http://www.bis.org/cbhub/list/series/sid_46/index.rss Research hub papers by series: Boston Fed Working papers en http://www.bos.frb.org/economic/wp/wp2012/wp1205.pdf Boston Fed Working papers by Michalis Drouvelis and Julian C. Jamison Selecting Public Goods Institutions: Who Likes to Punish and Reward? 2012-12-28T17:38:59Z The authors extend the standard public goods game in a variety of ways, in particular by allowing for endogenous preference over institutions and by studying the relationship between individual types, their preferences, and later behavior within the various institutional environments. They collect individual data on a variety of demographic factors, in addition to measuring levels of risk aversion and ambiguity aversion (over both gains and losses). The authors then elicit preferences in an incentive-compatible manner over voluntary contribution mechanisms with and without reward and punishment options. Finally, they randomly assign subjects to one of the four institutions and observe repeated play. They find that payoffs are significantly greater when punishment is allowed but that only a small minority of participants prefers such an environment. There is at most a weak link between individual characteristics and elicited preferences over environments. On the other hand, institutional preferences, as well as individual characteristics, are more strongly predictive of behavior in the public goods game. For instance, loss averse individuals preemptively reward more often when that option is available. This result suggests that when studying social interactions, especially if people can choose whether to participate in a sanctions-and-rewards mechanism, it is important to consider individual attitudes toward risk and uncertainty. Selecting Public Goods Institutions: Who Likes to Punish and Reward? 2012-12-28T17:38:59Z Abstract http://www.bos.frb.org/economic/wp/wp2012/wp1205.htm Full text http://www.bos.frb.org/economic/wp/wp2012/wp1205.pdf Michalis Drouvelis Julian C. Jamison Michalis Drouvelis and Julian C. Jamison 2000-12 Boston Fed Working papers http://www.bos.frb.org/economic/wp/wp2012/wp1216.pdf Boston Fed Working papers by Lynn Conell-Price and Julian Jamison Predicting Health Behaviors with Economic Preferences and Perceived Control 2012-12-28T17:38:59Z We present new evidence on the relationship between health behaviors and experimental measures of risk and time preferences and introduce evidence that perceived control-a measure incorporated from the health psychology literature-is a stronger and more consistent predictor of health behaviors than economic preferences. Predicting Health Behaviors with Economic Preferences and Perceived Control 2012-12-28T17:38:59Z Abstract http://www.bos.frb.org/economic/wp/wp2012/wp1216.htm Full text http://www.bos.frb.org/economic/wp/wp2012/wp1216.pdf Lynn Conell-Price Julian Jamison Lynn Conell-Price and Julian Jamison 2000-12 Boston Fed Working papers http://www.bos.frb.org/economic/wp/wp2012/wp1215.pdf Boston Fed Working papers by Susanto Basu and Brent Bundick Uncertainty Shocks in a Model of Effective Demand 2012-12-21T06:23:00Z This paper examines the role of uncertainty shocks in a one-sector, representative-agent dynamic stochastic general equilibrium model. When prices are flexible, uncertainty shocks are not capable of producing business cycle comovements among key macro variables. With countercyclical markups through sticky prices, however, uncertainty shocks can generate fluctuations that are consistent with business cycles. Monetary policy usually plays a key role in offsetting the negative impact of uncertainty shocks. If the central bank is constrained by the zero lower bound, then monetary policy can no longer perform its usual stabilizing function and higher uncertainty has even more negative effects on the economy. Calibrating the size of uncertainty shocks using fluctuations in the VIX, the authors find that increased uncertainty about the future may indeed have played a significant role in worsening the Great Recession, which is consistent with statements by policymakers, economists, and the financial press. Uncertainty