Econometrics Commons^™

War And Conflict In Economics: Theories, Applications, And Recent Trends, Erik O. Kimbrough, Kevin Laughren, Roman M. Sheremeta

ESI Working Papers

We review the main economic models of war and conflict. These models vary in details, but their implications are qualitatively consistent, highlighting key commonalities across a variety of conflict settings. Recent empirical literature, employing both laboratory and field data, in many cases confirms the basic implications of conflict theory. However, this literature also presents important challenges to the way economists traditionally model conflict. We finish our review by suggesting ways to address these challenges.

Bondholder Reorganization Of Systemically Important Financial Institutions, Steven Gjerstad

ESI Working Papers

This paper describes a resolution process for faltering financial firms that quickly allocates losses to bondholders and transfers ownership of the firm to them. This process overcomes the most serious flaws in resolution plans submitted by banks under Dodd-Frank Title I and in the FDIC receivership procedure in Dodd-Frank Title II by restoring the balance sheet of a failing financial institution and immediately replacing the management and board of directors who allowed its demise. In almost all bank failures, this process would eliminate the need for government involvement beyond court certification of the reorganization. The procedure overcomes the serious incentive …

Considerations For Mexican Immigration Policy Reform: How Motivations To Migrate Align With U.S. And Mexican Macroeconomic Conditions, Alix Naugler

Undergraduate Honors Theses

The nationalistic rhetoric adopted by the newly-elected president’s administration along with the public’s climaxing anti-immigrant hysteria has recently forced Mexican immigration intervention to the top of the U.S. agenda. Misconceptions regarding Mexicans’ role in stealing jobs, threatening cultural and ethnic traditions, and straining public welfare, educational, and healthcare resources have spurred a fear among the American people. This politically-fabricated “schizophrenia” has ceased the political and economic collaboration between the two nations and has resulted in the unilateral militarization of the U.S.-Mexico border. In this evaluation of the U.S. government’s immigration policies, the proposed economic theories related to Mexicans’ motivations in …

A Dual-Role Analysis Of Game Form Misconception And Cognitive Bias In Financial And Economic Decision Making, Chinedum D. Nwadiora

LSU New Orleans Theses and Dissertations

The endowment and the framing effect are widely examined cognitive biases. The experimental economics literature, using choice data gathered through an elicitation device, commonly finds evidence of these biases. Recent work by Cason & Plott (2014) shows that the interpretation of choice data as consistent with biases related non-standard preference theory could also be consistent with confusion or misconception of the game type used to elucidate preferences. I use the Cason and Plott card auction framework to analyze offers of buyers and sellers in an experimental setting with subjects from the University of New Orleans simulating 97 sellers and 90 …

Income Shocks And The Acceptance Of Intimate Partner Violence In Indonesia, Matthew N. Krupoff

Master's Theses

Intimate partner violence (IPV) is a pervasive issue affecting 1 in 3 women worldwide. Despite the negative welfare impacts, it is still seen as acceptable in some parts of the world, even amongst women. This paper examines how elastic these accepting attitudes towards IPV are to changing economic conditions. Specifically, this paper focuses on changes in intra-household resources from negative shocks to male-sourced income. The setting and context takes place in coastal communities in Indonesia, where fishing is a main source ofincome generated primarily by men. This paper uses satellite-derived fishing conditions to measure how women's attitudes towards IPV change …

Does A Better Running Back Mean More Rushing? Game Theory And The Nfl, Eric Lofquist

Honors Scholar Theses

In this paper I attempt to answer the question of whether or not teams in the National Football League (NFL) rush less with a better running back. This seems counterintuitive, but game theory supposes that this is true. Defenses facing a better running back will generally expect the offense to rush more and therefore defend the run more often. The offense, foreseeing the defense’s actions, will choose to pass more to counteract the run defense. This is the basis of the difference between the strategic effect and the direct effect in mixed strategies. The direct effect is when a player …

Robust Jump Regressions, Jia Li, Viktor Todorov, George Tauchen

Research Collection School Of Economics

We develop robust inference methods for studying linear dependence between the jumps of discretely observed processes at high frequency. Unlike classical linear regressions, jump regressions are determined by a small number of jumps occurring over a fixed time interval and the rest of the components of the processes around the jump times. The latter are the continuous martingale parts of the processes as well as observation noise. By sampling more frequently the role of these components, which are hidden in the observed price, shrinks asymptotically. The robustness of our inference procedure is with respect to outliers, which are of particular …

Gender, Punishment, And Cooperation: Men Hurt Others To Advance Their Interests, Terence C. Burnham

ESI Working Papers

A laboratory experiment that reports on gender, cooperation, and punishment in two repeated public goods game using high-powered punishment. In a repeated public goods game with punishment, no statistically significant differences between men and women are reported. In a modified game that adds an explicit payoff for relative performance, men punish more than women, men obtain higher rank, and punishment by males decreases payoffs for both men and for women. These results contribute to the debate about the origins and maintenance of cooperation.

