CORRUPTION Abhijit Banerjee Sendhil Mullainathan Rema Hanna
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Benjamin A. Olken
B ENJAMIN A. O LKEN MIT Department of Economics, 50 Memorial Drive, Cambridge MA 02142 (617) 253-6833 email: [email protected] web: econ-www.mit.edu/faculty/bolken Date of Birth: April 1975 Education 2004 Ph.D., Economics, Harvard University 1997 B.A. summa cum laude, Ethics, Politics, and Economics; Mathematics, Yale University Employment 2008 – present Associate Professor of Economics (with tenure), Department of Economics, Massachusetts Institute of Technology 2010 – 2011 Visiting Associate Professor of Economics, University of Chicago Booth School 2005 – 2008 Junior Fellow, Harvard Society of Fellows 2004 – 2005 Health and Aging Post-Doctoral Fellow, National Bureau of Economic Research 2001 – 2008 Consultant, The World Bank, Jakarta Office 1998 – 1999 Business Analyst, McKinsey and Company, New York 1997 – 1998 Luce Scholar in Economic Policy, The Castle Group, Jakarta Other Affiliations 2010 – present Co-Chair of Governance Initiative and Member of Board of Directors Executive Committe, Jameel Poverty Actio1n Lab (J-PAL) 2010 – present Fellow, Bureau for Economic Analysis of Development (BREAD) 2009 – present Research Associate, National Bureau of Economic Research (NBER) 2006 – present Research Affiliate, Centre for Economic Policy Research (CEPR) 2005 – 2010 Member, Jameel Poverty Action Lab (J-PAL) 2006 – 2010 Affiliate, Bureau for Economic Analysis of Development (BREAD) 2005 – 2009 Faculty Research Fellow, National Bureau of Economic Research (NBER) 2005 – 2008 Visiting Scholar, MIT Department of Economics and Poverty Action Lab -
Price Competition with Satisficing Consumers
View metadata, citation and similar papers at core.ac.uk brought to you by CORE provided by Aberdeen University Research Archive Price Competition with Satisficing Consumers∗ Mauro Papiy Abstract The ‘satisficing’ heuristic by Simon (1955) has recently attracted attention both theoretically and experimentally. In this paper I study a price-competition model in which the consumer is satisficing and firms can influence his aspiration price via marketing. Unlike existing models, whether a price comparison is made depends on both pricing and marketing strategies. I fully characterize the unique symmetric equilibrium by investigating the implications of satisficing on various aspects of market competition. The proposed model can help explain well-documented economic phenomena, such as the positive correla- tion between marketing and prices observed in some markets. JEL codes: C79, D03, D43. Keywords: Aspiration Price, Bounded Rationality, Price Competition, Satisficing, Search. ∗This version: August 2017. I would like to thank the Editor of this journal, two anonymous referees, Ed Hopkins, Hans Hvide, Kohei Kawamura, Ran Spiegler, the semi- nar audience at universities of Aberdeen, East Anglia, and Trento, and the participants to the 2015 OLIGO workshop (Madrid) and the 2015 Econometric Society World Congress (Montreal) for their comments. Financial support from the Aberdeen Principal's Excel- lence Fund and the Scottish Institute for Research in Economics is gratefully acknowledged. Any error is my own responsibility. yBusiness School, University of Aberdeen - Edward Wright Building, Dunbar Street, AB24 3QY, Old Aberdeen, Scotland, UK. E-mail address: [email protected]. 1 1 Introduction According to Herbert Simon (1955), in most global models of rational choice, all alternatives are eval- uated before a choice is made. -
ECON 1820: Behavioral Economics Spring 2015 Brown University Course Description Within Economics, the Standard Model of Be
ECON 1820: Behavioral Economics Spring 2015 Brown University Course Description Within economics, the standard model of behavior is that of a perfectly rational, self interested utility maximizer with unlimited cognitive resources. In many cases, this provides a good approximation to the types of behavior that economists are interested in. However, over the past 30 years, experimental and behavioral economists have documented ways in which the standard model is not just wrong, but is wrong in ways that are important for economic outcomes. Understanding these behaviors, and their implications, is one of the most exciting areas of current economic inquiry. The aim of this course is to