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on Experimental Economics |
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Issue of 2020‒11‒09
twenty-two papers chosen by |
| By: | Maca Millán Stefany; Arias Arévalo Paola; Restrepo Plaza Lina |
| Abstract: | Incentives based on extrinsic motivations such as Payments for Environmental Services (PES) could negatively affect intrinsic motivations (i.e., motivational crowding-out). This effect occurs when conservation levels after the intervention decline relative to those existing before the PES implementation. However, few experimental studies have assessed PES effects on motivations once financial incentives are missing. Moreover, experimental research still lacks insights on PES designs that may prevent motivational crowding-out. This research aims to i) provide a classification of plural motivations and values; ii) assess the motivational crowding effects associated to a PES design based merely on monetary incentives; and iii) assess the motivational crowding effect of integrating plural motivations and values in PES design via environmental awareness and social recognition. We conducted a lab-in-the-field experiment followed by a questionnaire involving 120 participants in rural Cali, Colombia. We use a difference in differences (DiD) approach to show that while PES had a crowding-out effect, integrating plural motivations and values via environmental awareness had a crowding-in effect on conservation. We also found that irrespectively of the PES treatment women were more prone to conservation. We conclude that conservation instruments such as PES could be more effective if they integrate plural motivations and values, rather than only emphasize extrinsic motivations and instrumental values. |
| Keywords: | Conservation motivations, environmental values, intrinsic values, lab-in-the-field experiment, relational values, plural values, pro-environmental behavior, public goods |
| JEL: | Q57 D9 H41 C9 |
| Date: | 2020–10–29 |
| URL: | http://d.repec.org/n?u=RePEc:col:000149:018495&r=all |
| By: | Adrián Caballero; R. López-Pérez |
| Abstract: | A recent experimental literature has documented that people are (sometimes) asymmetric updaters: Good news are over-weighted, relative to bad news. We contribute to this literature with a novel experimental test of a potential mechanism of asymmetric updating, that is, that people recall better the positive than the negative evidence. In our design, this account predicts inflated posteriors regarding some future financial prize. Contrary to that, the average subject (slightly) underestimates the mode of the posterior beliefs about that payoff prospect. Although subjects tend to exhibit self-serving recall (SSR) in that they remember better the positive realizations of a signal in a memory task, this has little effect on their estimates and the extent and direction of the bias. A difficulty to recall accurately, we conclude, is not a sufficient cause for a positivity bias. |
| Keywords: | Belief Updating; Biases; Motivated Beliefs; Optimism; Self-Serving Recall |
| JEL: | C91 D03 D80 D83 D84 |
| Date: | 2020–10 |
| URL: | http://d.repec.org/n?u=RePEc:ipp:wpaper:2005&r=all |
| By: | Adrián Caballero; Raúl López-Pérez |
| Abstract: | Economic theories of optimism provide different rationales for the phenomenon of motivated reasoning, and a recent empirical literature has tested some of them, with mixed results. We contribute to this literature with a novel experimental test of two mechanisms, according to which optimism is respectively predicted when (1) the potential material losses due to the bias are relatively small or (2) the cognitive costs of the bias are small enough. In our design, these two accounts predict inflated expectations regarding some future payoff. Contrary to that, the average subject tends to (slightly) underestimate that financial prospect. Although a minority of the subjects overestimate systematically, the size of their errors is rather reduced, and they hardly differ in their personal characteristics from the rest of the subjects. In fact, optimism in our experiment is correlated with the sample observed, in that it is more likely when a subject observes relatively few good signals. This is again at odds with (1) and (2). These mechanisms, we conclude, do not appear to fully capture under which circumstances people fail into a positivity bias. Yet (1) seems to be empirically less relevant, in that we observe a similarly limited level of bias irrespectively of its monetary cost. |
| Keywords: | BBelief Updating; Biases; Motivated Beliefs; Optimism; Wishful Thinking |
| JEL: | D03 D80 D83 D84 |
| Date: | 2020–10 |
| URL: | http://d.repec.org/n?u=RePEc:ipp:wpaper:2006&r=all |
| By: | Sengupta, Arjun; Vanberg, Christoph |
