Public policy decision making often requires balancing the benefits of a policy with the costs. While regulators in the United States and abroad rely heavily on benefit-cost analysis, critics contend that hypothetical bias precludes one of the most popular benefit estimation...

A simple theory is developed which formally describes how charities can resolve the information asymmetry problems faced by small donors by working with large donors to generate quality signals. To test the model, two large-scale natural field experiments were conducted. In the first experiment,...

Some researchers have argued that anchoring in economic valuations casts doubt on the assumption of consistent and stable preferences. We present new evidence that questions the robustness of certain anchoring results. We then present a theoretical framework that provides insights into why we...

Recent research has posited that, in advanced economies, there is a positive correlation between income inequality and development. Using a new unbalanced panel dataset for 71 countries from 1961 to 1992, we present evidence that supports this conjecture. Although many factors may be...

Expected utility theory, prospect theory, and most other models of risky choice are based on the fundamental premise that individuals choose among risky prospects by balancing the value of the possible consequences. These models, therefore, require that the value of a risky prospect lie between...

This paper explores to what extent secondary policy issues are influenced by electoral incentives. We develop a two-dimensional political agency model, in which a politician decides on both a frontline policy issue and a secondary policy issue. The model predicts when the incumbent should...

An important public policy question that remains unresolved is whether devolution will enhance sensible policy making by exploiting informational asymmetries or, instead, trigger a "beggar thy neighbor" response and stimulate free riding amongst localities. We analyze this question within the...

Recent discoveries in behavioral economics have led scholars to question the underpinnings of neoclassical economics. We use insights gained from one of the most influential lines of behavioral research-gift exchange-in an attempt to maximize worker effort in two quite distinct tasks: data entry...

This paper explores the origins of the strikingly high price premia paid for new food products in lab valuation exercises. Our experimental design distinguishes between two explanations of this phenomenon: novelty of the experimental experience versus the novelty of the good, i.e., preference...