why you can t find a taxi in the rain and other labor supply lessons from cab drivers i replicate and extend the seminal work of camerer et al labor supply of new york city cabdrivers one day at a time quarterly journal of economics 112 1997 407 441 who find that the wage elasticity of daily hours of work for new york city taxi drivers is negative and conclude that their labor supply behavior is consistent with reference dependence in contrast my analysis of the complete record of all trips taken in nyc taxi cabs from 2009 to 2013 shows that drivers tend to respond positively to unanticipated as well as anticipated increases in earnings opportunities additionally using a discrete choice stopping model the probability of a shift ending is strongly positively related to hours worked but at best weakly related to income earned i find substantial heterogeneity across drivers in their elasticities but the estimated elasticities are generally positive and rarely substantially negative i find that new drivers with smaller elasticities are more likely to exit the industry whereas drivers who remain quickly learn to be better optimizers have positive labor supply elasticities that grow with experience these results are consistent with the neoclassical optimizing model of labor supply and suggest that consideration of gain loss utility and income reference dependence is not an important factor in the daily labor supply decisions of taxi drivers jel codes d01 d03 j22

individual heterogeneity and cultural attitudes in credence goods provision abstract i study the heterogeneity of credence goods provision in taxi drivers taking detours in new york city first i document that there is significant detouring on average by drivers second there is significant heterogeneity in detouring across individuals yet each individual s propensity to take detours is stable drivers who detour almost always detour while those who do not detour almost never do drivers who take longer detours on each trip also take such trips more often third cultural attitudes plausibly explain some of this heterogeneity in behavior across individuals

when to quit narrow bracketing and reference dependence in taxi drivers abstract taxi drivers provide an ideal setting for testing various models of labor supply despite this the literature studying driver behavior has produced mixed evidence of which labor supply model best applies to driver labor supply using a novel analysis and large datasets of taxi trips from two different cities this paper provides a unifying analysis which reconciles previous inconsistencies in evidence for reference dependence in taxi drivers by testing for a particular non linear relationship between shift income and drivers hazard of stopping i identify behavior that is consistent with prospect theoretic s shaped reference dependence as opposed to the more extensively examined loss aversion model of reference dependence this particular model of reference dependence in this setting allows me to estimate individual driver reference points without an explicit functional form or ex ante assumptions about the existence of a reference point

altruism and time consistency the economics of fait accompli this paper analyzes the strategic and intertemporal interaction between two economic agents who have overlapping concerns such as altruistic concerns for each other s welfare the agents may be two individuals a social bureau and a client or two units in an organization we show how the presence of such common concerns may lead to socially inefficient outcomes in which one economic agent free rides on the other s concern we also briefly how this inefficiency and free riding in the context of interaction between individuals might be mitigated by compulsory social security systems as another example we interpret the inefficiency in terms of kornai s soft budget constraints within organizations

reference dependent preferences and labor supply the case of new york city taxi drivers i develop a model of daily labor supply where preferences are dependent on a reference daily income level and i apply this model to data on the labor supply of new york city taxi drivers i find that there may be a reference level of income on a given day that affects labor supply however there is substantial day to day variation in a given driver s reference level and most shifts end before reaching the reference income level this pattern is inconsistent with an important role for reference dependent preferences

a shred of credible evidence on the long run elasticity of labor supply all public policies regarding taxation and the redistribution of income rely on assumptions about the long run effect of wages rates on labour supply the variation in existing estimates calls for a simple natural experiment in which men can change their hours of work and in which wages have been exogenously and permanently changed we use a panel dataset of taxi drivers who choose their own hours and who experienced two exogenous permanent fare increases and estimate an elasticity of labour supply of 0 2 implying that income effects dominate substitution effects in the long run labour supply of males

why don t people trust experts abstractcredence goods such as health care legal and financial services and auto repair create a conflict of interest by requiring experts to diagnose and provide services to uninformed consumers mistreatment of consumers appears widespread empirically but a simple explanation for mistreatment under realistic assumptions has proved elusive i generalize uwe dulleck and rudolf kerschbamer s credence good model to incorporate the highly realistic assumption that consumers do not observe experts cost functions the model guarantees equilibrium mistreatment in a wide range of price setting and market environments the model also yields testable implications regarding the nature of mistreating firms and the direction of mistreatment

the effect of wage subsidies on piece rate workers evidence from the penny per pound program in florida abstract this paper studies a fair trade program in which consumers provide a wage subsidy bonus to piece rate tomato pickers the total subsidy determined by sales to participating buyers is divided among workers based on their relative output a worker who produces more gets a larger share of the bonus although seemingly mimicking the existing piece rate pay scheme the mechanism associated with the bonus payment is really a relative performance evaluation as the size of total bonus is exogenous and invariant to workers effort therefore for a given sized subsidy the combined total or per worker average utility gains would become the largest if the workers keep their efforts at the pre program level empirical analysis shows that worker effort and hence productivity increases substantially in response to the program suggesting that currently workers combined gains per dollar of subsidy are not being maximized