| Abstract: | This paper experimentally investigates the hypothesis that promise-keeping behavior is affected by the opportunities that a counterpart foregoes by relying on the promise. We present two motivational mechanisms that could drive such an effect. One is that people dislike causing harm through a promise, and the natural way to measure such harm is to take into account what the counterpart would have received had she not relied on the promise. The other is that people may dislike causing regret in another person. We test these ideas in the context of an experimental trust game. The main treatment variable is the payoff that the first mover forgoes if he “trusts”. Consistent with our main hypothesis, we find that an increase in this foregone payoff increases promise-keeping behavior. The experiment is designed to rule out alternative explanations for such an effect. Our evidence suggests that the mechanism driving the effect may involve an aversion to causing regret in others. |
| Date: | 2020–10–27 |
| URL: | http://d.repec.org/n?u=RePEc:awi:wpaper:0692&r=all |
| By: | Manuel Muñoz-Herrera; Nikos Nikiforakis (Division of Social Science) |
| Abstract: | Evidence shows that the willingness of individuals to avenge punishment inflicted upon them for transgressions they committed constitutes a significant obstacle towards upholding social norms and cooperation. The drivers of the desire to counter-punish, however, are not well understood. We hypothesize that negative motive attribution – the tendency to assign negative motives to punishers for their actions – increases the likelihood of counter-punishment. We test this hypothesis in a lab experiment in which we exogenously manipulate the ability to attribute negative motives to punishers by having the punisher be either an unaffected third party or the victim of a transgression (second party). We show that individuals consider second-party punishment to be substantially more biased than an identical, payoff-equalizing punishment meted out by a third party. In line with our hypothesis, we find that second-party punishers are 66.3% more likely to be counter-punished than third-party punishers, and suffer a loss in earnings which is 64.6% higher, all else equal. Our findings have implications for designing mechanisms to uphold cooperation and reduce conflict. JEL codes: C92, D70, H41 |
| Date: | 2020–10 |
| URL: | http://d.repec.org/n?u=RePEc:nad:wpaper:20200056&r=all |
| By: | Christina Gravert; Linus Olsson Collentine |
| Abstract: | In three large-scale field experiments with over 32,500 individuals, we investigate whether public transport uptake can be influenced by behavioral interventions and by economic incentives. Despite their effectiveness in other domains, we find a tightly estimated zero for social norms and implementation intentions on ridership. Increasing the economic incentive significantly increases uptake and long-term usage. This increase is sustained for months after removing the incentive. The effect is mainly driven by initial low users, which is evidence for habit formation and highlights the heterogeneous effects of the policy. While there is scope for long-term behavior change, nudging might not be the right approach. |
| Keywords: | transport, nudging, field experiment, habit formation |
| JEL: | C93 D04 D91 L91 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_8617&r=all |
| By: | Hassan Afrouzi; Spencer Yongwook Kwon; Augustin Landier; Yueran Ma; David Thesmar |
| Abstract: | We study how biases in expectations vary across different settings, through a large-scale randomized experiment where participants forecast stable random processes. The experiment allows us to control the data generating process and the participants’ relevant information sets, so we can cleanly measure forecast biases. We find that forecasts display significant overreaction to the most recent observation. Moreover, overreaction is especially pronounced for less persistent processes and longer forecast horizons. We also find that commonly-used expectations models do not easily account for the variation in overreaction across settings. We provide a theory of expectations formation with imperfect utilization of past information. Our model closely fits the empirical findings. |
| JEL: | C91 D03 D83 D84 |
| Date: | 2020–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:27947&r=all |
| By: | Thomas Markussen; Smriti Sharma; Saurabh Singhal; Finn Tarp |
