Digital Commons Network^™

Hunting Unicorns, Aaron Edlin

Aaron Edlin

On The Optimality Of One-Size-Fits-All Contracts: The Limited Liability Case, Felipe Balmaceda Assoc Prof.

Felipe Balmaceda

Strategic Ignorance In Sequential Procurement, Silvana Krasteva, Huseyin Yildirim

Huseyin Yildirim

Toward A Theory Of Entry In Moral Markets: The Role Of Social Movements And Organizational Identity, Brandon Lee, Panikos Georgallis

Brandon Lee

Re-Imagining The Labor Movement As A Social Movement, James Patin

James Patin

Bringing Emotions Into Social Exchange Theory, Edward J. Lawler, Shane R. Thye

Edward J Lawler

We analyze and review how research on emotion and emotional phenomena can elaborate and improve contemporary social exchange theory. After identifying six approaches from the psychology and sociology of emotion, we illustrate how these ideas bear on the context, process, and outcome of exchange in networks and groups. The paper reviews the current state of the field, develops testable hypotheses for empirical study, and provides specific suggestions for developing links between theories of emotion and theories of exchange.

The Theory Of Relational Cohesion: Review Of A Research Program, Shane R. Thye, Jeongkoo Yoon, Edward J. Lawler

Edward J Lawler

In this paper we analyze and review the theory of relational cohesion and attendant program of research. Since the early 1990s, the theory has evolved to answer a number of basic questions regarding cohesion and commitment in social exchange relations. Drawing from the sociology of emotion and modem theories of social identity, the theory asserts that joint activity in the form of frequent exchange unleashes positive emotions and perceptions of relational cohesion. In turn, relational cohesion is predicted to be the primary cause of commitment behavior in a range of situations. Here we outline the theory of relational cohesion, tracing …

Activating Actavis, Aaron Edlin, C. Scott Hemphill, Herbert J. Hovenkamp, Carl Shapiro

Aaron Edlin

In Federal Trade Commission v. Actavis, Inc., the Supreme Court provided fundamental guidance about how courts should handle antitrust challenges to reverse payment patent settlements. The Court came down strongly in favor of an antitrust solution to the problem, concluding that “an antitrust action is likely to prove more feasible administratively than the Eleventh Circuit believed.” At the same time, Justice Breyer’s majority opinion acknowledged that the Court did not answer every relevant question. The opinion closed by “leav[ing] to the lower courts the structuring of the present rule-of-reason antitrust litigation.”This article is an effort to help courts and counsel …

Actavis And Error Costs: A Reply To Critics, Aaron S. Edlin, C. Scott Hemphill, Herbert J. Hovenkamp, Carl Shapiro

Aaron Edlin

The Supreme Court’s opinion in Federal Trade Commission v. Actavis, Inc. provided fundamental guidance about how courts should handle antitrust challenges to reverse payment patent settlements. In our previous article, Activating Actavis, we identified and operationalized the essential features of the Court’s analysis. Our analysis has been challenged by four economists, who argue that our approach might condemn procompetitive settlements.As we explain in this reply, such settlements are feasible, however, only under special circumstances. Moreover, even where feasible, the parties would not actually choose such a settlement in equilibrium. These considerations, and others discussed in the reply, serve to confirm …

Trust In Cohesive Communities, Felipe Balmaceda Assoc Prof., Juan Escobar Assistant Professor

Felipe Balmaceda

This paper studies which social networks maximize trust and welfare when agreements are implicitly enforced. We study a repeated trust game in which trading opportunities arise exogenously and a social network determines the information each player has. We show that cohesive communities, modeled as social networks of complete components, emerge as the optimal community design. Cohesive communities generate some degree of common knowledge of transpired play that allows players to coordinate their punishments and, as a result, yield relatively high equilibrium payoffs. We also show that when news swiftly travel through the network, Pareto efficient networks are minimally connected: the …

Crop Residues: The Rest Of The Story, Douglas L. Karlen, Rattan Lal, Ronald F. Follett, John M. Kimble, Jerry L. Hatfield, John A. Miranowski, Cynthia A. Cambardella, Andrew Manale, Robert P. Anex, Charles W. Rice

Douglas L Karlen

Synopsis In the February 15, 2009 issue of ES&T Strand and Benford argued that oceanic deposition of agricultural crop residues was a viable option for net carbon sequestration (43 [4], 1000−1007). In reviewing the calculations and bringing their experience to bear, Karlen et al. argue in this Viewpoint that crop residue oceanic permanent sequestration (CROPS) as envisioned by Strand and Benford will not work. They further propose alternative possibilities in agricultural methods to achieve a net decrease of CO2 emissions.

