The Hidden Costs of Decisions in Applied Microeconomics
White, Dustin Randall
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In my first chapter, my coauthors and I examine the effect of the NCAA Tournament on the level of binge drinking through a nationally representative sample of American campuses. A focus on athletics may have a negative effect on the current student body by influencing risky behavior related to intercollegiate athletics, especially the consumption of alcohol commonly associated with game day festivities. Using the Harvard School of Public Health College Alcohol Study (CAS), we find that participation in the NCAA Tournament is associated with a 28\% increase in binge drinking by male students at participating schools. These results indicate that the culture of binge drinking on game days poses a serious health risk to the student body at participating schools. In the second chapter, I argue that changes in the wage structure for individuals working from home are driven by changes in the ability of firms to monitor employees who work outside of the office. Using American Community Survey and Census data, I find that changes in wage structure for home-workers are driven primarily by outcomes corresponding to hypotheses derived from the principal-agent model. These results suggest that the primary driver behind changes in the contracts offered to employees working from home is the lowered cost of monitoring employees on the part of the firm. In the final chapter, my coauthor and I propose that under certain circumstances firms may choose to reduce barriers to entry as a profit-maximizing mechanism. We predict that in some industries, an increase in the number of participating firms will induce enough growth in the industry to allow existing firms to increase profit by enticing other firms to enter the market. Using data from the National Football League, we demonstrate that firms (teams) do in fact engage in behavior to reduce barriers to entry for competitors and thereby increase their own profits. This model differs from the standard agglomeration models by proposing that firms deliberately lower fixed costs for their competitors as a rational act, instead of suggesting that fixed costs are incidentally reduced due to concentration of firms.