| Abstract: | We examine the effects of randomly introduced economic inequality on voluntary co-operation and whether this relationship is influenced by the quality of local institutions, as proxied by corruption. We use representative data from a large-scale lab-in-the-field public goods experiment with over 1,300 participants across rural Vietnam. Our results show that inequality adversely affects aggregate contributions, and this is on account of high endowment individuals contributing a significantly smaller share than those with low endowments. This negative effect of inequality on cooperation is exacerbated in high corruption environments. We nd that corruption leads to more pessimistic beliefs about others' contributions in heterogeneous groups, and this is an important mechanism explaining our results. In doing so, we highlight the indirect costs of corruption that are understudied in the literature. These findings have implications for public policies aimed at resolving local collective action problems. |
| Keywords: | Inequality, institutions, corruption, public goods, lab-in-field experiment |
| JEL: | H41 D73 D90 O12 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:lan:wpaper:309239622&r=all |
| By: | Si Chen; Carl Heese |
| Abstract: | Individuals can often inquire about how their decisions would affect others. When do they stop the inquiry if one of their options is preferred based on a selfish motive but is potentially in conflict with social motives? Using a laboratory experiment, we provide causal evidence that having a selfishly preferred option makes individuals more likely to continue the inquiry when the information received up to that point predominantly suggests that the selfish behavior harms others. In contrast, when the information received up to that point predominantly suggests that being selfish harms nobody, individuals are more likely to stop acquiring information. We propose a theoretical model drawing on the Bayesian persuasion model of (Kamenica and Gentzkow, 2011). The model shows that the information acquisition strategy documented in our experiment can be optimal for a Bayesian agent who values the belief of herself not harming others but attempts to persuade herself to behave self-interestedly. The model predicts that strategic information acquisition motivated by self-interest can reduce the decisions' resulting negative externalities and improve the welfare of the affected others. Our laboratory experiment indeed confirms this prediction. |
| Keywords: | Motivated Beliefs, Social Preferences, Information Preferences, Bayesian Persuasion, Belief Utility |
| JEL: | D90 D91 |
| Date: | 2020–10 |
| URL: | http://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2020_223&r=all |
| By: | Patrick Bareinz; Silke Uebelmesser |
| Abstract: | We conduct a survey experiment on the effect of information provision on attitudes towards immigration in Germany. The focus lies on two theory-based economic channels, labor market and welfare state concerns, and immigration policy preferences. Using probability-based representative survey data, we experimentally vary the quantity and the type of information provided to respondents. We find that a bundle of information on both the share and the unemployment rate of foreigners robustly decreases welfare state concerns about immigration. There are slightly less pronounced effects on the labor market and policy channels. Further data-driven analyses reveal heterogeneity in treatment effects. Our findings therefore suggest that careful composition and targeting of information interventions can increase their effectiveness in the public debate on immigration. |
| Keywords: | immigration attitudes, survey experiment, information provision, belief updating, welfare state, labor market, machine learning |
| JEL: | C90 D83 F22 J15 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_8635&r=all |
| By: | Ju, Ying (University of Munich, Munich, Germany); Kocher, Martin G. (Institute for Advanced Studies, Vienna, Department of Economics, University of Vienna, Austria, University of Gothenburg, Sweden) |
| Abstract: | Social dilemmas such as greenhouse gas emission reduction are often characterized by heterogeneity in benefits from solving the dilemma. How should leadership of group members be organized in such a setting? We implement a laboratory public goods experiment with heterogeneous marginal per capita returns from the public good and leading by example that is either implemented exogenously or by self-selection. Our results suggest that both exogenous and selfselected leadership only have a small effect on contributions to the public good. We do not find significant differences in contributions for exogenous and self-selected leadership. Leaders seem to need additional instruments to be more effective when benefits are heterogeneous. |
| Keywords: | Public goods experiment; heterogeneous benefits; leading by example |
| JEL: | C91 D03 D64 |
| Date: | 2020–10 |
| URL: | http://d.repec.org/n?u=RePEc:ihs:ihswps:25&r=all |
| By: | Hagmann, David (Harvard University); Feiler, Daniel |
