This paper explores a group rule–utilitarian approach to understanding voter turnout, inspired by the theoretical work of John C. Harsanyi (1980) and Timothy J. Feddersen and Alvaro Sandroni (2002). It develops a model based on this approach and studies its performance in explaining turnout in Texas liquor referenda. The results are encouraging: the comparative static predictions of the model are broadly consistent with the data, and a structurally estimated version of the model yields reasonable coefficient estimates and fits the data well. The structurally estimated model also outperforms a simple expressive voting model.
Using survey data, we identify a variety of factors that influence tipping behavior and in the process lay out a simple theoretical framework to help to interpret our empirical observations. We first investigate the efficiency of observed tipping behavior. While there are elements of efficiencynotably, percent tip depends on service quality-it does not appear fully efficient. We then posit a model in which customers trade off material well-being against disutility from not adhering to the norm, and we use this model to reinterpret initial empirical findings and make additional empirical predictions.
People's tastes change over time in systematic ways. A person's taste for cake depends on whether she is hungry or satiated; her taste for coffee depends on whether she has developed that taste; and her (dis)taste for a chronic medical condition depends on whether she has adapted to that condition. The standard economic approach to changing tastes assumes that people accurately predict changes in their tasteseither they know exactly how their tastes will change when taste changes are deterministic, or they have a correct model of how their tastes will change when taste changes are uncertain. Evidence from psychology, however, suggests that people exhibit a systematic bias in such predictions: while people understand qualitatively the direction in which their tastes change-e.g., they understand that eating dinner diminishes one's appetite for dessert-people systematically underestimate the magnitudes of these Although there is a great deal of evidence of projection bias, for the most part this evidence examines either (a) how people's predicted quality of life associated with chronic medical conditions or important life events (e.g., getting or being denied tenure) compare to actual self-reports of people who have experienced those outcomes; or (b) small-scale choices in the laboratory. We are not familiar with any fielddata evidence that projection bias influences purchases of goods and services. In this paper, we conduct precisely such a test by analyzing catalog orders for weather-related clothing items and sports equipment. We indeed find evidence of projection bias with respect to the weather, and in particular that people are overinfluenced by the weather at the time they make decisions. In addition, we estimate a structural model to measure the magnitude of the bias, and find that people's predictions for future tastes are roughly one-third to one-half the way between actual future tastes and current tastes. Projection Bias in Catalog OrdersOur evidence is important for several reasons. First, catalog sales are a large and growing segment of the US economy, with estimated total revenue of over $125 billion in 2006 and growth 1 Loewenstein, O'Donoghue, and Rabin (2003) review the evidence from psychology, build a simple model of the bias, and use this model to explore (theoretically) the implications of projection bias for economic environments. For a more detailed discussion of the psychological evidence, see Loewenstein and David Schkade (1999
We evaluate the effect of alcohol access on drug-related crime and mortality using detailed information on access laws in Texas between 1978 and 1996. Counties with alcohol access have higher average levels of drug-related crimes. However, after controlling for both county and year fixed effects, we find that having local alcohol access decreases crime associated with illicit drugs. This basic finding is replicated in two alternative analyses. First, we find that prohibiting the sale of beer to persons under 21, which arguably increases the implicit price of liquor more for juveniles in wet counties than for those in dry counties, increases the fraction of drug-related arrests involving juveniles more in wet counties than in dry counties. Second, we find that after controlling for both county and year fixed effects, local alcohol access decreases mortality associated with illicit drugs. Alcohol access and illicit-drugrelated outcomes appear to be substitutes.
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