Competitive Intensity And Its Two-Sided Effect On The Boundaries Of Firm Performance, Joao Montez, Francisco Ruiz-Aliseda, Michael D. Ryall

Michael D Ryall

The new perspective emerging from strategy's value-capture stream is that the effects of competition are two-fold: competition for an agent bounds its performance from below, while that for its transaction partners bounds from above. Thus, assessing the intensity of competition on either side is essential to understanding firm performance. Yet, the literature provides no formal notion of "competitive intensity" with which to make such assessments. Rather, some authors use added value as their central analytic concept, others the core. Added value is simple, but misses the crucial, for-an-agent side of competition. The core is theoretically complete, but difficult to interpret …

Costly Location In Hotelling Duopoly, Jeroen Hinloopen, Stephen Martin

Jeroen Hinloopen

We introduce a cost of location into Hotelling’s (1929) spatial duopoly. We derive the general conditions on the cost-of-location function under which a pure strategy price-location Nash equilibrium exists. With linear transportation cost and a suitably specified cost of location that rises toward the center of the Hotelling line, symmetric equilibrium locations are in the outer quartiles of the line, ensuring the existence of pure strategy equilibrium prices. With quadratic transportation cost and a suitably specified cost of location that falls toward the center of the line, symmetric equilibrium locations range from the center to the end of the line.

Research And Development Cooperatives And Market Collusion: A Global Dynamic Approach, Jeroen Hinloopen, Grega Smrkolj, Florian Wagener

Jeroen Hinloopen

We present a continuous-time generalization of the seminal research and development model of d’Aspremont and Jacquemin (Am Econ Rev 78(5):1133–1137, 1988) to examine the trade-off between the benefits of allowing firms to cooperate in research and the corresponding increased potential for product market collusion. Weshow the existence of a solution to the optimal investment problem using a combination of results from viscosity theory and the theory of planar dynamical systems. In particular, we show that there is a critical level of marginal cost at which firms are indifferent between doing nothing and starting to develop the technology.We findthat colluding firms …

Conservatism And Switcher's Curse, Aaron Edlin

Aaron Edlin

Workplace Deviance And Recession, Aniruddha Bagchi, Siddhartha Bandyopadhyay

Aniruddha Bagchi

An Empirical Analysis Of Manufacturing Overhead Cost Drivers, Rajiv D. Banker, Gordon S. Potter, Roger G. Schroeder

Gordon Potter

Empirical validity of the claim that overhead costs are driven not by production volume but by transactions resulting from production complexity is examined using data from 32 manufacturing plants from the electronics, machinery, and automobile components industries. Transactions are measured using number of engineering change orders, number of purchasing and production planning personnel, shop- floor area per part, and number of quality control and improvement personnel. Results indicate a strong positive relation between manufacturing overhead costs and both manufacturing transactions and production volume. Most of the variation in overhead costs, however, is explained by measures of manufacturing transactions, not volume.

Manufacturing Performance Reporting For Continuous Quality Improvement, Rajiv D. Banker, Gordon S. Potter, Roger G. Schroeder

Gordon Potter

Recently many plants have implemented the new manufacturing strategy of continuous quality improvement. The central hypothesis in this paper is that the implementation of a policy of continuous quality improvement results in a shift in the management control system. This article tests this hypothesis by examining the shop floor reporting policies of forty-two plants located in the United States. The paper documents that the extent of information concerning the current status of manufacturing, such as charts on defect rates or schedule compliance and productivity information, provided to workers on the shop floor is positively related to the implementation of continuous …

The Structural Transformation Of The Agricultural Sector, Neil E. Harl

Neil E. Harl

A major concern as we move into the Twenty-first Century is the structure of the agricultural sector. By structure, is meant considerations of size and scale as well as who is to manage, control and finance farming and agribusiness operations.

Optimal Task Assignments, Felipe Balmaceda Assoc Prof.

Felipe Balmaceda

This paper studies optimal task assignments in a risk neutral principal-agent model in which agents are compensated according to an aggregated performance measure. The main trade-off involved is one in which specialization allows the implementation of any possible effort profile, while multitasking constraint the set of implementable effort profiles. Yet, the implementation of any effort profile in this set is less expensive than that under specialization. The principal prefers multitasking to specialization except when tasks are complements and the output after success is small enough so that it is not second-best optimal to implement high effort in each task. This …

The Bidder's Curse: Comment, Henry S. Schneider

Henry S Schneider

The prices of auctions on eBay often exceed eBay’s fixed-price “Buy-It-Now” prices. I investigate the causes of this overbidding, focusing on the interpretation in Malmendier and Lee (2011) that the observed overbidding cannot be explained “without allowing for nonstandard preferences or beliefs” and that the “strongest direct evidence points to limited attention.” Using data from their study and new data from eBay, I provide evidence that a key condition for identifying nonstandard behavior may not have been met, and that the observed overbidding is not inconsistent with standard behavior once we allow for the likely presence of search costs.