Does The Effect Of Driving Distance On Pga/Lpga Tour Earnings Differ Across Genders?, Conner R. Albright

Georgia College Student Research Events

Since the early 21st century, the game of golf has seen a shift in importance of touch and finesse towards power and distance. Though many studies have observed the effects of individual golf statistics on earnings, none have examined if these effects fluctuate between genders. The purpose of my study is to show male and female professional golfers the effects of hitting the ball far and if their practice time might be better off spent practicing other areas of the game. By using player statistics from the 2015 PGA and LPGA cross sectional data set, this paper will examine if …

Profitable Horizontal Mergers Without Efficiencies Can Increase Consumer Surplus, Charles J. Thomas

ESI Working Papers

In a simple model I show consumer surplus can increase after competing sellers consummate a profitable merger that generates no cost savings. This finding contrasts sharply with the conventional wisdom that horizontal mergers without efficiencies must enhance sellers’ market power to be profitable, thereby harming buyers. The model fits industries in which individual buyers conduct distinct procurement contests for which sellers incur costs to participate, say to assess their product’s fit with the buyer’s preferences. Mergers benefit buyers by inducing stronger contest-level entry, echoing common claims from merging parties that their merger is beneficial because it creates a stronger competitor.

The Ideological Roots Of Institutional Change, Murat Iyigun, Jared Rubin

ESI Working Papers

Why do some societies fail to adopt more efficient institutions in response to changing economic conditions? And why do such conditions sometimes generate ideological backlashes and at other times lead to transformative sociopolitical movements? We propose an explanation that highlights the interplay--or lack thereof--between new technologies, ideologies, and institutions. When new technologies emerge, uncertainty results from a lack of understanding how the technology will fit with prevailing ideologies and institutions. This uncertainty discourages investment in institutions and the cultural capital necessary to take advantage of new technologies. Accordingly, increased uncertainty during times of rapid technological change may generate an ideological …

The Cultural Transmission Of Trust Norms: Evidence From A Lab In The Field On A Natural Experiment, Jared Rubin, Elira Karaja

ESI Working Papers

We conduct trust games in three villages in a northeastern Romanian commune. From 1775-1919, these villages were arbitrarily assigned to opposite sides of the Habsburg and Ottoman/Russian border despite being located seven kilometers apart. Russian and Ottoman Öscal institutions were more rapacious than Habsburg institutions, which may have eroded trust of outsiders (relative to co-villagers). Our design permits us to rigorously test this conjecture, and more generally, whether historically institutionalized cultural norms are transmitted intergenerationally. We Önd that participants on the Ottoman/Russian side are indeed less likely to trust outsiders but more likely to trust co-villagers.

Deception And Reception: The Behavior Of Information Providers And Users, Roman M. Sheremeta, Timothy W. Shields

ESI Working Papers

We investigate the behavior of information providers (underwriters) and users (investors) in a controlled laboratory experiment where underwriters have incentives to deceive and investors have incentives to avoid deception. Participants play simultaneously as underwriters and investors in one-shot information transmission games. The results of our experiment show a significant proportion of both deceptive and non-deceptive underwriters. Despite the presence of deceptive underwriters, investors are receptive to underwriters’ reports, gleaning information content, albeit overly optimistic. Within our sample, deception by underwriters and reception by investors are the most profitable strategies. Moreover, participants who send deceptive reports to investors, but at the …

Monitoring Institutions In Indefinitely Repeated Games, Gabriele Camera, Marco Casari

ESI Working Papers

Does monitoring past conduct facilitate intertemporal cooperation? We designed an experiment characterized by strategic uncertainty and multiple equilibria where coordinating on the efficient outcome is a challenge. Participants, interacting anonymously in a group, could pay a cost either to obtain information about their counterparts, or to create a freely available public record of individual conduct. Both monitoring institutions were actively employed. However, groups were unable to attain higher levels of cooperation compared to a treatment without monitoring. Information about past conduct alone thus appears to be ineffective in overcoming coordination challenges.

