»ESI Lecture Series, sponsored by IFREE
+-2013-2014 Lecture Guests
Abstract: We explore the behavior of losers of promotion tournaments after the tournament is concluded. We do so through the use of an experiment in which we vary the design of the promotion tournament to determine how tournament design affects post tournament effort. We provide a theoretical model demonstrating two possible effects from the tournaments which are strategic sabotage and the possibility that a worker becomes discouraged by the tournament outcome. We examine behavior after the tournament and find evidence suggesting that bad tournament design can lead to workers being discouraged. This discouragement effect is strong for low ability workers but not for high ability workers. On the other hand we do find evidence that some high ability workers engage in strategic sabotage but the incidence does not vary with the design of the promotion tournament.
Bio: Tim Salmon is Professor of Economics at Southern Methodist University. He earned his PhD from the Johns Hopkins University and has had prior positions at Florida State, The California Institute of Technology and the Federal Communications Commission. Tim is a behavioral economist who uses the tools of economic theory and experimental economics in trying to answer a range of applied mechanism design problems. His research has ranged from the design of auction mechanisms to the design of monitoring mechanisms for limiting corruption in developing countries.
Abstract: Self-dealing is difficult to study because its success depends on its concealment from its victims. A by-product of this is that researchers using naturally occurring data cannot directly observe strategies that successfully conceal self-dealing. We circumvent this problem by using an experiment where self-dealing emerges endogenously along with concealment actions that are fashioned by the self-dealer. We find that a significant percentage of subjects profitably self-deal and use multiple actions that likely have the combined effect of concealing self-dealing. These actions include opacity-preserving resource allocations, misleading direct communication, false promises about future resource divisions, and providing high early benefits to partners that can be subsequently exploited for personal gain. Interestingly, these choices also include profit skimming, which likely reduces both partner suspicions and the private gains from self-dealing. The ultimate consequence is that self-dealing occurs frequently, but its impact on the distribution of wealth and economic efficiency is limited considerably. These findings are contrasted with new evidence from the field based on 376 legal actions initiated by the Securities and Exchange during 1988-2012 to shut down Ponzi schemes.
Bio: Gregory Waymire is the Asa Griggs Candler Professor of Accounting at the Goizueta Business School of Emory University and Distinguished Visiting Scholar at the Economic Science Institute of Chapman University. His early research has examined the economic history of U.S. accounting. In this research he has explored a range of topics that include the relation between accounting earnings and early 20th century stock prices, the consequences of enforceable accounting rules imposed on U.S. railroads in 1906, and the association between corporate reporting and stock prices during the market crash of October 1929. His current research focuses on the economic foundations of accounting as manifested in transaction records, the role of accounting principles in promoting economic exchange, and the emergence of early 20th century U.S. accounting norms. He received his PhD from the University of Chicago in 1984 and is a past President of the American Accounting Association (2011-12).
April 28, 2014, Jeffrey Carpenter, Ph.D. - Motivating Agents: How much does the mission matter?
Abstract: Economic theory predicts that agents work harder if they believe in the mission of the organization. We conduct a real effort experiment with workers whose mission preferences are known, randomly assigning them to organizations with clear missions to create both mission matches and mismatches. Our estimates suggest that matching is a strong motivator, especially compared to mismatches. Further, we find that performance pay increases effort, though mostly among mismatched workers who substitute pay for mission matching. Our results have implications for how organizations define their missions and highlight the importance of screening and compensation policies.
Bio: Jeffrey Carpenter is the James Jermain Professor of Political Economy at Middlebury College and an Associate Editor at Management Science, the Journal of Economic Behavior and Organization and the Journal of Socio-Economics. His research has been published in the American Economic Review, the Review of Economic Studies, the Economic Journal, Games and Economic Behavior, the Industrial and Labor Relations Review, the Journal of Public Economics, and the Proceedings on the National Academy of Sciences, among other journals. His research interests include Experimental and Behavioral Economics with applications to Labor, Public and Development Economics.
