Other Economics Commons^™

A Universally Translatable Explication Of Adam Smith's Famous Proposition On "The Extent Of The Market", Bart J. Wilson, Gian Marco Farese

ESI Publications

Following Adam Smith’s line of argument, we examine the semantics of four economic principles in Chapter III of the Wealth of Nations that compose his famous proposition “that the division of labour is limited by the extent of the market.” We apply the Natural Semantic Metalanguage framework in linguistics to produce a series of explications that are clear and plain, cross-translatable into any language, intelligible to twenty-first-century readers, and faithfully close to the original text. Our paper explicates Smith’s logical argument in Chapter III and demonstrates how his ideas can be shared among speakers with different linguacultural backgrounds in line …

Preventing (Panic) Bank Runs, Hubert János Kiss, Ismael Rodriguez-Lara, Alfonso Rosa-Garcia

ESI Publications

We study experimentally an instrument to prevent bank runs in healthy banks. In particular, we extend the basic bank-run game, where depositors choose between withdrawing or keeping their money deposited, with a third option, the possibility to relocate funds to a priority account that is less profitable, but which guarantees a payoff even in a bank run. Theoretically, the use of this instrument dominates withdrawals for depositors without liquidity needs, and given this fact, depositors should optimally keep their deposits in the bank, so no bank run shall happen. In our experiment, we find evidence that the mechanism reduces not …

Review Of Religion And The Rise Of Capitalism, Jared Rubin

ESI Publications

A review of Religion and the Rise of Capitalism by Benjamin M. Friedman

Political Legitimacy In Historical Political Economy, Avner Greif, Jared Rubin

ESI Working Papers

Political legitimacy has long been recognized in the social sciences as an integral component of governance. It encourages obedience without the threat of force, thus lowering governing costs and improving the efficacy of policies. This chapter begins by overviewing the extensive literature on political legitimacy, classifying studies by whether they are based on the beliefs (regarding the legitimacy of the authority) or effectiveness (good governance is legitimate governance). Among the studies focusing on beliefs, most take legitimacy as an exogenous element of political authority. We develop a conceptual framework to study how beliefs regarding political legitimacy form endogenously and impact …

300 Anniversary Of Smith’ Birth, Vernon L. Smith

ESI Working Papers

Thousand-word brief on key quotes from Adam Smith’s two books (TMS, WN) modelling Society and Economy.

How Do Reward Versus Penalty Framed Incentives Affect Diagnostic Performance In Auditing?, Bright (Yue) Hong, Timothy W. Shields

ESI Working Papers

Prior research examines how rewards versus economically equivalent penalties affect effort. However, accountants perform various diagnostic analyses that involve more than exerting effort. For example, auditors often need to identify whether a material misstatement is the underlying cause of a phenomenon among the possible causes. Testing helps identify the cause, but testing is costly. When participants are incentivized to test accurately (rather than test more) and objectively (unbiased between testing and not testing), we find that framing the incentives as rewards versus equivalent penalties increases testing by lowering the subjective testing criterion and by increasing the assessed risk of material …

Motives For Cooperation In The One-Shot Prisoner’S Dilemma, Mark Schneider, Timothy W. Shields

ESI Working Papers

We investigate the motives for cooperation in the one-shot Prisoner’s Dilemma (PD). A prior study finds that cooperation rates in one-shot PD games can be ranked empirically by the social surplus from cooperation. That study employs symmetric payoffs from cooperation in simultaneous PD games. Hence, in that setting, it is not possible to discern the motives for cooperation since three prominent social welfare criteria, social surplus (efficiency) preferences, Rawlsian maximin preferences, and inequity aversion make the same predictions. In the present paper, we conduct an experiment to identify which of these social preferences best explains differences in cooperation rates and …

The Coronavirus Pandemic And Participation In The Influencer Economy, Emma Grace Richbourg

Honors Theses

The 2019 coronavirus pandemic, also referred to as the COVID-19 pandemic, altered day-to-day life and has effected the economy quite notably. The aim of this paper is to determine to what extent the COVID-19 pandemic altered consumer behavior and whether these alterations encouraged participation in the influencer economy, which represents social media influencers who create and monetize online content. In order to do so, I administered a survey to 250 respondents to evaluate the reach of influencers during the pandemic and whether social media users felt the presence of influencers was an effective marketing technique. I also conducted an analysis …

