Essays in Microeconomics

Abstract

This dissertation consists of three essays in applied microeconomics. Each essay explores a different issue of economic interest.The essay in Chapter 2 describes an experiment designed to investigate if using assets with an intrinsic value that increases over time leads to persistent undervaluation in laboratory asset trading markets. This question has not previously been investigated by researchers. Results from ten sessions are reported. Three used assets with an intrinsic value that decreased over time. The results from these sessions are consistent with the findings by prior researchers who frequently observed price bubbles in laboratory asset trading experiments. The remaining seven sessions used assets with an intrinsic value that increased over time. In all these sessions trading generally occurred at prices below the asset's intrinsic value.In Chapter 3, in an essay co-authored with Adrian Stoian, we study road running races. Tournaments, where ordinal position determines rewards, are an important component of our economy. By studying sporting tournaments, we hope to shed light on the nature of other economically significant tournaments where data may be less readily available. We separately quantify the sorting and incentive effects of tournament prizes by employing a novel two-part model which we apply to a unique data set of road running race results. We present a counterfactual example of how a hypothetical change in prizes would be predicted to change race participation and speed.In Chapter 4, in an essay co-authored with Jedidiah Brewer and Joseph Cullen, we examine the combined effects of the locations and the brands of retail gasoline outlets in Tucson, Arizona on market prices. We apply an innovative approach to model the impact of competing gas stations that avoids limiting analysis to predetermined nearby locations. We show that increased brand diversity is associated with higher prices and that gas stations affiliated with mass-merchandisers and grocery stores reduce market prices by a larger amount and over a greater distance than other types of gas stations. We demonstrate that our conclusions are not sensitive to the choice of distance metric.