EVIDENCE ON PRICE ADJUSTMENT COSTS IN U.S. MANUFACTURING INDUSTRY

This paper investigates the degree of rigidity in prices of manufactured products in the U.S., conditional on labor costs. I extend Rotemberg's model of quadratic price-adjustment costs and find that prices are costly to adjust: after a year, about 40 percent of adjustment remains to be completed for aggregate manufacturing, while for some industries the adjustment is twice as slow. But manufacturing prices are less sluggish than prices in the U.S. economy as a whole. Thus, nominal rigidity in other markets, such as those for services or labor, may be important.     

AN EVOLUTIONARY MODEL OF TASTE FOR RISK

Economists take tastes as given. However, tastes must be derived from biological models of evolutionary survival; we exhibit those tastes which served to make our ancestors survive. In particular, economists have no theory which explains observed behavior towards risk; rather, we take behavior as a datum. In this paper we present a model which explains risk seeking by adolescents and risk aversion by mature males as the result of an evolutionary mechanism.     

WHAT DO OPEN-ENDED QUESTIONS MEASURE?

Open-ended questions are frequently used by survey researchersto measure public opinion. Some scholars, however, have doubtsabout how accurately these kinds of questions measure the viewsof the public. A chief concern is that the questions tap, inpart, people's ability to articulate a response, not their underlyingattitudes. This paper tests whether this concern is warranted.Using open-ended questions from the Center for Political Studies,I show that almost all people respond to open-ended questions.The few individuals who do not respond appear uninterested inthe specific question posed, not unable to answer such questionsin general. These findings should increase our confidence inwork of scholars who have relied on open-ended questions.     

IMPOSED HEALTH INSURANCE IN MONOPOLISTIC MARKETS: A THEORETICAL ANALYSIS

The impact of public health insurance on price and output of medical care is analyzed within the context of monopolistic markets for health services. An important result, which is not obtained in competitive markets, is that indemnity benefits cause smaller price increases than service benefits, both directly and indirectly through the effect of benefit structure on the production of information. Various types of price regulation are considered, including limitation to "usual, customary, and prevailing" levels, a frequently used technique. With a simple dynamic model this type of regulation is shown to cause chronic price inflation.     

EXPERIMENTAL STUDIES OF CONSUMER DEMAND BEHAVIOR USING LABORATORY ANIMALS*

Using laboratory animals as subjects, two series of experimental studies of consumer demand behavior are reported. The experiments show that laboratory animals will change consumption patterns in response to changes in the budget set, consuming more of the lower priced commodities and less of the higher priced commodities. Large rotations in the budget line for essential commodities resulted in severe disruption of consumer behavior. The experiments demonstrate the feasibility of using non-human subjects in laboratory studies of economic behavior.