credence goods markets with conscientious and selfish experts i study credence goods markets when there are both selfish and conscientious experts the selfish expert is a profit maximizer the conscientious expert wants to maximize profit and repair the consumer s problem there are two classes of equilibria uniform price equilibria and nonuniform price equilibria a consumer cannot infer the expert s type from his price list in a uniform price equilibrium but can do that in a nonuniform price equilibrium when the fraction of the conscientious expert is small the selfish expert will be honest about the severity of the consumer s problem when the fraction of the conscientious expert is large the selfish expert will cheat the consumer overcharging the consumer whenever he offers to repair the problem finally more conscientious experts may result in a larger social loss when the fraction of the conscientious expert is close to one of the two extremes 0 and 1 more conscientious experts will result in smaller social loss when the fraction of the conscientious expert is in a middle range more conscientious experts may result in a larger social loss

an empirical analysis of the daily labor supply of stadium venors this paper analyzes the daily labor supply behavior of food and beverage vendors at a single stadium over an entire baseball season this labor market is attractive for the study of labor supply both because ofvendors unilateraly decide whether to participate on each game date and because canges in product demand conditions across days are large and highly predictable generating exogenous game to game variation in the vendor wage i exploit the observable shift in product demand conditions across games to esumate the labor supply participation elasticity of stadium vendors estimates that recognize that demand conditions and vendor labor supply decisions simultancously determine the venofdor wage always find substantial labor supply elasticities typically in the 55 65 range in contract estimates that ignore the endoreneity of the ties these results highlight the imporatance of using demand shift markets

does competition reduce price dispersion new evidence from the airline industry we analyze the effects of competition on price dispersion in the airline industry using panel data from 1993 q1 through 2006 q3 competition has a negative effect on price dispersion in line with the textbook treatment of price discrimination this effect is pronounced for routes with consumers characterized by relatively heterogeneous elasticities of demand on routes with a homogeneous customer base the effects of competition on price dispersion are smaller our results contrast with those of borenstein and rose who found that price dispersion increases with competition we reconcile the different results by showing that the cross sectional estimator suffers from omitted variable bias

an analysis of congestion measures and heterogeneous angler preferences in a random utility model of recreational fishing the potential importance ofcongestion effects on the management andrationing of recreational facilities andservices in the presence of heterogeneouspreferences were highlighted nearly twenty fiveyears ago by freeman and haveman 1977 whilethere have been a number of theoretical modelsextending and expanding upon this work mcconnell 1988 anderson 1993 empiricalresearch evaluating such impacts is limited evidence of the potential impacts of congestionon resource usage is of obvious importance especially for natural resource managers whounderstand that congestion can be an effectiverationing device and because users likelydiffer in both their preferences for use andaversion to congestion it is the objective ofthis research to compare alternative measuresof congestion for explaining site choice withina random utility modeling framework thecongestion measures differ with respect to thetime horizon over which they are assumed to beformulated and the measure of central tendencyused to represent them furthermore weinvestigate how the response to thesecongestion measures may differ across twodistinct angler types and the implications ofthose differences on the per trip willingnessto pay for stock enhancement

demand inducement and the physician patient relationship the physician patient relationship is a paradigm for any expert client relationship the physician both diagnoses the patient s illness and recommends a treatment this dual role gives the physician incentive to recommend treatments whose costs outweigh their medical benefits these socially inefficient treatments correspond to the notion of physician induced demand the level of inducement chosen by the physician is shown to depend on the price and potential medical benefits of treatment and the relative diagnostic skills of physician and patient this model offers several testable hypotheses some of which are confirmed by related studies

how many pears would a pear packer pack if a pear packer could pack pears at quasi exogenously varying piece rates abstract we examine labor supply using a unique dataset collected from a large pear packing factory pear packers face both expected and unexpected shocks to their wages and we use this to evaluate different models of inter temporal labor supply we find strong evidence for reference dependent preferences but only mixed support for models of rational expectations based targets

wage elasticities in working and volunteering the role of reference points in a laboratory study we experimentally test how effort responds to wages randomly assigned to accrue to individuals or to a charity in the presence of expectations based reference points or targets when individuals earn money for themselves higher wages lead to higher effort with relatively muted targeting behavior when individuals earn money for a charity higher wages instead lead to lower effort with substantial targeting behavior a reference dependent theoretical framework suggests an explanation for this differential impact when individuals place less value on earnings such as when accruing earnings for a charity instead of themselves more targeting behavior and a more sluggish response to incentives should result results from an additional experiment add support to this explanation when individuals select into earning money for a charity and thus likely place a higher value on those earnings targeting behavior is muted and no longer generates a negative effort response to higher wages data and the online appe