Shocks in a Model of Effective Demand 2012-12-21T06:23:00Z Abstract http://www.bos.frb.org/economic/wp/wp2012/wp1215.htm Full text http://www.bos.frb.org/economic/wp/wp2012/wp1215.pdf Brent Bundick Susanto Basu Susanto Basu and Brent Bundick 2000-12 Boston Fed Working papers http://www.bos.frb.org/economic/econbios/peek.htm Boston Fed Working papers by Yasushi Hamao, Kenji Kutsuna, and Joe Peek Nice to be on the A-List 2012-11-10T06:23:59Z Research & Data Nice to be on the A-List 2012-11-10T06:23:59Z Abstract http://www.bos.frb.org/economic/econbios/peek.htm Joe Peek Kenji Kutsuna Yasushi Hamao Yasushi Hamao, Kenji Kutsuna, and Joe Peek 2000-11 Boston Fed Working papers http://www.bos.frb.org/economic/wp/wp2012/wp1210.pdf Boston Fed Working papers by Emmanuel Farhi, Gita Gopinath, and Oleg Itskhoki Fiscal Devaluations 2012-10-19T06:39:59Z The authors show that even when the exchange rate cannot be devalued, a small set of conventional fiscal policy instruments can robustly replicate the real allocations attained under a nominal exchange rate devaluation in a standard New Keynesian open economy environment. They perform the analysis under alternative pricing assumptions-producer or local currency pricing along with nominal wage stickiness, under alternative asset market structures, and for anticipated and unanticipated devaluations. There are two types of fiscal policies equivalent to an exchange rate devaluation: one, a uniform increase in the import tariff and export subsidy, and two, an increase in the value-added tax and a uniform reduction in the payroll tax. When the devaluations are anticipated, these policies need to be supplemented with a reduction in the consumption tax and an increase in income taxes. These policies have zero impact on fiscal revenues. In certain cases equivalence requires in addition a partial default on foreign bondholders. They discuss the issues regarding implementation of these policies, in particular in the case of a currency union. Fiscal Devaluations 2012-10-19T06:39:59Z Abstract http://www.bos.frb.org/economic/wp/wp2012/wp1210.htm Full text http://www.bos.frb.org/economic/wp/wp2012/wp1210.pdf Emmanuel Farhi Oleg Itskhoki Gita Gopinath Emmanuel Farhi, Gita Gopinath, and Oleg Itskhoki 2000-10 Boston Fed Working papers http://www.bos.frb.org/economic/econbios/presno.htm Boston Fed Working papers by Demian Pouzo and Ignacio Presno Sovereign Default Risk and Uncertainty Premia 2012-10-19T06:39:59Z Research & Data Sovereign Default Risk and Uncertainty Premia 2012-10-19T06:39:59Z Abstract http://www.bos.frb.org/economic/econbios/presno.htm Demian Pouzo Ignacio Presno Demian Pouzo and Ignacio Presno 2000-10 Boston Fed Working papers http://www.bos.frb.org/economic/econbios/sasser.htm Boston Fed Working papers by Alicia Sasser Modestino and Julia Dennett Are American Homeowners Locked into Their Houses? The Impact of Housing Market Conditions on State-to-State Migration 2012-02-08T17:38:59Z Research & Data Are American Homeowners Locked into Their Houses? The Impact of Housing Market Conditions on State-to-State Migration 2012-02-08T17:38:59Z Abstract http://www.bos.frb.org/economic/econbios/sasser.htm Alicia Sasser Modestino Julia Dennett Alicia Sasser Modestino and Julia Dennett 2000-02 Boston Fed Working papers http://www.bos.frb.org/economic/econbios/jamison.htm Boston Fed Working papers by Julian C. Jamison Games with Synergistic Preferences 2011-12-08T10:39:59Z Research & Data Games with Synergistic Preferences 2011-12-08T10:39:59Z Abstract http://www.bos.frb.org/economic/econbios/jamison.htm Julian C. Jamison Julian C. Jamison 2000-12 Boston Fed Working papers http://www.bos.frb.org/economic/wp/wp2011/wp1114.pdf Boston Fed Working papers by Markus M. Möbius, Muriel Niederle, Paul Niehaus, and Tanya S. Rosenblat Managing Self-Confidence: Theory and Experimental Evidence 2011-12-08T10:39:59Z Evidence from social psychology suggests that agents process information about their own ability in a biased manner. This evidence has motivated exciting research in behavioral economics, but also garnered critics who point out that it is potentially consistent with