Economic Theory Commons^™

Dynamic Poverty Decomposition Analysis: An Application To The Philippines, Tomoki Fujii

Research Collection School Of Economics

In this paper, we propose a new method of poverty decomposition. Our method remedies the shortcomings of existing methods and has some desirable properties such as time-revision consistency and subperiod additivity. It integrates the existing methods of growth-redistribution decomposition and sector based decomposition, because it allows us to decompose poverty change into growth and redistribution components for each group (e.g., regions or sectors) in the economy. We extend out method to have six components and provide empirical application to the Philippines for the period of 1985 to 2009.

Essays On Inequality And Macroeconomic Stability, Thomas Hauner

All Graduate Works by Year: Dissertations, Theses, and Capstone Projects

This dissertation consists of three chapters. . .

Chapter 1: Aggregate Wealth and Its Distribution as Determinants of Financial Crises: Panel Evidence This essay investigates the relationship between wealth inequality and financial crises across a panel of nine advanced economies over the past 100 years. While substantiation of a role for income inequality is ambiguous in the literature, evidence is presented suggesting a unique capacity for the accumulation of assets to increase the likelihood of a future financial crisis episode. Testing long-run panel data with a reduced form, two-way fixed effects model, estimates suggest that increasing wealth inequality, in an economy with ...

No Mere Tautology: The Division Of Labor Is Limited By The Division Of Labor, Andrew Smyth, Bart J. Wilson

ESI Working Papers

We explore the intersection of growth theory and the theory of the firm with an experiment. Economic growth is possible in our experiment when agents specialize to exploit increasing returns. We find that low opportunity costs are sufficient for Marshallian internal economies, but that Marshallian external economies are slow to emerge in four probing treatment conditions. Transaction costs do not hamper external economies as we anticipated prior to collecting data. When external economies falter, it is because new ideas about the cost and value of more extensive specialization fail to emerge. Ideas are what make further divisions of the division ...

Where Prices Come From, Lester G. Telser

Lester G Telser

The Attack And Defense Of Weakest Link Networks, Dan Kovenock, Brian Roberson, Roman M. Sheremeta

ESI Working Papers

We experimentally test the qualitatively different equilibrium predictions of two theoretical models of attack and defense of a weakest-link network of targets. In such a network, the attacker’s objective is to successfully attack at least one target and the defender’s objective is to defend all targets. The models differ in how the conflict at each target is modeled — specifically, the lottery and auction contest success functions (CSFs). Consistent with equilibrium in the auction CSF model, attackers utilize a stochastic “guerrilla-warfare” strategy, which involves randomly attacking at most one target with a random level of force. Inconsistent with equilibrium ...

Loss Aversion And The Quantity-Quality Tradeoff, Jared Rubin, Anya Samek, Roman M. Sheremeta

ESI Working Papers

Firms face an optimization problem that requires a maximal quantity output given a quality constraint. But how do firms incentivize quantity and quality to meet these dual goals, and what role do behavioral factors, such as loss aversion, play in the tradeoffs workers face? We address these questions with a theoretical model and an experiment in which participants are paid for both quantity and quality of a real effort task. Consistent with basic economic theory, higher quality incentives encourage participants to shift their attention from quantity to quality. However, we also find that loss averse participants shift their attention from ...

A Reexamination Of “The Hidden Return To Incentives”, Jing Davis, Steven Schwartz, Richard Young

Economics Faculty Articles and Research

Prior literature has observed a “hidden return to incentives” where principals receive more cooperation from agents when formal incentives are available but not used than when not available. Previous experiments are replicated using a gift-exchange rather than a trust game. Hidden returns to incentives are not observed, and in fact the results show the opposite. Suggestions for future research are provided.

The Effect Of Paid Sick Leave On Physician Office-Based Visits, Korvin Vicente

School of Arts & Sciences Theses

This paper uses a balanced sample of workers from cross-sections of the National Health Interview Survey to estimate the causal effects of paid sick leave on the medical care seeking behavior of individuals, as measured by physician office-based visits.

Reputation And Multilateral Punishment Under Uncertainty, Aidin Hajikhameneh, Jared Rubin

ESI Working Papers

Prinicpal-agent problems can reduce gains from exchange available in long distance trade. One solution to mitigate this problem is multilateral punishment, whereby groups of principals jointly punish cheating agents by giving them bad reputations. But how does such punishment work when there is uncertainty regarding whether an agent actually cheated or was just the victim of bad luck? And how might such uncertainty be mitigated—or exacerbated—by nonobservable, pro-social behavioral characteristics? We address these questions by designing a simple modified trust game with uncertainty and the capacity for principals to employ multilateral punishment. We find that a modest amount ...