| Abstract: | Principals often bargain through agents, and past work suggests that such bargaining too often ends in costly impasse. We present experimental evidence that the agent-selection process which precedes bargaining may be a significant driver of failures to reach agreement. We find that principals select overly aggressive agents, such that those sent to the bargaining table are more polarized in their views than are potential agents in general. Agent-selection makes parties worse off than if they were assigned an agent at random and, conditional on engaging in agent-selection, both parties could improve their outcome by selecting a less aggressive agent. |
| Date: | 2020–10–06 |
| URL: | http://d.repec.org/n?u=RePEc:osf:osfxxx:y6tq2&r=all |
| By: | Ilona Reindl (University of Vienna); Jean-Robert Tyran (Department of Economics, University of Copenhagen, Denmark) |
| Abstract: | We experimentally investigate how income redistribution shapes support for economic inclusion, i.e., a policy that creates equality of opportunity for income generation. We study a setting in which low-endowment subjects are excluded from investment opportunities unless those with high endowments transfer resources to the low-endowment subjects. We find that support for economic inclusion is stronger among high-endowment subjects if incomes are known to be redistributed in the future compared to a situation in which this is precluded by design. Income redistribution spreads both risks and returns of investments in the population which, in turn, induces a higher rate of profitable investments, and this prospect tends to foster support for economic inclusion. Income redistribution thus induces more equal and efficient outcomes by boosting popular support for economic inclusion. |
| Keywords: | laboratory experiment, income redistribution, economic inclusion, equality of opportunity, investment, risk taking |
| JEL: | C91 D31 D63 D81 |
| Date: | 2020–10–26 |
| URL: | http://d.repec.org/n?u=RePEc:kud:kuiedp:2007&r=all |
| By: | Christopher Cotton; Brent R. Hickman; John A. List; Joseph Price; Sutanuka Roy |
| Abstract: | We leverage a field experiment across three distinct school districts to identify key pieces of a structural model of adolescent human capital production. Our focus is inspired by the contemporary psychology of education literature, which expresses learning as a function of the ratio of the time spent on learning to the time needed to learn. By capturing two crucial student-level unobservables—which we denote as academic efficiency (turning inputs into outputs) and time preference (motivation)—our field experiment lends insights into the underpinnings of adolescent skill formation and provides a novel view of how to lessen racial and gender achievement gaps. One general insight is that students who are falling behind their peers, whether correlated to race, gender, or school district, are doing so because of academic efficiency rather than time preference. We view this result, and others found in our data, as fundamental to practitioners, academics, and policymakers interested in designing strategies to provide equal opportunities to students. |
| JEL: | C93 I21 I24 I25 I26 J01 J24 O38 |
| Date: | 2020–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:27995&r=all |
| By: | Christopher Cotton (Queen's University); Brent R. Hickman (Olin Business School, University of Washington); John List (University of Chicago); Joseph P. Price (Brigham Young University); Sutanuka Roy |
| Abstract: | We leverage a field experiment across three distinct school districts to identify key pieces of a structural model of adolescent human capital production. Our focus is inspired by the contemporary psychology of education literature, which expresses learning as a function of the ratio of the time spent on learning to the time needed to learn. By capturing two crucial student-level unobservables—which we denote as academic efficiency (turning inputs into outputs) and time preference (motivation)—our field experiment lends insights into the underpinnings of adolescent skill formation and provides a novel view of how to lessen racial and gender achievement gaps. One general insight is that students who are falling behind their peers, whether correlated to race, gender, or school district, are doing so because of academic efficiency rather than time preference. We view this result, and others found in our data, as fundamental to practitioners, academics, and policymakers interested in designing strategies to provide equal opportunities to students. |
| Keywords: | Human capital, field experiment, structural econometrics, psychology of education, learning, school districts, school quality, demographics, gender gap, racial gap |
| JEL: | C93 I21 I24 J22 J24 O15 |
| Date: | 2020–10 |
| URL: | http://d.repec.org/n?u=RePEc:qed:wpaper:1444&r=all |