standard Bayesian updating. We implement a direct experimental test. We study a large sample of 656 undergraduate students, tracking the evolution of their beliefs about their own relative performance on an IQ test as they receive noisy feedback from a known data-generating process. Our design lets us repeatedly measure the complete relevant belief distribution incentive-compatibly. We find that subjects (1) place approximately full weight on their priors, but (2) are asymmetric, over-weighting positive feedback relative to negative, and (3) conservative, updating too little in response to both positive and negative signals. These biases are substantially less pronounced in a placebo experiment where ego is not at stake. We also find that (4) a substantial portion of subjects are averse to receiving information about their ability, and that (5) less confident subjects are more likely to be averse. We unify these phenomena by showing that they all arise naturally in a simple model of optimally biased Bayesian information processing. Managing Self-Confidence: Theory and Experimental Evidence 2011-12-08T10:39:59Z Abstract http://www.bos.frb.org/economic/wp/wp2011/wp1114.htm Full text http://www.bos.frb.org/economic/wp/wp2011/wp1114.pdf Markus M. Möbius Muriel Niederle Tanya S. Rosenblat Paul Niehaus Markus M. Möbius, Muriel Niederle, Paul Niehaus, and Tanya S. Rosenblat 2000-12 Boston Fed Working papers http://www.bos.frb.org/economic/econbios/fuhrer.htm Boston Fed Working papers by Jeffrey C. Fuhrer The Role of Expectations in U.S. Inflation Dynamics 2011-12-08T10:39:59Z Research & Data The Role of Expectations in U.S. Inflation Dynamics 2011-12-08T10:39:59Z Abstract http://www.bos.frb.org/economic/econbios/fuhrer.htm Jeffrey C. Fuhrer Jeffrey C. Fuhrer 2000-12 Boston Fed Working papers http://www.bos.frb.org/economic/wp/wp2011/wp1112.pdf Boston Fed Working papers by Ryan Bubb and Alex Kaufman Further Investigations into the Origin of Credit Score Cutoff Rules 2011-12-08T10:39:59Z Keys, Mukherjee, and Vig (2010a) argue that the evidence presented in Bubb and Kaufman (2009) is based on an inappropriate pooling of loans sold to private-label securitizers with loans sold to the government sponsored enterprises (GSEs). In this paper we investigate the issues raised by the authors and conclude that they do not change our basic analytical approach or conclusions. We examine samples that do not pool together loans sold to these two types of purchasers-a sample of loans bought by the GSEs, a sample of loans originated in 2008-2009 after the private-label market collapsed, and a sample of jumbo loans-and find discontinuities in the number and default rate of loans at credit score cutoffs in the absence of corresponding discontinuities in the securitization rate. We also examine a key assumption underlying their estimates-that no loans are both at risk of being sold to the GSEs and at risk of being sold to private-label securitizers-and show that the data are inconsistent with that assumption. We find that 18 percent of conforming loans in our sample at some time switched between GSE and private-label ownership, demonstrating that the GSEs and private-label securitizers competed for the same loans. Additionally, we show that lender screening cutoffs grew steadily over the period 1997-2010 during which the private-label market rose and collapsed. Further Investigations into the Origin of Credit Score Cutoff Rules 2011-12-08T10:39:59Z Abstract http://www.bos.frb.org/economic/wp/wp2011/wp1112.htm Full text http://www.bos.frb.org/economic/wp/wp2011/wp1112.pdf Alex Kaufman Ryan Bubb Ryan Bubb and Alex Kaufman 2000-12 Boston Fed Working papers http://www.bos.frb.org/economic/wp/wp2011/wp1109.pdf Boston Fed Working papers by Gita Gopinath and Brent Neiman Trade Adjustment and Productivity in Large Crises 2011-09-14T06:23:00Z The authors empirically characterize the mechanics of trade adjustment during the Argentine crisis using detailed firm-level customs data covering the universe of import transactions made during 1996â€"2008. Their main findings are as follows: First, the extensive margin defined as the entry and exit