Behavioral Economics Commons^™

Book Review: Not Broke, But Badly Bent, Charles F. Angell

Bridgewater Review

Review of:

• Gary Rivlin, Broke, USA: From Pawnshops to Poverty, Inc. - How the Working Poor Became Big Business
• Ellen Ruppel Shell, Cheap: The High Cost of Discount Culture
• Barbara Ehrenreich, Bright-Sided: How the Relentless Promotion of Positive Thinking Has Undermined America

A Contractual Approach To Shareholder Oppression Law, Benjamin Means

Faculty Publications

According to standard law and economics, minority shareholders in closely held corporations must bargain against opportunism by controlling shareholders before investing. Put simply, you made your bed, now you must lie in it. Yet most courts offer a remedy for shareholder oppression, often premised on the notion that controlling shareholders owe fiduciary duties to the minority or must honor the minority's reasonable expectations. Thus, law and economics, the dominant mode of corporate law scholarship, appears irreconcilably opposed to minority shareholder protection, a defining feature of the existing law of close corporations.

This Article contends that a more nuanced theory of …

The Allocation Of Time And Goods: Three Essays On American Household Shopping Behavior, Jing Cai

Dissertations

Consumers’ shopping behavior connects market goods expenditure with the out of- market time allocation in their daily time use. This study is composed of three essays. In the first essay, data are collected from the American Time Use Survey and it is found that an individual’s time devoted to shopping is positively determined by opportunity cost of time. Grocery shopping and other shopping, as two distinct types of shopping, react differently to a series of individual and household characteristics as well as by seasons. The corresponding marginal effects also differentiate between shopping time, leisure time, and home production time. In …

Economic Writing On The Pressing Problems Of The Day: The Roles Of Moral Intuition And Methodological Confusion, Julie A. Nelson

Economics Faculty Publication Series

Economists are often called on to help address pressing problems of the day, yet many economists are uncomfortable about disclosing the values that they bring to this work. This essay explores how an inadequate understanding of the role of methodology, as related to ethics and human emotions of concern, underlies this reluctance and compromises the quality of economic advice. The tension between caring about the problems, on the one hand, and writing within the existing culture of the discipline, on the other, are illustrated with examples from U.S. policymaking, behavioral economics, and the economics of climate change and global poverty. …

Group Reputation, Anonymous Matching, And External Monitoring In A Model Of Corruption, Huan Wang, Yi Zhang

Research Collection School Of Economics

We explore what group reputation is and model its formation and evolution. Based solely on group signals, we define a player’s group reputation as the belief that others have about the characteristics of the group the player belongs to. A model of group reputation of civil servants with anonymous matching and external monitoring is constructed to characterize the strategic behavior of potential bribers and civil servants, the corresponding levels of corruption, possible anti-corruption policies, and the effects of these policies. Our results indicate that as there are two types of corruption behavior of civil servants: accepting bribes and dereliction of …

Sex Ratios, Divorce Laws And The Marriage Market, Brishti Guha

Research Collection School Of Economics

We show how an interaction between the skewness of the sex ratio and the jump in divorce rates after a liberalization in divorce laws can obtain in a model of marriage market matching with non-transferable utility. This model is partly motivated by a significant cross-country correlation between these two variables. We also find that men’s hopes or fears about women’s marriage market odds are self-confirming under mutual consent, resulting in multiple equilibria. The multiplicity vanishes with a more skewed sex ratio or a liberalization of divorce laws. Our work sheds some light on the possible implications of divorce liberalization and …

Put Your Money Where Your Butt Is: A Commitment Contract For Smoking Cessation, Xavier Giné, Dean Karlan, Jonathan Zinman

Dartmouth Scholarship

We designed and tested a voluntary commitment product to help smokers quit smoking. The product (CARES) offered smokers a savings account in which they deposit funds for six months, after which they take a urine test for nicotine and cotinine. If they pass, their money is returned; otherwise, their money is forfeited to charity. Of smokers offered CARES, 11 percent took up, and smokers randomly offered CARES were 3 percentage points more likely to pass the 6-month test than the control group. More importantly, this effect persisted in surprise tests at 12 months, indicating that CARES produced lasting smoking cessation. …

Overview Of The Four Pillars Of The Banking Reforms., Samuel A. Oni

Bullion

The reports of the risk assessment exercise formed the basis of the intervention by the CBN in some banks and the introduction of the four pillar reform programme, to guarantee the safety and soundness of the banking system. The four pillars of the banking system reforms, which is the main subject, are as follows: Enhancing the quality of banks; Establishing financial stability; Enabling healthy financial sector evolution; and Ensuring that the financial sector contributes to the real economy.