On The Generalizability Of Using Mobile Devices To Conduct Economic Experiments, Yiting Guo, Jason Shachat, Matthew J. Walker, Lijia Wei

ESI Working Papers

Recent technological advances enable the implementation of online, field and hybrid experiments using mobile devices. Mobile devices enable sampling of incentivized decisions in more representative samples, consequently increasing the generalizability of results. Generalizability might be compromised, however, if the device is a relevant behavioural confound. This paper reports on a battery of common economic games and decision-making tasks in which we systematically randomize the decision-making device (computer versus mobile phone) and the laboratory setup (physical versus online). The results offer broad support for conducting decision experiments using mobile devices. For six out of eight tasks, we find robust null results …

Who Withdraws First? Line Formation During Bank Runs, Hubert János Kiss, Ismael Rodriguez-Lara, Alfonso Rosa-Garcia

ESI Working Papers

We study how lines form in front of banks. In our model, depositors choose first the level of effort to arrive early at the bank and then whether or not to withdraw their deposit. We argue that the informational environment (i.e., the possibility of observing the action of others) affects the emergence of bank runs and should, therefore, influence the line formation. We test this prediction experimentally. While the informational environment has no effect on the line formation when we look at the average level of effort, our findings suggest that the reasons to arrive early at the bank varies …

Agency, Benevolence And Justice, Prithvijit Mukherjee, J. Dustin Tracy

ESI Working Papers

We test for social norms regarding how Agents should select between risky prospects for Principals, including norms consistent with observations by Adam Smith. We elicit norms from subjects serving as ``impartial spectator[s]" about the choice of risky prospects selected by the Agents. We find strong evidence for the existence of norms, consistent with Smith's observations. Furthermore, we find that Agents are more likely to select more normative options. In contrast, we find that Principals' allocation for bonuses depends on the realization of the risky prospect rather than whether the Agents' choice was consistent with the norm.

Prevalence Of Dementia And Mild Cognitive Impairment In Indigenous Bolivian Forager-Horticulturalists, Margaret Gatz, Wendy J. Mack, Helena C. Chui, E. Meng Law, Giuseppe Barisano, M. Linda Sutherland, James D. Sutherland, Daniel Eid Rodriguez, Raul Quispe Gutierrez, Juan Copajira Adrian, Jesus Bani Cuata, Amy R. Borenstein, Ellen E. Waters, Andrei Irimia, Christopher J. Rowan, L. Samuel Wann, Adel H. Allam, Randall C. Thompson, Michael I. Miyamoto, David E. Michalik, Daniel K. Cummings, Edmond Seabright, Angela R. Garcia, Paul L. Hooper, Thomas S. Kraft, Caleb E. Finch, Gregory S. Thomas, Jonathan Stieglitz, Benjamin C. Trumble, Michael D. Gurven, Hillard Kaplan

ESI Publications

Introduction

We evaluated the prevalence of dementia and mild cognitive impairment (MCI) in indigenous Tsimane and Moseten, who lead a subsistence lifestyle.

Methods

Participants from population-based samples ≥ 60 years of age (n = 623) were assessed using adapted versions of the Modified Mini-Mental State Examination, informant interview, longitudinal cognitive testing and brain computed tomography (CT) scans.

Results

Tsimane exhibited five cases of dementia (among n = 435; crude prevalence = 1.2%, 95% confidence interval [CI]: 0.4, 2.7); Moseten exhibited one case (among n = 169; crude prevalence = 0.6%, 95% CI: 0.0, 3.2), all age ≥ 80 years. …

Laboratory Experiments Of Land Assembly Without Eminent Domain, Mark Desantis, Matthew W. Mccarter, Abel Winn

ESI Publications

The authors use laboratory experiments to test two self-assessment tax mechanisms for facilitating land assembly. One mechanism is incentive compatible with a complex tax function, while the other uses a flat tax rate to mitigate implementation concerns. Sellers publicly declare a price for their land. Overstating its true value is penalized by using the declared price to assess a property tax; understating its value is penalized by allowing developers to buy the property at the declared price. The authors find that both mechanisms increase the rate of land assembly and gains from trade relative to a control in which sellers’ …

