Nicola Persico

The effect of adolescent experience on labor market outcomes: The case of height

Taller workers receive a wage premium. Net of differences in family background, the disparity is similar in magnitude to the race and gender gaps. We exploit variation in an individual’s height over time to explore how height affects wages. Controlling for teen height essentially eliminates the effect of adult height on wages for white men. The teen height premium is not explained by differences in resources or endowments. The teen height premium is partially mediated through participation in high school sports and clubs. We estimate the monetary benefits of a medical treatment for children that increases height.

Why did the Elites Extend the Suffrage? Democracy and the Scope of Government, with an Application to Britain's “Age of Reform”

A new rationale is presented for why an elite may want to expand the franchise even in the absence of threats to the established order. Expanding the franchise can turn politicians away from particularistic politics based on ad personam redistribution within the elite and foster competition based on programs with diffuse benefits. If these programs are valuable, a majority of the elite votes in favor of an extension of the franchise despite the absence of a threat from the disenfranchised. We argue that the evolution of public spending and of political competition in nineteenth century Britain is consistent with our model.

Information Acquisition in Auctions

OUR AIM IN THIS PAPER is to study the incentives to acquire information. We consider decision problems where the payoff has the single-crossing property and signals are affiliated with the unknown parameter. We introduce the notion of risk-sensitiity, and establish that the value of information is higher in decision problems that are more risk-sensitive. We apply this result to auctions: we are able to show that a first price auction induces more information acquisition than a second price auction. Consider a decision maker choosing an action a to maximize the expected value of a Ž. payoff function u , a . The decision maker does not observe , which he regards as a random variable V. Instead, he observes the realization of a random variable X ,a signal which conveys information about .W eassume that the decision maker can make X more informative, at a cost. Making X more informative increases the expected payoff. We analyze the returns to making X more informative. Ž. We focus on problems where X and V are affiliated, and u , a has the weak Ž. Ž .

Uniqueness and Existence of Equilibrium in Auctions with a Reserve Price

Abstract We prove existence and uniqueness of equilibrium for a general class of two-player bidding games. We apply our results to the first price auction, the combination of first and second price auctions, the war of attrition, the all pay auction, as well as combinations of the latter two auction forms. We also treat the first price auction without risk neutrality. Our results deal with the asymmetric, affiliated common values environment. In the case where signals are independent our results apply to all equilibria. When signals are not independent, our uniqueness results hold in the class of nondecreasing strategy equilibria. Journal of Economic Literature Classification Number: D44.

The Effect of Adolescent Experience on Labor Market Outcomes: The Case of Height

Aluminum or aluminum foil is placed in communication with the interior of a cold cathode gas discharge display chamber to prevent undesirable quantities of mercury from entering the display chamber and to absorb undesirable O2 and H2O which may evolve during the life of the display device.

A Drawback Of Electoral Competition

In most major democracies there are very fewparties compared to the number of possible policy positions held by voters. We provide an efficiency rationale for why it might be appropriate to limit the proliferation of parties. In our model, the larger the number of parties, the greater the inefficiency of the outcome of electoral competition. The reason is that, when the number of parties increases, electoral incentives push each party to focus its electoral promises on a narrower constituency, and then special interest policies replace more efficient policies that have diffuse benefits. The analysis provides a possible explanation for the existence of institutional features that limit the extent of electoral competition: thresholds of exclusion, runoff electoral systems, and majoritarian two-party political systems. (JEL: D82, L15) Copyright (c) 2005 by the European Economic Association.

Racial Profiling, Fairness, and Effectiveness of Policing

Citizens of two groups may engage in crime, depending on their legal earning opportunities and on the probability of being audited. Police audit citizens. Police behavior is fair if both groups are policed with the same intensity. We provide exact conditions under which forcing the police to behave more fairly reduces the total amount of crime. These conditions are expressed as constraints on the quantile-quantile plot of the distributions of legal earning opportunities in the two groups. We also investigate the definition of fairness when the cost of being searched reflects the stigma of being singled out by police.

Generalising the Hit Rates Test for Racial Bias in Law Enforcement, With an Application to Vehicle Searches in Wichita

This article considers the use of outcomes-based tests for detecting racial bias in the context of police searches of motor vehicles. We characterise the police and motorist decision problems in a game theoretic framework, where police encounter motorists and decide whether to search them and motorists decide whether to carry contraband. Our modelling framework generalises that of Knowles et al. (2001). We apply the tests to data on police searches of motor vehicles gathered by the Wichita police department. The empirical findings are consistent with the notion that police in Wichita choose their search strategies to maximise successful searches.

Information Acquisition and Refunds for Returns

A product exhibits personal fit uncertainty when its consumers have idiosyncratic and uncertain values for it. Often a consumer can learn her long-run value quickly by obtaining the good for a trial period. Money back guarantees of satisfaction are commonly used to lower the cost to consumers of learning their values this way. Increasingly, however, consumers can instead learn about their values before they purchase by, e.g., reading product reviews or consulting experts. We study the effect on a firm’s optimal price and refund of this competing source of information. An efficient outcome would be achieved by setting the refund for a return equal to its salvage value. But a monopoly will, for some parameters, induce consumers to stay uninformed by promising a refund that is greater than the salvage value. This generates an inefficiently large number of returns, which the firm finds worthwhile in order to eliminate the information rents that consumers would obtain by becoming informed. This finding is consistent with the observation that for many products, money back guarantees are generous, as they commonly refund the entire, or almost the entire, purchase price of a product.

The Hit Rates Test for Racial Bias in Motor‐Vehicle Searches

This paper exposits a rational choice model of police–motorist interactions originally developed in Knowles, Persico, and Todd (Knowles, J., Persico, N., & Todd, P. [2001]. Racial bias in motor vehicle searches: Theory and evidence. Journal of Political Economy, 109, 203–299). It discusses how the model provides a test for detecting bias in police enforcement based on the success rate of searches and presents empirical evidence on the models implications based on policing data from Maryland.