of firms or of products (at the country level) plays a small role during the crisis. Second, the sub-extensive margin defined as the churning of inputs within firms plays a sizeable role in aggregate adjustment. This implies that the true increase in input costs exceeds that imputed from conventional price indices. Third, the relative importance of these margins and of overall trade adjustment varies with firm size. Motivated by these facts, we build a model of trade in intermediate inputs with heterogeneous firms, fixed import costs, and round-about production to evaluate the channels through which a collapse in imports affects TFP (total factor productivity) in manufacturing. Measured aggregate productivity in the sector depends on within-firm adjustments to the varieties imported as well as the joint distribution of each firm's technology and the share of imports in its total spending on inputs. We simulate an imported input cost shock and show that these mechanisms can deliver quantitatively significant declines in manufacturing TFP. Trade Adjustment and Productivity in Large Crises 2011-09-14T06:23:00Z Abstract http://www.bos.frb.org/economic/wp/wp2011/wp1109.htm Full text http://www.bos.frb.org/economic/wp/wp2011/wp1109.pdf Brent Neiman Gita Gopinath Gita Gopinath and Brent Neiman 2000-09 Boston Fed Working papers http://www.bos.frb.org/economic/econbios/ozdagli.htm Boston Fed Working papers by Ali K. Ozdagli and Nicholas Trachter On the Distribution of College Dropouts: Household Wealth and Uninsurable Idiosyncratic Risk 2011-07-26T06:23:00Z Research & Data On the Distribution of College Dropouts: Household Wealth and Uninsurable Idiosyncratic Risk 2011-07-26T06:23:00Z Abstract http://www.bos.frb.org/economic/econbios/ozdagli.htm Ali K. Ozdagli Nicholas Trachter Ali K. Ozdagli and Nicholas Trachter 2000-07 Boston Fed Working papers http://www.bos.frb.org/economic/econbios/shy.htm Boston Fed Working papers by Oz Shy and Rune Stenbacka Customer Recognition and Competition 2011-07-16T06:23:59Z Research & Data Customer Recognition and Competition 2011-07-16T06:23:59Z Abstract http://www.bos.frb.org/economic/econbios/shy.htm Oz Shy Rune Stenbacka Oz Shy and Rune Stenbacka 2000-07 Boston Fed Working papers http://www.bos.frb.org/economic/econbios/cooper.htm Boston Fed Working papers by Daniel Cooper and María José Luengo-Prado House Price Growth When Kids are Teenagers: A Path to Higher Intergenerational Achievement? 2011-07-09T06:23:00Z Research & Data House Price Growth When Kids are Teenagers: A Path to Higher Intergenerational Achievement? 2011-07-09T06:23:00Z Abstract http://www.bos.frb.org/economic/econbios/cooper.htm Daniel Cooper María José Luengo-Prado Daniel Cooper and María José Luengo-Prado 2011-07 Boston Fed Working papers http://www.bos.frb.org/economic/econbios/diez.htm Boston Fed Working papers by Federico J. Díez and Ali K. Ozdagli Self-Employment in the Global Economy 2011-07-01T06:23:59Z Research & Data Self-Employment in the Global Economy 2011-07-01T06:23:59Z Abstract http://www.bos.frb.org/economic/econbios/diez.htm Ali K. Ozdagli Federico J. Díez Federico J. Díez and Ali K. Ozdagli 2011-07 Boston Fed Working papers http://www.bos.frb.org/economic/econbios/barnes.htm Boston Fed Working papers by Michelle L. Barnes, Fabià Gumbau-Brisa, Denny Lie, and Giovanni P. Olivei Estimation of Forward-Looking Relationships in Closed Form: An Application to the New Keynesian Phillips Curve 2011-06-17T17:40:00Z Research & Data Estimation of Forward-Looking Relationships in Closed Form: An Application to the New Keynesian Phillips Curve 2011-06-17T17:40:00Z Abstract http://www.bos.frb.org/economic/econbios/barnes.htm Fabià Gumbau-Brisa Michelle L. Barnes Denny Lie Giovanni Olivei Michelle L. Barnes, Fabià Gumbau-Brisa, Denny Lie, and Giovanni P. Olivei 2011-06 Boston Fed Working papers http://www.bos.frb.org/economic/wp/wp2010/wp1017.pdf Boston Fed Working papers by Paroma Sanyal and Catherine L. Mann The Financial Structure of Startup Firms: The Role of Assets, Information, and Entrepreneur Characteristics 2010-12-31T06:23:59Z Using the Kauffman Firm Survey, we examine how characteristics