Weekly Top 5 Papers – August 1, 2014


1. Government Surveillance and Internet Search Behavior by Alex Marthews (Digital Fourth) and Catherine Tucker (Massachusetts Institute of Technology (MIT) – Management Science (MS))

Our new working paper tries to do something both simple and unusual:To measure empirically whether there was a chilling effect on users’ Google searches that resulted from the surveillance revelations of June 2013. Surveys have reported that people say their activities have been chilled, but people might easily be telling the survey-taker what they think the survey-taker wants to hear. We thought, actually, that we would find no chill on actual behavior, and that we’d then have to find an explanation for a lack of effect in the literature on political apathy and ignorance. As it turns out, we were able to trace out empirically an effect on user behavior which differed across the US and its international trading partners. Crucially, it was internationally that we see a suppression of searches on the kinds of terms which might be personally embarrassing – in the US the effect was restricted to terms which users perceived could get you into trouble with the US government. Our finding matters because it shifts the terms of policy debate, from whether mass surveillance chills free speech to whether that chill matters.

-Alex Marthews, President, Digital Fourth

2. The (True) Legacy of Two Really Existing Economic Systems by Dan Ariely (Duke University – Fuqua School of Business) and Ximena Garcia-Rada (Duke University) and Lars Hornuf (Ludwig-Maximilians-Universität München) and Heather Mann (Duke University – Fuqua School of Business)

Our paper provides evidence to suggest that socialism can have lasting effects on individuals’ behavior. In a study exploiting history’s essentially random assignment of Germans to capitalist or socialist regimes, we found that Eastern or Western family background predicted cheating behavior in a simple die-rolling task. Furthermore, the longer participants’ exposure to socialism, the more likely they were to cheat on the task.

Our study exposes a likely connection between socialism and individual dishonesty, but leaves us to speculate about why this connection might exist. We do know that while Eastern Germans were sold the notion of a free and equal society, what they got was government coercion and personal hardship. Promises are a basic mechanism for fostering cooperation and trust, and the socialist regime’s broken promises may have eroded its people’s willingness to cooperate and act honestly.  Eastern Germans were also sharply aware of the economic and socio-political differences on either side of the Wall. Previous research has found that individuals cheat more after being treated unfairly and being exposed to upward social comparisons; conceivably, prolonged exposure to unfairness could cement such tendencies.  We believe our work has implications for promoting government transparency and reducing inequality – but additional mechanisms, such as demoralization or strengthened in-group biases, should also be explored.

-Dan Ariely, Ximena Garcia-Rada, Lars Hornuf & Heather Mann

3. A Brief Introduction to the Basics of Game Theory by Matthew Jackson (Stanford University – Department of Economics)

4. Forecasting Equity Returns: An Analysis of Macro vs. Micro Earnings and an Introduction of a Composite Valuation Model by Stephen Jones (String Advisors, Inc)

I find it interesting that this paper can say so much with theory and deduction, as opposed to rocket science. I also find it worthwhile that the conclusion is so timely, and that the findings could contribute to other research.

-Stephen Jones, String Advisors

5. Taxation Without Representation: The Illegal IRS Rule to Expand Tax Credits Under the PPACA by Jonathan Adler (Case Western Reserve University School of Law) and Michael Cannon (Cato Institute)