Targeted Campaign Competition, Loyal Voters, And Supermajorities, Pierre C. Boyer, Kai A. Konrad, Brian Roberson

ESI Working Papers

We consider campaign competition in which candidates compete for votes among a continuum of voters by engaging in persuasive efforts that are targetable. Each individual voter is persuaded by campaign effort and votes for the candidate who targets more persuasive effort to this voter. Each candidate chooses a level of total campaign effort and allocates their effort among the set of voters. We completely characterize equilibrium for the majoritarian objective game and compare that to the vote-share maximizing game. If the candidates are symmetric ex ante, both types of electoral competition dissipate the rents from once in expectation. However, the …

Reduced Forms And Weak Instrumentation, Peter C. B. Phillips

Research Collection School Of Economics

This paper develops exact finite sample and asymptotic distributions for a class of reduced form estimators and predictors, allowing for the presence of unidentified or weakly identified structural equations. Weak instrument asymptotic theory is developed directly from finite sample results, unifying earlier findings and showing the usefulness of structural information in making predictions from reduced form systems in applications. Asymptotic results are reported for predictions from models with many weak instruments. Of particular interest is the finding that, in unidentified and weakly identified structural models, partially restricted reduced form predictors have considerably smaller forecast mean square errors than unrestricted reduced …

The Paradox Of Power: Principal-Agent Problems And Fiscal Capacity In Absolutist Regimes, Debin Ma, Jared Rubin

ESI Working Papers

Tax extraction in Qing China was low relative to Western Europe. It is not obvious why: China was much more absolutist and had stronger rights over property and people. Why did the Chinese not convert their absolute power into revenue? We propose a model, supported by historical evidence, which suggests that i) the center could not ask its tax collecting agents to levy high taxes because it would incentivize agents to overtax the peasantry; ii) the center could not pay agents high wages in return for high taxes because the center had no mechanism to commit to refrain from confiscating …

Investing In The Presence Of Massive Flows, Terence C. Burnham, Harry Gakidis, Jeffrey Wurgler

ESI Working Papers

Approximately $10 trillion is benchmarked to Morgan Stanley Capital International’s Developed, Emerging, Frontier, and standalone market indexes. Reclassifications from one index to another require thousands of investors to decide how to react. We study a comprehensive sample of past reclassifications to guide this decision. Reclassified markets’ prices substantially overshoot between the announcement and effective dates—prices fall when a market moves from an index with more benchmarked ownership to one with less, such from Emerging to Frontier, and vice-versa—but revert within a year. We identify alpha-maximizing responses to reclassifications for both tightly benchmarked and more flexible investors.

An Outlay Equivalence Analysis Of South African Households, Samuel Peevey

Graduate Student Theses, Dissertations, & Professional Papers

A significant amount of evidence suggests that gender inequality in the developing world negatively impacts women and girls’ health, education and future wage potential. This thesis investigates whether households in South Africa discriminated against their girl children, in favor of their boy children. Additionally, I will investigate whether household heads favored children matching their own sex. Using the 1^st wave of the National Income Dynamics Study and Angus Deaton’s outlay-equivalence ratio method, I will estimate the impact, 8 age and sex categories have on their household’s adult goods expenditure. I found statistically significant but practically insignificant evidence, from a …

The Real Estate And Stock Market During The Great Depression: Construction Permit Growth As A Leading Economic Indicator For Stock Returns, Will Cresap

CMC Senior Theses

The 1929 stock market crash on Black Thursday, followed by the subsequent four-year period of extreme economic downturn, signifies an extremely profound piece of U.S. history. During this time, global economic productivity – measured by GDP – decreased while the U.S. unemployment rate increased staggeringly. Leveraging construction permits as a forward-looking measure of economic activity, I empirically evaluate the effect of construction permits – specifically, the lagged growth rate of monthly construction permits – and lagged monthly stock returns on monthly Standard & Poor's 500 (S&P 500) stock returns. Lagged construction permit returns and lagged stock returns provide early indications …

On Estimating Market Microstructure Noise Variance, Yingjie Dong, Yiu Kuen Tse

Research Collection School Of Economics

We study the market microstructure noise-variance estimation of high-frequency stock prices. Based on the Hansen and Lunde (2006) approach, we propose estimates using subsampling method at different time scales. We conduct a Monte Carlo study to compare our method against others in the literature. Our results show that our proposed estimates have lower (absolute) mean error and root mean-squared error, and their performance is quite stable at different time scales.

Is Silence The Answer?, Gator Adams

CMC Senior Theses

This study examines the relationship between company management guidance, and ex-ante crash risk over the duration of 2008(Jan 2006-Dec 2009) financial crisis using the implied volatility skew, which is based upon ex-ante volatility implied by the pricing model developed by Black-Scholes (1973). The study finds that over the duration of this crisis period, management guidance decreases with a rise in ex-ante crash risk. Further, the study provides evidence on the relationship of management guidance and earnings volatility, and how that is affected by a firm's industry product concentration based on the Herfindahl-Hirschman Index (HHI) score.

