Econometrics Commons^™

Focality And Asymmetry In Multi-Battle Contests, Subhashish M. Chowdhury, Dan Kovenock, David Rojo Arjona, Nathaniel Wilcox

ESI Working Papers

This article examines behavior in two-person constant-sum Colonel Blotto games in which each player maximizes the expected total value of the battlefields won. A lottery contest success function is employed in each battlefield. Recent experimental research on such games provides only partial support for Nash equilibrium behavior. We hypothesize that the salience of battlefields affects strategic behavior (the salient target hypothesis). We present a controlled test of this hypothesis – against Nash predictions – when the sources of salience come from certain asymmetries in either battlefield values or labels (as in Schelling (1960)). In both cases, subjects over-allocate the resource …

The Influence Of The Electric Supply Industry On Economic Growth In Less Developed Countries, Edward Richard Bee

Dissertations

This study measures the impact that electrical outages have on manufacturing production in 135 less developed countries using stochastic frontier analysis and data from World Bank’s Investment Climate surveys. Outages of electricity, for firms with and without backup power sources, are the most frequently cited constraint on manufacturing growth in these surveys.

Outages are shown to reduce output below the production frontier by almost five percent in Africa and by a lower percentage in South Asia, Southeast Asia and the Middle East and North Africa. Production response to outages is quadratic in form. Outages also increase labor cost, reduce exports …

Air Pollution And Fetal Loss In The Global Tropics, Shuqiao Cheng

Master's Theses

Abstract: Recent work has shown that in-utero air pollution has negative effects on both contemporaneous birth outcomes and long-term human capital outcomes. However, only a few studies explore the effects of in-utero exposure to air pollution on fetal loss, and none of the studies has been done in developing countries. In this study, we examine the impact of naturally caused CO and PM 2.5 on reproductive outcomes in 40 developing countries from 1997 to 2009. We present childbirths and birth gender as measures for potential fetal losses. The richest model identified using variation in pollution between pregnancies with controlling for …

Air Pollution, Temperature And Cognitive Performance In The Short Run: Evidence From Women’S Ability To Recall Dates, Ke Yang

Master's Theses

Abstract: Cognitive performance is important to productivity across many fields and potentially correlated to air pollution and extreme temperatures. We study the effects of daily ambient air pollution and monthly temperature on women’s ability of recalling dates across 42 developing countries from 1997 to 2009. We use an estimated natural air pollution data, and calculate the AQI to get an aggregate effect of air pollution. We find that one standard deviation increase in the AQI leads to a statistical decrease in women’s probability to recall dates such as birthdays, marriage date or children’s birthdays by 0.44 percentage point. Furthermore, there …

Dynamic Behavior And Player Types In Majoritarian Multi-Battle Contests, Alan Gelder, Dan Kovenock

ESI Working Papers

In a dynamic contest where it is costly to compete, a player who is behind must decide whether to surrender or to keep fighting in the face of bleak odds. We experimentally examine the game theoretic prediction of last stand behavior in a multi-battle contest with a winning prize and losing penalty, as well as the contrasting prediction of surrendering in the corresponding contest with no penalty. We find varied evidence in support of these hypotheses in the aggregated data, but more conclusive evidence when scrutinizing individual player behavior. Players’ realized strategies tend to conform to one of several “types”. …

Mean-Dispersion Preferences With A Specific Dispersion Function, Mark Schneider, Manuel Nunez

ESI Working Papers

A popular approach to modeling ambiguity aversion is to decompose preferences into the subjective expected utility of an act and an ambiguity index, or an adjustment factor, or a dispersion function. However, in these approaches the dispersion function (or ambiguity index, or adjustment factor) has very little structure imposed on it, leaving the selection of a specific dispersion function in applications to be rather arbitrary. In this note, working in the Anscombe- Aumann (1963) framework, we provide a simpler axiomatic characterization of mean-dispersion preferences which uniquely identifies the dispersion function from the infinite class of possible alternatives. Given the representation, …

Designing Contests Between Heterogeneous Contestants: An Experimental Study Of Tie-Breaks And Bid-Caps In All-Pay Auctions, Aniol Llorente-Saguer, Roman M. Sheremeta, Nora Szech

ESI Working Papers

A well-known theoretical result in the contest literature is that greater heterogeneity decreases performance of contestants because of the “discouragement effect.” Leveling the playing field by favoring weaker contestants through bid-caps and favorable tie-breaking rules can reduce the discouragement effect and increase the designer’s revenue. We test these predictions in an experiment. Our data show that indeed, strengthening weaker contestants through tie-breaks and bid-caps significantly diminishes the discouragement effect. Bid-caps can also improve revenue. Most deviations from Nash equilibrium can be explained by the level-k model of reasoning.