| By: | Ho, Thong (School of Economics, University of Economics, Ho Chi Minh City); Nie, Zihan (University of Gothenburg); Alpizar, Francisco (Environmental Economics and Natural Resources Group, Wageningen University and Research); Carlsson, Fredrik (Department of Economics, School of Business, Economics and Law, Göteborg University); Khanh Nam, Pham (School of Economics, University of Economics Ho Chi Minh City) |
| Abstract: | We conduct a natural field experiment on the effect of having a celebrity endorse an information campaign aiming to induce pro-environmental behavior in the context of single-use plastics consumption. We find that an information campaign does not have a significant effect on behavior unless it is endorsed by a celebrity. Subjects in the treatment with a combination of information campaign and celebrity endorsement use around 25% fewer plastic items compared with subjects in the control group. Adding a pledge to the endorsement does not result in an incremental reduction in the use of plastic items. Exploratory analysis suggests that the information campaign itself affect attitudes, but not behavior, and that it is the celebrity endorsement itself that affect behavior. |
| Keywords: | pro-environmental behavior; celebrity endorsement; information |
| JEL: | C93 D90 Q50 |
| Date: | 2020–10 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:gunwpe:0795&r=all |
| By: | Béatrice Boulu-Reshef (Université d'Orléans, Laboratoire d'Economie d'Orléans); Nina Rapoport (Centre d'Economie de la Sorbonne, Université Paris 1 Panthéon-Sorbonne, Paris School of Economics) |
| Abstract: | undraising project unfolds with the sequence of decisions. This paper examines how the different sources of information available to potential donors in such settings influence their decision-making. Contrary to most of the leadership literature, neither leaders nor followers in these settings have certainty about the quality of the fundraising project. We explore whether leaders remain influential, the extent to which they use their influence strategically, and the consequences on followers when leaders are misinformed. We combine an information cascade method with a modified public goods game to create a “Voluntary Contributions in Cascades” paradigm. Participants sequentially receive private signals about the state of the world, which determines the potential returns from the public good, and take two public actions: an incentivized prediction about the state of the world and a contribution to the public good. We find that participants' predictions mostly align with Bayesian predictions, and find no evidence for strategic or misleading predictions. Leaders' contributions are positively correlated with followers', suggesting they remain influential despite their limited informational advantage. This influence takes a tragic turn when leaders happen to be misinformed, as most misinformed leaders end up unintentionally misleading followers. We find that having a misleading leader is associated with a reduction in gains from contributions roughly twice as large as the reduction that stems from dividing the marginal-per-capita-return by two. Our results stress the significance of having well-informed leaders |
| Keywords: | voluntary contribution; information cascade; fundraising; sequential public good game; leadership |
| JEL: | C92 D80 H41 |
| Date: | 2020–10 |
| URL: | http://d.repec.org/n?u=RePEc:mse:cesdoc:20023&r=all |
| By: | George Gui |
| Abstract: | Experiments are the gold standard for causal identification but often have limited scale, while observational datasets are large but often violate standard identification assumptions. To improve the estimation efficiency, we propose a new method that combines experimental and observational data by leveraging covariates that satisfy the first-stage relevance condition in the observational data. We first use the observational data to derive a biased estimate of the causal effect and then correct this bias using the experimental data. We show that this bias-corrected estimator is uncorrelated with the benchmark estimator that only uses the experimental data, and can thus be combined with the benchmark estimator to improve efficiency. Under a common experimental design that randomly assigns units into the experimental group, our method can reduce the variance by up to 50%, so that only half of the experimental sample is required to attain the same accuracy. This accuracy can be further improved if the experimental design accounts for this relevant first-stage covariate and select the experimental group differently. |
| Date: | 2020–10 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2010.05117&r=all |
| By: | Islam, Asad (Monash University); Ushchev, Philip (National Research University); Zenou, Yves (Monasch University); Zhang, Xin (Monash University) |
