Economic Theory Commons^™

Intertemporal Choice Experiments And Large-Stakes Behavior, Diego Aycinena, Szabolcs Blazsek, Lucas Rentschler, Charles Sprenger

ESI Working Papers

Intertemporal choice experiments are increasingly implemented to make inference about discounting and marginal utility, yet little is known about the predictive power of resulting measures. This project links standard experimental choices to a decision on the desire to smooth a large-stakes payment | around 10% of annual income | through time. In a sample of around 400 Guatemalan Conditional Cash Transfer recipients, we find that preferences over large-stakes payment plans are closely predicted by experimental measures of patience and diminishing marginal utility. These represent the first findings in the literature on the predictive content of such experimentally elicited measures of …

Friedrich Hayek On Monetary And Banking Systems Reforms, Adrian Ravier

Journal of New Finance

Throughout his life, Friedrich Hayek worked towards prescribing a monetary policy under which the world economy would again enjoy the stability it had known under the classical international gold standard system. This paper presents three banking and monetary systems that were pivotal in the history of banking and closely scrutinized by Hayek. The paper outlines those systems, summarizes Hayek’s comments on each and then discusses the recent literature on the subject in the light of Hayek’s influence.

Evidence For Height And Immune Function Trade-Offs Among Preadolescents In A High Pathogen Population, Angela R. Garcia, Aaron Blackwell, Benjamin C. Trumble, Jonathan Stieglitz, Hillard Kaplan, Michael Gurven

ESI Publications

Background

In an energy-limited environment, caloric investments in one characteristic should trade-off with investments in other characteristics. In high pathogen ecologies, biasing energy allocation towards immune function over growth would be predicted, given strong selective pressures against early-life mortality.

Methodology

In the present study, we use flow cytometry to examine trade-offs between adaptive immune function (T cell subsets, B cells), innate immune function (natural killer cells), adaptive to innate ratio and height-for-age z scores (HAZ) among young children (N = 344; aged 2 months–8 years) in the Bolivian Amazon, using maternal BMI and child weight-for-height z scores (WHZ) as …

Multiplex Network Ties And The Spatial Diffusion Of Radical Innovations: Martin Luther’S Leadership In The Early Reformation, Sascha O. Becker, Yuan Hsiao, Steven Pfaff, Jared Rubin

ESI Publications

This article analyzes Martin Luther’s role in spreading the early Reformation, one of the most important episodes of radical institutional change in the last millennium. We argue that social relations played a key role in its diffusion because the spread of heterodox ideologies and their eventual institutionalization relied not only on private “infection” through exposure to innovation but also on active conversion and promotion of that new faith through personal ties. We conceive of that process as leader-to-follower directional influence originating with Luther and flowing to local elites through personal ties. Based on novel data on Luther’s correspondence, Luther’s visits, …

A Defense And Expansion Of The Theory Of Capitalist Ground Rent: Speculation, Securitization, And Struggles Over Land And Housing, Francesca Manning

Dissertations, Theses, and Capstone Projects

Why are the rents so high? Who is responsible for homelessness, for urban and rural displacement? How can these problems be combatted?

Recent literature addressing these questions has pointed to gentrification and the financialization of land and housing, faulted financialized landlords, hedge funds, and the irredeemable logic of finance, and pointed to the importance of land and housing regulation to prevent displacement.

However, theories of displacement—in both land and housing, on both urban and rural terrain—suffer from a lack of an underlying theory of the logic, tendencies, and limits of ground rent extraction in capitalism.

This dissertation develops a theory …

Order On Types Based On Monotone Comparative Statics, Takashi Kunimoto, Takuro Yamashita

Research Collection School Of Economics

This paper introduces a novel concept of orders on types by which the so-called monotone comparative statics is valid in all supermodular games with incomplete information. We fully characterize this order in terms of what we call common optimism, providing a sense in which our order has a sharp epistemic interpretation. We say that type ti′ is higher than type ti in the order of the common optimism if ti′ is more optimistic about state than ti; ti′ is more optimistic that all players are more optimistic about state than ti; and so on, ad infinitum. First, we show that …

Menu-Dependent Food Choices And Food Waste, Hongxing Liu, Joaquín Gómez-Miñambres, Danyi Qi

