Econometrics Commons^™

Why Do Countries Cooperate? The Effect Of Cross-Border Pollution, Eric D. Johnson

Graduate Student Theses, Dissertations, & Professional Papers

As evidence regarding the consequences of climate change grows, the need to act cooperatively becomes increasingly apparent. International environmental agreements are one of many means being pursued to improve environmental management and combat climate change at large. This study examines factors that influence international environmental treaty participation among European countries. Using panel data on 35 European countries for 1980-1999, joint treaty participation is estimated as a function of various globalization variables with specific attention given to the effects of cross-border air pollution, foreign direct investment, and trade. These results suggest that cross-border air pollution does increase cooperation even after controlling …

Firm Characteristics And Organizational Change: The Effects Of Electronic Commerce In The United States Manufacturing Industry, Candice Y. Wallace

Theses and Dissertations--Geography

This dissertation seeks to provide insight to how e-commerce adoption and utilization change the condition of U.S. Manufacturing establishments, by answering two interrelated questions: (1) What are the characteristics of manufacturing establishments that were early adopters of e-commerce activities?; (2) Once e-commerce is adopted, how has adoption affected employment within manufacturing establishments? The U.S. manufacturing industry was selected for analysis as manufacturing has been and continues to be an important sector for employment and the overall U.S. economy and has been the primary sector responsible for the majority of Business-to-Business e-commerce activity.

Using two econometric models, seemingly unrelated regression (SUR) …

Estimation And Identification Of Change Points In Panel Models With Nonstationary Or Stationary Regressors And Error Term, Badi H. Baltagi, Chihwa Kao, Long Liu

Center for Policy Research

This paper studies the estimation of change point in panel models. We extend Bai (2010) and Feng, Kao and Lazarová (2009) to the case of stationary or nonstationary regressors and error term, and whether the change point is present or not. We prove consistency and derive the asymptotic distributions of the Ordinary Least Squares (OLS) and First Difference (FD) estimators. We find that the FD estimator is robust for all cases considered.

Price, Perceived Value And Customer Satisfaction: A Text-Based Econometric Analysis Of Yelp! Reviews, Eleanor A. Dwyer

Scripps Senior Theses

We examine the antecedents of customer satisfaction in the restaurant sector, paying particular attention to perceived value and price level. Using Latent Dirichlet Allocation, we extract latent topics from the text of Yelp! reviews, then analyze the relationship between these topics and satisfaction, measured as the difference between review rating and user average review rating.

Heteroskedasticity Of Unknown Form In Spatial Autoregressive Models With A Moving Average Disturbance Term, Osman Dogan

Publications and Research

In this study, I investigate the necessary condition for the consistency of the maximum likelihood estimator (MLE) of spatial models with a spatial moving average process in the disturbance term. I show that the MLE of spatial autoregressive and spatial moving average parameters is generally inconsistent when heteroskedasticity is not considered in the estimation. I also show that the MLE of parameters of exogenous variables is inconsistent and determine its asymptotic bias. I provide simulation results to evaluate the performance of the MLE. The simulation results indicate that the MLE imposes a substantial amount of bias on both autoregressive and …

Successfully Financing Classical Music Kickstarter Projects, Sarah Chung

Scripps Senior Theses

With the rise of technology and finance, crowdfunding has been uprising as a popular method of financing projects. Kickstarter provides an online platform in which anyone with Internet access can upload their own project “pitch” to gain funding for their idea on an all-or-nothing model. My thesis explores financial trends and factors that potentially contribute to a successful Kickstarter campaign within the classical music projects subcategory. I use a logistic regression and the Ordinary Least Squares model to examine a dataset of already successfully funded projects and a second dataset that contains both successfully and unsuccessfully funded projects that were …

Limit Theory For An Explosive Autoregressive Process, Xiaohu Wang, Jun Yu

Research Collection School Of Economics

Large sample properties are studied for a first-order autoregression (AR(1)) with a root greater than unity. It is shown that, contrary to the AR coefficient, the least-squares (LS) estimator of the intercept and its t-statistic are asymptotically normal without requiring the Gaussian error distribution, and hence an invariance principle applies. The coefficient based test and the t test have better power for testing the hypothesis of zero intercept in the explosive process than in the stationary process.

Nonparametric Threshold Regression: Estimation And Inference, Daniel J. Henderson, Christopher F. Parmeter, Liangjun Su

Research Collection School Of Economics

The present work describes a simple approach to estimating the location of a threshold/changepoint in a nonparametric regression. This model has connections both to the time-series and regressiondiscontinuity literatures. The estimator leverages a simple decomposition, giving it the form of asemiparametric smooth coefficient model. Optimal bandwidth selection and a suite of testing facilitiesare also presented. Several empirical examples are provided to illustrate the implementation of themethods discussed here.

