Economic Theory Commons^™

Economic Impacts Of The Fifa World Cup In Developing Countries, Mirele Matsuoka De Aragao

Honors Theses

Hosting mega events, which have traditionally been a privilege of developed nations, became an attainable goal for developing countries starting in 2008. This might seem to be a positive step, but there are speculations concerning the real benefits and expenses those games generate. The aim of this thesis is to investigate if it is recommendable for a developing country to host a World Cup. This question is answered through an analysis of the two previous World Cups in South Africa (2010) and Brazil (2014). The research involves comparing before and after data for both countries on government expenditure, labor market, …

Better Lucky Than Good: The Role Of Information In Other-Regarding Preferences, Matthew J. Mcmahon

Economics & Finance Faculty Publications

There is anecdotal evidence that people often treat income earned by effort differently than that gained by luck, yet economists often overlook this distinction. Furthermore, others’ income sources may often be (at least partially) obfuscated. I adapt a common inequality aversion model to allow for income distinction by source, both for own income and others’, and for uncertainty over others’ sources. I empirically test resulting hypotheses in a dictator game experiment wherein subjects gain income via both effort and luck. Dictators know recipients’ income by source in control, but only total income in treatment. I find that partially informed dictators …

Benefits Of Eu Membership For The Transition Countries: The Case Of Latvia, Marko Martinovic

Economics Honors Projects

This paper estimates the benefits of EU membership for Latvia, a former communist country and a member of the former USSR. It is widely believed that the EU membership significantly contributes to raising living standards and growth of the economies of new members. Using counterfactual analysis with the official date of accession of 2003 I find that Latvia demonstrates stronger economic growth from the EU membership, but only up to 2009. After the 2009 financial crisis Latvia’s economic growth is severally compromised as a consequence of joining the EU. When 1999 is treated as the treatment year, the year when …

Inefficiency In The Shadow Of Unobservable Reservation Payoffs, Madhav S. Aney

Research Collection School Of Economics

This paper considers the problem of allocating an object between two players in an environment with one sided asymmetric information when their reservation payoffs depend on the type of the informed player, causing the reservation payoff of the uninformed player to be unobservable to her. Inefficiency arises naturally in this setting and can be characterized by a simple condition on the reservation payoffs that is necessary and sufficient. I derive the necessary and sufficient condition for the existence of an implementable allocation that at least weakly dominates the reservation payoffs. Under a mild assumption on the distribution of types, I …

Economic Analysis Of Flight Delay, Nathan D. Boettcher

Seaver College Research And Scholarly Achievement Symposium

Our project began as an investigation into the phenomenon of flight delay. We approached this problem with two goals in mind. First, we used mathematical statistics and econometric methods to develop a predictive model of flight delay. An improved forecasting process has obvious benefits for customers, and would additionally shed light on the factors which airports and airlines should seek to change in order to reduce flight delay. Our secondary goal was to complement this predictive research with a theoretical analysis of the incentive structure that consumers and producers face. We limited the scope of this model to delayed flights …

Analyzing Options Market Toxicity And The Black-Scholes Formula In The Presence Of Jump Diffusion As Simulated With Agent-Based Modeling, William D. Elliott

Undergraduate Economic Review

This paper presents new and significant research on the Black-Scholes Formula using the agent-based modeling software NetLogo. The software was used to simulate an options market subject to jump diffusion. Since the widely-used Black-Scholes Formula has at times proven unreliable, this research sought to understand circumstances that render the formula ineffective. It was hypothesized that markets would become difficult to trade in or “toxic” at low price volatility but high jump volatility. Further, it was predicted that kurtosis would alert the presence of toxic markets by accurately and consistently conveying whether jump diffusion was present.

Inclusive Fitness And Differential Productivity Across The Life Course Determine Intergenerational Transfers In A Small-Scale Human Society, Paul L. Hooper, Michael Gurven, Jeffrey Winking, Hillard Kaplan

ESI Publications

Transfers of resources between generations are an essential element in current models of human life-history evolution accounting for prolonged development, extended lifespan and menopause. Integrating these models with Hamilton’s theory of inclusive fitness, we predict that the interaction of biological kinship with the age-schedule of resource production should be a key driver of intergenerational transfers. In the empirical case of Tsimane’ forager–horticulturalists in Bolivian Amazonia, we provide a detailed characterization of net transfers of food according to age, sex, kinship and the net need of donors and recipients. We show that parents, grandparents and siblings provide significant net downward transfers …

Working Paper No. 06, Towards A Veblenian Theory Of Economic Development: Drawing From Imperial Germany, Cesar Maldonado

