Economic Theory Commons^™

Fight Or Flight? Defending Against Sequential Attacks In The Game Of Siege, Cary Deck, Roman M. Sheremeta

ESI Working Papers

This paper examines theory and behavior in a two-player game of siege, sequential attack and defense. The attacker’s objective is to successfully win at least one battle while the defender’s objective is to win every battle. Theoretically, the defender either folds immediately or, if his valuation is sufficiently high and the number of battles is sufficiently small, then he has a constant incentive to fight in each battle. Attackers respond to defense with diminishing assaults over time. Consistent with theoretical predictions, our experimental results indicate that the probability of successful defense increases in the defenders valuation and it decreases in …

Affecting Policy By Manipulating Prediction Markets: Experimental Evidence, Cary Deck, Shengle Lin, David Porter

ESI Working Papers

Documented results indicate prediction markets effectively aggregate information and form accurate predictions. This has led to a proliferation of markets predicting everything from the results of elections to a company’s sales to movie box office receipts. Recent research suggests prediction markets are robust to manipulation attacks and resulting market outcomes improve forecast accuracy. However, we present evidence from the lab indicating that single‐minded, well‐funded manipulators can in fact destroy a prediction market’s ability to aggregate informative prices and mislead those who are making forecasts based upon market predictions. However, we find that manipulators primarily influence market trades meaning outstanding bids …

Personality And The Consistency Of Risk Taking Behavior: Experimental Evidence, Cary Deck, Jungmin Lee, Javier Reyes

ESI Working Papers

Researchers have found that an individual’s risk attitude is not stable across elicitation methods. Results reported by Deck et al. (2009) suggest that personality may help explain the apparent inconsistency, offering support to Borghans et al.’s (2008) argument that economists should consider a multi‐domain approach to measuring risk attitudes. This paper uses laboratory methods to compare risk attitudes as measured by the Holt and Laury (2002) procedure under two different frames. We find that, as in Deck et al. (2009), one’s willingness to take financial risks (as measured by Weber et al. 2002) significantly affects behavior; however the effect is …

Perfect And Imperfect Real-Time Monitoring In A Minimum-Effort Game, Cary Deck, Nikos Nikiforakis

ESI Working Papers

This paper presents the results from a minimum-effort game in which individuals can observe the choices of others in real time. We find that under perfect monitoring almost all groups coordinate at the payoff-dominant equilibrium. However, when individuals can only observe the actions of their immediate neighbors in a circle network, monitoring improves neither coordination nor efficiency relative to a baseline treatment without real-time monitoring. We argue that the inefficiency of imperfect monitoring is due to information uncertainty, that is, uncertainty about the interpretation of the information available regarding the actions of others.

Price Increasing Competition? Experimental Evidence, Cary Deck, Jingping Gu

ESI Working Papers

Economic intuition suggests that increased competition generates lower prices. However, recent theoretical work shows that a monopolist may charge a lower price than a firm facing a competitor selling a differentiated product. The direction of the price change when competition is introduced is dependent upon the joint distribution of buyer values for the two products. We explore this relationship using controlled laboratory experiments. Our results indicate that the distribution of buyer values does affect prices in a manner consistent with the theoretical predictions, although price increasing competition is rare due in part to overly intense competition regardless of the distribution …

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

ESI Working Papers

This paper experimentally examines behavior in a two-player game of attack and defense of a weakest-link network of targets, in which the attacker‟s objective is to successfully attack at least one target and the defender‟s objective is diametrically opposed. We apply two benchmark contest success functions (CSFs): the auction CSF and the lottery CSF. Consistent with the theoretical prediction, under the auction CSF, attackers utilize a stochastic “guerilla warfare” strategy — in which a single random target is attacked — more than 80% of the time. Under the lottery CSF, attackers utilize the stochastic guerilla warfare strategy almost 45% of …

Durability, Re-Trading And Market Performance, John Dickhaut, Shengle Lin, David Porter, Vernon Smith

ESI Working Papers

Key differential structural characteristics of environments studied in previous market experiments have documented large divergences in their observed performance, particularly discrepancies in their convergence to expected equilibrium outcomes. We investigate why this should be so.