of a startup's assets, information about the startup, and entrepreneur attributes relate to financial structure at inception. Startups with more physical assets or those where the entrepreneurs have other similar businesses are more likely to use external debt in the financial structure since these assets have a high liquidation value. Startups with human capital embodied in the entrepreneur or intellectual property assets have a lower probability of using debt, consistent with the higher asset specificity and lower collateral value of these assets. Startups characterized as small, unincorporated, solo, first-time, or home-office-based are more likely to be financed by self, family and friends, and importantly through credit cards, as these have both highly specific assets and information opacity. More educated founders and non-African American founders are more likely to be financed by external sources. Controlling for other attributes of the startup, the financial structure of women-owned startups does not differ from that of other startups. Hi-tech startups' financial structure differs significantly from that of startups in other business sectors. The Financial Structure of Startup Firms: The Role of Assets, Information, and Entrepreneur Characteristics 2010-12-31T06:23:59Z Abstract http://www.bos.frb.org/economic/wp/wp2010/wp1017.htm Full text http://www.bos.frb.org/economic/wp/wp2010/wp1017.pdf Catherine L. Mann Paroma Sanyal Paroma Sanyal and Catherine L. Mann 2010-12 Boston Fed Working papers http://www.bos.frb.org/economic/wp/wp2010/wp1016.pdf Boston Fed Working papers by Anat Bracha and Donald J. Brown Affective Decision Making: A Theory of Optimism Bias 2010-12-24T06:23:59Z Optimism bias is inconsistent with the independence of decision weights and payoffs found in models of choice under risk, such as expected utility theory and prospect theory. Hence, to explain the evidence suggesting that agents are optimistically biased, we propose an alternative model of risky choice, affective decision making, where decision weights—which we label affective or perceived risk—are endogenized. Affective Decision Making: A Theory of Optimism Bias 2010-12-24T06:23:59Z Abstract http://www.bos.frb.org/economic/wp/wp2010/wp1016.htm Full text http://www.bos.frb.org/economic/wp/wp2010/wp1016.pdf Donald J. Brown Anat Bracha Anat Bracha and Donald J. Brown 2010-12 Boston Fed Working papers http://www.bos.frb.org/economic/wp/wp2010/wp1014.pdf Boston Fed Working papers by Dean T. Jamison and Julian C. Jamison Characterizing the Amount and Speed of Discounting Procedures 2010-12-21T06:23:59Z This paper introduces the concept of categorizing the amount and speed of a discounting procedure in order to generate well-characterized families of procedures for use in social project evaluation. Exponential discounting isolates the concepts of amount and speed into a single parameter that must be disaggregated in order to characterize nonconstant rate procedures. The inverse of the present value of a unit stream of benefits provides a natural measure of the amount a procedure discounts the future. We propose geometrical- and time horizon-based measures of how rapidly a procedure acquires its ultimate present value, and we prove these values are the same. This equivalency provides an unambiguous measure of the speed of discounting, with values between 0 (slow) and 2 (fast). Exponential discounting has a speed of 1. A commonly proposed approach to aggregating individual discounting procedures into a social one for project evaluation averages the individual functions. We point to a serious shortcoming with this approach and propose an alternative for which the amount and time horizon of the social procedure are the average values of the amounts and time horizons of the individual procedures. We further show that this social procedure will in general be slower than the average of the individual procedures' speeds. We then characterize three families of two-parameter discounting procedures—hyperbolic, gamma, and Weibull—in terms of their discount functions, discount rate functions, amounts, speeds, and time horizons. (The