WritingEconomicTheoryPapers

bySimonBoardandMoritzMeyerterVehn

October2014

Thesenotesaimtodistillouradviceconcerninghowtowriteadecenttheorypaper.Thesenotesare
deliberatelybrief,makingthemeasytoconsult.Inparticular,itconsistsoftheadvicewemostfrequently
givetoourstudents.

First,wewillfollowourownadviceandexplainourmarginalcontributionovertheotherworksout
there.Varian(1997)isawonderfulessay,expressinghispersonalapproach.Incomparison,thispaper
seekstobemoreofahowtoguide.Thomson(2001)isacomprehensiveandwellwrittenguidetoall
aspectsofayoungeconomistscareer.Thispaperismorefocusedonexplainingwhatwelookforin
goodeconomictheorypaper.

ContributionofthePaper

Whenwritingatheorypaper,onemustpreparetoanswerthemostbasicquestion:WhyshouldIcare?
Theanswerusuallyfallsintothefollowingcategories:
1. Thepaperasksanewquestion.Apapershouldansweraquestion.Occasionallythe
contributionofthepaperwillbetoaskanovelquestionratherthanwritingdownthemodelor
doingtheanalysis.Theseareoftenthemostcitedpapersonceyouhaveanewhammer,lots
ofthingsstarttolooklikenails.Forexample,KamenicaandGentzkow(2011)askwhatisthe
optimalwayforaprincipaltodesignaninformationstructureforanagent.Thecontributionisto
asknotjustwhetheraparticularsignalcanmaketheprincipalbetteroff,butwhatisthebestthe
principalcoulddoiftheycouldchooseanyexperiment.
2. Thepaperpositsanewmodel.Amodelisalensthroughwhichweseetheworld,andthereare
differentlensesthatallowustofocusondifferentaspectsoftheproblem.Mostmodelscontain
somethingnew,butsomeareasufficientlylargeconceptualstepthatitpromisestobringnew
headway(eveniftheresultsofthepaperarenotthatexciting).Forexample,Sannikov(2008)
paperonthecontinuoustimeprincipalagentproblemshowedhowwecanmodeltheseclassic
problemsinadifferentwaythathasthepotentialtobemuchmoretractable.
3. Themodelspeakstoanimportantapplication.Forexample,applyingmatchingtheorytoschool

choiceisimportantbecauseoftheeconomicsignificanceoftheapplicationwithoutthisthe
comparisonbetweenBostonandGaleShapleyalgorithmswouldbeadrytheoretical
discussion.
4. Themodelidentifiessomeinterestingeconomicforce.Themodelmaybeunrealisticinmany
dimensions,butitisolatesanewfeatureofafamilyofproblemsthatchangesthewaywethink.
Muchofthevaluefromeconomictheoryisinhoningourintuitionsandunderstandingthe
qualitativenatureofeconomicforces.Forexample,onceoneunderstandsSpencesmodelof
signalling,onecanhappilytalkaboutbankersbuildinglargegranitebuildingsweunderstandthat
weneedonlycheckthatsinglecrossingissatisfied.
5. Themodeldevelopsnewempiricalpredictions.TheclassicFriedmanviewisthatatheory
shouldbeevaluatedonthebasisofitspredictions.Forexample,areasonablemodelofpeer
effectswouldpositthatschoolssortchildrenofdifferentabilityassortativelyintodifferent
classes,placingsmarterkidsintolargerclassesthismaythenexplainwhyregressionsofclass
sizeonchildperformancehavehistoricallyfoundrelativelyweakcorrelation.
Onenaturalquestioniswhyweshouldcareabouteconomicintuitionifweonlycareabout
predictions.Oneresponseisthatamajorpartofeconomictheoryisaboutcategorization(e.g.
definingasignalingmodel).AsecondcomesfromtheLucascritiquewhichpointoutthatifthe
foundationalassumptionsofamodelarewrong,thenwhentheenvironmentchangesthemodel
maybreakdown.
6. Thepapermakesatechnicalcontribution.Therearesomelongstandingproblemsin
economicsifyoucanmakeprogressononebyinventinganewproofmethodorjuststaringat
theproblemlongerthanothers,thenotherswillbenaturallyinterestedinthepaper.For
example,Sugaya(2014)provedthefolktheoremingameswithimperfectprivatemonitoring.

Exercise:Whatisthecontributionofthefollowingpapers:
a. MaskinandRiley(1984)addedriskaversebuyerstothestandardriskneutralauctionsetup.
b. MailathandSamuelson(2001)consideramodelofreputationwherehighcostfirmsalways
producelowqualityandlowcostfirmsarestrategic.
c. CrawfordandSobel(1982)consideramodelofcommunicationwhereasenderobtainsa
signalaboutthestateoftheworld,sendsamessagetothereceiverwhotakesanaction.The
twoagentsidealactionsincreaseinthestate,butthesenderalwayswantahigheractionthan
thereceiver.