Human Milk Oligosaccharide Compositions Illustrate Global Variations In Early Nutrition, Anita Vinjamuri, Jasmine C. C. Davis, Sarah M. Totten, Lauren D. Wu, Laura D. Klein, Melanie Martin, Ea Quinn, Brooke Scelza, Alicia Breakey, Michael Gurven, Grazyna Jasienska, Hillard Kaplan, Claudia Valeggia, Katie Hinde, Jennifer T. Smilowitz, Robin M. Bernstein, Angela M. Zivkovic, Michael J. Barratt, Jeffrey I. Gordon, Mark A. Underwood, David A. Mills, J. Bruce German, Carlito B. Lebrilla

ESI Publications

Background

Human milk oligosaccharides (HMOs) are an abundant class of compounds found in human milk and have been linked to the development of the infant, and specifically the brain, immune system, and gut microbiome.

Objectives

Advanced analytical methods were used to obtain relative quantitation of many structures in approximately 2000 samples from over 1000 mothers in urban, semirural, and rural sites across geographically diverse countries.

Methods

LC-MS−based analytical methods were used to profile the compounds with broad structural coverage and quantitative information. The profiles revealed their structural heterogeneity and their potential biological roles. Comparisons of HMO compositions were made between …

Data For "Agency, Benevolence And Justice", Prithvijit Mukherjee, J. Dustin Tracy

ESI Data Sets

We test for social norms regarding how agents should select between risky prospects for principals, including norms consistent with beneficence and justice propositions from Adam Smith. We elicit norms from subjects serving as "impartial spectator[s]" about choice of risky prospect selected by the agents. We find strong evidence for the existence of norms, consistent with the Smith propositions. Furthermore we find that agents are more likely to select more normative options. In contrast, we find that principals' allocation for bonuses depends on the realization of the risky prospect rather than whether the agents choice was consistent with the norm.

The No-Arbitrage Hypothesis And Inertia In Forward Markets, José Luis Ferreira, Praveen Kujal, Stephen Rassenti

ESI Working Papers

Allaz (1992) showed that the no-arbitrage condition in forward markets is obtained as a feature of the equilibrium if the model allows for strategic behavior on the part of the buyers. He showed that having active buyers is equivalent to passive buyers plus the no-arbitrage hypothesis. We test this experimentally in a forward market by allowing for active buyer’s under exogenously or endogenously determined market closure. We further test an inertia hypothesis that looks at whether past participation in a spot-market results in quantities being limited in the forward market stage. Importantly, the no-arbitrage condition can only be tested with …

The Effects Of Environmental Corporate Social Responsibility On Financial Returns, Kevin Acevedo

Theses and Dissertations

A major issue concerning companies is global warming and the impact that firms have on the environment. Companies are taking steps towards sustainability, but it is unclear if sustainable business practices are beneficial to companies’ financial performance. This paper examines the effect of environmental corporate social responsibility (CSR) of Fortune 250 companies on financial performance. The analysis reveals significant effects on financial performance, but they are inconsistent and hard to interpret.

Economics Of Markets: Neoclassical Theory, Experiments, And Theory Of Classical Price Discovery, Sabiou M. Inoua, Vernon L. Smith

ESI Publications

This book establishes that neoclassical economics based on the marginal utility calculus failed to derive a theory of consumer market price discovery consistent with the experimental market evidence. Such markets involve inherently discrete final-demand items bought for consumption and not subject to resale. Classical economists following Adam Smith articulated a rich narrative of price discovery theory consistent with experimental evidence based on operational concepts of discrete demand values (maximum willingness-to-pay), and symmetrically, supply costs (minimum willingness-to-accept). We develop and extend a mathematical model of classical market price formation. Chapter 1 & 2 describes this theme and chapter 3 connects it …

A Profit-Based View Of Economic Granularity In The Perspective Of Market Competition, Jeffrey Yi-Lin Forrest

Pennsylvania Economic Review

This paper studies Gabaix’s granular hypothesis from an analytical angle in lights of profits and market competition. By establishing the profit pictures of the initial firms of an emerging market and the incumbent firms of a maturing market, it is shown that consumers’ evolving preference help intensify market competition and encourage new firms’ entry into an established oligopoly market. With this profit-based logic, among other results established are precise conditions under which Gabaix’s granular hypothesis is either surely true or definitely not true, followed by relevant empirical confirmations. At the end, several important open questions are posed for future research.