ESI Working Papers

We use a combination of randomized field experiments and online surveys to test how the menu design affects food choices and food waste. In our field experiment, participants face one of two menus: a narrow menu that only displays a small portion of food, or a broad menu that also contains bigger portions. While all options are equally available in both menus, they differ in how easy and fast the different choices can be made. Our results show that, compared to the broad menu, participants in the narrow menu ordered smaller portions of food. Importantly, food intake was similar across …

A Notion Of Prominence For Games With Natural-Language Labels, Alessandro Sontuoso, Sudeep Bhatia

ESI Working Papers

We study games with natural-language labels (i.e., strategic problems where options are denoted by words), for which we propose and test a measurable characterization of prominence. We assume that – ceteris paribus – players find particularly prominent those strategies that are denoted by words more frequently used in their everyday language. To operationalize this assumption, we suggest that the prominence of a strategy-label is correlated with its frequency of occurrence in large text corpora, such as the Google Books corpus (“n-gram” frequency). In testing for the strategic use of word frequency, we consider experimental games with different incentive structures (such …

A Simple, Ecologically Rational Rule For Settling Found Property Disputes, Bart J. Wilson

ESI Publications

Who has property in a found item X, which is contained in Y? The finder of X or the person who has property in Y? The common law says it depends. It depends upon whether the owner of Y knew about X, or whether X was lost or mislaid, or how small the weight of X is relative to Y (as compared to its value), or whether the finder was an employee of the owner of Y, to name just a few. Wilson (2020) hypothesizes that humans universally cognize property as being contained in a …

Trust And Trustworthiness In Procurement Contracts With Retainage, Matthew J. Walker, Elena Katok, Jason Shachat

ESI Working Papers

In complex procurement projects, it is difficult to write enforceable contracts that condition price upon quality. Supplier non-performance becomes an acute risk, particularly when there is intense competition for the contract. An established incentive mechanism used to mitigate the problem of supplier non-performance is retainage, in which the buyer sets aside a portion of the purchase price. After project completion, the buyer determines the amount of retainage that is released to the seller, considering any defects that arise. While generally a feasible contract form to implement, the practical difficulties in assessing completion introduce a moral hazard for the buyer. We …

Consistent Differences In A Virtual World Model Of Ape Societies, Bart J. Wilson, Sarah F. Brosnan, Elizabeth V. Lonsdorf, Crickette M. Sanz

ESI Publications

Practical and ethical constraints limit our ability to experimentally test socioecological theory in wild primates. We took an alternate approach to model this, allowing groups of humans to interact in a virtual world in which they had to find food and interact with both ingroup and outgroup avatars to earn rewards. We altered ratios and distributions of high- and low-value foods to test the hypothesis that hominoids vary with regards to social cohesion and intergroup tolerance due to their feeding ecology. We found larger nesting clusters and decreased attacks on outgroup competitors in the Bonobo condition versus the Chimpanzee condition, …

The Impact Of The Covid-19 Pandemic On Economic Behaviours And Preferences: Experimental Evidence From Wuhan, Jason Shachat, Matthew J. Walker, Lijia Wei

ESI Working Papers

We examine how the emergence of Covid-19 in Wuhan, and the ramifications of associated events, influence pro-sociality, trust and attitudes towards risk and ambiguity. We assess these influences using an experiment consisting of financially incentivized economic tasks. We establish causality via the comparison of a baseline sample collected pre-epidemic with five sampling waves starting from the imposition of a stringent lock- down in Wuhan and completed six weeks later. We find significant long-term increases - measured as the difference between the baseline and final wave average responses - in altruism, cooperation, trust and risk tolerance. Participants who remained in Wuhan …

Does Free Information Provision Crowd Out Costly Information Acquisition? It’S A Matter Of Timing, Diego Aycinena, Alexander Elbittar, Andrei Gomberg, Lucas Rentschler

ESI Working Papers

We consider the issue of how timing of provision of additional information affects information-acquisition incentives. In environments with costly attention, a sufficiently confident agent may choose to act based on the prior, without incurring those costs. However, a promise of additional information in the future may be used to encourage additional attentional effort. This may be viewed as a novel empirical implication of rational inattention. In a lab experiment designed to test this theoretical prediction, we show that promise of future “free” information induces subjects to acquire information which they would not be acquiring without such a promise.