an empirical model of labor supply in a life cycle setting this paper formulates and estimates a structural intertemporal model of labor supply using theoretical characterizations derived from an economic model of lifetime behavior a two step empirical analysis yields estimates of intertemporal and uncompensated substitution effects which provide the information needed to predict the response of hours of work to life cycle wage growth and shifts in the lifetime wage path

disruptive change in the taxi business the case of uber in most cities the taxi industry is highly regulated and utilizes technology developed in the 1940s ride sharing services such as uber and lyft which use modern internet based mobile technology to connect passengers and drivers have begun to compete with traditional taxis this paper examines the efficiency of ride sharing services vis a vis taxis by comparing the capacity utilization rate of uberx drivers with that of traditional taxi drivers in five cities the capacity utilization rate is measured by the fraction of time a driver has a fare paying passenger in the car while he or she is working and by the share of total miles that drivers log in which a passenger is in their car the main conclusion is that in most cities with data available uberx drivers spend a significantly higher fraction of their time and drive a substantially higher share of miles with a passenger in their car than do taxi drivers four factors likely contribute to the higher capacity utilization rate of uberx drivers 1 uber s more efficient driver passenger matching technology 2 the larger scale of uber than taxi companies 3 inefficient taxi regulations and 4 uber s flexible labor supply model and surge pricing more closely match supply with demand throughout the day

the economics of credence goods an experiment on the role of liability verifiability reputation and competition credence goods markets are characterized by asymmetric information between sellers and consumers that may give rise to inefficiencies such as under and overtreatment or market breakdown we study in a large experiment with 936 participants the determinants for efficiency in credence goods markets while theory predicts that liability or verifiability yield efficiency we find that liability has a crucial but verifiability at best a minor allowing sellers to build up reputation has little influence as predicted seller competition drives down prices and yields maximal trade but does not lead to higher efficiency as long as liability is violated jel d12 d82

annual fees and recreation choice models of recreation behavior have typically ignored the role of fixed annual fees such as the fee for a recreational license in determining choice and welfare we demonstrate how techniques from the literature on discrete continuous choice and two part tariffs can address a situation where fixed annual fees are essential to determining the choice of a recreation site we explore how accounting for value captured by fixed fees can influence the way resource changes are assessed

measurement error in recreation demand models the joint estimation of participation site choice and site characteristics abstract in the demand for recreational fishing sites an important explanatory variable differentiating sites is the unobserved expected catch rate since the observed catch rate is subject to sampling variability using the average of a site s observed catch rates causes the parameter estimator on catch to be biased downward we develop and demonstrate a solution to this errors in variables problem when there are repeated measurements on the catch rate consistent and efficient estimates of both the demand parameters and the expected catch rates are obtained by simultaneously estimating them by maximum likelihood an empirical example demonstrates the importance of simultaneous estimation

has ryanair s pricing strategy changed over time an empirical analysis of its 2006 2007 flights abstract this paper analyzes the question of whether ryanair s pricing strategies have changed over time we create a panel dataset of fares for all of ryanair s european flights over a two year period from 1 january 2006 to 31 december 2007 we calculate the average fare over a 90 day period prior to departure and the intensity of dynamic pricing for each flight in the panel in particular analysing the changes in these variables observed between pairs of equivalent flights our results show that overall both average fares and the intensity of dynamic pricing decreased in 2007 more than one third of flights saw a price reduction of more than 10 now that it has become the dominant low cost carrier in europe ryanair appears to be softening its dynamic pricing activities on existing routes typically employed to stimulate additional touristic demand thus booking in advance becomes relatively more expensive

second opinions and price competition inefficiency in the market for expert advice we consider a market in which an expert must exert costly but unobservable effort to identify the service that meets the consumer s need in our model experts offer competing contracts and the consumer may gather multiple opinions we explore the incentives that a competitive sampling of prices and opinions provides for experts to exert effort and find that there is a tension between price competition and the equilibrium effort in particular the equilibrium fails to realize the second best welfare optimum an intervention that limits price competition via price control increases welfare

on doctors mechanics and computer specialists the economics of credence goods most of us need the services of an expert when our apartment s heating or our washing machine breaks down or when our car starts to make strange noises and for most of us commissioning an expert to solve the problem causes concern this concern does not disappear even after repair and payment of the bill on the contrary one worries about paying for a service that was not provided or receiving some unnecessary treatment this article studies the economics underlying these worries under which conditions do experts have an incentive to exploit the informational problems associated with markets for diagnosis and treatment what types of fraud exist what are the methods and institutions for dealing with these informational problems under which conditions does the market provide incentives to deter fraudulent behavior and what happens if all or some of those conditions are violated