Salience, Framing, And Decisions Under Risk, Uncertainty, And Time, Jonathan W. Leland, Mark Schneider

ESI Working Papers

We propose a comparative model of decision making under risk, uncertainty, and time, in which large differences in payoffs and probabilities or dates of receipt are perceived as salient and overweighted in the evaluation process. The predictions of the model depend on what differences are compared across alternatives which, in turn, depends on how the choice is framed. We formalize a class of matrix-based frames which applies to decisions under risk, uncertainty, and time, and we specify two important types of frames within this class: minimal frames which provide the simplest representation of choice alternatives, and transparent frames which make …

The Effects Of Alcohol Use On Economic Decision Making, Klajdi Bregu, Cary Deck, Lindsay Ham, Salar Jahedi

ESI Working Papers

It is notoriously hard to study the effect of alcohol on decision making, given the selection that takes place in who drinks alcohol and when they choose to do so. In a controlled laboratory experiment, we study the causal effect of alcohol on economic decision making. We examine the impact of alcohol on the following types of tasks: math and logic, uncertainty, overconfidence, strategic games, food choices, anchoring, and altruism. Our results indicate that alcohol consumption, as measured by the blood alcohol concentration (BAC), increases cooperation in strategic settings and altruism in Dictator games. We do not find any effects …

Optimal Tilts, Malcom Baker, Terence C. Burnham, Ryan Taliaferro

ESI Working Papers

We examine the optimal weighting of four characteristic tilts in US equity markets over the period from 1968 through 2014. We define a “tilt” as a positive-Sharpe-ratio, characteristicbased portfolio strategy that requires relatively low annual turnover and a “trade” as a characteristic-based portfolio strategy that requires relatively high annual turnover and liquidity demands. Size is a tilt, because of its very low turnover; high frequency reversal is a trade. This dichotomy is necessary to make practical use of Fama-French style factor regressions. Unlike low-turnover tilts, a full history of transaction costs and an estimate of capacity is critical to determine …

Arousal And Economic Decision Making, Salar Jahedi, Cary Deck, Dan Ariely

ESI Working Papers

Previous experiments have found that subjecting participants to cognitive load leads to poorer decision making, consistent with dual-system models of behavior. Rather than taxing the cognitive system, this paper reports the results of an experiment that takes a complementary approach: arousing the emotional system. The results indicate that exposure to arousing visual stimuli as compared to neutral images has a negligible impact on performance in arithmetic tasks, impatience, risk taking in the domain of losses, and snack choice although we find that arousal modestly increases in risk-taking in the gains domain and increases susceptibility to anchoring effects. We find the …

A Panel Data Analysis On Globalization And Income Inequality, Dave Mclean-Shinaman

Empirical Economic Bulletin, An Undergraduate Journal

The paper investigates the relationship between globalization and income inequality using a comprehensive set of variables. It uses a panel data analysis of 51 countries over the time period of 2000-2013. The independent variables included are globalization, economic growth, education, economic freedom, and urbanization. Overall, the results suggest that globalization, as well as economic freedom and urbanization, have a significant impact on income inequality within developing nations. However, they differ in their effect on income inequality. Globalization is shown to decrease income inequality while economic freedom and urbanization in turn widen the income distribution gap. Meanwhile, results also suggest that …

Revisiting Government Size And Economic Growth: Does Institutional Quality Matter?, Julio Diaz

Empirical Economic Bulletin, An Undergraduate Journal

This paper revisits the relationship between government size and economic growth depending on the public sector quality. In this paper, an econometric panel study on a sample of 12 Latin American countries covering 1996-2013 period. It is important to note that the data has its limitation and may affect the quality of the study. The results show no significance in the relationship between government size and economic growth at any level institutional quality. These findings show a negative relationship between government size and economic growth. In addition, the results show a dependency between government size and corruption.

Tip-Off Titans: Hedonic Price Analysis Of Autographed Nba Memorabilia, Jeffrey Girgenti

Empirical Economic Bulletin, An Undergraduate Journal

Studies have explored the economics surrounding the emergence of superstars, but relatively little research exists on the associated memorabilia markets. Using a sample of autographed artifacts, on sale through an internet outlet, hedonic analysis is used to gain insight into the significant characteristics of price determination. The data consists of current and former autographs of National Basketball Association (NBA) players on photographs. This study explores price differences with respect to a number of independent variables related to the artifact and player status. A notable difference emerges among framed and limited edition pieces, and pieces signed by top-ranked players.