Rebuilding Confidence In Nigerian Banks: The Challenge Of Good Corporate Governance And Professionalism., Uju M. Ogubunka

Bullion

The Nigerian Banking industry which is still evolving, has great potentials for positively impacting on the developing economy with over a hundred and forty million (140 million) people. Without a doubt, the industry has made noticeable progress and positive impact since its birth in the early 1890s, it would have achieved more had it not been bedevilled by occasional crisis. incidences of bank crisis in Nigeria, like in other jurisdictions, had led to bank shake-ups, failures and subsequent liquidations. Those outcomes gave rise to serious erosion of stakeholders' confidence in banking institutions and the system with far-reaching negative consequences for …

Patrilocal Exogamy As A Monitoring Mechanism: How Inheritance And Residence Patterns Co-Evolve, Brishti Guha

Research Collection School Of Economics

Economists have modeled inheritance norms assuming the pattern of post-marital residence is exogenous. We model the co-evolution of these two institutions, examining how patrilineal inheritance and patrilocal exogamy reinforced each other in a patrilineal-patrilocal equilibrium. We also derive conditions for a matrilineal-matrilocal equilibrium. The endogenous choice of the old to monitor the sexual behavior of the young women who reside with them, thereby affecting the paternity confidence of the young women’s husbands and hence their incentives, is crucial. Our model fits the data on the relationship between inheritance, residence patterns and paternity confidence, and on the importance of paternity uncertainty.

Advertising Collusion In Retail Markets, Kyle Bagwell, Gea M. Lee

Research Collection School Of Economics

We analyze non-price advertising by retail firms, when the firms are privately informed about their respective costs of production. In a static advertising game, an advertising equilibrium exists in which lower-cost firms select higher advertising levels. In this equilibrium, informed consumers rationally employ an advertising search rule in which they buy from the highest-advertising firm since lower-cost firms also select lower prices. In a repeated advertising game, colluding firms face a trade-off: the use of advertising can promote productive efficiency, but only if sufficient current or future advertising expenses are incurred. At one extreme, if firms pool at zero advertising, …

Investor Knowledge And Investment Barriers., Steven Doman

Student Works (2010-2019)

The world of investing in the various products related to the stock and bond markets is confusing for many people. This is a problem since financial investments often represent a large portion of an individual’s personal assets. As regulators begin to search for answers about what caused the economic crisis of 2008-2009 and try to pass regulations that will prevent it from happening again, investors will continue to look to the products of investment firms to help accomplish their financial goals. Unfortunately for investors, many will continue to choose investments based on very limited personal knowledge. Investment firms will in …

Financial Illiteracy: Prevalence, Consequences, And Solutions, Gerald Matasy

Economics Undergraduate Honors Theses

As Americans have become increasingly responsible for their own financial security their ability to make financial decisions in their best interests has certainly grown in importance. The focus of this paper is to determine what role financial literacy plays in making optimal financial decisions and maintaining economic stability. Using mostly research from other studies and some original research, this paper seeks to examine the level of financial literacy among the general population and what the implications are for the general lack of literacy. What I find is that individuals who have lower levels of financial literacy generally make poorer financial …

Getting Past 'Rational Man/Emotional Woman': Comments On Research Programs In Happiness Economics And Interpersonal Relations, Julie A. Nelson

Economics Faculty Publication Series

Orthodox neoclassical economics portrays reason as far more important than emotion, autonomy as more characteristic of economic life than social connection, and, more generally, things culturally and cognitively associated with masculinity as more central than things associated with femininity. Research from contemporary neuroscience suggests that such biases are related to certain automatic processes in the brain, and feminist scholarship suggests ways of getting beyond them. The “happiness” and “interpersonal relations” economics research programs have made substantial progress in overcoming a number of these biases, bringing into consideration by economists a wide range of phenomena which were previously neglected. Analysis from …

The Economic Impact Of Medicaid Spending In Arkansas, Katherine A. Deck, Viktoria Riiman

Publications and Presentations

Arkansas Medicaid is a joint federal and state program that provides necessary medical services to needy and low-income persons that is administered through the Arkansas Division of Medical Services at the Arkansas Department of Human Services. The Medicaid program is designed to provide the baseline health outcomes that are necessary for the state’s economy to function. The expenditures that are made through the Arkansas Medicaid program significantly affect the Arkansas economy. This report details the economic impacts of the direct expenditures of the Medicaid program on the Arkansas economy.