Would You Choose To Be Happy? Tradeoffs Between Happiness And The Other Dimensions Of Life In A Large Population Survey, Matthew D. Adler, Paula Dolan, Georgios Kavetsos

Faculty Scholarship

A large literature documents the correlates and causes of subjective well-being, or happiness. But few studies have investigated whether people choose happiness. Is happiness all that people want from life, or are they willing to sacrifice it for other attributes, such as income and health? Tackling this question has largely been the preserve of philosophers. In this article, we find out just how much happiness matters to ordinary citizens. Our sample consists of nearly 13,000 members of the UK and US general populations. We ask them to choose between, and make judgments over, lives that are high (or low) in …

The Resource Curse And Economic Freedom: A Bayesian Perspective, Danielle M. Roberts

CMC Senior Theses

The literature addressing the resource curse has been extensive. Many studies have put forth theories to explain the curse, but these theories are often refuted by new studies. Recently, there has been a theory that natural resource abundance leads to decreased economic freedom, which causes slower economic growth. Many of these studies have using frequentist testing to arrive at their conclusions. Although frequentist testing is widely used, there are several drawbacks. In particular, there is no way of addressing model uncertainty. Unless a study is able to incorporate every significant explanatory variable, the results will suffer from omitted variable bias. …

Applications Of Monte Carlo Methods In Statistical Inference Using Regression Analysis, Ji Young Huh

CMC Senior Theses

This paper studies the use of Monte Carlo simulation techniques in the field of econometrics, specifically statistical inference. First, I examine several estimators by deriving properties explicitly and generate their distributions through simulations. Here, simulations are used to illustrate and support the analytical results. Then, I look at test statistics where derivations are costly because of the sensitivity of their critical values to the data generating processes. Simulations here establish significance and necessity for drawing statistical inference. Overall, the paper examines when and how simulations are needed in studying econometric theories.

County Level Economic Voting In U.S. Presidential Elections, Martin R. Sartorius

CMC Senior Theses

This thesis seeks to understand the relationship between county level economic voting and county level economic voting by demographic group on county level vote shares for U.S. presidential elections. Using an entity and time fixed effects regression model, I study the effects that county level growth in real per capita personal income and unemployment rate change have on county level two-party vote share for the Democratic Party. Additionally, I observe the responsiveness of a county’s voting behavior due to the demographic makeup of that specific county. I then compare my initial results to those of Eisenberg and Ketcham (2004) for …

Adaptive Elastic Net Gmm Estimation With Many Invalid Moment Conditions: Simultaneous Model And Moment Selection, Mehmet Caner, Xu Han, Yoonseok Lee

Center for Policy Research

This paper develops the adaptive elastic net GMM estimator in large dimensional models with many possibly invalid moment conditions, where both the number of structural parameters and the number of moment conditions may increase with the sample size. The basic idea is to conduct the standard GMM estimation combined with two penalty terms: the quadratic regularization and the adaptively weighted lasso shrinkage. The new estimation procedure consistently selects both the nonzero structural parameters and the valid moment conditions. At the same time, it uses information only from the valid moment conditions to estimate the selected structural parameters and thus achieves …

From Trade Deficit In Goods To Trade Surplus In Services: An Eclectic And Extended Gravity Model Approach In Analyzing The Determinants Of Service Trade Of The United States, Tofayel Ahmmad

Masters Theses

This paper employs an eclectic and extended gravity model of trade to assess the most important determinants of real export and import of services of the United States by analyzing US service trade with its 33 partner countries for 15 years. Distance affects US real export of services negatively, but has no influence on US real import of services. A devaluation of the US dollar increases service export of the United States. We find a positive relationship between US goods trade and US service exports. US outward FDI has a positive impact on US real export of services, but has …

Specification Testing For Transformation Models With An Application To Generalized Accelerated Failure-Time Models, Arthur Lewbel, Xun Lu, Liangjun Su

Research Collection School Of Economics

This paper provides a nonparametric test of the specification of a transformation model. Specifically, we test whether an observable outcome Y is monotonic in the sum of a function of observable covariates X plus an unobservable error U. Transformation models of this form are commonly assumed in economics, including, e.g., standard specifications of duration models and hedonic pricing models. Our test statistic is asymptotically normal under local alternatives and consistent against nonparametric alternatives violating the implied restriction. Monte Carlo experiments show that our test performs well in finite samples. We apply our results to test for specifications of generalized accelerated …

Testing Linearity Using Power Transforms Of Regressors, Yae In Baek, Jin Seo Cho, Peter C. B. Phillips