Whilethemaincontributionofthepapercouldbeanyoneofthesixcriteriaabove,thesedifferent
objectivesoverlap.Forexample,ifoneiswritingapaperthatspeakstoaninterestingappliedquestion,

themodelshouldbereasonableandtheeconomicforcespersuasivewithinthecontextofthat
application.Ontheotherhand,amoreabstractpaperwherethecontributionisthemodelneednotlook
asrealisticbutshouldpromisetodeliversomenewinsights.Therearealsodifferenttasteswithinthe
profession.Someresearcherstakemodelsveryseriously,thinkingtherearecorrectmodelsandthat
ourjobistoworkouttheimplicationsofthesemodelsotherresearchersthinkthatamodelisawayof
deliveringaninsight,sowhatmattersiswhatwelearnratherthantheassumptionsperse.Agood
introductionwillmakeitcleartoeveryonewhatyouseeasthecontribution.

Whileapapercanbegreatifitsatisfiesanyoftheabovecriteria,oneshouldrememberthatweare
economistsandnotmathematicians.Thismeansthattheultimateaimistospeakaboutapplications
mathematicaltoolsareimportant,buttheyareameanstoanend.Moreover,fromapractical
standpoint,thereisafarbiggermarketforappliedtheorythanhighbrowtheory.Nashonlyneededto
definehisequilibriumonce,butitcanbeappliedathousandtimes.

TheIntroduction

AcanonicalIntroductionhasthefollowingsteps.Manygoodintroductionsdifferfromthesesteps,but
thisisagoodbenchmark.

1. Broadmotivation(12paras).Whyisthisareainteresting?Thepapercanbemotivatedbyan
application(Whydoesinequalityriseafterrecessions?)orviatheliterature(Coases
conjecturestatesthatamonopolistwhocannotcommitcannotpriceabovemarginalcost).
2. Thecontribution(12paras).Seeabove.ItsagoodideatohavethelineThecontributionof
thispaperis...inordertoforceyourselftobeexplicit.Forexample,ifyourmodelandresults
arenovel,thenyoumightwantaparagraphonboth.Remember:peopledontknowyour
modelatthispoint,soeverythingshouldbeselfexplanatory.
3. Explainthemodel(12paras).Ifreadersaregoingtounderstandyourresults,youneedto
explainthesetup.Thisdoesnotneedtobeformal,butitneedstosketchoutthemainelements
thatdriveyourresults.
4. Explainyourresults(12pages).Theaimistogiveanoverviewofyourmaininsights.Explain
whatyouaredoing,thedrivingforcesbehindyourresultsandsomeimportantimplications.This
shouldinformreaderswhowillonlyreadtheintroduction(i.e.themajorityofreaders)andwhet
theappetiteofthosewhoareinterestedinthisarea.
5. Explaintherelationshipbetweenyourresultsandrelatedwork(12pages).Theaimisnotto
surveytheliterature,buttoelaborateonyourcontribution.Nevercriticizeothersworkexplicitly:

itisunnecessaryandthoseauthorsmaybeyourreferees.InsteadofsayingArrowandDebreu
(1954)ignoredmarketpowersaywedevelopArrowandDebreuscanonicalmodelto
includemarketpower.

Somerules:
Dontmaketypos.Whenyouareyoung,thereadersareupdatingveryquicklyaboutyour
ability.Typosraisequestionmarks,andcancausefrustrationifitcloudsclarity.Andafrustrated
readerwilllikelyrejectyourpaper.
Dontmakeloosestatements.Conjecturesshouldbeclearlylabelledassuch,andonlyincluded
withcaution.Ifareaderseesyoumakeanincorrectstatementtheystarttoquestioneverything
else.
Dontincludelongwindedjustificationsofthemodelsassumptionsintheintroduction.Byall
meansincludeasentencemotivatinganassumptionthatisnonstandard,butyoushouldnotbe
overlydefensive.
Dontspendtoolongontheextensionsintheintroduction.Thereaderbarelyunderstandsthe
modelatthispoint,letaloneanextension.Byallmeansgiveaheadlineresult(Thisshowsour
mainresultsarerobusttoX)butdontexpectthereadertofollowanydetails.
Dontbetoorepetitive.Forexample,ifyouciteanempiricalstudy,thenyoudontneeditinthe
abstract,paragraph3andintheliteraturereview.
Beconsistent.Ifyouexplainthingsusinganintuition,thenitisbesttostickwiththisapproach
throughoutthepaperratherthanswitchingeveryotherresult.

ModelSection

Theheartofatheorypaperareitsmodelanditstheorems.Themodelsectiondistillshowyouwantto
thereadertothinkabouttheeconomicproblemathandthetheoremsarethemostimportantand
interestinginsightsyouhavederivedinyourmodel.Ifittakesyoufourpagestostateyourmodel,
rememberthatamodelshouldsimplifythewaywethinkaboutaproblem.Ifyouhavetentheorems,
youshouldthinkwhichthreeofthemyouwouldwantthereadertotakeawayifyouhadto.