Jump Regressions, Jia Li, Viktor Todorov, George Tauchen

Research Collection School Of Economics

We develop econometric tools for studying jump dependence of two processes from high-frequency observations on a fixed time interval. In this context, only segments of data around a few outlying observations are informative for the inference. We derive an asymptotically valid test for stability of a linear jump relation over regions of the jump size domain. The test has power against general forms of nonlinearity in the jump dependence as well as temporal instabilities. We further propose an efficient estimator for the linear jump regression model that is formed by optimally weighting the detected jumps with weights based on the …

Bubbles In Experimental Asset Markets, Praveen Kujal, Owen Powell

ESI Working Papers

"One can define a bubble as a persistent increase in the price of an asset over and above its fundamental value with an abrupt fall in prices when no buyers are available to make purchases. The occurrence of market bubbles has a long history, starting with the Dutch Tulip Mania (1624-1637) to the South Sea and Mississippi Bubble (1716-1720), the British Railway Mania (1840´s) to the crash of 1929. Recent events have been the crash of 1987, the dot-com bubble (1990s) to the most recent housing crisis in early 2000. Even though bubbles, and a subsequent crash, may reallocate resources …

Humans’ (Incorrect) Distrust Of Reflective Decisions, Antonio Cabrales, Antonio M. Espín, Praveen Kujal, Stephen Rassenti

ESI Working Papers

Recent experiments suggest that social behavior may be shaped by the time available for decision making. It is known that fast decision making relies more on intuition whereas slow decision making is affected by reflective processes. Little is known, however, about whether people correctly anticipate the effect of intuition vs. reflection on others’ decision making. This is important in everyday situations where anticipating others’ behavior is often essential. A good example of this is the extensively studied Trust Game where the trustor, by sending an amount of money to the trustee, runs the risk of being exploited by the trustee’s …

Luis Daniel Gonzalez, Anwar Shaikh Phd

Archives of Anwar Shaikh

This collection includes:

• Luis Daniel Gonzalez. NA-24-12. 2017.

• Michael Lahr → I-O coefficients have a beta distribution in each column. 2017. Manuscript note credited to Anwar Shaikh, PhD.

• Michael Lahr — Luis Daniel defense. October 31, 2017. Manuscript note credited to Anwar Shaikh, PhD.

• Comments on Chapter 1: constraints, equilibrium, and empirical regularities. October 31, 2017. Manuscript note credited to Anwar Shaikh, PhD.

• Chapter 1: w-r can be linear if ρi’s are linear, in which case the composition of output. Manuscript note credited to Anwar Shaikh, PhD.

• Chapter 1: empirical regularities imply “constraints”. Manuscript …

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Risk Preference, Time Preference, And Salience Perception, Jonathan Leland, Mark Schneider

ESI Working Papers

A model of decision making is introduced that provides a unified approach for predicting choices under risk and over time. The model predicts systematic departures from expected utility and discounted utility using the same mathematical structure and the same psychological intuition and shows that a dozen diverse choice anomalies can be given a common underlying explanation. The model weights attribute differences both by their importance (consistent with expected utility and discounted utility) and by their salience or similarity (consistent with procedural models based on heuristics), and so provides a bridge between rational and heuristic representations of decision making.

A Flexible And Customizable Method For Assessing Cognitive Abilities, Andrea Civelli, Cary Deck

ESI Working Papers

Raven's Progressive Matrices are a broadly used tool for measuring cognitive ability. This paper develops and validates a set of nonverbal puzzles that can be viewed as an extension of or substitute for the well-known Ravens tasks. Specifically, we describe the characteristics of our puzzles and provide a calibration of the matrices in terms of response accuracy and response time as a function of these characteristics. Then we directly compare within-subject performance on our puzzles and Ravens tasks. Finally, we replicate a previous experimental paper, substituting our puzzles for the Ravens matrices, and show the two tools have similar predictive …

Minimal Frames And Transparent Frames For Risk, Time, And Uncertainty, Jonathan Leland, Mark Schneider, Nathaniel Wilcox

ESI Working Papers

It has been argued that behavior differs between transparent and nontransparent representations of a decision. However, the notion of a ‘transparent representation’ has not been precisely defined. We address this gap by providing formal definitions of ‘transparent frames’ for risk and time, establishing their uniqueness, presenting an approach to construct such frames, and comparing these framesto the ‘standard’ presentation format. Our typology of frames provides a logic for predicting systematic shifts in risk and time preferences as well as changes in the violation rates of rational choice theory. We conduct an experiment for choice under risk to investigate the framing …

All-Pay Auctions With Ties, Alan Gelder, Dan Kovenock, Brian Roberson

ESI Working Papers

We study the two-player, complete information all-pay auction in which a tie ensues if neither player outbids the other by more than a given amount. In the event of a tie, each player receives an identical fraction of the winning prize. Thus players engage in two margins of competition: losing versus tying, and tying versus winning. Two pertinent parameters are the margin required for victory and the value of tying relative to winning. We fully characterize the set of Nash equilibria for the entire parameter space. For much of the parameter space, there is a unique Nash equilibrium which is …