Working Papers in Economics

This inquiry summarizes and analyzes Thorstein Veblen’s explanations for Imperial Germany’s rapid industrialization. In his book Imperial Germany and the Industrial Revolution, Thorstein Veblen introduces a comprehensive understanding of processes affecting economic development. Technology transfer, human capital and state intervention are the variables that transformed an agrarian feudal Germany into industrialized Imperial Germany. Instead of developing technology over time by trial and error, Germany just transferred already established technology to their country. Since Germany had no established institution they could set up the most modern technologies. The machine process of the industrial system renders it easy to train workers …

Does Online Availability Increase Citations? Theory And Evidence From A Panel Of Economics And Business Journals, Mark J. Mccabe, Christopher M. Snyder

Dartmouth Scholarship

Does online availability boost citations? Using a panel of citations to economics and business journals, we show that the enormous effects found in previous studies were an artifact of their failure to control for article quality, disappearing once fixed effects are added as controls. The absence of aggregate effects masks heterogeneity across platforms: JSTOR has a uniquely large effect, boosting citations around 10%. We examine other sources of heterogeneity, including whether JSTOR disproportionately increases cites from developing countries or to ‘‘long-tail’’ articles. Our theoretical analysis informs the econometric specification and allows citation increases to be translated into welfare terms.

Mountain Monitor - 4th Quarter 2014, Kenan Fikri, Mark Muro

Mountain Monitor Quarterly

With the national economy gaining steam, the 10 major metro areas of the Mountain West ended 2014 with another quarter of strong economic performance. On the four indicators of economic vitality measured by the Mountain Monitor—employment growth, output growth, changes in unemployment, and house price growth—with only a few exceptions, every metro area registered advances on every indicator. Such widespread progress heretofore eluded the region, where recovery from the Great Recession has been characterized by unevenness.

In aggregate, the 10 Mountain metro areas ended 2014 with their fastest quarter of job growth of the year. Employment increased by 0.8 …

Slides: Practicing Sustainability In Natural Resource Industries, Gary D. Libecap

Natural Resource Industries and the Sustainability Challenge (Martz Winter Symposium, February 27-28)

Presenter: Gary D. Libecap, Bren School of Environmental Science and Management and Economics Department, University of California, Santa Barbara, National Bureau of Economic Research (NBER)

10 slides

Nonparametric Testing For Anomaly Effects In Empirical Asset Pricing Models, Sainan Jin, Liangjun Su, Yonghui Zhang

Research Collection School Of Economics

In this paper, we propose a class of nonparametric tests for anomaly effects in empirical asset pricing models in the framework of nonparametric panel data models with interactive fixed effects. Our approach has two prominent features: one is the adoption of nonparametric functional form to capture the anomaly effects of some asset-specific characteristics and the other is the flexible treatment of both observed/constructed and unobserved common factors. By estimating the unknown factors, betas, and nonparametric function simultaneously, our setup is robust to misspecification of functional form and common factors and avoids the well-known "error-in-variable" problem associated with the commonly used …

Essays On Spatial Econometrics: Estimation Methods And Applications, Osman Dogan

Dissertations, Theses, and Capstone Projects

This dissertation consists of four essays on the estimation methods and applications of spatial econometrics models. In the first essay, we consider a spatial econometric model containing spatial lags in the dependent variable and the disturbance terms with an unknown form of heteroskedasticity in the innovations. We first prove that the maximum likelihood estimator (MLE) is generally inconsistent when heteroskedasticity is not taken into account in the estimation. We show that the necessary condition for consistency of the MLE depends on the specification of the spatial weight matrices. Then, we extend the robust generalized method of moment (GMM) estimation approach …

State Failure And Political Instability: The Impact Of Educational Attainment In Africa, Jesse D. Neugarten

Undergraduate Economic Review

I investigate the role of educational attainment on state failure and political stability across the African continent. For the empirical analysis, I estimate a Linear Probability Model (LPM) for State Failure by Ordinary Least Squares (OLS). I hypothesize that differences in educational attainment in Africa can explain differences in political stability and state failure. Furthermore, I believe that this effect has persisted over time and that early educational attainment in the late colonial and early independence era is a significant determinant of state affairs in more recent times. I find that early secondary educational attainment explains higher state stability, while …

Nominal Gdp Targeting: A Policy Recommendation To Meet The Fed’S Dual Mandate, R. Shaw Bridges

Gettysburg Economic Review

This paper was written in early December 2014 in response to the Federal Reserve Challenge Team’s argument for a regime change in the Federal Reserve to nominal GDP targeting as the appropriate policy to return the U.S. economy to long-term sustainable economic growth. After the 2007 recession, the FOMC took extraordinary measures to minimize the collateral damage caused by bank balance sheets weighed down with mortgage-backed securities and other below-investment grade assets. The periodic “stress tests” and use of emergency lending facilities were historically unprecedented, however, the economy six years later was still growing slowly in part due to market …

