Posts

New

Surviving Childhood: Effects of Removing a Child From Home

Ronja Helénsdotter

This paper studies the effects of the court-ordered removal of children from home on health, crime, and education. To isolate causal effects, I exploit quasi-random variation in judge assignment together with across-judge variation in the tendency to favor removal in an instrumental variable (IV) design. Using a novel data set (N=26,579) based on Swedish court documents that I transcribe and link with detailed register data, I find that court-ordered out-of-home placement has large adverse effects on the mortality of the marginal child.

New

Good Dispersion, Bad Dispersion

Matthias Kehrig and Nicolas Vincent

We document that most dispersion in marginal revenue products of inputs occurs across plants within firms rather than between firms. This is commonly thought to reflect misallocation: dispersion is “bad.” However, we show that eliminating frictions hampering internal capital markets in a multi-plant firm model may in fact increase productivity dispersion and raise output: dispersion can be “good.” This arises as firms optimally stagger investment activity across their plants over time to avoid raising costly external finance, instead relying on reallocating internal funds.

New

Public Listing Choice with Persistent Hidden Information

Francesco Celentano and Mark Rempel

How much does firm intangibility amplify CEOs’ persistent private information and reduce firms’ public listing propensity? We develop a model of competing public and private investors financing firms heterogeneously exposed to persistent private cash flows. Equilibrium financing is driven by information rent differentials in CEO compensation. We validate and structurally estimate the model using firm listing and CEO compensation data.

New

Hiring as Exploration

Danielle Li, Lindsey Raymond, and Peter Bergman

This paper views hiring as a contextual bandit problem: to find the best workers over time, firms must balance “exploitation” (selecting from groups with proven track records) with “exploration” (selecting from under-represented groups to learn about quality). Yet modern hiring algorithms, based on supervised learning approaches, are designed solely for exploitation. Instead, we build a resume screening algorithm that values exploration by evaluating candidates according to their statistical upside potential.

New

Complexity and Satisficing: Theory with Evidence from Chess

Yuval Salant and Jörg L. Spenkuch

We develop a satisficing model of choice in which the available alternatives differ in their inherent complexity. We assume—and experimentally validate—that complexity leads to errors in the perception of alternatives’ values. The model yields sharp predictions about the effect of complexity on choice probabilities, some of which qualitatively contrast with those of maximization-based choice models.

New

Extreme Categories and Overreaction to News

Spencer Kwon and Johnny Tang

What characteristics of news generate over-or-underreaction? We study the asset-pricing consequences of diagnostic expectations, a model of belief formation based on the representativeness heuristic, in a setting where news events are drawn from categories with extreme distributions of fundamentals. Our model predicts greater over-reaction to news belonging to categories with more extreme outliers, or tail events. We test our theory on a comprehensive database of corporate news that includes news from 24 different categories, including earnings announcements, product launches, M&A, business expansions, and client-related news.

New

Racial Discrimination and the Social Contract: Evidence from U.S. Army Enlistment during WWII

Nancy Qian and Marco Tabellini

This paper documents that the Pearl Harbor attack triggered a sharp increase in volunteer enlistment rates of American men, the magnitude of the increase was smaller for Black men than for white men and the Black-white gap was larger in counties with higher levels of racial discrimination. The results suggest that political exclusion and discrimination can undermine support for the government during critical times such as war.

New

Cascades and Fluctuations in an Economy with an Endogenous Production Network

Mathieu Taschereau-Dumouchel

This paper studies the efficient allocation in an economy in which firms are connected through input-output linkages and must pay a fixed cost to produce. When economic conditions are poor, some firms might decide not to operate, thereby severing the links with their neighbors and changing the structure of the production network. Since producers benefit from having access to additional suppliers, nearby firms tend to operate, or not, together. As a result, the production network features clusters of operating firms, and the exit of a producer can create a cascade of firm shutdowns.

Follow us

The Review of Economic Studies Follow

The official account of the Review of Economic Studies, one of the world's top economics journals.

RevEconStudies
Retweet on Twitter The Review of Economic Studies Retweeted

Version 2.0 of the National Elections Database is online!
We now cover presidential and parliamentary elections 1789–2023, extending the post-1945 data of Electoral Turnovers @RevEconStudies (https://academic.oup.com/restud/advance-article/doi/10.1093/restud/rdae108/7899604).
w/ @benjaminmarx and @vincent_rollet

Reply on Twitter 1930598811006587041 Retweet on Twitter 1930598811006587041 84 Like on Twitter 1930598811006587041 298 Twitter 1930598811006587041
Retweet on Twitter The Review of Economic Studies Retweeted

``Many networks naturally form as people come together to form subgraphs, e.g. as coauthors of a paper, or other teams. This is the basis for a new, computationally tractable method of estimating network formation."

From Chandrasekhar & @JacksonmMatt:

https://www.restud.com/a-network-formation-model-based-on-subgraphs/

Reply on Twitter 1896484969868062832 Retweet on Twitter 1896484969868062832 20 Like on Twitter 1896484969868062832 84 Twitter 1896484969868062832
Retweet on Twitter The Review of Economic Studies Retweeted

Recently accepted to #REStud, ``Simultaneous Search and Adverse Selection," from Auster, Gottardi and Wolthoff @rpwolthoff:

https://www.restud.com/simultaneous-search-and-adverse-selection/

Reply on Twitter 1896445588729917790 Retweet on Twitter 1896445588729917790 6 Like on Twitter 1896445588729917790 26 Twitter 1896445588729917790
Retweet on Twitter The Review of Economic Studies Retweeted

Recently accepted to #REStud, ``Affiliated Common Value Auctions with Costly Entry," from Murto & Välimäki:

https://www.restud.com/affiliated-common-value-auctions-with-costly-entry/

Reply on Twitter 1896440059316035607 Retweet on Twitter 1896440059316035607 3 Like on Twitter 1896440059316035607 13 Twitter 1896440059316035607
Load More