Applicant Screening And Performance-Related Outcomes, Fali Huang, Peter Cappelli

Research Collection School Of Economics

A fundamental problem faced by employers is how to elicit effort from employees. Most economic models suggest that employers meet this challenge by monitoring employees carefully to prevent shirking. But there is another option that relies on heterogeneity across employees, and that is to screen job candidates to find workers with a stronger work ethic who require less monitoring. We might therefore expect employers who screen candidates more intensively to monitor them less. Using data from a national sample of US employers, we find that employers who screen applicants more intensively for factors that should predict work ethic also monitor …

Major League Baseball: America’S Recession-Proof Pastime, Mark Mcdonnell

Honors Projects in Finance

This project is a study which examines how attendance levels in Major League Baseball stadiums have been impacted by the current recession in the United States which began in October 2007. Research on attendance during past recessions has shown a strong relationship that during downtrends in the economy, baseball attendance levels generally do not suffer. Using an ordinary least squares regression, independent variables including; percent change in ticket price from previous season, distance to closest competitor, percent change in ticket price of the closest competitor, winning percentage during previous year, winning percentage during current year, unemployment rate during current year, …

Customer Loyalty And Lifetime Value: An Empirical Investigation Of Consumer Packaged Goods, Jason Q. Zhang, Ashutosh Dixit, Roberto Friedmann

Marketing

It is traditionally accepted that customer loyalty is critical for a firm’s profitability. Recent research,however, questions the effects of customer loyalty on profitability. In light of this controversy, we examine the financial effects of customer loyalty using the framework of customer lifetime value (CLV). Our analysis reveals that in the area of consumer packaged goods, customer loyalty is positively associated with customer revenue and customer retention, both of which drive CLV. Thus, customer loyalty is indeed a predictor of long-term customer profitability to a firm. For marketers, customer loyalty continues to be a legitimate end goal to pursue in marketing …

The Green Revolution Of The 1960'S And Its Impact On Small Farmers In India, Kathryn Sebby

Department of Environmental Studies: Undergraduate Student Theses

The Green Revolution was initiated in the 1960’s to address the issue of malnutrition in the developing world. The technology of the Green Revolution involved bio-engineered seeds that worked in conjunction with chemical fertilizers and heavy irrigation to increase crop yields. The technology was readily adopted in many stated in India and for some was a great success. However, there were many farmers who could not afford the inputs necessary to participate in the Green Revolution and gaps between social classes widened as wealthy farmers got wealthier and poor farmers lagged behind. This paper discusses how small farmers were affected …

The Impact Of Short Term Economic Data On The Perception Of Public Officials: Analysis Of The 2008 Economic Crisis And The American Presidential Election, James A. Foster

Political Science Theses and Capstones

As the economy of the United States fluctuated in the months leading to the 2008 presidential election, so did the public’s perception of the two leading candidates for the Oval Office. While American voting habits and economic trends have been researched heavily, the potential to analyze the effects of the economy on public opinion during an historic recession is just being uncovered. Using data from the 2008 American National Election Study, as well as daily closing numbers of the Dow Jones Industrial Average, trends emerge suggesting a possible relationship between short run economic indicators and the public’s views towards political …

Dynamic Treatment Effect Analysis Of Tv Effects On Child Cognitive Development, Fali Huang, Myoung-Jae Lee

Research Collection School Of Economics

We investigate whether TV watching at ages 6-7 and 8-9 affects cognitive development measured by math and reading scores at ages 8-9, using a rich childhood longitudinal sample from NLSY79. Dynamic panel data models are estimated to handle the unobserved child-specific factor, endogeneity of TV watching, and dynamic nature of the causal relation. A special emphasis is placed on the last aspect, where TV watching affects cognitive development, which in turn affects future TV watching. When this feedback occurs, it is not straightforward to identify and estimate the TV effect. We develop a two-stage estimation method which can deal with …

Research Poster: Vulnerability To Climate Change And Policy Support In Rural Nevada, Ahmad Safi