the economics of breakdowns checkups and cures a market in which the owner of a durable good x contracts with an expert for diagnostic and treatment services is studied good x may be in one of three states health disease or failure only experts can determine whether x is healthy or diseased and perform treatment the owner cannot tell whether recommended treatment is really needed this creates an information based demand for health insurance by risk neutral consumers imperfections in the market for spot insurance may give rise to free diagnostic checks strategic procrastination and long term health maintenance agreements

what drives taxi drivers a field experiment on fraud in a market for credence goods credence goods are characterized by informational a symmetries between sellers and consumers that invite fraudulent behavior by seller s this paper presents the results of a natural field experiment on taxi rides in athens g reece set up to measure different types of fraud and to examine the influence of passengers p resumed information and income on the extent of fraud results reveal that taxi drivers c heat passengers in systematic ways passengers with inferior information about optimal routes are taken on longer detours while asymmetric information on the local tariff system l eads to manipulated bills higher income seems to lead to more fraud

honesty in a model of strategic information transmission we consider the following simple model of consumer fraud consumers need one of two possible repairs an expensive repair denoted e or an inexpensive repair denoted i the exogenous probability that a consumer needs the more costly remedy is r each consumer is assumed to know r an expert can observe with certainty which of the two repairs is needed and can offer to sell either to the consumer in a simple extension we allow for uncertainty with respect to the expert s observation we assume that selling the expensive remedy to a consumer who needs only the inexpensive one is more profitable than selling the inexpensive one thus h eii h1 iji where h denotes profit and i denotes conditional on needing the profit functions are increasing in the price of the respective repairs for convenience we suppress the dependence of h on prices in our notation we also assume that a consumer prefers to obtain the appropriate repair to the inappropriate one thus u eie u ije and u iii u eii where u is the consumer s payoff lastly we assume that the functions u eje and u e i are decreasing in the price of the expensive repair and that u iie and u iii are decreasing in the price of the inexpensive repair we also assume that u iie is decreasing in the price of the expensive repair since the consumer ultimately buys the expensive repair in this case see below for further assumptions regarding the repairs we are interested in the equilibrium levels of honesty in this model how honest is the expert at the equilibrium do consumers always follow the expert s advice does the level of honesty increase as the interests of the agents become more similar in a sense to be defined below our assumptions are similar to those in the abstract strategic information transmission models of vincent crawford and joel sobel 1982 and jerry green and nancy stokey 1980 we follow the former paper which asks whether the signals sent become less noisy as the agents preferences become more similar despite the similarity of our model to crawford sobel s we arrive at some different conclusions with respect to the expert s honesty vis a vis the agents closeness of interests we explain this in detail in section iii in addition we allow that the expert may be uncertain about the true state of the world we also explicitly model the level of expert honesty which extends crawford sobel the outline of the paper is as follows in section i we provide the details of the model and show that a unique equilibrium exists comparative static results and a simple extension incorporating the assumption of the incompetent expert are given in section ii we draw comparisons with crawfordsobel in section iii in section iv we conclude with a brief summary

consumer information in a market for expert services abstract we present a model of credence goods in which the consumers are heterogenous in terms of the valuation they place for getting a serious problem fixed we introduce consumer information into this framework by assuming that prior to visiting an expert some consumers receive an information signal about whether they have a serious or a minor problem we show that when the fraction of consumers with low willingness to pay is sufficiently high the expert does not cheat any low valuation consumer regardless of their information status but cheats the high valuation consumers those high valuation consumers with bad signals are the most frequent victims of cheating whereas those with good signals are the least likely victims when the fraction of consumers with low willingness to pay is below a certain threshold however the unique equilibrium involves no cheating

on the role of verifiability and commitment in credence goods markets a client has a problem but does not know whether it is serious or minor she consults an expert who can correctly diagnose and fix her problem this paper characterizes the equilibrium pricing and recommendation strategies of an expert under the assumptions that i the type of treatment is verifiable by the client ii the client has the option of rejecting any treatment recommendation and iii the expert is not liable for the outcome of the treatment it is found for any parameter configuration that there exist equilibria in which the expert makes fraudulent recommendations resulting in inefficient treatment the market outcome is compared with that under an alternative market environment in which the expert is liable for treatment outcome but the type of treatment performed is non verifiable it is shown that for some parameter configurations the equilibrium is more efficient when liability is in place than when the treatment is verifiable these findings stand in sharp contrast to the received wisdom that the market outcome under verifiability of treatment is efficient while the market outcome under liability for outcome is not finally this paper shows that the existence of some honest experts may induce more fraudulent behavior by opportunistic experts