Research Collection School Of Economics

We develop a method of testing linearity using power transforms of regressors, allowing for stationary processes and time trends. The linear model is a simplifying hypothesis that derives from the power transform model in three different ways, each producing its own identification problem. We call this modeling difficulty the trifold identification problem and show that it may be overcome using a test based on the quasi-likelihood ratio (QLR) statistic. More specifically, the QLR statistic may be approximated under each identification problem and the separate null approximations may be combined to produce a composite approximation that embodies the linear model hypothesis. …

Language And Cooperation In Hominin Scavenging, Bart J. Wilson, Samuel R. Harris

ESI Working Papers

Bickerton (2009, 2014) hypothesizes that language emerged as the solution to a scavenging problem faced by proto‐humans. We design a virtual world to explore how people use words to persuade others to work together for a common end. By gradually reducing the vocabularies that the participants can use, we trace the process of solving the hominin scavenging problem. Our experiment changes the way we think about social dilemmas. Instead of asking how does a group overcome the selfinterest of its constituents, the question becomes, how do constituents persuade one another to work together for a common end that yields a …

Decomposing The Wage Gap: Analysis Of The Wage Gap Between Racial And Ethnic Minorities And Whites, Jennifer Kamara

Pepperdine Policy Review

Across the country in big cities, suburbs and rural areas, Blacks and Hispanics earn less in comparison to Whites. The prevalence of the wage gap for racial and ethnic minorities is widely known though the composition of that gap has been up for debate. Using empirical analysis, this paper first investigates the relationship between race and wages then, using Oaxaca Decomposition, decomposes the wage gap for these groups. Weighted regression analysis confirms previous research that indicates Blacks and Hispanics earn significantly less than Whites however decomposition results indicate alternate theories as to the basis of the wage differential. In metro …

Sharing As Risk Pooling In A Social Dilemma Experiment, Todd L. Cherry, E. Lance Howe, James J. Murphy

ESI Working Papers

In rural economies with missing or incomplete markets, idiosyncratic risk is frequently pooled through informal networks. Idiosyncratic shocks, however, are not limited to private goods but can also restrict an individual from partaking in or benefiting from a collective activity. In these situations, a group must decide whether to provide insurance to the affected member. In this paper, we describe results of a laboratory experiment designed to test whether a simple sharing institution can sustain risk pooling in a social dilemma with idiosyncratic risk. We test whether risk can be pooled without a commitment device and, separately, whether effective risk …

Revisiting The Tradeoff Between Risk And Incentives: The Shocking Effect Of Random Shocks, Brice Corgnet, Roberto Hérnan-Gonzalez

ESI Working Papers

Despite its central role in the theory of incentives, empirical evidence of a tradeoff between risk and incentives remains scarce. We reexamine this empirical puzzle in a controlled laboratory environment so as to isolate possible confounding factors encountered in the field. In line with the principal-agent model, we find that principals increase fixed pay while lowering performance pay when the relationship between effort and output is noisier. Unexpectedly, agents produce substantially more in the noisy environment than in the baseline despite lesser pay for performance. We show that this result can be accounted for by introducing agents’ loss aversion in …

Dynamic Directed Search, Gabriele Camera, Jaehong Kim

ESI Working Papers

The directed search model (Peters, 1984) is static; its dynamic extensions typically restrict strategies, often assuming price or match commitments. We lift such restrictions to study equilibrium when search can be directed over time, without constraints and at no cost. In equilibrium trade frictions arise endogenously, and price commitments, if they do exist, are self-enforcing. In contrast to the typical model, there exists a continuum of equilibria that exhibit trade frictions. These equilibria support any price above the static price, including monopoly pricing in arbitrarily large markets. Dispersion in posted prices can naturally arise as temporary or permanent phenomenon despite …

Generalizations Of The General Lotto And Colonel Blotto Games, Dan Kovenock, Brian Roberson

ESI Working Papers

In this paper, we generalize the General Lotto game (budget constraints satisfied in expectation) and the Colonel Blotto game (budget constraints hold with probability one) to allow for battlefield valuations that are heterogeneous across battlefields and asymmetric across players, and for the players to have asymmetric resource constraints. We completely characterize Nash equilibrium in the generalized version of the General Lotto game and then show how this characterization can be applied to identify equilibria in the Colonel Blotto version of the game. In both games, we find that there exist sets of non-pathological parameter configurations of positive Lebesgue measure with …

The Impact Of Social Information On The Voluntary Provision Of Public Goods: A Replication Study, James J. Murphy, Nomin Batmunkh, Ben Nilson, Samantha Ray

ESI Working Papers

Shang and Croson (2009) found that providing information about the donation decisions of others can have a positive impact on individual donations to public radio. In this study, we attempted to replicate their results, however, we found no evidence of that social comparisons affected donation decisions. Most of our donors were renewing members, a group which Shang and Croson also found were not influenced by social information.

