Other Economics Commons^™

Deception And Reception: The Behavior Of Information Providers And Users, Roman M. Sheremeta, Timothy W. Shields

ESI Working Papers

We investigate the behavior of information providers (underwriters) and users (investors) in a controlled laboratory experiment where underwriters have incentives to deceive and investors have incentives to avoid deception. Participants play simultaneously as underwriters and investors in one-shot information transmission games. The results of our experiment show a significant proportion of both deceptive and non-deceptive underwriters. Despite the presence of deceptive underwriters, investors are receptive to underwriters’ reports, gleaning information content, albeit overly optimistic. Within our sample, deception by underwriters and reception by investors are the most profitable strategies. Moreover, participants who send deceptive reports to investors, but at the …

Monitoring Institutions In Indefinitely Repeated Games, Gabriele Camera, Marco Casari

ESI Working Papers

Does monitoring past conduct facilitate intertemporal cooperation? We designed an experiment characterized by strategic uncertainty and multiple equilibria where coordinating on the efficient outcome is a challenge. Participants, interacting anonymously in a group, could pay a cost either to obtain information about their counterparts, or to create a freely available public record of individual conduct. Both monitoring institutions were actively employed. However, groups were unable to attain higher levels of cooperation compared to a treatment without monitoring. Information about past conduct alone thus appears to be ineffective in overcoming coordination challenges.

Targeted Campaign Competition, Loyal Voters, And Supermajorities, Pierre C. Boyer, Kai A. Konrad, Brian Roberson

ESI Working Papers

We consider campaign competition in which candidates compete for votes among a continuum of voters by engaging in persuasive efforts that are targetable. Each individual voter is persuaded by campaign effort and votes for the candidate who targets more persuasive effort to this voter. Each candidate chooses a level of total campaign effort and allocates their effort among the set of voters. We completely characterize equilibrium for the majoritarian objective game and compare that to the vote-share maximizing game. If the candidates are symmetric ex ante, both types of electoral competition dissipate the rents from once in expectation. However, the …

Rulers, Religion, And Riches: Why The West Got Rich And The Middle East Did Not, Jared Rubin

Economics Faculty Books and Book Chapters

For centuries following the spread of Islam, the Middle East was far ahead of Europe. Yet, the modern economy was born in Europe. Why was it not born in the Middle East? In this book Jared Rubin examines the role that Islam played in this reversal of fortunes. It argues that the religion itself is not to blame; the importance of religious legitimacy in Middle Eastern politics was the primary culprit. Muslim religious authorities were given an important seat at the political bargaining table, which they used to block important advancements such as the printing press and lending at interest. …

The Paradox Of Power: Principal-Agent Problems And Fiscal Capacity In Absolutist Regimes, Debin Ma, Jared Rubin

ESI Working Papers

Tax extraction in Qing China was low relative to Western Europe. It is not obvious why: China was much more absolutist and had stronger rights over property and people. Why did the Chinese not convert their absolute power into revenue? We propose a model, supported by historical evidence, which suggests that i) the center could not ask its tax collecting agents to levy high taxes because it would incentivize agents to overtax the peasantry; ii) the center could not pay agents high wages in return for high taxes because the center had no mechanism to commit to refrain from confiscating …

Coordination When There Are Restricted And Unrestricted Options, Shaun P. Hargreaves Heap, David Rojo Arjona, Robert Sugden

Economics Faculty Articles and Research

One might expect that, in pure coordination games, coordination would become less frequent as the number of options increases. Contrary to this expectation, we report an experiment which found more frequent coordination when the option set was unrestricted than when it was restricted. To try to explain this result, we develop a method for eliciting the general rules that subjects use to identify salient options in restricted and unrestricted sets. We find that each such rule, if used by all subjects, would generate greater coordination in restricted sets. However, subjects tend to apply different rules to restricted and unrestricted sets.

Human Grooming In Comparative Perspective: People In Six Small-Scale Societies Groom Less But Socialize Just As Much As Expected For A Typical Primate, Adrian V. Jaeggi, Karen Kramer, Raymond Hames, Evan J. Kiely, Cristina Gomes, Hillard Kaplan, Michael Gurven

ESI Publications

Objectives—Grooming has important utilitarian and social functions in primates but little is known about grooming and its functional analogues in traditional human societies. We compare human grooming to typical primate patterns to test its hygienic and social functions.