Corruption And Economic Growth In The Brics: An Empirical Analysis, Iemanjá Dos Santos

Empirical Economic Bulletin, An Undergraduate Journal

This paper investigates the relationship between corruption and economic growth in Brazil, Russia, India, China and South Africa; collectively known as the BRICS. Given the rapid rise of the BRICS and the international spotlight placed on them, this research study aims to explore the effect corruption has on the GDP growth of the states. To do this, a time-series analysis is conducted on each of the five states in order to analyze corruption’s effect on the individual countries. It is found that corruption only holds significance in Brazil and Russia, however, whilst there appears to be an inverse relationship between …

The Shadow Rate And Its Relationship With Lender And Borrower Variables, Andrei Irimia

Honors Undergraduate Theses

Since the federal funds rate reached the zero lower bound in late 2008, economists have been struggling to adapt their models to a long-term zero rate. Wu and Xia built upon previous research by Fischer Black to create a model for how the federal funds rate behaves during the ZLB period. In their model, the rate actually dips into the negative digits, which the actual federal funds rate does not do. The logic behind the model is that a negative shadow rate is a much better indicator of true economic conditions while the current zero rate merely masks the actual …

How Does Student Debt Affect Household Formation?, Robert Young

Empirical Economic Bulletin, An Undergraduate Journal

This paper investigates the impact student debt has on household formation. In order to determine what the impact is, an existing model around household formation was used and that model expanded it to include additional variables in order to add student debt into the model. Overall student debt at the individual and household levels has increased tremendously in the last 30 years. With student loan debt taking up a greater share of income for individuals and households, this research seeks to demonstrate that as student loan debt increases, the rate at which households are formed decreases. The findings of this …

A Panel Analysis Of Fdi And Trade: Growth In Developing Countries, Matthew Guerriero

Empirical Economic Bulletin, An Undergraduate Journal

This paper investigates the relationship between FDI and trade openness in 5 lower-middle income countries and 5 upper-middle income countries. This study utilizes a panel data regression analysis to determine what plays a role in growth and whether or not it varies depending on development level. The results show that lower-middle income countries should focus their attention on attracting FDI and upper-middle income countries should focus on increasing trade and decreasing government involvement in business operations.

How Trade Liberalization Affects Unemployment Under The Trans-Pacific Partnership: A Panel Data Analysis, Steven Brodeur

Empirical Economic Bulletin, An Undergraduate Journal

Between 1994 and 2000, NAFTA eliminated over 700,000 U.S. jobs from an increasing trade deficit. Will the TPP have similar detrimental effects? This study uses panel data to investigate the relationship between trade liberalization and unemployment among the TPP confirmed and interested signatories. The results show that a negative correlation exists between taxes on international goods and the net barter terms of trade index, indicating and ceteris paribus that the elimination of duties could result in a larger trade deficit for countries with comparably stronger currencies. Additionally, the fixed-effects GLS regression yields real exchange rates to be insignificant, supporting cheaper …

Empirical Analysis Of Immigrant Wage Gap: Study Of Ethnicity And Language Proficiency, Dominik Kozlowski

Empirical Economic Bulletin, An Undergraduate Journal

This paper investigates the effect of being an immigrant on a person’s wage. There is also a key focus on variables such as on language proficiency and ethnicity. Comparing the people that were born in New England to the people that were born in different areas of the world for the most recent data that was collected from the American Community Survey. The model shows and the research shows that immigrants’ wages are negatively affected because they are immigrants.

The Impact Of Government Debt Levels On Gdp Growth: A Panel Data Analysis, Guillaume Sabourin

Empirical Economic Bulletin, An Undergraduate Journal

This paper analyzes the impact of government debt-to-GDP levels on GDP growth in 6 European Union Nations and 5 Middle Eastern countries. While government debt levels shot up in the EU as a result of massive fiscal stimulus following the Great Recession, debt levels have been steadily decreasing in certain Middle Eastern countries. Several variables are observed to determine the relationship between debt and growth, including real interest rates, unemployment, inflation, population growth, trade, and consumption. For the EU nations studied, panel least squares analysis indicates that every 10% increase in government debt-to-GDP costs 30 basis points of GDP growth. …

The Relationship Of Savings And Economic Growth In Developing Nations, Zachary Westner

Empirical Economic Bulletin, An Undergraduate Journal

The aim of this paper is to analyze the cause and effect relationship between economic growth and savings in developing countries. In this paper I used the co-integration model and the granger causality test which are typically used in finding the relationship between savings and economic growth. Before estimating the model, it was essential to determine the stationaries of the time series. To do so I used the ADF test (augmented dickey-fuller). The results confirmed the existence of a one-way causal relationship between Gross Domestic Savings and economic growth in developing nations.