| Abstract: | We develop a theoretical model in which technology adoption decisions are based on the information received from others about the quality of a new technology and on their risk attitudes. We test the predictions of this model using a randomized field experiment in Bangladesh. We show that the share of treated farmers who receive better training in System of Rice Intensification (SRI) technology have a high positive impact on the adoption rate of untreated farmers. We also find that untreated farmers who are more risk-averse tend to adopt the technology less and are less influenced by their treated peers. Our results thus indicate that spillover effects are important in technology adoption and that information transmission about the quality of the technology matters. |
| Keywords: | Technology adoption; Peers; Risk attitude; RCT; Bangladesh |
| JEL: | O13 Z13 |
| Date: | 2020–10–12 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:1363&r=all |
| By: | Liam Wren-Lewis (PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Luis Becerra-Valbuena (PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Kenneth Houngbedji (LEDa - Laboratoire d'Economie de Dauphine - IRD - Institut de Recherche pour le Développement - Université Paris Dauphine-PSL - PSL - Université Paris sciences et lettres - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | Many countries are formalizing customary land rights systems with the aim of improving agricultural productivity and facilitating community forest management. This paper evaluates the impact on tree cover loss of the first randomized control trial of such a program. Around 70,000 landholdings were demarcated and registered in randomly chosen villages in Benin, a country with a high rate of deforestation driven by demand for agricultural land. We estimate that the program reduced the area of forest loss in treated villages, with no evidence of anticipatory deforestation or negative spillovers to other areas. Surveys indicate that possible mechanisms include an increase in tenure security and an improvement in the effectiveness of community forest management. Overall, our results suggest that formalizing customary land rights in rural areas can be an effective way to reduce forest loss while improving agricultural investments. |
| Keywords: | agricultural investments,Community Forest Management,deforestation |
| Date: | 2020–06 |
| URL: | http://d.repec.org/n?u=RePEc:hal:pseptp:hal-02898187&r=all |
| By: | Asadullah, M. Niaz; De Cao, Elisabetta; Khatoon, Fathema Zhura; Siddique, Zahra |
| Abstract: | We elicit adolescent girls’ attitudes towards intimate partner violence and child marriage using purposefully collected data from rural Bangladesh. Alongside direct survey questions, we conduct list experiments to elicit true preferences for intimate partner violence and marriage before age 18. Responses to direct survey questions suggest that very few adolescent girls in the study accept the practises of intimate partner violence and child marriage (5% and 2%). However, our list experiments reveal significantly higher support for both intimate partner violence and child marriage (at 30% and 24%). We further investigate how numerous variables relate to preferences for egalitarian gender norms in rural Bangladesh. |
| Keywords: | Bangladesh; child marriage; C83indirect response survey methods; intimate partner violence; list experiment |
| JEL: | O10 C13 |
| Date: | 2020–10–06 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:106991&r=all |
| By: | Anya Samek; Justin R. Sydnor |
| Abstract: | Insurance choices are often hard to rationalize by standard theory and frequently appear sub-optimal. A key reason may be that people are unable to map the cost-sharing features of plans to their distribution of financial consequences. We develop and experimentally test a decision aid that provides this mapping to simplify comparisons of plan options. In two experiments mirroring typical health insurance decisions, we find that when people choose plans using standard feature-based information, they violate dominance at high rates. Our distribution-based decision aid substantially reduces dominance violations, and also changes choice patterns in situations where there is no dominant option. Choice patterns under feature-based menus can be most easily rationalized by models of heuristic choices, such as minimizing premium or deductible. With the decision aid, though, significantly more people have choice patterns that are better explained by expected utility theory. We compare our distribution-based approach to an alternative of providing estimates of the expected value of costs, which is the most common decision-support available in most insurance markets. Providing expected values affects choices in a similar direction as our consequence-based approach, but in a more muted fashion, and is only about half as effective at reducing dominance violations. |
| JEL: | D81 D83 G22 I13 |
| Date: | 2020–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:28003&r=all |