Social and Behavioral Sciences Commons^™

Sequential Equilibria In Bayesian Games With Communication, Dino Gerardi, Roger B. Myerson

Cowles Foundation Discussion Papers

We study the effects of communication in Bayesian games when the players are sequentially rational but some combinations of types have zero probability. Not all communication equilibria can be implemented as sequential equilibria. We define the set of strong sequential equilibria (SSCE) and characterize it. SSCE differs from the concept of sequential communication equilibrium (SCE) defined by Myerson (1986) in that SCE allows the possibility of trembles by the mediator. We show that these two concepts coincide when there are three or more players, but the set of SSCE may be strictly smaller than the set of SCE for two-player …

Testing Linearity In Cointegrating Relations With An Application To Purchasing Power Parity, Seung Hyun Hong, Peter C.B. Phillips

Cowles Foundation Discussion Papers

This paper develops a linearity test that can be applied to cointegrating relations. We consider the widely used RESET specification test and show that when this test is applied to nonstationary time series its asymptotic distribution involves a mixture of noncentral chi-squared distributions, which leads to severe size distortions in conventional testing based on the central chi-squared. Nonstationarity is shown to introduce two bias terms in the limit distribution, which are the source of the size distortion in testing. Appropriate corrections for this asymptotic bias leads to a modified version of the RESET test which has a central chi-squared limit …

The Response Of Prices, Sales, And Output To Temporary Changes In Demand, Adam Copeland, George J. Hall

Cowles Foundation Discussion Papers

We determine empirically how the Big Three automakers accommodate shocks to demand. They have the capability to change prices, alter labor inputs through temporary layoffs and overtime, or adjust inventories. These adjustments are interrelated, non-convex, and dynamic in nature. Combining weekly plant-level data on production schedules and output with monthly data on sales and transaction prices, we estimate a dynamic profit-maximization model of the firm. Using impulse response functions, we demonstrate that when an automaker is hit with a demand shock sales respond immediately, prices respond gradually, and production responds only after a delay. The size of the immediate sales …

Grading In Games Of Status: Marking Exams And Setting Wages, Pradeep Dubey, John Geanakoplos

Cowles Foundation Discussion Papers

We introduce grading into games of status. Each player chooses effort, producing a stochastic output or score. Utilities depend on the ranking of all the scores. By clustering scores into grades, the ranking is coarsened, and the incentives to work are changed. We first apply games of status to grading exams. Our main conclusion is that if students care primarily about their status (relative rank) in class, they are often best motivated to work not by revealing their exact numerical exam scores (100,99,…,1), but instead by clumping them into coarse categories ( A,B,C ). When student abilities are disparate, the …

Grading In Games Of Status: Marking Exams And Setting Wages, Pradeep Dubey, John Geanakoplos

Cowles Foundation Discussion Papers

We introduce grading into games of status. Each player chooses effort, producing a stochastic output or score. Utilities depend on the ranking of all the scores. By clustering scores into grades, the ranking is coarsened, and the incentives to work are changed. We first apply games of status to grading exams. Our main conclusion is that if students care primarily about their status (relative rank) in class, they are often best motivated to work not by revealing their exact numerical exam scores (100,99,…,1), but instead by clumping them into coarse categories ( A,B,C ). When student abilities are disparate, the …

An Evaluation Of The Renaissance Zone Programs Of Michigan, Yuanlei Zhu

Dissertations

This dissertation analyzes whether the Renaissance Zone (RZ) programs in the state of Michigan are effective in helping distressed urban areas. The unique ES202 data permits us to use both establishment level data and aggregated zip level data to examine the impact of RZ programs on the establishment number and the firms' employment, real wage, and life duration. Based upon the presumption that different firms are sensitive to the tax incentives in different ways, this study examines the impact on all firms, on new firms, dead firms, and existing firms, on manufacturing and service firms, and on large and small …

Review Of Perspectives On The Economics Of Aging. David A. Wise (Ed.). Reviewed By Martin B. Tracy., Martin B. Tracy

The Journal of Sociology & Social Welfare

Book review of David A. Wise (Ed.), Perspectives on the Economics of Aging. Chicago, IL: University of Chicago Press, 2004. $90.00 hardcover.