credence goods costly diagnosis and subjective evaluation we study contracting between a consumer and an expert the expert can invest in diagnosis to obtain a noisy signal about whether a low cost service is sufficient or whether a high cost treatment is required to solve the consumer s problem this involves moral hazard because diagnosis effort and signals are not observable treatments are contractible but success or failure of the low cost treatment is observed only by the consumer payments can therefore not depend on the objective outcome but only the consumer s report or subjective evaluation a failure of the low cost treatment delays the solution of the consumer s problem by the high cost treatment to a second period we show that the first best solution can always be implemented if the parties discount rate is zero an increase in the discount rate reduces the range of parameter combinations for which the first best can be obtained in an extension we show that the first best is also always implementable if diagnosis and treatment can be separated by contracting with two different agents

economic impacts of new unionization on private sector employers 1984 2001 economic impacts of unionization on employers are difficult to estimate in the absence of large representative data on establishments with union status information estimates are also confounded by selection bias because unions could organize at highly profitable enterprises that are more likely to grow and pay higher wages using multiple establishment level data sets that represent establishments that faced organizing drives in the united states during 1984 1999 this paper uses a regression discontinuity design to estimate the impact of unionization on business survival employment output productivity and wages essentially outcomes for employers where unions barely won the election e g by one vote are compared with those where the unions barely lost the analysis finds small impacts on all outcomes that we examine estimates for wages are close to zero the evidence suggests that at least in recent decades the legal mandate that requires the employer to bargain with a certified union has had little economic impact on employers because unions have been somewhat unsuccessful at securing significant wage gains

optimal pricing policies for perishable products in many industrial settings managers face the problem of establishing a pricing policy that maximises the revenue from selling a given inventory of items by a fixed deadline with the full inventory of items being available for sale from the beginning of the selling period this problem arises in a variety of industries including the sale of fashion garments flight seats and hotel rooms we present a family of continuous pricing functions for which the optimal pricing strategy can be explicitly characterised and easily implemented these pricing functions are the basis for a general pricing methodology which is particularly well suited for application in the context of an increasing role for the internet as a means to market goods and services

when do experts cheat and whom do they target a credence good is a product or service whose usefulness or necessity is better known to the seller than to the buyer this information asymmetry often persists even after the credence good is consumed i propose two new theories of expert cheating suggesting that identifiable heterogeneities among customers can cause expert sellers to defraud their customers according to these theories cheating arises as a substitute for price discrimination and experts cheat selectively for instance experts target high valuation and high cost customers finally selective cheating may damage the communication of useful information from customers to experts and result in inferior services

airline pricing under different market conditions evidence from european low cost carriers abstract traditional theories of airline pricing maintain that fares monotonically increase as fewer seats remain available on a flight this implies a monotonically increasing temporal profile of fares in this paper we exploit the presence of drops in offered fares over time as an indicator of an active yield management intervention by two main european low cost carriers and measure its effectiveness we find that reduction of the offered airfare by one standard deviation raises a flight s load factor on average by 2 7 percent a measure unaffected by the intensity of competition in a route furthermore yield management interventions are less effective the higher the share of leisure holiday and visiting friends and relatives traffic on the route this result runs counter to the common perception of leisure passengers being more responsive to price changes

union organizing activity firm growth and the business cycle this paper analyzes the relationship between changes in unionization and firm growth average growth is significantly low er in manufacturing firms that experience successful union elections bu t these strong effects are largely illusory the authors find no evidence of a significant relationship between unionization and firm growth despite a strong cyclical pattern in election activity thei r results suggest that the significant negative effect of organizing activity on a firm s market value is not accompanied by any growth changes the authors therefore cannot reject the hypothesis that t he equity losses from union election activity represent a simple transf er of wealth from shareholders to workers copyright 1993 by american economic association

multi dimensional price elasticity for leisure and business destinations in the low cost air transport market evidence from easyjet this study investigates the price elasticity of demand in the european low cost carrier lcc industry by analysing internet fares for all easyjet flights departing from the amsterdam schiphol airport towards 21 european destinations between march and september 2015 results suggest that the price elasticity of demand greatly varies across different dimensions ranging from 0 535 for the business oriented route of hamburg to 1 915 for the leisure oriented route of split price elasticity is also found to be higher for reservations made more days in advance for reservations and departures occurring on weekends and for flights taking off during lunchtime and in the summer period all results are consistent with the different behaviours of leisure and business passengers and the ongoing increase in the business component of the lcc passenger mix

the labor supply of fixed wage workers estimates from a real effort experiment abstract fixed wage workers comprise the bulk of the labor force and yet little is known about how they respond to changes in their wage given recent interest in theories of reciprocity and intrinsic motivation and their implications for effort provision the neoclassical prediction seems less obvious today to better understand the motivation of these workers i estimate their labor supply using a real effort experiment two results stand out first no one theory seems to fit the pooled data on average people work considerably harder than the minimum but they do not respond to changes in the wage second pooling the data is deceptive because there seem to be distinct types with differing responses to the wage most workers can be classified as reciprocal or intrinsically motivated and indeed these types respond as theory would predict reciprocators return wage gifts with increased effort and extrinsic incentives crowd out motivation for intrinsic workers

