NewThe Value of Privacy in Cartels: An Analysis of the Inner Workings of a Bidding Ring 9 April 2025 Kei Kawai, Jun Nakabayashi, and Juan OrtnerWe study how incentive constraints can be relaxed by randomization in a repeated-game setting. Our study is motivated by the workings of a detected bidding cartel that adopted a protocol of keeping the winning bid secret from the designated losers when defection was a concern. Keeping the winning bid secret makes accurately undercutting the winning bid more difficult and makes defection less attractive as potential defectors risk not winning the auction even if they deviate.
NewBelief identification by proxy 9 April 2025 Elias TsakasIt is well known that individual beliefs cannot be identified using traditional choice data, unless we exogenously assume state-independent utilities. In this paper, I propose a novel methodology that solves this long-standing identification problem in a simple way. This method relies on extending the state space by introducing a proxy, for which the agent has no stakes conditional on the original state space.
NewHow People Use Statistics 2 April 2025 Pedro Bordalo, John Conlon, Nicola Gennaioli, Spencer Kwon, and Andrei ShleiferFor standard statistical problems, we provide new evidence documenting i) multi-modality and ii) instability in probability estimates, including from irrelevant changes in problem description. The evidence motivates a model in which, when solving a problem, people represent each hypothesis by attending to its salient features while neglecting other, potentially more relevant, ones. Only the statistics associated with salient features are used.
New Joint Managing Editor 31 March 2025 We warmly welcome Jakub Steiner (University of Zurich, CERGE-EI, CTS) to join us as Joint Managing Editors with effect from 1st April 2025. A huge thanks to Bard Harstad who served as Joint Managing Editors until March 2025.
NewThe US, Economic News, and the Global Financial Cycle 31 March 2025 Christoph E. Boehm and T. Niklas KronerWe provide evidence for a causal link between the US economy and the global financial cycle. Using intraday data, we show that US macroeconomic news releases have large and significant effects on global risky asset prices. Stock price indexes of 27 countries, the VIX, and commodity prices all jump instantaneously upon news releases. The responses of stock indexes co-move across countries and are large—often comparable in size to the response of the S&P 500.
NewHow to sample and when to stop sampling: The generalized Wald problem and minimax policies 31 March 2025 Karun AdusumilliWe study sequential experiments where sampling is costly and a decision-maker aims to determine the best treatment for full scale implementation by (1) adaptively allocating units between two possible treatments, and (2) stopping the experiment when the expected welfare (inclusive of sampling costs) from implementing the chosen treatment is maximized. Working under a continuous time limit, we characterize the optimal policies under the minimax regret criterion.
NewUnemployment insurance reforms and labor market dynamics 20 March 2025 Benjamin Hartung, Philip Jung, and Moritz KuhnA key question in labor market research is how the unemployment insurance system affects unemployment rates and labor market dynamics. We provide new answers to this old question by studying one of the largest unemployment insurance reforms in recent decades, the German Hartz reforms. On average, lower separation rates into unemployment account for 76% of declining unemployment after the reform, a fact unexplained by existing research focusing on job-finding rates.
New‘Bad’ Oil, ‘Worse’ Oil and Carbon Misallocation 10 March 2025 Renaud Coulomb, Fanny Henriet, and Léo ReitzmannNot all barrels of oil are created equal: their extraction varies in both private cost and carbon intensity. Leveraging a comprehensive micro-dataset on world oil fields, alongside detailed estimates of carbon intensities and private extraction costs, this study quantifies the additional emissions and costs from having extracted the ’wrong’ deposits. We do so by comparing historical deposit-level supplies to counterfactuals that factor in pollution costs, while keeping annual global consumption unchanged.
