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1. Data and incentives

   https://doi.org/10.3982/TE5289  

   Liang, Annie; Madsen, Erik (January 2024, Theoretical Economics)

   “Big data” gives markets access to previously unmeasured characteristics of individual agents. Policymakers must decide whether and how to regulate the use of this data. We study how new data affects incentives for agents to exert effort in settings such as the labor market, where an agent's quality is initially unknown but is forecast from an observable outcome. We show that measurement of a new covariate has a systematic effect on the average effort exerted by agents, with the direction of the effect determined by whether the covariate is informative about long‐run quality versus a shock to short‐run outcomes. For a class of covariates satisfying a statistical property that we callstrong homoskedasticity, this effect is uniform across agents. More generally, new measurements can impact agents unequally, and we show that these distributional effects have a first‐order impact on social welfare. 

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2. Prosumer Pricing, Incentives and Fairness

   https://doi.org/10.1145/3307772.3328304  

   Khodabakhsh, Ali; Horn, Jimmy; Nikolova, Evdokia; Pountourakis, Emmanouil (January 2019, Proceedings of the Tenth ACM International Conference on Future Energy Systems)
3. Evaluating State and Local Business Incentives

   https://doi.org/10.1257/jep.34.2.90  

   Slattery, Cailin; Zidar, Owen (May 2020, Journal of Economic Perspectives)

   null (Ed.)

   This essay describes and evaluates state and local business tax incentives in the United States. In 2014, states spent between $5 and $216 per capita on incentives for firms in the form of firm-specific subsidies and general tax credits, which mostly target investment, job creation, and research and development. States with higher per capita incentives tend to have higher state corporate tax rates. Recipients of firm-specific incentives are usually large establishments in manufacturing, technology, and high-skilled service industries, and the average discretionary subsidy is $178M for 1,500 promised jobs. Firms tend to accept subsidy deals from places that are richer, larger, and more urban than the average county, and poor places provide larger incentives and spend more per job. Comparing winning and runner-up locations for each deal, we find that average employment within the three-digit industry of the deal increases by roughly 1,500 jobs. While we find some evidence of direct employment gains from attracting a firm, we do not find strong evidence that firm-specific tax incentives increase broader economic growth at the state and local level. 

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4. Dynamic Incentives in Wait List Mechanisms

   https://doi.org/10.1257/pandp.20181079  

   Agarwal, Nikhil; Ashlagi, Itai; Somaini, Paulo; Waldinger, Daniel (January 2018, AEA Papers and Proceedings)

   Many scarce public resources are allocated through wait lists that use priorities for individual agents. A new priority system for allocating deceased donor kidneys was adopted in 2014. This redesign was guided by simulations that held decision-rules fixed. We synthesize recent theoretical results to show that the welfare effects of a mechanism depend on the interaction between dynamic incentives and heterogeneity in preferences. We show evidence suggesting that patient decisions on the deceased donor kidney wait list respond to dynamic incentives. Therefore, an empirical approach to dynamic mechanism design is an essential complement to mechanism design theory in dynamic environments. 

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5. Collective PES: More than the sum of individual incentives

   https://doi.org/10.1016/j.envsci.2019.09.010  

   Hayes, Tanya; Grillos, Tara; Bremer, Leah L.; Murtinho, Felipe; Shapiro, Elizabeth (December 2019, Environmental Science & Policy)