Materials and Methods—Bayesian phylogenetic analyses were used to derive expected human grooming time given the potential associations between grooming, group size, body size, terrestriality, and several climatic variables across 69 primate species. This was compared against observed times dedicated to grooming, other hygienic behavior and conversation among the Maya, Pumé, Sanöma, Tsimane’, Yanomamö, and Ye’kwana (mean number of behavioral scans …

Deliberation Favours Social Efficiency By Making People Disregard Their Relative Shares: Evidence From Usa And India, Valerie Capraro, Brice Corgnet, Antonio M. Espín, Roberto Hernán-González

ESI Publications

Groups make decisions on both the production and the distribution of resources. These decisions typically involve a tension between increasing the total level of group resources (i.e. social efficiency) and distributing these resources among group members (i.e. individuals’ relative shares). This is the case because the redistribution process may destroy part of the resources, thus resulting in socially inefficient allocations. Here we apply a dual-process approach to understand the cognitive underpinnings of this fundamental tension. We conducted a set of experiments to examine the extent to which different allocation decisions respond to intuition or deliberation. In a newly developed approach, …

Investing In The Presence Of Massive Flows, Terence C. Burnham, Harry Gakidis, Jeffrey Wurgler

ESI Working Papers

Approximately $10 trillion is benchmarked to Morgan Stanley Capital International’s Developed, Emerging, Frontier, and standalone market indexes. Reclassifications from one index to another require thousands of investors to decide how to react. We study a comprehensive sample of past reclassifications to guide this decision. Reclassified markets’ prices substantially overshoot between the announcement and effective dates—prices fall when a market moves from an index with more benchmarked ownership to one with less, such from Emerging to Frontier, and vice-versa—but revert within a year. We identify alpha-maximizing responses to reclassifications for both tightly benchmarked and more flexible investors.

Fdi And Income Inequality In Latin America, Terese Coulon

Empirical Economic Bulletin, An Undergraduate Journal

The main purpose of this paper is to determine the relationship between FDI and income inequality in Latin America after Operation Condor. This study uses economic panel data from seven different Latin American countries over a sixteen year time period. This study takes place from 1982 to 1997. Other variables have been included in this study to achieve the most accurate results possible. The results from this study show that FDI is significant to income inequality at the 5% significance level in Latin America during this time period. Also, the results indicate that FDI has a positive effect on income …

Are Education And Economic Growth Related? Some Evidence From The States, R. W. Hafer

Center for Applied Economics

It seems common sense that the more educated someone is, the greater the chances that they will have relatively higher incomes. Indeed, on average someone with a college degree is more likely will have a higher lifetime stream of earnings than someone who only graduates from high school. Does this same relationship hold at the state level? Are states with better education outcomes also the states that tend to grow faster? More specifically, what does the evidence on Missouri’s educational achievement predict for the state’s economic future?

We investigate whether differences in economic growth across states are in part explainable …

Income Inequality In Latin America And The Caribbean: Inefficient Labor Markets And Remnants Of Racism, Vivian Tejada

Empirical Economic Bulletin, An Undergraduate Journal

This paper aims to explore the key reasons as to why income inequality in Latin America is so vast. The study will investigate the various manners in which labor markets operate throughout Latin America and attempt to draw a connection between labor market inefficiency and income inequality keeping in mind the regions tumulus history with racism. Factors considered in this assessment are rate of income levels, unemployment, GDP p/capita, educational attainment, and age of labor force. The factors are accounted for in a regression model to examine the level of influence labor markets and race have on income inequality.

Effects Of Drought Conditions On Agricultural Productivity In Central And Western Tennessee, Sean Erwin

Empirical Economic Bulletin, An Undergraduate Journal

This paper analyzes the relationship between agricultural productivity of farms in drought conditions. The variables used in this research include fertilizer expense, precipitation totals, and average temperature. The model integrates all of the mentioned variables and finds the connection between the land value of farms and the variables. The outcomes show that both fertilizer expense and precipitation have negative relationships to land values for farms, while average temperature has a positive relationship.

