Mankiw and Reis (2002) have revived imperfect information explanations for the short run real effects of monetary policy. This paper contrasts their sticky information model with the standard sticky price model. First, I utilize a theoretical relation between aggregate prices and unit labor cost that allows me to leave unspecified household preferences, wage setting and money demand. Second, I introduce a modeling approach that allows me to nest the sticky price and the sticky information models within a single empirical framework. Third, I propose a single-step estimation method that provides consistent estimates of adjustment speeds and reliable confidence bands that enable me to reject flexible prices. Finally, I use the approach to carry out an empirical specification analysis of multiple structural models. An empirical comparison favors the sticky price explanation over the Mankiw-Reis model.

We show that, if giving is equivalent to not taking, impure altruism could account for List's (2007) finding that the payoff to recipients in a dictator game decreases when the dictator has the option to take. We examine behavior in dictator games with different taking options but equivalent final payoff possibilities. We find that the recipients tend to earn more as the amount the dictator must take to achieve a given final payoff increases, a result consistent with the hypothesis that the cold prickle of taking is stronger than the warm glow of giving. We conclude that not taking is not equivalent to giving and agree with List (2007) that the current social preference models fail to rationalize the observed data.

Abstract:We design an experiment to test whether incomplete crowding out in dictator games can be rationalized by the impurely altruistic preferences. By giving the recipients an endowment of varying levels, we create an environment in which crowding out may occur. We find that the behavior of 66 percent of the dictators can be rationalized by the impurely altruistic utility function.Keywords: Dictator Game, Impure Altruism, Incomplete Crowding Out JEL Classifications: C91, D01, D64, H30, H41 * We would like to thank Asen Ivanov for patience and many helpful comments and insights. We would also like to thank Rachel Croson, Doug Davis, Catherine

Abstract:We present the results of an experiment designed to identify more clearly the motivation underlying dictators' behavior. In the typical dictator game, recipients are given no endowment. We give an endowment to the recipient as well as the dictator. This new dimension allows us to test directly for inequality aversion. Our results confirm that the inequality between dictator's and recipient's endowment is a key determinant of the dictator's giving. As we increase the recipient's endowment from 0 to an amount equal to the dictator's endowment, the mean amount passed drops from 30% to less than 12% of the dictator's endowment, and the proportion of dictators who pass positive amounts falls from 75% to 26%. Thus the majority of dictators exhibit behavior consistent with inequality averse preferences. On the other hand, only 24% of dictators split payoffs equally suggesting that maximin preferences are less important drivers of dictators' giving.

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