appendix characterizes additional families, including the quasi-hyperbolic procedure.) A one-parameter version of hyperbolic discounting, d(t)=(1+rt)-2, has amount r and speed 0. We argue that this zero-speed hyperbolic procedure is a good candidate for use in social project evaluation, although additional empirical work is needed to fully justify a one-parameter simplification of the more general procedure. Characterizing the Amount and Speed of Discounting Procedures 2010-12-21T06:23:59Z Abstract http://www.bos.frb.org/economic/wp/wp2010/wp1014.htm Full text http://www.bos.frb.org/economic/wp/wp2010/wp1014.pdf Dean T. Jamison Julian C. Jamison Dean T. Jamison and Julian C. Jamison 2010-12 Boston Fed Working papers http://www.bos.frb.org/economic/wp/wp2010/wp1015.pdf Boston Fed Working papers by Michelle L. Barnes and N. Aaron Pancost Internal Sources of Finance and the Great Recession 2010-12-21T06:23:59Z The rising stockpile of cash as a share of total assets at U.S. firms has intrigued economists since at least the paper of Bates, Kahle, and Stulz (2006), yet there has been relatively little work on where this cash has come from and how it is related to investment performance. We exploit Statement of Cash Flows data from Compustat to decompose firms' cash stocks and show that the rise in cash holdings has coincided with an increased willingness to save internally generated cash. We show that although investment is normally sensitive to externally generated cash, the increased sensitivity of investment to cash during the Great Recession is driven by cash from internal sources. Smaller firms were also more affected by the recent downturn than larger firms. Our results agree with the findings of Almeida, Campello, and Weisbach (2004) on cash hoarding and financial constraints, as well as the estimates in Duchin, Ozbas, and Sensoy (2010) on the important role of saved cash during the financial crisis. Internal Sources of Finance and the Great Recession 2010-12-21T06:23:59Z Abstract http://www.bos.frb.org/economic/wp/wp2010/wp1015.htm Full text http://www.bos.frb.org/economic/wp/wp2010/wp1015.pdf N. Aaron Pancost Michelle L. Barnes Michelle L. Barnes and N. Aaron Pancost 2010-12 Boston Fed Working papers http://www.bos.frb.org/economic/wp/wp2010/wp1013.pdf Boston Fed Working papers by Ali K. Ozdagli The Distress Premium Puzzle 2010-12-21T06:23:59Z Fama and French (1992) suggest that the positive value premium results from risk of financial distress. However, recent empirical research has found that financially distressed firms have lower stock returns, using empirical estimates of default probabilities. This paper reconciles the positive value premium and the negative distress premium in a model that decouples actual and risk-neutral default probabilities. Moreover, in agreement with the data, firms with higher bond yields have higher stock returns in the model. The model also captures the fact that book-to-market value dominates financial leverage in explaining stock returns. Finally, the model predicts that firms with higher risk-neutral default probabilities should have higher stock returns, a hypothesis that can be tested using credit default swap premiums. The Distress Premium Puzzle 2010-12-21T06:23:59Z Abstract http://www.bos.frb.org/economic/wp/wp2010/wp1013.htm Full text http://www.bos.frb.org/economic/wp/wp2010/wp1013.pdf Ali K. Ozdagli Ali K. Ozdagli 2010-12 Boston Fed Working papers http://www.bos.frb.org/economic/wp/wp2010/wp1012.htm Boston Fed Working papers by Daniel Cooper Inputing Household Spending in the Panel Study of Income Dynamics: A Comparison of Approaches 2010-12-09T17:38:00Z One of the drawbacks of using household surveys to investigate macroeconomic issues has been a lack of a dataset that contains both adequate household expenditure data and comprehensive household wealth and income data. This paper compares alternative methods of imputing household expenditures in the Panel Study of Income Dynamics (PSID)—that of Blundell et al. (2006) and Cooper ( 2009). It also analyzes the additional expenditure questions included in the PSID starting in 1999 and expanded in 2005. The