May 2, 2014, Effrosyni Faye Diamantoudi, Ph.D. - Subsidies, emissions, and social welfare in general equilibrium with imperfect competition
Abstract: Governments often grand various forms of subsidies, like low interest .financing and price support, to specific firms or sectors. It has been shown that, when using partial equilibrium models, subsidies granded to environmentally sensitive sectors increase both output and emissions. However, welfare effects of subsidies in the presence of emission externalities has not been examined thoroughly. On the other hand, previous work in general equilibrium with imperfect competition has demonstrated that subsidies can increase the social welfare as, in the presence of market power, the market outcome is no longer
Pareto optimal. However, these models do not consider pollution as a factor of the social welfare. In this paper we examine the environmental and welfare effects of subsidies in general equilibrium under imperfect competition in the output market. We show that when firms differ in their emission intensities and their total factor productivities, awarding subsidies can increase or decrease the social welfare depending on the tradeoff between output and emissions. We analyze the conditions under which a price support has a positive effect on reducing total emissions and raising social welfare. Furthermore, it is shown that, unlike in the case of market imperfection alone, the optimal tax in the presence of distorting subsidies might be greater than the marginal social damage.
Bio: Effrosyni Diamantoudi is an Associate Professor at the Department of Economics of Concordia University in Montreal, Canada. She earned her PhD in Economics from McGill University. She previously served as an Assistant Professor at the University of Aarhus in Aarhus, Denmark and at Concordia University. Her research interests include game theory, matching, coalition formation, cartel stability, international environmental agreements and environmental Kuznets curves. Her work has appeared in major academic journals such Journal of Economic Theory, Games and Economic Behaviour and Economic Theory among others. She has served as a member of various scientific committees of reserch centers and conferences. She has been the chairwoman of the Social Choice and Welfare bi-annual world congress in 2008.
May 9, 2014, Leeat Yariv, Ph.D. - Collusion through Communication in Auctions
Abstract: We study the extent to which communication can serve as a collusion device in auctions. We focus on one-shot first- and second-price sealed-bid auctions. Theoretically, the availability of cheap-talk communication between bidders does not change the set of equilibrium outcomes in first-price auctions, but expands the set of equilibrium outcomes in second-price auctions. In a series of laboratory experiments, we vary the amount of interactions (communication and/or transfers without commitment) between bidders. The revenues of the auctioneer decrease when bidders can communicate. When, additionally, bidders can make (non-committal) transfer promises, revenues decline substantially, with 70% of the auctions culminating in the good sold for approximately the minimal price. These effects are similar across auction formats. Finally, we identify persistent trends in the underlying communication protocols. The study suggests the importance of accounting for communication, in addition to other channels such as repeated play, when inspecting collusion in strategic interactions.
More information forthcoming.
Abstract: That the rationality of individual people is ‘bounded’ – that is, finite in scope and representational reach, and constrained by the opportunity cost of time – cannot reasonably be controversial as an empirical matter. In this context, the paper addresses the question as to why, if economics is an empirical science, economists introduce bounds on the rationality of agents in their models only grudgingly and partially. The answer defended in the paper is that most economists are interested primarily in markets and only secondarily in the dynamics of individual decisions – specifically, they are interested in these dynamics mainly insofar as they might systematically influence the most useful approaches to modeling interesting markets. In market contexts, bounds on rationality are typically generated by institutional and informational properties specific to the market in question, which arise and are sustained by structural dynamics that do not originate in or reduce to individuals’ decisions or psychological dispositions. To be sure, these influences interact with psychological dispositions, so economists have reason to attend to the psychology of valuation. But no general model of bounded rationality should ever be expected to feature in the economist’s toolkit, regardless of the extent to which psychologists successfully identify specific human cognitive limitations. Use of moderate rational expectations assumptions should be understood in this light. Such assumptions are readily relaxed in specific applications, and in ways customized to modeling circumstances, that modelers, experimentalists and econometricians are making steadily more sophisticated.
Bio: Don Ross is Professor of Economics and Dean of Commerce at the University of Cape Town, and Program Director for Methodology at the Center for Economic Analysis of Risk at Georgia State University. His areas of recent research include economic methodology, experimental economics of risk and time preferences in vulnerable populations, strategic foundations of human sociality, and scientific metaphysics. His many publications include Economic Theory and Cognitive Science: Microexplanation (2005), Every Thing Must Go: Metaphysics Naturalized (with J Ladyman) (2007), Midbrain Mutiny: The Picoeconomics and Neuroeconomics of Disordered Gambling (with C Sharp, R Vuchinich and D Spurrett) (2008) and Philosophy of Economics (2014).