provide a grounding in the main areas of study within behavioral economics, including temptation and self control, fairness and reciprocity, reference dependence, bounded rationality and choice under risk and uncertainty. For each area we will study three things: 1. The evidence that indicates that the standard economic model is missing some important behavior 2. The models that have been developed to capture these behaviors 3. Applications of these models to (for example) finance, labor and development economics As well as the standard lectures, homework assignments, exams and so on, you will be asked to participate in economic experiments, the data from which will be used to illustrate some of the principals in the course. There will also be a certain small degree of classroom ‘flipping’, with a portion of many lectures given over to group problem solving. Finally, an integral part of the course will be a research proposal that you must complete by the end of the course, outlining a novel piece of research that you would be interested in doing. -
Behavioral Economics and Marketing in Aid of Decision Making Among the Poor
Behavioral Economics and Marketing in Aid of Decision Making Among the Poor The Harvard community has made this article openly available. Please share how this access benefits you. Your story matters Citation Bertrand, Marianne, Sendhil Mullainathan, and Eldar Shafir. 2006. Behavioral economics and marketing in aid of decision making among the poor. Journal of Public Policy and Marketing 25(1): 8-23. Published Version http://dx.doi.org/10.1509/jppm.25.1.8 Citable link http://nrs.harvard.edu/urn-3:HUL.InstRepos:2962609 Terms of Use This article was downloaded from Harvard University’s DASH repository, and is made available under the terms and conditions applicable to Other Posted Material, as set forth at http:// nrs.harvard.edu/urn-3:HUL.InstRepos:dash.current.terms-of- use#LAA Behavioral Economics and Marketing in Aid of Decision Making Among the Poor Marianne Bertrand, Sendhil Mullainathan, and Eldar Shafir This article considers several aspects of the economic decision making of the poor from the perspective of behavioral economics, and it focuses on potential contributions from marketing. Among other things, the authors consider some relevant facets of the social and institutional environments in which the poor interact, and they review some behavioral patterns that are likely to arise in these contexts. A behaviorally more informed perspective can help make sense of what might otherwise be considered “puzzles” in the economic comportment of the poor. A behavioral analysis suggests that substantial welfare changes could result from relatively minor policy interventions, and insightful marketing may provide much needed help in the design of such interventions. -
Esther Duflo Wins Clark Medal
Esther Duflo wins Clark medal http://web.mit.edu/newsoffice/2010/duflo-clark-0423.html?tmpl=compon... MIT’s influential poverty researcher heralded as best economist under age 40. Peter Dizikes, MIT News Office April 23, 2010 MIT economist Esther Duflo PhD ‘99, whose influential research has prompted new ways of fighting poverty around the globe, was named winner today of the John Bates Clark medal. Duflo is the second woman to receive the award, which ranks below only the Nobel Prize in prestige within the economics profession and is considered a reliable indicator of future Nobel consideration (about 40 percent of past recipients have won a Nobel). Duflo, a 37-year-old native of France, is the Abdul Esther Duflo, the Abdul Latif Jameel Professor of Poverty Alleviation Latif Jameel Professor of Poverty Alleviation and and Development Economics at MIT, was named the winner of the Development Economics at MIT and a director of 2010 John Bates Clark medal. MIT’s Abdul Latif Jameel Poverty Action Lab Photo - Photo: L. Barry Hetherington (J-PAL). Her work uses randomized field experiments to identify highly specific programs that can alleviate poverty, ranging from low-cost medical treatments to innovative education programs. Duflo, who officially found out about the medal via a phone call earlier today, says she regards the medal as “one for the team,” meaning the many researchers who have contributed to the renewal of development economics. “This is a great honor,” Duflo told MIT News. “Not only for me, but my colleagues and MIT. Development economics has changed radically over the last 10 years, and this is recognition of the work many people are doing.” The American Economic Association, which gives the Clark medal to the top economist under age 40, said Duflo had distinguished herself through “definitive contributions” in the field of development economics. -
