We exploit the introduction of pedestrian countdown signals—timers that indicate when traffic lights will change—to evaluate a policy that improves the information of all market participants. We find that although countdown signals reduce the number of pedestrians struck by automobiles, they increase the number of collisions between automobiles. They also cause more collisions overall, implying that welfare gains can be attained by hiding the information from drivers. Whereas most empirical studies on the role of information in markets suggest that asymmetric information reduces welfare, we conclude that asymmetric information can, in fact, improve it. (JEL D82, D83, R41)
We estimate the causal effect of independent candidates on voter turnout and election outcomes in India. To do this, we exploit exogenous changes in the entry deposit candidates pay for their participation in the political process, changes that disproportionately excluded candidates with no affiliation to established political parties. A one standard deviation increase in the number of independent candidates increases voter turnout by more than 6 percentage points, as some voters choose to vote rather than stay home. The vote share of independent candidates increases by more than 10 percentage points, as some existing voters switch who they vote for. Thus, independents allow winning candidates to win with less vote share, decrease the probability of electing a candidate from the governing coalition by about 31 percentage points, and ultimately increase the probability of electing an ethnic-party candidate. Altogether, the results imply that the price of participation by independents is constituency representation in government.
We draw on a discontinuity at a large university, wherein second-year students with a low first-year grade point average are allocated to a full year of forced, frequent, and regular attendance, to estimate the causal effect of additional structure on academic performance. We show that the policy increases student attendance but has no average effect on grades. The effects differ, however, depending on how course instructors handled unforced students, such that we observe significant grade decreases in courses where unforced students were given full discretion over their attendance. Our evidence suggests that grades decrease in these courses because the policy prevented forced students from picking their desired mix of study inputs.
Queues are puzzling because they are consistent with wasted profit in equilibrium.Standard rationales trace the puzzle to the pricing of goods. This article uses field experimental evidence from large-scale restaurants to trace the puzzle to the pricing of labor. The customary wage contract in these settings fosters congestion and longer queues because it can encourage workers to emphasize the quality rather than quantity of output. To study this problem, the field experiment pays waiters bonuses for customer volume on days with excess demand, in addition to the tips and hourly wages they customarily receive. The experimental contract shortens queues substantially, generating surplus gains for consumers with no discernible cost in terms of perceived service quality. Workers earn more via the bonuses and because they earn more in tips. Short-run profits increase by at least 49%. There is no discernible reduction in long-run profit. The firm reverted to the baseline contract on excess demand days after many months of evidence, even after acknowledging the gains from the experimental contract. The evidence suggests the puzzle may partly be explained by inefficient wage contracting. K E Y W O R D S congestion externalities, nonprice rationing, profit maximization, queues, restaurants, uniform pricing, wage contracts J E L C L A S S I F I C A T I O N J33; L81; M52 | INTRODUCTIONWhy do businesses use queues to allocate goods among consumers? Queues are suggestive of excess demand, where the goods are priced below market clearing levels, and where a capacity constrained business can increase profit simply by raising prices. Becker (1991) famously identified this situation as puzzling because it fit poorly with conventional profitmaximizing pricing models at the time. Becker rationalized queues via a model of social influence, where consumers value goods more when the goods are valued by other consumers, aggregate demand is consequently increasing in price over some range, and prices are relatively high rather than relatively low. In his model queues can coexist with high ---This is an open access article under the terms of the Creative Commons Attribution License, which permits use, distribution and reproduction in any medium, provided the original work is properly cited.
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