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In this paper we conduct laboratory experiments to test the Crawford and Sobel [Crawford, V., Sobel, J., 1982. Strategic information transmission. Econometrica 50, 1431–1451] theory of strategic information transmission. Our experimental results strongly support the basic insight of the theory, namely, that less information is transmitted when preferences(More)
We report results from a randomized natural …eld experiment conducted in a restaurant dining setting to distinguish the observational learning e¤ect from the saliency e¤ect. We …nd that, when customers are given ranking information of the …ve most popular dishes, the demand for those dishes increases by 13 to 20 percent. We do not …nd a signi…cant saliency(More)
There are two fundamentally different views of the role of elections in policy formation. In one view, voters can affect candidates’ policy choices: competition for votes induces politicians to move toward the center. In this view, elections have the effect of bringing about some degree of policy compromise. In the alternative view, voters merely elect(More)
C economic reforms, which have been in flux for three decades, have more than doubled China’s economic growth, from an average of 4.4 percent annually before 1978 to an average of 9.5 percent after 1978. Even more impressively, the contribution of TFP to the growth has increased from 11 percent before 1978 to more than 40 percent afterwards (Dwight H.(More)
Competition among regional or local governments in a decentralized political system is often thought to discipline lazy or corrupt officials, improving public good provision and increasing welfare. Some scholars note possible distortions due to spillovers or a “race-to-the-bottom”, but suggest that central transfers or regulations can remedy these. Both(More)
We consider optimal capital allocation and managerial compensation mechanisms for decentralized ̄rms when division managers have an incentive to misrepresent project quality and to minimize privately costly but value-enhancing e®ort. We show that in the optimal mechanism ̄rms always underinvest in capital relative to a naive application of the net present(More)
How does access to formal microinsurance affect economic development? We report results from a large randomized natural field experiment conducted in southwestern China in the context of insurance for sows. We find that providing access to formal insurance significantly increases farmers’ tendency to raise sows. We argue that this finding also suggests that(More)
This article investigates whether market competition enhances the incentives of Chinese industrial firms to avoid corporate income tax. We estimate the effects of competition on the relationship between firms reported accounting profits and their imputed profits based on the national income account. To cope with measurement errors and potential endogeneity,(More)