Nft-Related Companies: Token Sale Returns, Robert Liu

CMC Senior Theses

Non-fungible tokens (NFTs) have emerged as a new means of digital asset ownership and many companies are building projects that revolve around the technology. These companies are blockchain-based and raise capital for their projects through cryptocurrency token sales, which have become a new mechanism of entrepreneurial finance. In a sample of 62 NFT-related companies, I examine which company, fundraising, and token sale process characteristics are associated with the performance of 7-day and 60-day market returns after a token’s public listing. A multivariate regression analysis finds that the total amount of capital raised before a token launch has a negative relationship …

Marx, Critical Theory, And The Treadmill Of Production Of Value: Why Environmental Sociology Needs A Critique Of Capital, Alex Stoner

Journal Articles

This chapter explores the domestication of Marx’s critique of political economy within Marxist-oriented environmental sociology, and treadmill of production (ToP) theory, in particular. The aim is to explicate the theoretical resources for a rigorous critique of capital-induced planetary degradation. Shortcomings of ToP theory pertaining to the conceptualization of capital and value are identified. The reasons for these shortcomings, including how they might be addressed, are elaborated by reconsidering key aspects of Marx’s critical theory of modern capitalist society. The chapter contributes to current discussions in both critical theory and environmental sociology by demonstrating the continued relevance of Marx’s critical theory …

Perishable Goods Versus Re-Tradable Assets: A Theoretical Reappraisal Of A Fundamental Dichotomy, Sabiou M. Inoua, Vernon L. Smith

ESI Working Papers

Although various typologies of goods are commonly adopted in economics, one stood out in market experiment results contrasting market stability and efficiency with market instability: non-durable, or perishable, goods (Smith, 1962) versus durable re-tradable assets (Smith et al., 1988; Dickhaut et al., 2012; S. D. Gjerstad et al., 2015). This dichotomy of goods also proved central for understanding macroeconomic instability more broadly: about 75% of consumer spending is bought for final consumption, and is a rock of stability; instability arises from the other 25% re-tradable goods, most prominently, houses (S. D. Gjerstad & Smith, 2014). In this chapter, we revisit …

The Implications Of Covid-19 On Fear Of Financial Collapse, Alexis Reekie

Student Scholar Symposium Abstracts and Posters

By disrupting the general value paradigm, the typical hierarchy of values, individuals directly affected by the COVID-19 virus have realized an overall shift in perspective, indicating a need to understand the effects of the COVID-19 virus on one’s outlook regarding economic anxiety and fear of financial collapse. The possibility of a global health crisis reaching levels of devastation are certainly great and worth investigating. Throughout this research paper I worked to determine the correlation between fear of financial crises and individuals who have been affected by the COVID-19 virus. Utilizing the Chapman Survey of American Fears (FEAR survey) questions pertaining …

Life Satisfaction And Tax Morale In Azerbaijan: Mediating Role Of Institutional Trust And Financial Satisfaction, Orkhan Nadirov, Khatai Aliyev, Bruce Dehning, Ilaha Sharifzada, Rafiga Aliyeva

Accounting Faculty Articles and Research

This paper examines the relationship between life satisfaction (measured as the self-reported satisfaction of each individual with their past life and goal achievements) and tax morale (measured as the likelihood of an individual’s intrinsic motivation to pay taxes). Using a large-scale survey dataset from Azerbaijan, it is documented that life satisfaction is positively associated with tax morale. Life satisfaction plays a significant role in increasing tax compliance practices. It is also important to note that there is a positive mediating effect of life satisfaction on tax morale through financial satisfaction and institutional trust. In line with our hypotheses, the results …

Prosocial Option Increases Women’S Entry Into Competition, Alessandra Cassar, Mary L. Rigdon

ESI Publications

We provide evidence that women enter competitions at the same rate as men when the incentive for winning includes the option to share part of the rewards with the losers (i.e., when the incentive system is socially oriented). Using an experiment (with N = 238 subjects from three laboratories), we find that about 16% more men than women choose to compete in the standard tournament; this gender gap is eliminated in the socially oriented incentive treatment. While men’s choice to compete remains unchanged, at around 52% in both conditions, women increase their entry rate from 35% in the standard tournament …