paper finds that the Blundell et al. (2006) method works well for imputing households' nondurable expenditures between 1980 and 2007. The results further show that the imputation method in Cooper (2009) dominates that of Blundell et al. (2006) for generating data on households’ total expenditures. The decision of which imputation approach to use or whether to use the actual PSID expenditure data from 1999 to 2007 will depend on the user’s research question(s) and analysis goals. Inputing Household Spending in the Panel Study of Income Dynamics: A Comparison of Approaches 2010-12-09T17:38:00Z Abstract http://www.bos.frb.org/economic/wp/wp2010/wp1012.htm Daniel Cooper Daniel Cooper 2010-12 Boston Fed Working papers http://www.bos.frb.org/economic/wp/wp2010/wp1011.pdf Boston Fed Working papers by Alessandro Barattieri, Susanto Basu, and Peter Gottschalk Some Evidence on the Importance of Sticky Wages 2010-12-03T17:40:00Z Nominal wage stickiness is an important component of recent medium-scale macroeconomic models, but to date there has been little microeconomic evidence supporting the assumption of sluggish nominal wage adjustment. We present evidence on the frequency of nominal wage adjustment using data from the Survey of Income and Program Participation (SIPP) for the period 1996–1999. The SIPP provides high-frequency information on wages, employment, and demographic characteristics for a large and representative sample of the U.S. population. The main results of the analysis are as follows: (1) After correcting for measurement error, wages appear to be very sticky. In the average quarter, the probability that an individual will experience a nominal wage change is between 5 and 18 percent, depending on the samples and assumptions used. (2) The frequency of wage adjustment does not display significant seasonal patterns. (3) There is little heterogeneity in the frequency of wage adjustment across industries and occupations. (4) The hazard of a nominal wage change first increases and then decreases, with a peak at 12 months. (5) The probability of a wage change is positively correlated with the unemployment rate and with the consumer price inflation rate. Some Evidence on the Importance of Sticky Wages 2010-12-03T17:40:00Z Abstract http://www.bos.frb.org/economic/wp/wp2010/wp1011.htm Full text http://www.bos.frb.org/economic/wp/wp2010/wp1011.pdf Peter Gottschalk Alessandro Barattieri Susanto Basu Alessandro Barattieri, Susanto Basu, and Peter Gottschalk 2010-12 Boston Fed Working papers http://www.bos.frb.org/economic/wp/wp2010/wp1010.htm Boston Fed Working papers by David H. Wolpert, Julian Jamison, David Newth, and Michael Harre Strategic Choice of Preferences: The Persona Model 2010-09-29T09:25:59Z We introduce a modification to the two-timescale games studied in the evolution of preferences (EOP) literature. In this modification, the strategic process occurring on the long timescale is learning by an individual across his or her lifetime, not natural selection operating on genomes over multiple generations. This change to the longer timescale removes many of the formal difficulties of EOP models and allows us to show how two-timescale games can provide endogenous explanations for why humans sometimes adopt interdependent preferences and sometimes exhibit logit quantal response functions. In particular, we show that our modification to EOP explains experimental data in the Traveler’s Dilemma. We also use our modification to show how cooperation can arise in nonrepeated versions of the Prisoner’s Dilemma (PD). We then show that our modification to EOP predicts a “crowding out" phenomenon in the PD, in which introducing incentives to cooperate causes players to stop cooperating instead. We also use our modification to predict a tradeoff between the robustness and the benefit of cooperation in the PD. Strategic Choice of Preferences: The Persona Model 2010-09-29T09:25:59Z Abstract http://www.bos.frb.org/economic/wp/wp2010/wp1010.htm David Newth David H. Wolpert Julian Jamison Michael Harre David H. Wolpert, Julian Jamison, David Newth, and Michael Harre 2010-09 Boston Fed Working papers C70 C72 D03