Ausefulruleis:onepaper,onemodel.Thepurposeofthemodelistofixideas,sochangingitover
thecourseofthepaperisusuallyasourceofconfusion.Whenderivingyourresultsyoumayfindthat
somedesiredresultsholdinonevariationofyourmodel,whileotherdesiredresultsholdinother
variations.Sometimesitispossibletocapturethosedifferentvariationsbyaparameterinthemodeland
viewtheresultsascomparativestaticsinthatparameter.Sometimesthereisonecanonicalbaseline
modelthatcanbeextendedinlatersections.Itisusuallynotagoodideatospecifyanoverlygeneral

modelinwhichonecanprovelittleofinterest,andthenintroducethecrucialassumptionsjustbeforethe
theoremstatements.

Thestandardwaytopresentagametheoreticmodel(andmucheconomictheorythesedaysisbased
ongametheory)istostateassuccinctlyaspossible:
1. Whoaretheplayers,
2. Whatcantheydo,
3. Whatdotheyknow,
4. Whataretheirpreferences.
Delayingthesedefinitions,changingthisorder,orinterspersingthemwithtoomuchinterpretationand
preliminaryanalysisisusuallyasourceofconfusion.Indeed,evenintheIntroduction,oneshouldensure
theythingsareclearsothereadercanunderstandyourresults.

Remarks.Whilelayingoutthemodel,youprobablyhavesomethingsyouwishtosayconcerningthe
motivationandinterpretationofsomeassumptions,andthenecessityofothers.
Motivationofassumptions.Ifamotivationisshort(1line),thenyoucanincludeitinthemain
modelsection.Forlongerjustifications,youcanincludeadiscussionsectionattheendofthe
modelsection.
Varyingassumptions.Becarefulwhentalkingaboutotherassumptionsyoucouldhavemade
thiscancauseconfusionaboutthemodelyouareanalyzing.Ifanassumptionisforconvenience
ordefiniteness,thenyoucansaysointhemodelsection(e.g.inafootnote)ifitdoesnot
interrupttheflow,orinadiscussionsectionattheendofthemodelsection.Longer
discussionsoftheroleofassumptionscanbedelayeduntiladiscussionsectionafterthemain
result,anextensionssectionoftheconclusion.Ingeneral,youshouldonlymentionsomething
inthemodelsectionifitislikelyconcernsthereader.Otherwise,delayituntilafteryourmain
result.

TheAnalysis

Writingthissectionisharderthanitmayseem.Theanalysishastobecrystalclearandalsokeepthe
readersattention.Thismeansthatyoushouldaskwhatthereaderwanttolearnfromthepaper,and
presentthisinformationinthemostprecisewaypossible.Likeanyargument,youshouldfirsttellthe
readerwhereyouaregoing,andtellthemwhyeachstepisimportantorinteresting.Ifyourpaperreads
likepageafterpageofmathematicalmanipulationsyouwillquicklylosetheirattention.

Whenpresentingaresult,youshouldgothroughthefollowingsteps:

1. Beforetheresult.Abovethestatement,giveanyrelevantdefinitions,remindthereaderof

anythingtheyneedtoknowandsaywhattheresultwillsayinwords.Iftheresultis
selfexplanatory,thismaybeoneline.
2. StatetheTheorem.Thestatementsshouldaspiretobeselfcontainedandnotrequirethereader
togosearchingforvariabledefinitions.Thereisabalancingactbetweenmathematicalrigor
(algebraicstatements)andclarity(prosaicstatements).Inapresentation,youshouldtipthe
balancetowardsclarityinthepaper,theresultshouldbefullyrigorous.Inpractice,Lemmas
canbewritteninamoremathematicalway,whileyoushouldtrytoTheoremsmore
comprehensiblebymakeappropriatedefinitionsbeforetheTheorem.Itisusuallyabadideato
includeadefinitioninatheoremstatementbecauseittendstoclutterthestatementandreduce
clarity.Also,trytoavoidlongequationsinTheoremstatements.
3. Statetheproof.Ifthisisinterestingorshort,thenincludeitinthemaintext.Ifitisstandardand
boring,thenputitintheAppendix.Iftheanalysisiskeyforthepaper(e.g.yourmain
derivation),thenconsiderputtingaheuristicversioninthemaintextbeforethestatementofthe
theorem.Peopleoftenskiptheproofsso,byputtingsomethinginthemaintext,yournudgeyour
readerstoreadit.
4. Statetheintuition.EveryresultshouldbeexplainedinsimpleEnglishunlessitisobviousor
technical.Themaintakeawayfromthepaperisoftentheeconomicinsight,soitisimportantto
deliveragoodexplanation.
5. Stateanyimplications.Iftheresultwillbeusedlaterinthepaper,orhasempiricalimplications
thensayso.Ofcourse,youshouldbewaryaboutdiscussingtangentialissuesinthemiddleof
theflowofanargument.

Otherissues:
Footnotes.Footnotesareforelaborationsandclarifications.Footnotesareoptionalfora
reader,sodontincludenecessarydefinitions.Asarule,apapershouldhavefewerfootnotes
thanpages.

Bibliography

H.Varian(1997),HowtoBuildanEconomicModelinYourSpareTimeinPassionandCraft:
EconomistsatWork,editedbyMichaelSzenberg,UniversityofMichiganPress.

W.Thomson(2001),AGuidefortheYoungEconomist,MITPress