Sendhil Mullainathan [email protected]
Sendhil Mullainathan [email protected] _____________________________________________________________________________________ Education HARVARD UNIVERSITY, CAMBRIDGE, MA, 1993-1998 PhD in Economics Dissertation Topic: Essays in Applied Microeconomics Advisors: Drew Fudenberg, Lawrence Katz, and Andrei Shleifer CORNELL UNIVERSITY, ITHACA, NY, 1990-1993 B.A. in Computer Science, Economics, and Mathematics, magna cum laude Fields of Interest Behavioral Economics, Poverty, Applied Econometrics, Machine Learning Professional Affiliations UNIVERSITY OF CHICAGO Roman Family University Professor of Computation and Behavioral Science, January 1, 2019 to present. University Professor, Professor of Computational and Behavioral Science, and George C. Tiao Faculty Fellow, Booth School of Business, July 1, 2018 to December 31, 2018. HARVARD UNIVERSITY Robert C Waggoner Professor of Economics, 2015 to 2018. Affiliate in Computer Science, Harvard John A. Paulson School of Engineering and Applied Sciences, July 1, 2016 to 2018. Professor of Economics, 2004 (September) to 2015. UNIVERSITY OF CHICAGO Visiting Professor, Booth School of Business, 2016-17. MASSACHUSETTS INSTITUTE OF TECHNOLOGY Mark Hyman Jr. Career Development Associate Professor, 2002-2004 Mark Hyman Jr. Career Development Assistant Professor, 2000-2002 Assistant Professor, 1998- 2000 SELECTED AFFILIATIONS Co - Founder and Senior Scientific Director, ideas42 Research Associate, National Bureau of Economic Research Founding Member, Poverty Action Lab Member, American Academy of Arts -
Chapter 4: Conceptual Illusions
CHAPTER 4: CONCEPTUAL ILLUSIONS In this chapter we will consider some fallacies and peculiarities of the way we reason. We’ll briefly consider the fallacy of denying the evidence and then confirmation bias, the paradox of choice, the conjunction fallacy and implicit bias. 1 DENYING THE EVIDENCE My scale is broken. It shows a higher figure every day so I have to keep adjusting it down. 2 CONFIRMATION BIAS "It is the peculiar and perpetual error of the human understanding to be more moved and excited by affirmatives than by negatives." --Francis Bacon Confirmation bias refers to a type of selective thinking whereby one tends to notice and to look for what confirms one's beliefs, and to ignore, not look for, or undervalue the relevance of what contradicts one's beliefs. For example, if you believe that during a full moon there is an increase in admissions to the emergency room where you work, you will take notice of admissions during a full moon, but be inattentive to the moon when admissions occur during other nights of the month. A tendency to do this over time unjustifiably strengthens your belief in the relationship between the full moon and accidents and other lunar effects. 52 This tendency to give more attention and weight to data that support our beliefs than we do to contrary data is especially pernicious when our beliefs are little more than prejudices. If our beliefs are firmly established on solid evidence and valid confirmatory experiments, the tendency to give more attention and weight to data that fit with our beliefs should not lead us astray as a rule. -
Sendhil Mullainathan Education Fields of Interest Professional
Sendhil Mullainathan Robert C Waggoner Professor of Economics Littauer Center M-18 Harvard University Cambridge, MA 02138 [email protected] 617 496 2720 _____________________________________________________________________________________ Education HARVARD UNIVERSITY, CAMBRIDGE, MA, 1993-1998 PhD in Economics Dissertation Topic: Essays in Applied Microeconomics Advisors: Drew Fudenberg, Lawrence Katz, and Andrei Shleifer CORNELL UNIVERSITY, ITHACA, NY, 1990-1993 B.A. in Computer Science, Economics, and Mathematics, magna cum laude Fields of Interest Behavioral Economics, Poverty, Applied Econometrics, Machine Learning Professional Affiliations HARVARD UNIVERSITY Robert C Waggoner Professor of Economics, 2015 to present. Affiliate in Computer Science, Harvard John A. Paulson