On The Merit Of Equal Pay: When Influence Activities Interact With Incentive Setting, Brice Corgnet, Ludivine Martin, Peguy Ndodjang, Angela Sutan

ESI Working Papers

Influence costs models predict that organizations should limit managerial discretion to deter organizational members from engaging in wasteful politicking activities. We test this conjecture in a controlled, yet realistic, work environment in which we allow employees to influence managers’ decisions about rewards. We find that influence activities are pervasive and significantly lower organizational performance. Organizational performance suffers because principals offer weaker incentives when influence activities are allowed than when they are not. Importantly, we show that equal pay incentive schemes perform better when influence activities are available than when they are not. Our results thus support the idea that prevalent …

When Income Depends On Performance And Luck: The Effects Of Culture And Information On Giving, Pedro Rey-Biel, Roman M. Sheremeta, Neslihan Uler

ESI Working Papers

We study how giving depends on income and luck, and how culture and information about the determinants of others’ income affect this relationship. Our data come from an experiment conducted in two countries, the US and Spain, which have different beliefs about how income inequality arises. We find no cross-cultural differences in giving when individuals are informed about the determinants of income, but when uninformed, Americans give less than Spanish. Culture and information not only affect individual giving, but also the determinants of giving and the beliefs about how income inequality arises. Beliefs partially moderate cross-cultural differences in giving.

Competition Between And Within Universities: Theoretical And Experimental Investigation Of Group Identity And The Desire To Win, Zhuoqiong Charlie Chen, David Ong, Roman M. Sheremeta

ESI Working Papers

We study how salient group identity, created through competition between students from different universities, as well as differences in the value of winning impact competitive behavior. Our experiment employs a simple all-pay auction within and between two university subject pools. We find that when competing against their peers, students within the lower tier university bid more aggressively than students within the top-tier university. Also, students from the lower tier university, in particular women, bid more aggressively when competing against students from the top-tier university. These findings, interpreted through a theoretical model incorporating both group identity and differential value of winning, …

Revisiting Information Aggregation In Asset Markets: Reflective Learning & Market Efficiency, Brice Corgnet, Mark Desantis, David Porter

ESI Working Papers

The ability of markets to aggregate disperse information leading to prices that reflect the fundamental value of an asset is key to assessing the often-debated efficiency of markets. We study information aggregation in the experimental environment originally created by Plott and Sunder (1988). Contrary to the current belief, we find that markets do not aggregate information. The model that best describes our data, as well as data on information aggregation subsequent to Plott and Sunder (1988), is prior information (Lintner, 1969). That is, traders use their private information but fail to use market prices to infer other traders’ information. We …

An Experiment On Retail Payments Systems, Gabriele Camera, Marco Casari, Stefania Bortolotti

ESI Working Papers

We develop a novel theoretical and experimental framework to study adoption and use of cash versus electronic payments in retail transactions. The design allows us to assess the behavioral impact of sellers’ service fees and buyers’ rewards from using electronic payments. In the experiment, buyers and sellers faced a coordination problem, independently choosing a payment method before trading. Sellers readily adopted electronic payments but buyers did not. Eliminating service fees or introducing rewards significantly increased adoption and use of electronic payments. Buyers’ economic incentives played a pivotal role in the diffusion of electronic payments but cannot fully explain their adoption …

The Effects Of Make And Take Fees In Experimental Markets, Vince Bourke, David Porter

ESI Working Papers

We conduct a series of experiments to examine the effects of the make and take fee structure currently used by equity exchanges in the U.S. We examine the effects of these fees on measures of market quality (allocative efficiency, trading volume, book depth, and the bid-ask spread). With the exception of increased book depth, we document no significant effects of make and take fees relative to a baseline case in which trading fees are assessed on both sides of a transaction.

Asymmetric And Endogenous Within-Group Communication In Competitive Coordination Games, Timothy N. Cason, Roman Sheremeta, Jingjing Zhang

ESI Working Papers

Within-group communication in competitive coordination games has been shown to increase competition between groups and lower efficiency. This study further explores potentially harmful effects of communication, by addressing the questions of (i) asymmetric communication and (ii) the endogenous emergence of communication. Our theoretical analysis provides testable hypotheses regarding the effect of communication on competitive behavior and efficiency. We test these predictions using a laboratory experiment. The experiment shows that although asymmetric communication is not as harmful as symmetric communication, it leads to more aggressive competition and lower efficiency relative to the case when neither group can communicate. Moreover, groups vote …