Monitoring Managers Through Corporate Compliance Programs, Charles Angelucci, Martijn Han

Martijn A. Han

Compliance programs entail monitoring of employees' behavior with the claimed objective of fighting corporate crime. (Competition) Authorities promote such intra-firm monitoring. In a three-tier hierarchy model, authority-shareholder-manager, we study the impact of monitoring through a compliance program on contracting within the firm and the authority's optimal sanctions and leniency policy. We find that compliance programs are beneficial in the fight against corporate crime if and only if the managerial sanction is low. Moreover, when the shareholder blows the whistle, the authority optimally grants partial corporate leniency, while not granting individual leniency to the involved employees. Conversely, when the employee blows …

Firms As Social Actors, Richard Adelstein

Richard Adelstein

A close look at what firms are and how they act.

Organizations And Economics, Richard Adelstein

Richard Adelstein

A contribution to a symposium on a paper by Richard Posner.

Measuring Poverty And Human Capital Development In Sudan, Professor Issam A.W. Mohamed

Professor Issam A.W. Mohamed

Catastrophes in Sudan are of many dimensions. Food security is a chronic and intrinsic problem in Sub Saharan Africa which is a fact recognized by the international society. Political instability, civil wars and finally recent secession of its Southern part is another fact which may be taken as a vivid example for other regions of that previously largest African country to be followed. The present paper introduces an analysis and assessment of measurements for human development indices in Sudan. It is empirically concluded that human welfare is invisible. The parameters are very low. Strategies are needed to provide for basic …

Exports And Productivity Selection Effects For Dutch Firms, Henk Lm Kox, Hugo Rojas Romogosa

Henk LM Kox

Should Income Transfers Be Targeted Or Universal? Insights From Public Pension Influences On Elderly Mortality In Canada, 1921–1966, Jesse A. Matheson, J.C. Herbert Emery

Jesse A Matheson

Black Tuesday And Graying The Legitimacy Line For Governmental Intervention: When Tomorrow Is Just A Future Yesterday, Donald J. Kochan

Donald J. Kochan

Black Tuesday in October 1929 marked a major crisis in American history. As we face current economic woes, it is appropriate to recall not only the event but also reflect on how it altered the legal landscape and the change it precipitated in the acceptance of governmental intervention into the marketplace. Perceived or real crises can cause us to dance between free markets and regulatory power. Much like the events of 1929, current financial concerns have led to new, unprecedented governmental intervention into the private sector. This Article seeks caution, on the basis of history, arguing that fear and crisis …

(Re)Scaling Gender And Globalization: Livelihood Strategies In Accra, Ghana, Ann M. Oberhauser

Ann Oberhauser

Employee Voice And Intent To Leave: An Empirical Evidence Of Pakistani Banking Sector, Ahmed Imran Hunjra, Muhammad Asghar Ali, Muhammad Irfan Chani, Hashim Khan, Kashif Ur Rehman

Muhammad Irfan Chani

A Note On Causal Relationship Between Fdi And Savings In Bangladesh, Mohammad Salahuddin, Muhammad Shahbaz Shahbaz, Muhammad Irfan Chani

Muhammad Irfan Chani

This paper aims to investigate the causal relationship between foreign direct investment and gross domestic savings in Bangladesh over a period of 1985-2007. In doing so, Johansen cointegration technique and error correction methods are employed to examine the long run and short run relationship between foreign direct investment and gross domestic savings. To determine the direction of causality, we used innovation accounting approach. Results suggest that there exist bi-directional causal relationship between foreign direct investment and gross domestic savings but the movement is stronger from domestic savings to foreign direct investment. The result also implies complimentary relationship between them and …