information transmission in regulated markets the seminal papers of vincent p crawford and joel sobel 1982 and jerry green and nancy stokey 1980 study models in which a signal about the state of the world is transmitted from a perfectly informed sender to an uninformed receiver the authors study a model in which multiple signalers compete for consumers the authors ask how much information is revealed how consumers shopping around affects this information and how each is affected by incentives an implication of the model is that in a price regulated market for health care patients should not be prohibited from gathering more than one opinion

new york city cab drivers labor supply revisited reference dependent preferences with rational expectations targets for hours and income this paper reconsiders whether cabdrivers labor supply decisions reflect reference dependent preferences following botond koszegi and matthew rabin 2006 we construct a model with targets for hours as well as income both determined by rational expectations estimating using henry s farber s 2005 2008 data we show that the reference dependent model can reconcile his 2005 finding that drivers stopping probabilities are significantly related to hours but not income with the negative wage elasticity of hours found by colin camerer et al 1997 and farber 2005 2008 the model yields sensible estimates that avoid farber s 2008 criticism that drivers income targets are too unstable to allow a useful reference dependent model of labor supply

are long term wage elasticities of labor supply more negative than short term ones standard models imply that the wage elasticity of labor supply is more negative the longer a wage change lasts i observe decreasing daily hours during short term wage increases but not during a long term one daily income goals adjusted in the long term

unionization and profitability evidence from the capital market this paper examines the effect of unionization on the profitability of firms abnormal monthly common stock returns for a sample of 253 nyse listed firms are estimated for the month in which the union petitions for an election and for the month in which the national labor relations board certifies the election outcome the results suggest that unionization on average is associated with a reduction in equity value when unions win an election the average loss associated with the unionization drive is 3 8 percent of equity value when unions lose an election there is an average net reduction of 1 3 percent in the equity value of the firm

discussion of morey and waldman s measurement error in recreation demand models abstract morey and waldman have proposed a method for handling measurement error in site attributes such as catch rates in models of anglers choice of fishing sites we discuss the properties of this method and compare these properties with those of the standard estimation procedure we show that i both methods are biased and ii the standard procedure is consistent whenever morey and waldman s procedure is consistent as well as under more general conditions in particular morey and waldman s procedure is inconsistent if any site attributes are omitted from the model whereas the standard procedure is consistent in the presence of omitted site attributes as long as the impact of these attributes on the dependent variable is uncorrelated with included variables a condition shared by all regression models

experts vs discounters consumer free riding and experts withholding advice in markets for credence goods this paper studies the incentives for credence goods experts to invest effort in diagnosis if effort is both costly and unobservable and if they face competition by discounters who are not able to perform a diagnosis the unobservability of diagnosis effort and the credence characteristic of the good induce experts to choose incentive compatible tariff structures this makes them vulnerable to competition by discounters we explore the conditions under which honestly diagnosing experts survive competition by discounters we identify situations in which experts misdiagnose consumers in order to prevent them from free riding on experts advice and we discuss policy options to solve the free riding consumers cheating experts problem

joint estimation of catch and other travel cost parameters some further thoughts abstract e r morey and d m waldman propose and use an estimator that jointly estimates catch rates and the parameter on those catch rates it is designed for situations where there is limited catch data for some of the sites in the choice set and takes advantage of the fact that trip patterns reflect variations in catch rates anglers do not like to fish at sites with few fish k train d mcfadden and r johnson note that this estimator is particularly sensitive to omitted variable bias and suggest an alternative estimator but their estimator effectively eliminates poor sites from the choice set

drivers of disruption estimating the uber effect abstract a frequent belief is that the rise of so called gig work has led to the displacement of workers in a wide range of traditional jobs this paper examines the impacts of the flagship of the gig economy uber on workers employed in conventional taxi services our analysis exploits newly collected data on the staggered rollout of uber across metropolitan areas in the united states and a difference in differences design to document that incumbent taxi drivers experienced a relative earnings decline of about 10 percent subsequent to uber s entry into a new market while there are no significant effects on their labor supply additional evidence from a battery of placebo tests event study estimates and specifications using google trends data to capture differences in treatment intensity underlines these findings a triple differences design that compares changes among taxi drivers relative to bus tractor and truck drivers that were unaffected by the arrival of uber provides further supporting evidence that the diffusion of uber has reduced the earnings potential of incumbent drivers in conventional taxi services in the united states

effects of regulations on expected catch expected harvest and site choice of recreational anglers the use of public lands and waterways is often subject to environmental regulations designed to limit the depletion of resource stocks such regulations may influence expectations of quality destination choice and consumer surplus this paper examines the effects of environmental regulations on recreational anglers the empirical application develops a joint model of expected catch and expected harvest in conjunction with a random utility model of site choice findings for maine anglers indicate that regulations have sizable effects on catch and harvest site choice and welfare