Futurological Fodder: On Communicating The Relationship Between Artificial Intelligence, Robotics, And Employment, Michael E. Samers Dr

Geography Faculty Publications

This article examines the debate concerning the employment implications of the so-called ‘Fourth Industrial Revolution’ (FIR) or the increasing presence of artificial intelligence and robotics in workplaces. I analyze three ‘genres’ associated with this debate (academic studies including neo-classical and heterodox/post-human approaches, the ‘gray literature’, and popular media) and I argue that together they represent ‘futurological fodder’ or discourses and knowledges that ‘perform’ the FIR and its purported consequences. I contend further that these genres involve a complex mix of ethics and politics, and I conclude with a reflection on the political implications of the FIR debate.

Helminth Infection Is Associated With Dampened Cytokine Responses To Viral And Bacterial Stimulations In Tsimane Forager-Horticulturalists, India A. Schneider-Crease, Aaron D. Blackwell, Thomas S. Kraft, Melissa Emery Thompson, Ivan Maldonado Suarez, Daniel K. Cummings, Jonathan Stieglitz, Noah Snyder-Mackler, Michael Gurven, Hillard Kaplan, Benjamin C. Trumble

ESI Publications

Background

Soil-transmitted helminths (STHs) and humans share long co-evolutionary histories over which STHs have evolved strategies to permit their persistence by downregulating host immunity. Understanding the interactions between STHs and other pathogens can inform our understanding of human evolution and contemporary disease patterns. Methodology

We worked with Tsimane forager-horticulturalists in the Bolivian Amazon, where STHs are prevalent. We tested whether STHs and eosinophil levels—likely indicative of infection in this population—are associated with dampened immune responses to in vitro stimulation with H1N1 and lipopolysaccharide (LPS) antigens. Whole blood samples (n = 179) were treated with H1N1 vaccine and LPS and …

A Reassessment Of The Potential For Loss-Framed Incentive Contracts To Increase Productivity: A Meta-Analysis And A Real-Effort Experiment, Paul J. Ferraro, J. Dustin Tracy

ESI Working Papers

Substantial productivity increases have been reported when incentives are framed as losses rather than gains. Loss-framed contracts have also been reported to be preferred by workers. The results from our meta-analysis and real-effort experiment challenge these claims. The meta-analysis' summary effect size of loss framing is a 0.16 SD increase in productivity. Whereas the summary effect size in laboratory experiments is a 0.33 SD, the summary effect size from field experiments is 0.02 SD. We detect evidence of publication biases among laboratory experiments. In a new laboratory experiment that addresses prior design weaknesses, we estimate an effect size of 0.12 …

Beware The Gini Index! A New Inequality Measure, Sabiou M. Inoua

ESI Working Papers

The Gini index underestimates inequality for heavy-tailed distributions: for example, a Pareto distribution with exponent 1.5 (which has infinite variance) has the same Gini index as any exponential distribution (a mere 0.5). This is because the Gini index is relatively robust to extreme observations; while a statistic’s robustness to extremes is desirable for data potentially distorted by outliers, it is misleading for heavy-tailed distributions, which inherently exhibit extremes. We propose an alternative inequality index: the variance normalized by the second moment. This ratio is more stable (hence more reliable) for large samples from an infinite-variance distribution than the Gini index …

The Efficiency Of U.S. Public Space Utilization During The Covid-19 Pandemic, Seth G. Benzell, Avinash Collis, Christos Nicolaides

Economics Faculty Articles and Research

The COVID-19 pandemic has called for and generated massive novel government regulations to increase social distancing for the purpose of reducing disease transmission. A number of studies have attempted to guide and measure the effectiveness of these policies, but there has been less focus on the overall efficiency of these policies. Efficient social distancing requires implementing stricter restrictions during periods of high viral prevalence and rationing social contact to disproportionately preserve gatherings that produce a good ratio of benefits to transmission risk. To evaluate whether U.S. social distancing policy actually produced an efficient social distancing regime, we tracked consumer preferences …