol","doi":"10.1093/jeea/jvad068","DOIUrl":"https://doi.org/10.1093/jeea/jvad068","url":null,"abstract":"Abstract Violence and delinquency levels in Central America are among the highest in the world and constrain human capital acquisition. We designed and conducted a randomized experiment in El Salvador to measure the impacts of an after-school program aimed at reducing school violence. The program combines a behavioral intervention with extracurricular activities for 10 to 16 year old students. We find the program reduced the participants’ violent behavior both inside and outside of school and indirectly improved their attendance, attitudes toward school and learning, and academic outcomes. Using state-of-the-art technology, we measured participant brain activity and show that the intervention fosters emotion regulation, enabling treated adolescents to remain calmer when faced with external stimuli.","PeriodicalId":48297,"journal":{"name":"Journal of the European Economic Association","volume":"102 3","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-11-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"134957759","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract In this paper I analyze the determinants of cohabitation, marriage, and divorce in the US. I first document that college graduates are more likely to marry, and less likely to cohabit and divorce, than non-college educated individuals. To account for these facts within a unified framework, I build and estimate a life-cycle model of partnership formation and dissolution where income processes differ by gender and education. I find that the main driver of education-based differences in mating strategies is that the gender wage gap is larger among college graduates. Since divorce is more costly than ending a cohabitation, marriages tend to be more stable and therefore offer women more protection from human capital depreciation during nonemployment. Consequently, marriage is a more effective means of enforcing household specialization. Since college graduates have more room for household specialization, they are more likely to choose marriage. The variance of income shocks, which affects the demand for consumption insurance, is larger among college graduates. Even if the variance of income shocks could potentially explain partnership choices, simulations suggest a small role of income volatility.
{"title":"Cohabitation <i>VS.</i> Marriage: Mating Strategies by Education in the Usa","authors":"Fabio Blasutto","doi":"10.1093/jeea/jvad065","DOIUrl":"https://doi.org/10.1093/jeea/jvad065","url":null,"abstract":"Abstract In this paper I analyze the determinants of cohabitation, marriage, and divorce in the US. I first document that college graduates are more likely to marry, and less likely to cohabit and divorce, than non-college educated individuals. To account for these facts within a unified framework, I build and estimate a life-cycle model of partnership formation and dissolution where income processes differ by gender and education. I find that the main driver of education-based differences in mating strategies is that the gender wage gap is larger among college graduates. Since divorce is more costly than ending a cohabitation, marriages tend to be more stable and therefore offer women more protection from human capital depreciation during nonemployment. Consequently, marriage is a more effective means of enforcing household specialization. Since college graduates have more room for household specialization, they are more likely to choose marriage. The variance of income shocks, which affects the demand for consumption insurance, is larger among college graduates. Even if the variance of income shocks could potentially explain partnership choices, simulations suggest a small role of income volatility.","PeriodicalId":48297,"journal":{"name":"Journal of the European Economic Association","volume":"40 3","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-11-07","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135431077","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Felipe González, Luis R Martínez, Pablo Muñoz, Mounu Prem
Abstract We provide new evidence on the causal effect of higher education on mortality. Our empirical strategy exploits the reduction in college openings introduced by the Pinochet regime after the 1973 coup in Chile, which led to a sharp downward kink in college enrollment among those cohorts reaching college age in the following years. Using administrative data from the vital statistics, we document an upward kink in the age-specific yearly mortality rate of individuals in the affected cohorts. We estimate a negative effect of college on mortality between ages 34-74, which is larger for men, but also sizable for women. Individuals in the affected cohorts experience worse labor market outcomes, are more likely to be enrolled in the public health system, and report lower consumption of health services. This suggests that economic disadvantage and limited access to care play an important mediating role in the link between higher education and mortality.
{"title":"Higher Education and Mortality: Legacies of an Authoritarian College Contraction","authors":"Felipe González, Luis R Martínez, Pablo Muñoz, Mounu Prem","doi":"10.1093/jeea/jvad066","DOIUrl":"https://doi.org/10.1093/jeea/jvad066","url":null,"abstract":"Abstract We provide new evidence on the causal effect of higher education on mortality. Our empirical strategy exploits the reduction in college openings introduced by the Pinochet regime after the 1973 coup in Chile, which led to a sharp downward kink in college enrollment among those cohorts reaching college age in the following years. Using administrative data from the vital statistics, we document an upward kink in the age-specific yearly mortality rate of individuals in the affected cohorts. We estimate a negative effect of college on mortality between ages 34-74, which is larger for men, but also sizable for women. Individuals in the affected cohorts experience worse labor market outcomes, are more likely to be enrolled in the public health system, and report lower consumption of health services. This suggests that economic disadvantage and limited access to care play an important mediating role in the link between higher education and mortality.","PeriodicalId":48297,"journal":{"name":"Journal of the European Economic Association","volume":"62 2","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-11-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135685630","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Katherine B. Coffman, Manuela Collis, Leena Kulkarni
Abstract We explore how feedback shapes, and perpetuates, gender gaps in self-assessments. Participants in our experiment take tests of their ability across different domains. We elicit their beliefs of their performance before and after feedback. We _nd that, even after the provision of highly informative feedback, gender stereotypes in_uence posterior beliefs, beyond what a Bayesian model would predict. This is primarily because both men and women update their beliefs more positively in response to good news when it arrives in a more gender congruent domain (i.e. more male-typed domains for men, more female-typed domains for women), fueling persistence in gender gaps.
{"title":"Stereotypes and Belief Updating","authors":"Katherine B. Coffman, Manuela Collis, Leena Kulkarni","doi":"10.1093/jeea/jvad063","DOIUrl":"https://doi.org/10.1093/jeea/jvad063","url":null,"abstract":"Abstract We explore how feedback shapes, and perpetuates, gender gaps in self-assessments. Participants in our experiment take tests of their ability across different domains. We elicit their beliefs of their performance before and after feedback. We _nd that, even after the provision of highly informative feedback, gender stereotypes in_uence posterior beliefs, beyond what a Bayesian model would predict. This is primarily because both men and women update their beliefs more positively in response to good news when it arrives in a more gender congruent domain (i.e. more male-typed domains for men, more female-typed domains for women), fueling persistence in gender gaps.","PeriodicalId":48297,"journal":{"name":"Journal of the European Economic Association","volume":"139 ","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-10-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"136018094","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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