2010 Annual Nevada NSF EPSCoR Climate Change Conference

Supervisor: Dr. William James Smith, Jr. Research poster

Does Television Viewing Affect Children's Behaviour?, Fali Huang, Myoung-Jae Lee

Research Collection School Of Economics

Using three-period panel data drawn from the National Longitudinal Survey of Youth 1979, we investigate whether television (TV) viewing at ages 6–7 and 8–9 years affects children's social and behavioural development at ages 8–9 years. Dynamic panel data models are estimated to handle the unobserved child-specific factor, endogeneity of TV viewing, and the dynamic nature of the causal relation. Special emphasis is placed on this last aspect, focusing on how early TV viewing affects interim child behavioural problems and in turn affects future TV viewing. Overall, we find that TV viewing during ages 6–7 and 8–9 years increases child behavioural …

Shin-Gate: Misunderstanding The Power Of Shame In South Korea, Koushik Ghosh

All Faculty Scholarship for the College of Business

Shame is not perceived the same way in different cultures, nor is it used the same way. How does that difference across cultures influence our interactions in public space? How does it affect our business interactions? It has been argued, especially in the wake of Asia’s financial crisis in 1997, that there was a lack of shame in Asian cultures aft er the economic crash. The same kind of argument has been presented in the United States following the financial crisis which began in 2008. President Obama has tried to shame the Wall Street crowd. Economic commentators have spoken of …

The Gettysburg Economic Review, Volume 4, Spring 2010

Gettysburg Economic Review

No abstract provided.

The Economic Impact Of The University Of Arkansas, Katherine A. Deck, Viktoria Riiman

Publications and Presentations

Founded in 1871, the University of Arkansas was established in the city of Fayetteville as both the state university and the major land‐grant university for Arkansas. The University of Arkansas is a flagship university for the integration of student engagement, scholarship and research, and innovation that collectively transforms lives and inspires leadership for a global society. As such, the impact of the University of Arkansas extends far beyond the transfer of knowledge from professors to students and is far reaching in social and economic terms. As leading research universities across the country engage in the process of enumerating the socio‐economic …

Did I Do That? Group Positioning And Asymmetry In Attributional Bias, Brian Gunia, Brice Corgnet

Economics Faculty Articles and Research

A laboratory experiment examined whether one structural feature of groups—members’ physical positioning—may produce asymmetry in their perceived contribution to a task. In particular, we investigated asymmetry in group members’ (often excessive) claims of credit for collective tasks ("the self-serving attributional bias"). Consistent with the availability account of this bias, group members located in the middle of a group, with easy visual access to their partners’ contributions, demonstrated less bias than outside members (who demonstrated bias consistent with prior research)—but no less satisfaction. Further analyses suggested that these results reflected bias reduction among middle members and did stem from visual availability. …

Multi-Player Bargaining With Endogenous Capacity, Gabriele Camera, Cemil Selcuk

Economics Faculty Articles and Research

We study equilibrium prices and trade volume in a market with several identical buyers and a seller who commits to an inventory and then offers goods sequentially. Prices are determined by a strategic costly bargaining process with a random sequence of proponents. A unique subgame perfect equilibrium exists, characterized by no costly delays and heterogeneous sale prices. In equilibrium constraining capacity is a bargaining tactic the seller uses to improve a weak bargaining position. With capacity constraints, sale prices approach the outcome of an auction as bargaining costs vanish. The framework provides a building block for price formation in models …

Team Formation And Self‐Serving Biases, Brice Corgnet

Economics Faculty Articles and Research

There is extensive evidence which indicates that people learn positively about themselves. We build on this finding to develop a model of team formation. We show that under complete information learning positively about oneself prevents efficient team formation. Agents becoming overconfident tend to ask for an excessive share of the group outcome. Positive learning generates divergence in workers' beliefs and hampers efficient team formation. Interestingly, in a context of incomplete information regarding the partner's ability, extensive learning biases may reduce the divergence in agents' beliefs and facilitate efficient team formation as a result. We apply our model to coauthorship and …

Price And Pretense In The Baby Market, Kimberly D. Krawiec

Faculty Scholarship

Throughout the world, baby selling is formally prohibited. And throughout the world babies are bought and sold each day. As demonstrated in this Essay, the legal baby trade is a global market in which prospective parents pay, scores of intermediaries profit, and the demand for children is clearly differentiated by age, race, special needs, and other consumer preferences, with prices ranging from zero to over one hundred thousand dollars. Yet legal regimes and policymakers around the world pretend that the baby market does not exist, most notably through prohibitions against “baby selling” – typically defined as a prohibition against the …