Fiscal Policy And Its Effects On Economic Growth, Jordan J. Smith

Empirical Economic Bulletin, An Undergraduate Journal

This paper investigates the impact of fiscal policy on economic growth during the time horizons of 1985, 1998, and 2014. Using cross country data from a minimum of 37 countries, it is found that international trade taxes share a partial correlation with economic growth. The magnitude of this relationship is found to be positive during all time horizons, and is diminishing over time. Estimates from 2014 suggest that a 10 percentage point increase in a country’s international trade tax will grant that country a .6% increase to their economic growth rate.

An Empirical Analysis On The Effects Of Fbs College Football Success On Undergraduate Enrollment From 2000 To 2014, Liam Rice

Empirical Economic Bulletin, An Undergraduate Journal

This paper investigates the theoretical connection between FBS College Football success and the undergraduate enrollment of schools in the Northeastern United States. With multiple texts qualitatively discussing the positive effects a winning football culture has on the amount of applicants an institution receives, this study attempts, using panel data, to discover quantitative connections in this field. Utilizing data from over 19 FBS colleges and universities from 2000 to 2014, this study finds that there is a significant, positive connection between undergraduate application rates and football wins, as well as championships. This study lays the foundation for future studies into the …

Does Economic Freedom Promote Standard Of Living Across Countries With Different Income Levels?, George Ossei

Empirical Economic Bulletin, An Undergraduate Journal

This paper investigates the possibility of a relationship between economic freedom and standard of living across countries with different income classifications. The study incorporates population with access to improved water supply sources, sanitation facilities, electricity and the internet, as well as foreign aid into the Kosack model of aid effectiveness. This is done in order to examine their effects on HDI.

Factors That Influence Economic Growth In Brics Member Countries And Oecd Developed Countries: A Panel Data Analysis, Xuran Zhang

Empirical Economic Bulletin, An Undergraduate Journal

This paper investigates the factors that affect economic growth in developed nations, such as the U.S., the United Kingdom, France, Germany, Australia and others. It also includes developing countries such as Brazil, Russia, India, China and South Africa (BRICS). This study incorporates several independent variables to examine their influence on economic growth in these two groups of nations. The study looks at contributing factors for economic growth, such as life expectancy, primary education, secondary education, expected import, expected export, population growth rate, FDI level, and public expenditure, using macro-level data from two sources: the World Bank and the Organization of …

The Effects Of Foreign Aid On Income Inequality In Africa, Sierra Moore

Empirical Economic Bulletin, An Undergraduate Journal

This paper examines the correlation between donations of foreign aid given to African countries and the income inequality, measured using the Gini coefficient, within those countries. A panel method is used in order to analyze trends in a number of countries over a period of time. The independent variables in this study are official developmental assistance, income group, inflation measured by CPI, polity, GDP per capita growth, and population growth. The results of this study show a negative relationship between foreign aid and income inequality, which is consistent with recent studies on the effectiveness of aid.

The Effects Of Tax Rates, Technology, And Quality Of Life On Standard Of Living In Developed Countries, Benjamin Jackson

Empirical Economic Bulletin, An Undergraduate Journal

This paper investigates the relationship between tax rates, technology, and the quality of life on the standard of living in developed countries over time. The study uses an econometric model to understand and quantify these relationships. Standard of living will be measured by PPP GDP in this study. The results show the most significant variables that impact the standard of living are life expectancy at birth, openness to trade, the domestic savings rate, and corruption.

Education Spending And The Lottery In The Western United States: A Panel Data Analysis, Erica Vendituoli

Empirical Economic Bulletin, An Undergraduate Journal

This paper investigates the relationship between the existence of a state lottery and state education spending. When consumers participate in the lottery, it is often with the assumption that even if they lose, their money will be contributed to state funded programs like education. This study looks at ten states in the west that have a variety of lottery circumstances. Both education expenditure as a percent of total state expenditure and per pupil aid are used to measure education funding. This research also incorporates multiple independent variables to fully capture the determinants of education spending. The results of this study …