An Empirical Analysis Of The Effect Of Wealth On Health Indicators, Olivia Derogatis

Empirical Economic Bulletin, An Undergraduate Journal

This paper uses regression analysis with panel data in order to investigate the relationship between income and health indicators in ten high income countries. The purpose of this study is to investigate if income has a significant and positive effect on the health of a nation’s population. In theory, the health of the population in high income countries should be positively correlated to the country’s income because the wealthier a nation, the more available resources the nation has to allocate to health care spending. The dependent variables in this study are life expectancy at birth and infant mortality rate. The …

Causal Relationship Between Terrorism And Economic Indicators, Jenna Labarre

Empirical Economic Bulletin, An Undergraduate Journal

This study aims to understand the causal linkage between terrorism and various economic indicators such as Gross Domestic Product, Tourism, and Foreign Direct Investment by running a Granger Causality regression. The expected results will show that terrorism does indeed decrease or increase as a result of changes in these economic indicators. In order to test for Granger Causality a unit-root test will first be performed, followed by a cointegration test. The results show that each nation experiences a different causal relationship with each of these indicators. Inflation is the most significant causal indicators in terms of percentage of countries tested …

The Impact Of State-Provided Paid Family Leave On Wages: Examining The Role Of Gender, Aimee Samantha Abrams Widdicombe

Scripps Senior Theses

The U.S. is the only OECD country that does not offer any form of federal paid parental leave. Only three states—California, New Jersey and Rhode Island—have state-provided paid leave policies; implemented in 2004, 2009 and 2014, respectively. Through descriptive statistics and difference-in-difference-in-difference regression analyses of the wages of women and men of childbearing age (19-45 years) in those three states, we assess whether the paid leave programs have effected wages, and whether these effects vary depending on gender. Our results show that wages of women of childbearing age saw negligible net effects post-policy in policy states, although statistically insignificant. On …

Citizen Wellbeing And Gdp: Towards More Appropriate Measures Of Namibia's Success And Progress, Justine Braby Dr, Jessica-Jane Lavelle, Johannes Mulunga, Newman Nekwaya, Fikameni Mathias, Angula Angula

Journal of Sustainable Social Impact

Developing nations like Namibia are aiming to industrialize much like developed nations and use the gross domestic product to measure their progress. However, this development path has been largely unsustainable. For Namibia to develop into a sustainable society, a different approach is needed. This study aimed to find entry points toward such an approach. Surveys were conducted in Windhoek, Namibia's capital, to measure human well-being. Generally, as is expected in a developing country, well-being correlated positively along the income line. However, the indicators did illustrate that a more holistic measure would go a long way toward more effective development planning …

Ballot-Box Environmentalism Across The Golden State: How Geography Influences California Voters’ Demand For Environmental Public Goods, William Skyler Lewis

Pomona Senior Theses

In California, voters frequently face ballot propositions dealing directly or indirectly with environmental protection. Records of these votes provide powerful evidence of the character of voters’ demand and willingness-to-pay for environmental public goods (e.g., air quality, watershed ecosystem services, parks and recreation), and have been used in past environmental econometrics research to produce aggregated income and price effect estimates. Using neighborhood-level voting records on seven environmental-related ballot propositions in California between 2002 and 2010, this econometric study investigates the nature of voters’ demand for environmental public goods, focusing on the effect of household income on pro-environment voting. Unlike previous studies, …

Causes And Consequences Of The Protestant Reformation, Sascha O. Becker, Steven Pfaff, Jared Rubin

ESI Working Papers

The Protestant Reformation is one of the defining events of the last millennium. Nearly 500 years after the Reformation, its causes and consequences have seen a renewed interest in the social sciences. Research in economics, sociology, and political science increasingly uses detailed individual-level, city-level, and regional-level data to identify drivers of the adoption of the Reformation, its diffusion pattern, and its socioeconomic consequences. This survey takes stock of the research so far, tries to point out what we know and what we do not know, and which are the most promising areas for future research.

Payment Scheme Self-Selection In The Credence Goods Market: An Experimental Study, Hernan Bejarano, Ellen P. Green, Stephen Rassenti

ESI Working Papers

Given heterogeneity in expert behavior across payment schemes in credence goods markets, it becomes important to understand the consequences of payment scheme selection. To study the effect on customer well being of expert self-selection, we recruited subjects to participate in a real-effort credence good laboratory market. Experts were either randomly assigned or faced with the choice of three payment schemes: fee-for-service, salary, and capitation. We found that experts who selected fee-for-service payment resulted in customers with significantly worse outcomes in comparison with experts who had been randomly assigned to fee-for-service. In contrast, experts who selected salary payment did not change …

Bringing A Natural Experiment Into The Laboratory: The Measurement Of Individual Risk Attitudes, Zuzana Brokesova, Cary Deck, Jana Peliova

ESI Working Papers

Controlled laboratory experiments have become a generally accepted method for studying economic behavior, but there are two issues that regularly arise with such work. The first pertains to the ability to generalize experimental results outside the laboratory. While laboratory experiments are typically designed to mimic naturally occurring situations, ceteris paribus comparisons are rare. Using data from a promotional campaign by a bank and a matching laboratory experiment, we find similar patterns of risk taking behavior controlling for gender and age. The second issue pertains to the impact that the payment procedure in an experiment has on observed risk taking behavior. …