A Remark On Bimodality And Weak Instrumentation In Structural Equation Estimation, Peter C.B. Phillips

Cowles Foundation Discussion Papers

In a simple model composed of a structural equation and identity, the finite sample distribution of the IV/LIML estimator is always bimodal and this is most apparent when the concentration parameter is small. Weak instrumentation is the energy that feeds the secondary mode and the coefficient in the structural identity provides a point of compression in the density that gives rise to it. The IV limit distribution can be normal, bimodal, or inverse normal depending on the behavior of the concentration parameter and the weakness of the instruments. The limit distribution of the OLS estimator is normal in all cases …

The Nasa Glenn Research Center: An Economic Impact Study Fiscal Year 2004, Robert Sadowski

All Maxine Goodman Levin School of Urban Affairs Publications

The John H. Glenn Research Center at Lewis Field (Glenn) is one of 10 National Aeronautics and Space Administration (NASA) Centers. Glenn is situated on 350 acres adjacent to Cleveland Hopkins International Airport. Its physical plant includes over 150 buildings that contain a unique collection of world-class test facilities. Glenn also includes the 6,400-acre Plum Brook Station near Sandusky, Ohio, 50 miles west of Cleveland. It specializes in large-scale tests that would be hazardous within the confines of the main campus.

Transforming Our Regional Economy, Ziona Austrian, Ed Morrison, Laszio Kozmon

All Maxine Goodman Levin School of Urban Affairs Publications

This strategic action plan focuses on the future of Cuyahoga County and sets forth a roadmap to build a more prosperous economy. It is not the only road map available to us, and we can certainly improve upon it. But, it is a roadmap that is practical, one that we can begin using today. We have set out initiatives that can and should be implemented.

Utilization Of Income Tax Credits By Low-Income Individuals, Stacy Dickert-Conlin, Katie Fitzpatrick, Andrew Hanson

Economics Faculty Research and Publications

The Internal Revenue Service-a sub-agency that exists to collect revenue-has the task of administering and enforcing a wide array of social policy: from subsidies for college and child care expenses, to creating jobs in depressed areas, and assisting welfare recipients with employment. While these new or expanded credits represent a new paradigm in the delivery of social policy, little is known about who uses these programs and, equally important, who does not use these programs. Understanding utilization is a key to understanding how effective this means of transferring income is and whether we are reaching the targeted populations. This paper …

Blind Spots: The Effects Of Information And Stakes On Fairness Bias And Dispersion, James Konow

Economics Faculty Works

Mounting empirical research provides evidence of fairness bias and its economic and social effects, where fairness bias refers here to a deviation of claims from unbiased justice due to a personal stake. A far less appreciated issue is dispersion of fairness views and claims, which is also important for its effects on disagreements, empirical analysis, and philosophical theories. This study undertakes a systematic analysis of the effects on fairness bias and dispersion of two variables: stakes and information. Most philosophical and social science analyses related to justice and bias associate heightened bias with increased information and, conversely, impartiality with the …

Empirical Studies Of Foreign Direct Investment, Joseph P. Daniels

Economics Faculty Research and Publications

No abstract provided.

International Technology Diffusion: Effects Of Trade And Fdi, Alejandro Ciruelos, Miao Wang

Economics Faculty Research and Publications

There has been little analysis of the effect of inward FDI on international R&D diffusion, especially in LDCs, although FDI has become the core of international production and LDCs have been receiving an increasing share of world FDI over the past few decades. Using data from 57 countries from 1988 to 2001, we find that both FDI and trade serve as important channels of international technology diffusion. However, there exist heterogeneous effects of FDI in DCs and LDCs. For inward FDI to promote technology diffusion in LDCs, a certain threshold of human capital has to be reached.

Designing State Aid To Education In The Presence Of Property Tax Exemptions Part 2, John Yinger

Center for Policy Research

It’s Elementary is a series of essays on topics in education and education policy. The main focus is on education finance in New York State, but general research findings in education and education policy issues in several other states are also discussed. John Yinger, Professor of Economics and Public Administration at the Maxwell School, Syracuse University is the author of most of these essays, although a few are written by or co-authored with other scholars.

Money And Real Fluctuations In The Chilean Economy, Andres Acuña, Carlos Oyarzun

Andrés A. Acuña

Hub-And-Spoke Or Else? Free Trade Agreements In The 'Enlarged' European Union, Luca De Benedictis, Roberta De Santis, Claudio Vicarelli

Luca De Benedictis

The object of this paper is to estimate if and how the Central European Free Trade Agreement (CEFTA) and the Baltic Free Trade Agreement (BFTA) exerted a significant impact on intra-European trade, effectively reducing the influence of the European Association Agreements (EAs) in shaping the European trade structure has a hub-and-spoke system – with the EU15 being the hub and the CEECs the spoke. This paper analyses bilateral trade flows between eight CEECs and EU-23. We estimate a gravity equation using a system GMM dynamic panel data approach. Results support the assumptions that gravity forces and “persistence effects” matter. With …

Asimmetrie Negli Incentivi, Equilibrio Competitivo E Impegno Agonistico, Distorsioni In Presenza Di Doping E Combine, Raul Caruso

Raul Caruso

No abstract provided.