Kaldor's Late Contributions, Up Sira Nukulkit

Electronic Theses and Dissertations

Nicholas Kaldor was a famous post-Keynesian theorist who fought on Keynesian revolution in Cambridge with Keynes himself. However, during the last twenty years of his life, Kaldor became engaged with increasing returns theory originated from Adam Smith and Allyn Young. Kaldor propagated the theory even though it was not mature. There were many controversies and critiques to Kaldor's increasing returns theory. Kaldor began to write extensively about this worldview scattered throughout many of his academic papers and essays. This thesis tracks Kaldor's process of theoretical formulation during the last twenty years of his life. It presents Kaldor's view from the …

Moishe Postone And The Critique Of Traditional Marxism: Helplessness And The Present Moment Of The Great Acceleration, Alexander M. Stoner, Andony Melathopoulos

Book Sections/Chapters

This chapter situates Moishe Postone's critique of traditional Marxism in relation to the present moment of the Great Acceleration. We engage a close reading of Postone reinterpretation of Marx's mature theory of capital with specific focus on the linkage between economic growth and ecological degradation, and how this linkage is necessary connected to social domination in modern capitalist society. Postone's Marxian theory is significant because, as we demonstrate, it allows one to grasp societally induced environmental degradation following WWII in a critical and reflexive manner. The chapter concludes by discussing the growing sense of helplessness that defines the present moment …

Humankind In Civilization’S Extended Order: A Tragedy, The First Part, Bart J. Wilson

ESI Publications

This article is a short, scientific story of the labyrinthian human career, of humankind’s place in the natural order of the world, and of the evolution of moral rules and rule following that make the extended order of civilization possible. Drawing upon work in anthropology, biology, and linguistics, I weave a science-based narrative of how Homo sapiens came to be the only primate to convert enemy aliens into trading friends. It is a Goethean story of the human condition that postulates the common origins of and modern tension between Pleistocene and Anthropocene morality. It is also a Hayekian story of …

Further Towards A Theory Of The Emergence Of Property, Bart J. Wilson

ESI Publications

This article explores the emergence of property as a moral convention. To understand this process I make use of several laboratory experiments on property in its nascence. These experiments illustrate how a rule of property arises from our knowledge of what is morally right, and not vice versa. I also argue that while the ultimate end of property is our interest in using things, the proximate end of property is not losing them, i.e., the end of a rule of property is to secure from morally unfounded harm.

Conflicted Emotions Following Trust-Based Interaction, Eric Schniter, Roman M. Sheremeta, Timothy W. Shields

ESI Publications

We observed reports of conflicted (concurrent positive and negative) emotions activated after interactions in the Trust game. Our analyses reveal that activation of 20 emotional states following trust-based interaction is better explained by predictions derived from a multi-dimensional Recalibrational perspective than by predictions derived from two-dimensional Valence and Arousal perspectives. The Recalibrational perspective proposes that emotions are activated according to their functional features – for example, emotions help people achieve short or long-sighted goals by up or down-regulating behavioral propensities, whereas Valence and Arousal perspectives consider simpler hedonic dimensions lacking functional specificity. The Recalibrational perspective is also distinguished from the …

To Trust, Or Not To Trust: Cognitive Reflection In Trust Games, Brice Corgnet, Antonio M. Espín, Roberto Hernán-González, Praveen Kujal, Stephen Rassenti

ESI Publications

We present results from two studies that show a positive relation between cognitive reflection and trusting behavior, but no significant relation with trustworthy behavior. Our finding holds regardless of individual distributional social preferences and risk aversion. Our results add to a growing body of literature that illustrates the role of cognitive ability in helping explain outcomes in economic experiments.

Dynamic Optimization And Conformity In Health Behavior And Life Enjoyment Over The Life Cycle, Hernán D. Bejarano, Hillard Kaplan, Stephen Rassenti

ESI Publications

This article examines individual and social influences on investments in health and enjoyment from immediate consumption. Our lab experiment mimics the problem of health investment over a lifetime (Grossman, 1972a,b). Incentives to find the appropriate expenditures on life enjoyment and health are given by making in each period come period a function of previous health investments. In order to model social effects in the experiment, we randomly assigned individuals to chat/observation groups. Groups were permitted to freely chat between repeated lifetimes. Two treatments were employed: In the Independent-rewards treatment, an individual's rewards from investments in life enjoyment depend only on …

Conduct In Narrativized Trust Games, Jan Osborn, Bart J. Wilson, Bradley R. Sherwood

English Faculty Articles and Research

We “narrativize” a basic extensive form trust game by placing participants in a story that contextualizes the interaction with an unforeseeable future. In our narrative experiment, participants consider each decision as a character, advancing the story with their choices for salient payoffs. Our interest is in understanding how participants apply Adam Smith's rules of beneficent and just conduct in our narrativized games with epistemic conditions of an unknown future, conditions which aren't possible in extensive form. We invite our readers to participate in the story of the results, making meaning as participants in a narrative that unfolds with their choices.