Predictors Of Social Distancing And Mask-Wearing Behavior: Panel Survey In Seven U.S. States, Plamen Nikolov, Andreas Pape, Ozlem Tonguc, Charlotte Williams

Economics Faculty Scholarship

This paper presents preliminary summary results from a longitudinal study of participants in seven U.S. states during the COVID-19 pandemic. In addition to standard socio-economic characteristics, we collect data on various economic preference parameters: time, risk, and social preferences, and risk perception biases. We pay special attention to predictors that are both important drivers of social distancing and are potentially malleable and susceptible to policy levers. We note three important findings: (1) demographic characteristics exert the largest influence on social distancing measures and mask-wearing, (2) we show that individual risk perception and cognitive biases exert a critical role in influencing …

New Kid On The Blockchain: The Rise Of Cryptocurrency In The Global Arena: Humanitarian Usage With Blockchain, Rhonda S. Binda

Open Educational Resources

In 2018, the world was shaken by the fast rise of Bitcoin and other cryptocurrencies that use a decentralized, blockchain technology for payment transfers outside of the traditional banking system. The potential impact this alternative form of banking could have in the medium and long term on the over 2 billion people globally unbanked is tremendous. Additionally, blockchain itself is being used for value transfer combined with bio and genetic tagging technologies in refugee camps for example, bringing to rise a new era where technology for development is disrupting education, healthcare and security programs globally.

Mechanisms Study: Using Game Theory To Assess The Effects Of Social Norms And Social Networks On Adolescent Smoking In Schools—Study Protocol, Ruth F. Hunter, Felipe Montes, Jennifer M. Murray, Sharon C. Sanchez-Franco, Shannon C. Montgomery, Joaquín Jaramillo, Christopher Tate, Rajnish Kumar, Laura Dunne, Abhijit Ramalingam, Erik O. Kimbrough, Erin Krupka, Huiyu Zhou, Laurence Moore, Linda Bauld, Blanca Llorente, Olga L. Sarmiento, Frank Kee

Economics Faculty Articles and Research

This proof of concept study harnesses novel transdisciplinary insights to contrast two school-based smoking prevention interventions among adolescents in the UK and Colombia. We compare schools in these locations because smoking rates and norms are different, in order to better understand social norms based mechanisms of action related to smoking. We aim to: (1) improve the measurement of social norms for smoking behaviors in adolescents and reveal how they spread in schools; (2) to better characterize the mechanisms of action of smoking prevention interventions in schools, learning lessons for future intervention research. The A Stop Smoking in Schools Trial (ASSIST) …

Data For "Consistent Differences In A Virtual World Model Of Ape Societies", Bart J. Wilson, Sarah F. Brosnan, Elizabeth V. Lonsdorf, Crickette M. Sanz

Business and Economics Faculty Data Sets

The zip file contains the data for the paper entitled "Consistent Differences in a Virtual World Model of Ape Societies" which appears in Scientific Reports.

The Property Species: Mine, Yours, And The Human Mind, Bart J. Wilson

Economics Faculty Books and Book Chapters

"Arguing that neither the sciences nor the humanities synthesizes a full account of property, the book offers a cross-disciplinary compromise that is sure to be controversial: Property is a universal and uniquely human custom. Integrating cognitive linguistics with philosophy of property and a fresh look at property disputes in the common law, the book makes the case that symbolic-thinking humans locate the meaning of property within a thing. That is, all human beings and only human beings have property in things, and at its core, property rests on custom, not rights. Such an alternative to conventional thinking contends that the …

Essays On Climate Change-Related Extreme Events, Alvin E. Harris

Dissertations

There are increasing and urgent calls for global economies to join in the fight against the impacts of climate change (World Bank, 2020). With reports such as the World Bank (2020) of climate change costing billions of dollars in losses for economies, the purpose of my dissertation is to examine the effects of climate change-related extreme events and their potential economic effects in three areas: agriculture, migration, and the labor market.

My first essay focuses on the factors that influence farmers’ perception of risk and adaptive strategies against the effects of climate change-related extreme events. I examine whether farmers’ social …

Opportunity Cost, Inattention And The Bidder's Curse, David J. Freeman, Erik O. Kimbrough, J. Philipp Reiss

Economics Faculty Articles and Research

Auction winners sometimes suffer a “bidder’s curse”, paying more for an item at auction than the fixed price charged for an identical item by other sellers. This seemingly irrational behavior is puzzling because the information necessary to avoid overpaying would appear to be readily available to bidders, yet they seem to ignore it. To understand this behavior, we consider the bidders’ decisions whether to acquire information about the fixed price before bidding, in the presence of opportunity costs. Our theory introduces costly information acquisition into an auction model, with a fixed price aftermarket selling an identical good. When information about …