December 5, 2014, David Hirshleifer, Ph.D.
More information forthcoming.
Mar. 17, 2014, Stephen Burks, Ph.D
Mar. 14, 2014, Joaquin Gomez Minambres, Ph.D. - Goal Setting and Monetary Incentives: When Large Stakes Are Not Enough
Mar. 7, 2014, Fabrice Lumineau, Ph.D.
Dec. 06, 2013, Jack Stecher, Ph.D. -Description and Experience Based Decision Making: An Experimental and Structural Estimation Approach to the Decision-Experience Gap
Feb. 22, 2013 Jordi Brandts Bernad, Ph.D. - Let’s talk: How communication affects contract design.
Nov. 9, 2012 Uri Gneezy, Ph.D. - Incentives and Behavior Change
Sept. 28, 2012 Charles Thomas, Ph.D. - An Alternating-Offers Model of Multilateral Negotiations - Watch lecture
Aug. 31, 2012 Yan Chen, Ph.D. - Crowdsourcing with All-pay Auctions: a Field Experiment on Taskcn - Watch lecture
Apr. 20, 2012 Shawn Kantor, Ph.D. - Do Research Universities Generate Local Economic Growth? - Watch lecture
Feb. 24, 2012 John Tooby, Ph.D. - The Welfare Tradeoff Architecture, Cooperation, and Social Emotions - For further reading please see: Formidability and the logic of human anger and The architecture of human kin detection. - Watch lecture
Nov. 11, 2011 Mark M. Bykowsky, Ph.D. - A Market-based Approach to Establishing Licensing Rules: Licensed Versus Unlicensed Use of Spectrum Federal Communications Commission - please watch this video before lecture - Watch lecture
Oct. 21, 2011 Parker Ballinger, Ph.D. - Individual versus Social Learning: The Importance of Demonstrability - Watch lecture
Apr. 8, 2011 Kevin McCabe, Ph.D. – Experiments on the role of third parties on redistribution decisions. For further reading please see: Shared Experience and Third-Party Decisions: A Laboratory Result, Legitimacy in the lab – The separate and joint effects of earned roles and earned endowments in third-party redistribution, Whose money is it anyway? Ingroups and distributive behavior. - Watch lecture
Apr. 1, 2011 Michael Gurven, Ph.D. - Experimental investigation of fairness and altruism norms in small-scale societies - Further reading: Culture sometimes matters: Intra-cultural variation in pro-social behavior among Tsimane Amerindians and Collective Action in Action: Prosocial Behavior in and out of the Laboratory - Watch lecture
Feb. 18, 2011 Catherine Eckel, Ph.D. - Giving to Government: Voluntary Taxation in the Lab - Watch lecture
Feb. 4, 2011 Peter Boettke, Ph.D. - Polycentrism and Gargantua: Which Model Best Provides Public Education? - Watch lecture
Oct. 5, 2010 Andreas Wilke, Ph.D. - Past and Present Environments: The Evolution of Decision Making
May 7, 2010 Jim Gentle, Ph.D. - The Contribution of Jumps to the Volatility of Asset Prices - Watch lecture
Apr. 9, 2010 Gregory Waymire, Ph.D. - Can Trust Be Sustained in an Uncertain World When Individuals Have Machiavellian Intelligence? - Watch lecture
Feb. 5, 2010 Kevin McCabe, Ph.D. - Watch lecture
Dec. 2, 2009 Jeffrey Tollaksen, Ph.D. - New Ideas About the Nature of Time - Watch lecture
Nov. 13, 2009 Sarah F. Brosnan, Ph.D. - An Evolutionary Perspective on the Perception and Utilization of Property . Watch lecture
Oct. 9, 2009 Monica Smith, Ph.D. - A cognitive History of Material Objects: The Archaeology of Possession, Inheritance, and Value . Watch lecture
May 20, 2009 Gerd Gigerenzer Ph.D. - Homo Heuristicus: Why Biased Minds Make Better Inferences. Watch lecture
Mar. 20, 2009 John Ledyard Ph.D. – Individual Evolutionary Learning, Other-regarding Preferences, and the Voluntary Contributions Mechanism. Watch lecture
Nov. 7, 2008 Larry Iannaccone Ph.D. - Looking Backward: A Cross-National Study of Religious Trends. Watch lecture
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