Bogatá Lectures, Anwar Shaikh Phd

Archives of Anwar Shaikh

This collection includes:

• Bogota lectures folder notes by Anwar Shaikh, PhD (23-27_Bogo... p. 1)
• Correspondence regarding final arrangements before travel to Colombia by Claudia Zeleika Casallas Vanoy (23-27_Bogo... p. 2)
• Universidad Javeriana meeting notes by Anwar Shaikh, PhD (23-27_Bogo... p. 4)
• Currie lecture agenda by Universidad Nacional de Colombia (23-27_Bogo... p. 5)
• International seminar program: El Capital 150 años by Proyecto El Capital 150 Aniversario (23-27_Bogo... p. 6).

Front Matter, Anwar Shaikh Phd

Archives of Anwar Shaikh

A text comparisonshows Front_Matter is textually identical to the upload of the First Uncorrected Proofs of Capitalism, page for page, differing only in its underlying file rendering and a later modification date.

Taking Down The Totem: A Post-Keynesian Behavioral Critique Of Neoclassical Economics, Gideon Olshansky

Economics Honors Papers

This thesis critiques neoclassical economic theory. In each chapter, with the exception of the last two, I will examine a different neoclassical theory and reveal its lack of realism, and how said theory cannot apply to the real economy. With each critique, I show how neoclassical economic theories are built vindicate free market capitalism. Therefore, neoclassical theory cannot actually understand the real economy, and anticipate its movements. The lack of realism in their theories, and staunch commitment to free markets, suggests that neoclassical theories should not be at the forefront of economic policy decisions and education programs. In the last …

Are Subjects Making Financial Decisions In Lab Auctions Or Are They Just Gambling?, Cary Deck, Jungmin Lee, Javier Reyes

Economics Faculty Articles and Research

Optimal bidding strategies in first-price and Dutch auctions are theoretically isomorphic but depend on bidder risk attitudes. However, laboratory experiments consistently find different behaviour between auction formats. This article explores whether the notion in psychology that financial and gambling risks are viewed differently can explain the discrepancy. Ultimately, the evidence does not support this hypothesis, but a bidder's propensity to gamble is associated with how much risk he takes in both auctions whereas his propensity to take financial risks is not. The results suggest that subjects may view themselves as gambling in laboratory auctions rather than making financial decisions.

Advancing The Understanding Of Behavior In Social-Ecological Systems: Results From Lab And Field Experiments, Marco A. Janssen, Therese Lindahl, James J. Murphy

ESI Publications

"Experiments have made important contributions to our understanding of human behavior, including behavior relevant for understanding social-ecological systems. When there is a conflict between individual and group interests in social-ecological systems, social dilemmas occur. From the many types of social-dilemma formulations that are used to study collective action, common-pool resource and public-good dilemmas are most relevant for social-ecological systems. Experimental studies of both common-pool resource and public-good dilemmas have shown that many predictions based on the conventional theory of collective action, which assumes rational, self-interested behavior, do not hold. More cooperation occurs than predicted (Ledyard 1995), “cheap talk” increases cooperation …

Performance Benefits Of Reward Choice: A Procedural Justice Perspective, Arran Caza, Matthew W. Mccarter, Gregory B. Northcraft

ESI Publications

Reward choice – employees' ability to exercise control over the formal rewards they receive from work – is an important part of many HRM strategies. Reward choice is expected to increase employee performance, but conflicting findings highlight the need to better understand how and when it will do so. Based on fairness heuristic theory, we predicted that procedural justice mediates reward choice's influence on performance, and that choice attractiveness moderates that influence. A field study and an experiment both had similar results, supporting our predictions. Reward choice can increase performance by as much as 40 per cent, but only when …

Sustaining Group Reputation, Erik O. Kimbrough, Jared Rubin

ESI Publications

When individuals trade with strangers, there is a temptation to renege on agreements. If repeated interaction or exogenous enforcement is unavailable, societies often solve this problem via institutions that rely on group, rather than individual, reputation. Groups can employ two mechanisms to uphold reputation that are unavailable to individuals: information sharing and in-group punishment. We design a laboratory experiment to distinguish the roles of these mechanisms when individual reputations are unobservable. Subjects are split into groups and play a trust game with random re-matching, where only the group identity of one’s partner is known. Treatments differ by whether information about …