Evaluating Brazilian Mutual Funds With Stochastic Frontiers, Andre Santos, Joao Tusi, Newton Da Costa Jr, Sergio Da Silva

Sergio Da Silva

We evaluate the performance of 307 Brazilian stock mutual funds employing stochastic frontiers. We list the top ten actively managed funds and the bottom ten for the period April 2001−July 2003, and show that a fund’s efficiency increases with management skill to beat the market. We also find that portfolios with low volatility tend to be more efficient. Yet we find no relationship between fund size and performance, though this might be blurred by a survivorship bias.

Travel Hysteresis In The Us Current Account After The Mid-1980s, Roberto Meurer, Guilherme Moura, Sergio Da Silva

Sergio Da Silva

Following the real appreciation of the US dollar in the first half of the 1980s, travel expenditures in the current account soared. Employing standard regression techniques as well as Markov−switching regime analysis we show that such expenditures did not return to their pre−appreciation levels thereafter. The permanent increase suggests the presence of travel hysteresis in the US current account after the mid−1980s.

Travel Hysteresis In The Brazilian Current Account, Roberto Meurer, Guilherme Moura, Sergio Da Silva

Sergio Da Silva

The strong Brazilian currency between 1994 and 1998 led Brazilians to an unprecedented increase in their travels abroad. Even after the 1999 currency crisis, travel patterns did not recover to their pre−exchange rate devaluation levels. The occasional exchange rate valuation has left long−lasting effects by changing habits, and thereby generating a travel hysteresis in the Brazilian current account.

Recalibrating The War On Terror By Enhancing Development Practices In The Middle East, Kevin J. Fandl

ExpressO

This research paper suggests that the cart has been placed before the horse, that democratization and open markets in the Middle East are more likely the result of effective development than the catalyst for it. The war on terror has been justified by the United States as an effective means of reducing the possibility of terrorist attacks. This paper analyzes the validity of those justifications by reviewing the linkage between democracy and economic growth and that between democracy and peace.

The paper begins by hypothesizing that the war on terror and forced democratization of the Middle East are leading to …

Job Training That Gets Results: Ten Principles Of Effective Employment Programs, Michael Bernick

Upjohn Press

Bernick shows the types of training programs that work and describes for whom they work. He identifies ways to improve performance among Workforce Investment Act (WIA) contractors while exploring the best uses for state discretionary WIA funds. He also describes what it takes to make an effective career ladder program, how postemployment welfare retention or skill advancement programs can succeed, and the type of training that workers with disabilities must go through to get and retain jobs.

Experiences With "Quality" Labeling Of Food Products, Thomas L. Dobbs

Economics Commentator

No abstract provided.

Results On The Bias And Inconsistency Of Ordinary Least Squares For The Linear Probability Model, William C. Horrace, Ronald L. Oaxaca

Economics - All Scholarship

This note formalizes bias and inconsistency results for ordinary least squares (OLS) on the linear probability model and provides sufficient conditions for unbiasedness and consistency to hold. The conditions suggest that a "trimming estimator" may reduce OLS bias.

When The Saints Go Marching Out, Scott J. Wallsten

Scott J. Wallsten

No abstract provided.

Equity Analysis And Natural Hazards Policy, Matthew D. Adler

All Faculty Scholarship

What is an “equitable” policy for mitigating the impacts of hurricanes, earthquakes, floods, and other natural hazards? Economists tend to see “equity” or “distribution” as irreducibly political and subjective. But, in truth, equity analysis and cost-benefit analysis are on a par. Both require a normative justification. Moreover, normative argument can help us structure equity analysis, just as it can cost-benefit analysis. This chapter, written for a forthcoming book on natural hazards policy after Katrina, argues that equity is a normative consideration distinct from efficiency or overall well-being. It then argues that equity is individualistic, not group-based; ex post, not ex …

Why Do Economists Favor Free Trade But Politicians Don't?, Shyam Sunder

Shyam Sunder

No abstract provided.

Detection Avoidance, Chris William Sanchirico

ExpressO

In practice, the problem of law enforcement is half a matter of what the government does to catch violators and half a matter of what violators do to avoid getting caught. In the theory of law enforcement, however, although the state’s efforts at "detection" play a decisive role, offenders’ efforts at "detection avoidance" are largely ignored. Always problematic, this imbalance has become critical in recent years as episodes of corporate misconduct spur new interest in punishing process crimes like obstruction of justice and perjury. This article adds detection avoidance to the existing theoretical frame with an eye toward informing the …

Adjusting Imperfect Data: Overview And Case Studies, Lars Vilhuber

Lars Vilhuber

[Excerpt] In this chapter, instead of using the similarity in the cleaned datasets to investigate economic fundamentals, we focus on the differences in the underlying ‘dirty’ data. We describe two data elements that remain fundamentally different across countries, and the extent to which they differ. We then proceed to document some of the problems that affect longitudinally linked administrative data in general, and we describe some of the solutions analysts and statistical agencies have implemented, and some that they did not implement. In each case, we explain the reasons for and against implementing a particular adjustment, and explore, through a …