School of Engineering and Applied Sciences, July 1, 2016 to present Professor of Economics, 2004 (September) to 2015. UNVIRSITY OF CHICAGO Visiting Professor, Booth School of Business, 2016-17. MASSACHUSETTS INSTITUTE OF TECHNOLOGY Mark Hyman Jr. Career Development Associate Professor, 2002-2004 Mark Hyman Jr. Career Development Assistant Professor, 2000-2002 Assistant Professor, 1998- 2000 SELECTED AFFILIATIONS Co - Founder and Senior Scientific Director, ideas42 Research Associate, National Bureau of Economic Research Founding Member, Poverty Action Lab Member, American Academy of Arts and Sciences Contributing Writer, New York Times Sendhil Mullainathan __________________________________________________________________ Books Scarcity: Why Having Too Little Means So Much, joint with Eldar Shafir, 2013. New York, NY: Times Books Policy and Choice: Public Finance through the Lens of Behavioral Economics, joint with William J Congdon and Jeffrey Kling, 2011. Washington, DC: Brookings Institution Press Work in Progress Machine Learning and Econometrics: Prediction, Estimation and Big Data, joint with Jann Spiess, book manuscript in preparation. “Multiple Hypothesis Testing in Experiments: A Machine Learning Approach,” joint with Jens Ludwig and Jann Spiess, in preparation. -
Marianne Bertrand Simeon Djankov Rema Hanna Sendhil Mullainathan
NBER WORKING PAPER SERIES DOES CORRUPTION PRODUCE UNSAFE DRIVERS? Marianne Bertrand Simeon Djankov Rema Hanna Sendhil Mullainathan Working Paper 12274 http://www.nber.org/papers/w12274 NATIONAL BUREAU OF ECONOMIC RESEARCH 1050 Massachusetts Avenue Cambridge, MA 02138 May 2006 This project was conducted and funded by the International Finance Corporation. We thank Anup Kumar Roy for outstanding research assistance. We are grateful to Abhijit Banerjee, Gary Becker, Ryan Bubb, Anne Case, Angus Deaton, Luis Garicano, Ben Olken, Sam Pelzman, Andrei Shleifer, Jakob Svensson and to seminar participants at Harvard, MIT, Princeton, University of California at Berkeley, University of Chicago GSB, LSE, Yale University, NYU, Ohio State University, University of Florida and the ASSA 2006 meeting for helpful comments. The views expressed herein are those of the author(s) and do not necessarily reflect the views of the National Bureau of Economic Research. ©2006 by Marianne Bertrand, Simeon Djankov, Rema Hanna and Sendhil Mullainathan. All rights reserved. Short sections of text, not to exceed two paragraphs, may be quoted without explicit permission provided that full credit, including © notice, is given to the source. Does Corruption Produce Unsafe Drivers? Marianne Bertrand, Simeon Djankov, Rema Hanna and Sendhil Mullainathan NBER Working Paper No. 12274 May 2006 JEL No. ABSTRACT We follow 822 applicants through the process of obtaining a driver’s license in New Delhi, India. To understand how the bureaucracy responds to individual and social needs, participants were randomly assigned to one of three groups: bonus, lesson, and comparison groups. Participants in the bonus group were offered a financial reward if they could obtain their license fast; participants in the lesson group were offered free driving lessons. -
Nber Working Paper Series
NBER WORKING PAPER SERIES REEVALUATING THE MODERNIZATION HYPOTHESIS Daron Acemoglu Simon Johnson James A. Robinson Pierre Yared Working Paper 13334 http://www.nber.org/papers/w13334 NATIONAL BUREAU OF ECONOMIC RESEARCH 1050 Massachusetts Avenue Cambridge, MA 02138 August 2007 We are grateful for the comments and suggestions of José Antionio Cheibub, Jorge Dominguez, Peter Hall, and Susan Stokes. The views expressed herein are those of the author(s) and do not necessarily reflect the views of the National Bureau of Economic Research. © 2007 by Daron Acemoglu, Simon Johnson, James A. Robinson, and Pierre Yared. All rights reserved. Short sections of text, not to exceed two paragraphs, may be quoted without explicit permission provided that full credit, including © notice, is given to the source. Reevaluating the Modernization Hypothesis Daron Acemoglu, Simon Johnson, James A. Robinson, and Pierre Yared NBER Working Paper No. 13334 August 2007 JEL No. O10,P16 ABSTRACT This paper revisits and critically reevaluates the widely-accepted modernization hypothesis which claims that per capita income causes the creation and the consolidation of democracy. We argue that existing studies find support for this hypothesis because they fail to control for the presence of omitted variables. There are many underlying historical factors that affect both the level of income per capita and the likelihood of democracy in a country, and failing to control for these factors may introduce a spurious relationship between income and democracy. We show that controlling for these historical factors by including fixed country effects removes the correlation between income and democracy, as well as the correlation between income and the likelihood of transitions to and from democratic regimes. -
