Working Papers
Conditionally accepted at the Economic Journal
with Lionel Page
We study the efficiency of market prices’ reaction to information shocks. We use a natural experiment setting on binary option markets: we compare the evolution of market prices in situations where the occurrence or not of information shocks depends on knife-edge situations and where shocks can be considered as good as random. We find that most of the time, prices react surprisingly efficiently to information shocks with no evidence of abnormal average returns. We nonetheless find evidence of under-reaction in specific situations where information shocks are large.
with Evan T. R. Rosenman, Karthik Rajkumar, and Robert Slonim.
Regression discontinuity designs (RDDs) have become one of the most widely-used quasi-experimental tools for causal inference. A crucial assumption on which they rely is that the running variable cannot be manipulated – an assumption frequently violated in practice, jeopardizing point identification. In this paper, we introduce a novel method that provides partial identification bounds on the causal parameter of interest in sharp and fuzzy RDDs. The method first estimates the number of manipulators in the sample using a log-concavity assumption on the un-manipulated density of the running variable. It then derives best- and worst-case bounds when we delete that number of points from the data, along with fast computational methods to obtain them. We apply this procedure to a dataset of blood donations from the Abu Dhabi blood bank to obtain the causal effect of donor deferral on future volunteering behavior. We find that, despite significant manipulation in the data, we are able to detect causal effects where traditional methods, such as donut-hole RDDs, fail.
with Jeanne Dall’Orso and Lionel Page [Press]
We investigate how restaurants can use high visibility locations to charge higher prices or offer lower quality to customers who are imperfectly informed and face search costs. We use a large dataset of user reviews in 10 large cities in North America and Europe. We find that prime locations in terms of visibility such as touristic locations or street intersections are associated with substantial lower customer satisfaction. This result can be explained by economic models of search. Restaurants with greater visibility face a larger number of uninformed customers and have therefore less need to rely on quality or low price to attract customers.
(with Stephanie A. Heger and Robert Slonim)
We apply the basic lessons and insights learned in the elicitation and estimation of risk and time preferences literature to the literature on social preferences. Following Andersen et al. (2008), we design a laboratory experiment to jointly elicit risk preferences and preferences for altruism. Consistent with theory, we find that the standard simplifying assumptions about risk preferences lead to significantly biased estimates of altruism. This is particularly problematic when comparing altruism across relevant sub-groups, such as gender and wealth, leading to possibly erroneous conclusions about which is the more generous sex and the self-regarding rich.