unions wages and skills studies uniformly conclude that union wage effects are largest for workers with low measured skills longitudinal analysis using 1989 90 1994 95 cps matched panels produces union premium estimates equivalent across skill groups following appropriate sample restrictions and control for worker specific skills nlsy evidence on aptitude scores confirms that union workers with high measured skills have relatively low unmeasured skills differential selection by skill class and skill homogeneity in union workplaces result from employer and employee sorting in response to wage standardization union organizing where skills are homogeneous and unionized employers reluctance to hire the most as well as least able workers

credence goods experts and risk aversion abstract the existing literature on credence goods and expert services has overlooked the importance of risk aversion in this paper we extend a standard expert model of credence goods with verifiable service quality by considering risk averse consumers our results show that the presence of risk aversion reduces the expert s incentive to invest in diagnosis and may thus lead to consumers mistreatment

is tomorrow another day the labor supply of new york city cabdrivers the labor supply of taxi drivers is consistent with the existence of intertemporal substitution my analysis of the stopping behavior of new york city cabdrivers shows that daily income effects are small and that the decision to stop work at a particular point on a given day is primarily related to cumulative daily hours to that point this is in contrast to the analysis of camerer et al who find that the daily wage elasticity of labor supply of new york city cabdrivers is substantially negative implying large daily income effects this difference in findings is due to important differences in empirical methods and to problems with the conception and measurement of the daily wage rate used by camerer et al

rationed access and welfare case of public resource lotteries pressures on public lands and waterways are resulting increasingly in the rationing of public access by lottery upon accounting for the uncertainties of random rationing discrete choice models lend themselves to analyzing participation in public resource lotteries and estimating welfare changes key to valuing lotteryrationed rights is accounting for changes in access probabilities that result from policy changes the empirical application models the discrete choices of more than 18 000 participants in a new mexico lottery system for elk harvest rights welfare estimates are obtained from simulated policy changes that affect individually and jointly the access probability and indirect utility

equilibrium price dispersion under demand uncertainty the roles of costly capacity and market structure when capacity is costly and prices are set in advance firms facing uncertain demand will sell output at multiple prices and limit the quantity available at each price i show that the optimal price strategy of a monopolist and the unique pure strategy nash equilibria of oligopolists both exhibit intrafirm price dispersion moreover as the market becomes more competitive prices become more dispersed a pattern documented in the airline industry while generating similar predictions the model differs from the revenue management literature because it disregards market segmentation and fare restrictions that screen customers

low cost pricing strategies in leisure markets abstract the practice of dynamic pricing typical of low cost carriers is generally regarded as a form of price discrimination between leisure and business travellers on a single flight or route the same may not be true across different routes because of the different incidence of business travellers if price increases in the 15 days prior to departure are meant to discriminate business demand leisure demand should account for earlier price variations in the present study we used a database containing the daily fare over the 3 months prior to each flight operated by easyjet during 2009 for each route we defined the leisure index as the difference between the price rates of change during the 90 days and 15 days prior to departure overall business routes had lower average prices per km while leisure routes showed less dynamic price behaviour with higher minimum and lower maximum prices per km

credence goods monopolists abstract with a credence good consumers never discover how much of the good they actually need therefore the seller acts as the expert determining the customers requirements this information asymmetry creates strong incentives for the seller to cheat on services we analyze whether the market mechanism may induce non fraudulent seller behavior we consider four scenarios differing in the amount of information consumers have at hand to infer the seller s incentives to be honest in three constellations the profit maximizing credence goods monopolist provides honest services only in one scenario there is no trade

behavioral economics and public policy a pragmatic perspective the debate about behavioral economics the incorporation of insights from psychology into economics is often framed as a question about the foundational assumptions of economic models this paper presents a more pragmatic perspective on behavioral economics that focuses on its value for improving empirical predictions and policy decisions i discuss three ways in which behavioral economics can contribute to public policy by oering new policy tools improving predictions about the eects

income targeting and farm labor supply there is considerable anecdotal evidence that farm workers who are paid by piece rate tend to income target or work only until they achieve a certain amount of daily income and then stop work we estimate reduced form and structural models derived from the reference dependent preference model of koszegi and rabin 2006 to test the income targeting hypothesis using data from the national agricultural workers survey naws we find evidence that supports the income targeting hypothesis in both the reduced form and structural econometric models our findings suggest that even higher piece rates may not help the widely reported shortage of agricultural labor on the intensive margin as labor supply curves can be backward bending