REMA HANNA 79 JFK Street (Mailbox 26), Littauer-315 Cambridge, MA 02138 Rema [email protected] ● 617-496-1140
Harvard Kennedy School REMA HANNA 79 JFK Street (Mailbox 26), Littauer-315 Cambridge, MA 02138 [email protected] ● 617-496-1140 EMPLOYMENT John F. Kennedy School of Government, Harvard University Assistant Professor of Public Policy (July 2008 – present) Wagner Graduate School of Public Service and Department of Economics, New York University Assistant Professor of Public Policy and Economics (September 2005 – June 2008) Federal Reserve Bank of New York Research Associate (July 1999 – July 2000) EDUCATION Massachusetts Institute of Technology, Cambridge, Massachusetts Ph. D., Economics, September 2005. Fields in Development and Econometrics Cornell University, Ithaca, New York B. S. Policy Analysis, May 1999. Graduated with Honors and Distinction PUBLICATIONS IN ECONOMICS 1. “Incentives Work: Getting Teachers to Come to School,” Joint with Esther Duflo and Stephen Ryan. [Program evaluated in this paper won the Digital Learning Award of India of 2007], accepted at the American Economic Review. 2. “Targeting the Poor: Evidence from a Field Experiment in Indonesia,” Joint with Vivi Alatas, Abhijit Banerjee, Julia Tobias, and Ben Olken; accepted at the American Economic Review. 3. “U.S. Environmental Regulation and FDI: Evidence from a Panel of U.S. Based Multinational Firms,” American Economic Journal: Applied Economics, July 2010. 4. “The Impact of Inspections on Plant-Level Air Emissions,” with Paulina Oliva, Berkeley Electronic Press Journals, March 2010. 5. “Affirmative Action: Evidence from College Admissions in India,” Joint with Marianne Bertrand and Sendhil Mullainathan, Journal of Public Economics, Feb 2010. 6. “Obtaining a Driving License in India: An Experimental Approach to Studying Corruption,” Joint with Marianne Bertrand, Simeon Djankov, and Sendhil Mullainathan, Quarterly Journal of Economics, November 2007. -
Investor Protection and Corporate Valuation
THE JOURNAL OF FINANCE • VOL. LVII, NO. 3 • JUNE 2002 Investor Protection and Corporate Valuation RAFAEL LA PORTA, FLORENCIO LOPEZ-DE-SILANES, ANDREI SHLEIFER, and ROBERT VISHNY* ABSTRACT We present a model of the effects of legal protection of minority shareholders and of cash-flow ownership by a controlling shareholder on the valuation of firms. We then test this model using a sample of 539 large firms from 27 wealthy economies. Consistent with the model, we find evidence of higher valuation of firms in coun- tries with better protection of minority shareholders and in firms with higher cash- flow ownership by the controlling shareholder. RECENT RESEARCH SUGGESTS THAT THE EXTENT of legal protection of investors in a country is an important determinant of the development of its financial markets. Where laws are protective of outside investors and well enforced, investors are willing to finance firms, and financial markets are both broader and more valuable. In contrast, where laws are unprotective of investors, the development of financial markets is stunted. Moreover, systematic differ- ences among countries in the structure of laws and their enforcement, such as the historical origin of their laws, account for the differences in financial development ~La Porta et al. ~1997, 1998!!. How does better protection of outside investors ~both shareholders and creditors! promote financial market development? When their rights are bet- ter protected by the law, outside investors are willing to pay more for finan- cial assets such as equity and debt. They pay more because they recognize that, with better legal protection, more of the firm’s profits would come back to them as interest or dividends as opposed to being expropriated by the entrepreneur who controls the firm.