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Indiana University Bloomington


The Kelley Advantage

The department is home to the authors of Managerial Economics and Business Strategy and Games and Information: An Introduction to Game Theory, two of the nation’s leading textbooks in the field.

Research and Publications

Journal Articles

Observed Choice, Estimation, and Optimism about Policy Changes

1998, Public Choice

Eric Bennett Rasmusen


A policy will be used more heavily in a time and place where its cost is lower. The analyst who treats times and places as identical will overestimate the policy's net benefit, especially for policy intensities greater than exist in his sample. In regression analysis, the problem can be solved by instrumental variables. Using state-level data, the technique substantially increases the estimated responsiveness of illegitimacy to transfers. Copyright 1998 by Kluwer Academic Publishers


Rasmusen, Eric Bennett (1998), "Observed Choice, Estimation, and Optimism about Policy Changes," Public Choice, Vol. 97, Nos. 1-2, October, 65-91.