unobserved investment endogenous quality and trade a seller can make investments that affect a tradable asset s future returns the potential buyer of the asset cannot observe the seller s investment prior to trade nor does he receive any signal of it nor can he verify it in anyway after trade despite this severe moral hazard problem this paper shows the seller will invest with positive probability in equilibrium and that trade will occur with positive probability the outcome of the game is sensitive to the distribution of bargaining power between the parties with a holdup problem existing if the buyer has the bargaining power a consequence of the holdup problem is surplus reducing distortions in investment level perhaps counterintuitively in many situations this distortion involves an increase in the expected amount invested vis a vis the situation without holdup

the effect of wage bargains on the stock market value of the firm the author estimates the change in the value of common stock resulting from an unexpected change in collectively bargained labor costs using bargaining unit wage data and nyse stock returns he estimates a dollar for dollar trade off between these variables this result is consistent with stock valuations based on present value maximizing managerial decisions that is the results are consistent with hotelling s lemma the author also finds support for the hypothesis that collective bargains maximize the sum of shareholder and union member wealth that is the results are consistent with strong efficiency in the contracting environment copyright 1989 by american economic association

reference dependent job search evidence from hungary we propose a model of job search with reference dependent preferences with loss aversion relative to recent income the reference point in this model newly unemployed individuals search hard since consumption is below their reference point over time though they get used to lower income and thus reduce their search effort in anticipation of a benefit cut their search effort rises again then declines once they get accustomed to the lower postcut benefit level the model fits the typical pattern of exit from unemployment even with no unobserved heterogeneity to distinguish between this and other models we use a unique reform in the unemployment insurance ui benefit path in 2005 hungary switched from a single step ui system to a two step system with overall generosity unchanged the system generated increased hazard rates in anticipation of and especially following benefit cuts in ways the standard model has a hard time explaining we estimate a model with optimal consumption endogenous search effort and unobserved heterogeneity the reference dependent model fits the hazard rates substantially better than plausible versions of the standard model including habit formation our estimates indicate a slow adjusting reference point and substantial impatience likely reflecting present bias jel codes d03 j64 j65

labor supply of new york city cabdrivers one day at a time life cycle models of labor supply predict a positive relationship between hours supplied and transitory changes in wages because such changes have virtually no effect on life cycle wealth previous attempts to test this hypothesis empirically with time series data have not been supportive estimated elasticities are typically negative or nonsignificant such analyses however are vulnerable to measurement error and other estimation problems we use data on daily observations of wages and hours for new york city cab drivers to estimate the supply response to transitory fluctuations in wages cab drivers decide daily how many hours to supply and face wages that are positively correlated within days but largely uncorrelated between days using these data our central finding is that wage elasticities are persistently negative from 5 to 1 in three different samples even after correcting for measurement error using instrumental variables these negative wage elasticities challenge the notion that cab drivers trade off labor and leisure at different points in time and question the empirical adequacy of life cycle formulations of labor supply

search bargaining and signalling in the market for legal services over the last eight centuries lawyers in common law countries have generally been precluded from buying their clients cases recently a number of economists and lawyers have argued that sale should be allowed so as to eliminate moral hazard particularly when contingent fees are used this argument is based on full information reasoning however if the lawyer has private information about the case value then compensation demands potentially signal this value when the client can search over lawyers we provide a formal model and a family of computational examples that show that allowing possibly partial purchase can reduce expected social efficiency

reference points and effort provision a key open question for theories of reference dependent preferences is what determines the reference point one candidate is expectations what people expect could affect how they feel about what actually occurs in a real effort experiment we manipulate the rational expectations of subjects and check whether this manipulation influences their effort provision we find that effort provision is significantly different between treatments in the way predicted by models of expectation based reference dependent preferences if expectations are high subjects work longer and earn more money than if expectations are low

an expected profit model for monetizing fishing location choices abstract we develop and analyze the properties of a new type of discrete choice model which jointly estimates the expected value of catch and location choice this model implicitly monetizes location choices and can be used to predict costs and effort redistribution of creating marine protected areas or of implementing other policy changes that either increase travel costs or alter expected revenue we illustrate our approach by considering the closing of the steller sea lion conservation area in the united states bering sea to pollock fishing

loss aversion under prospect theory a parameter free measurement agrowing body of qualitative evidence shows that loss aversion a phenomenon formalized in prospect theory can explain a variety of field and experimental data quantifications of loss aversion are however hindered by the absence of a general preference based method to elicit the utility for gains and losses simultaneously this paper proposes such a method and uses it to measure loss aversion in an experimental study without making any parametric assumptions thus it is the first to obtain a parameter free elicitation of prospect theory s utility function on the whole domain our method also provides an efficient way to elicit utility midpoints which are important in axiomatizations of utility several definitions of loss aversion have been put forward in the literature according to most definitions we find strong evidence of loss aversion at both the aggregate and the individual level the degree of loss aversion varies with the definition used which underlines the need for a commonly accepted definition of loss aversion