Favorite–Longshot Bias In Pari-Mutuel Betting: An Evolutionary Explanation, Atsushi Kajii, Takahiro Watanabe

Research Collection School Of Economics

Favorite–longshot bias (FLB) refers to an observed tendency whereby “longshots” are overvalued and favorites are undervalued. We offer an evolutionary explanation for FLB in pari-mutuel betting using a simple market model. A bettor is forced to quit with some probability if his total net gain in one day is negative. Because of a positive track take, the expected returns of any strategy are negative, and so every agent must eventually lose and disappear in the long run. Those who favor longshots have a better chance of getting ahead with rare but large gains, enabling them to survive for longer ...

The Optimal Defense Of Networks Of Targets, Dan Kovenock, Brian Roberson

ESI Working Papers

This paper examines a game-theoretic model of attack and defense of multiple networks of targets in which there exist intra-network strategic complementarities among targets. The defender’s objective is to successfully defend all of the networks and the attacker’s objective is to successfully attack at least one network of targets. Although there are multiple equilibria, we characterize correlation structures in the allocations of forces across targets that arise in all equilibria. For example, in all equilibria the attacker utilizes a stochastic ‘guerrilla warfare’ strategy in which a single random network is attacked.

Braided Cobwebs: Cautionary Tales For Dynamic Retail Pricing In End-To-End Power Systems, Auswin George Thomas, Leigh Tesfatsion

Leigh Tesfatsion

This study investigates the effects of dynamic-price retail contracting on end-to-end power system operations. Performance is evaluated by means of carefully defined metrics for system stability, market efficiency, and market participant welfare. The study is carried out for an Integrated Retail and Wholesale (IRW) Test Case for which households have smart (price-responsive) air-conditioning (A/C) systems. A simplified version of the IRW Test Case with a directly postulated linear household demand curve is first used to derive, analytically, a set of necessary and sufficient conditions for system stability under dynamic-price retail contracting. A key finding is that dynamicprice retail contracts ...

Cross-Listed Securities And Multiple Exchange Memberships, Marta Faias, Jaime Luque

Jaime Luque

Cross-Border Residential Mortgage Lending: Theory And Evidence From The European Sovereign Debt Crisis, Jaime Luque

Jaime Luque

Braided Cobwebs: Cautionary Tales For Dynamic Retail Pricing In End-To-End Power Systems, Auswin George Thomas, Leigh Tesfatsion

Economics Working Papers

This study investigates the effects of dynamic-price retail contracting on end-to-end power system operations. Performance is evaluated by means of carefully defined metrics for system stability, market efficiency, and market participant welfare. The study is carried out for an Integrated Retail and Wholesale (IRW) Test Case for which households have smart (price-responsive) air-conditioning (A/C) systems. A simplified version of the IRW Test Case with a directly postulated linear household demand curve is first used to derive, analytically, a set of necessary and sufficient conditions for system stability under dynamic-price retail contracting. A key finding is that dynamicprice retail contracts ...

Willingness-To-Pay Vs. Willingness-To-Accept: Legal And Economic Implications,, Elizabeth Hoffman, Matthew L. Spitzer

Elizabeth Hoffman

Do people value commodities more when they own the commodities than when they do not? Although economic models generally presume that economic agents evaluate commodities independently of whether the agents own those commodities--the "basic independence" assumption researchers in economics and law are starting to doubt whether this assumption is true. Doubts about the soundness of the basic independence assumption challenge accepted economic doctrines. Most theoretical and applied models in economics use the basic independence assumption both to predict and to assess the operation of markets. In the relatively new discipline that combines law and economics, the basic independence assumption produces ...

Experimental Economics, Elizabeth Hoffman

Elizabeth Hoffman

"Experimental economics" is a general term for the experimental laboratory approach to studying economic institutions. Most applied economists study economic institutions by observing the way in which they operate in the naturally occurring environment and by measuring such economic variables as the prices of good sand services, the quantities of goods and services that are bought and sold, the wages that are paid to workers, and the quantities of inputs and outputs in the production of goods and services.

Introduction: What Have We Learned About Academic Leadership, Elizabeth Hoffman

Elizabeth Hoffman

When Bob Sternberg embarked on this project in May of 2013, I was nearing the end of a year's administrative leave after stepping down from my fifth major administrative position, an administrative career spanning twenty-three years. My latest position was a five-year term s executive vice president and provost at Iowa State University. I had been one of the Big XII provosts who formed the original set of contributors to this important book.

An Empirical Application Of Laboratory Experimental Auctions In Marketing Research, Dale J. Menkhaus, George W. Borden, Glen D. Whipple, Elizabeth Hoffman, Ray A. Field

Elizabeth Hoffman

A laboratory experimental auction was used to determine factors influencing the relative value consumers place on alternative retail beef packaging. Results indicate information is very important for the successful introduction and marketing of the vacuum skin package. Physical appearance of the beef plays a major role in purchasing decisions by consumers, with fat and shape significantly decreasing the value of beef in the vacuum skin package relative to beef in the overwrapped styrofoam tray package. Experimental economics procedures, when combined with traditional marketing research techniques, can provide useful information for marketing decisions and economic analyses.

Land, Patents And Copyright, Lester G. Telser

Lester G Telser