The Economics Of Retail Markets For New And Used Cars, Charles Murry, Henry S. Schneider

Henry S Schneider

In this chapter we describe the institutions and economics of new- and used-car retailing. Our aim is to provide a resource for researchers interested in the automobile market. We focus on three categories of economic concepts relevant to car retailing: dealership location choice, including agglomeration, entry, and exit; determinants of car pricing; and information, which is central to the used-car market but also affects the new-car market. We also provide a primer on the institutions of car retailing and a reference on data sources for researchers interested in empirical work involving cars.

Beautiful Lemons: Adverse Selection In Durable-Goods Markets With Sorting, Jonathan R. Peterson, Henry S. Schneider

Henry S Schneider

We document a basic characteristic of adverse selection in secondhand markets for durable goods: goods with higher observed quality may have more adverse selection and hence lower unobserved quality. We provide a simple theoretical model to demonstrate this result, which is a consequence of the interaction of sorting between drivers over observed quality and adverse selection over unobserved quality. We then offer empirical support using data on secondhand prices and repair rates of used cars from the Consumer Expenditure Survey, and discuss a number of implications for everyday advertising and consumer questions.

Nonstandard Bidder Behavior In Real-World Auctions, Joseph U. Podwol, Henry S. Schneider

Henry S Schneider

Empirical work on auctions has found that bidders deviate from standard behavior in important ways. We investigate a range of these behaviors, including nonrational herding, auction fever, quasi-endowment effect, and escalation of commitment. Our innovations are to more completely control for unobservables by using new data from a field experiment on eBay, and by accounting for censoring of bids below the starting price. Consistent with standard auction theory and in contrast to the predictions of the nonstandard behaviors, we find that auction starting price has no effect on bidder willingness to pay in a private-values setting. We conclude that there …

The Price Of Unobservability: Moral Hazard And Limited Liability, Felipe Balmaceda Assoc Prof.

Felipe Balmaceda

This article studies a principal-agent problem with discrete outcome and effort space. The principal and the agent are risk neutral and the latter is subject to limited liability. For a given monitoring technology, we consider the maximum possible ratio between the first best social welfare to the social welfare arising from the principal's optimal pay-for-performance contract (the price of unobservability). Our main results provide tight bounds for this price. Key parameters to these bounds are number of possible efforts, the likelihood ratio evaluated at the highest outcome, and the ratio between costs of the highest and the lowest efforts. The …

An Evaluation Of Competitive Industrial Structure And Regional Manufacturing Employment Change., Joshua Drucker

Joshua Drucker

Ports And Ladders: The Nature And Relevance Of Internal Labor Markets In A Changing World, Paul Osterman, M. Diane Burton

M. Diane Burton

[Excerpt] Many believe that the nature of careers has changed dramatically in the past twenty years. One scholar writes that internal labor markets have been 'demolished', while a human resources manager at Intel comments that, in contrast to the past, today, 'You own your own employability. You are responsible' (Knoke 2001: 31). The idea of the 'boundaryless career' seems increasingly popular (Arthur and Rousseau 1996). If it is in fact true that the old rules for organizing work have disappeared, this would represent a fundamental change for employees. It would also have major implications for how scholars think about the …

The Equity Beta Of Telcos Operating In Small Island Nations, Bruno E. Viani

Bruno E. Viani

Analysts often use the capital assets pricing model (CAPM) to estimate the cost of equity capital. A key parameter in estimating that cost is the so-called equity beta. Estimates of equity betas for telecommunications firms, or telcos, in small island nations are not readily available, so analysts often rely on estimated equity betas from larger firms in jurisdictions with much larger markets. Doing so may introduce significant errors if the equity risk premium for telcos in large markets differs significantly from those in small markets. In this research note we explore this hypothesis. We find that the equity betas of …

Game Theory In Transport & Logistic World, Sajjad Khaksari

SAJJAD KHAKSARI

"OV & DP and BRT" some assumptions and a Case Study for studying John Nash "Game Theory" method in logistics and transportation world and that is only a briefly attempt to get familiar with the idea. A thought which asks "Is it possible to model and analyze one of the authenticity of the transport or logistics service request with respect to the Game Theory optimization idea?

Where Have All The Michigan Auto Jobs Gone?, Randall W. Eberts, George A. Erickcek

George A. Erickcek

No abstract provided.