Other Economics Commons^™

The Trouble With Basic: Price Distortion After Halliburton, Jill E. Fisch

All Faculty Scholarship

Many commentators credit the Supreme Court’s decision in Basic, Inc. v. Levinson, which allowed courts to presume reliance rather than requiring individualized proof, with spawning a vast industry of private securities fraud litigation. Today, the validity of Basic’s holding has come under attack as scholars have raised questions about the extent to which the capital markets are efficient. In truth, both these views are overstated. Basic’s adoption of the Fraud on the Market presumption reflected a retreat from prevailing lower court recognition that the application of a reliance requirement was inappropriate in the context of impersonal public …

Cognitive Systems For Revenge And Forgiveness, Michael E. Mccullough, Robert Kurzban, Benjamin A. Tabak

ESI Publications

Minimizing the costs that others impose upon oneself and upon those in whom one has a fitness stake, such as kin and allies, is a key adaptive problem for many organisms. Our ancestors regularly faced such adaptive problems (including homicide, bodily harm, theft, mate poaching, cuckoldry, reputational damage, sexual aggression, and the infliction of these costs on one's offspring, mates, coalition partners, or friends). One solution to this problem is to impose retaliatory costs on an aggressor so that the aggressor and other observers will lower their estimates of the net benefits to be gained from exploiting the retaliator in …

How Universal Is The Big Five? Testing The Five-Factor Model Of Personality Variation Among Forager-Farmers In The Bolivian Amazon, Michael Gurven, Christopher Von Rueden, Maxim Massenkoff, Hillard Kaplan, Marino Lero Vie

ESI Publications

The five-factor model (FFM) of personality variation has been replicated across a range of human societies, suggesting the FFM is a human universal. However, most studies of the FFM have been restricted to literate, urban populations, which are uncharacteristic of the majority of human evolutionary history. We present the first test of the FFM in a largely illiterate, indigenous society. Tsimane forager–horticulturalist men and women of Bolivia (n = 632) completed a translation of the 44-item Big Five Inventory (Benet-Martínez & John, 1998), a widely used metric of the FFM. We failed to find robust support for the FFM, based …

Recalibrational Emotions And The Regulation Of Trust-Based Behaviors, Eric Schniter, Timothy W. Shields

ESI Working Papers

Though individuals differ in the degree to which they are predisposed to trust or act trustworthy, we theorize that trust-based behaviors are universally determined by the calibration of conflicting short- and long-sighted behavior regulation programs, and that these programs are calibrated by emotions experienced personally and interpersonally. In this chapter we review both the main-stream and evolutionary theories of emotions that philosophers, psychologists, and behavioral economists have based their work on and which can inform our understanding of trust-based behavior regulation. The standard paradigm for understanding emotions is based on mapping their positive and negative affect valence. While Valence Models …

Commitment Problems In Conflict Resolution, Erik O. Kimbrough, Jared Rubin, Roman M. Sheremeta, Timothy W. Shields

ESI Working Papers

Commitment problems are inherent to non-binding conflict resolution mechanisms, since an unsatisfied party can ignore the resolution and initiate conflict. We provide experimental evidence suggesting that even in the absence of binding contractual agreements individuals often avoid conflict by committing to the outcome of a conflict resolution mechanism. Commitment problems are mitigated to a greater extent for groups who opt-in to the conflict resolution mechanism, but only when opting-in is costly. Although conflict rates are higher when opting-in is costly than when it is free or exogenously imposed, commitment problems are greatly reduced amongst those groups who choose to opt-in.

The Impact Of Competition On Prices With Numerous Firms, Xavier Gabaix, David Laibson, Deyuan Li, Hongyi Li

ESI Working Papers

We use extreme value theory (EVT) to develop insights about price theory. Our analysis reveals detail-independent equilibrium properties that characterize a large family of models. We derive a formula relating equilibrium prices to the level of competition. When the number of rms is large, markups are proportional to 1= (nF' [F^-1 (1- 1/n)], where F is the random utility noise distribution and n is the number of rms. This implies prices are pinned down by the tail properties of the noise distribution and that prices are independent of many other institutional details. The elasticity of the markup with respect to …

Prediction Markets In The Laboratory, Cary Deck, David Porter

ESI Working Papers

"The idea that there is wisdom from the collective has been forcefully described in “The Wisdom of the Crowds” by James Surowiecki, who argues that the aggregation of information in groups results in better decisions than those that are afforded by any single member of the group. Markets, like opinion polls, are one mechanism for aggregating disparate pieces of information. The aggregation properties of prices were first noted by Hayek (1945) and were formally examined by Muth (1961). In particular, Hayek argues that market prices serve the purpose of sharing and coordinating local and personal knowledge, while Muth shows that …

When Parity Promotes Peace: Resolving Conflict Between Asymmetric Agents, Erik O. Kimbrough, Roman M. Sheremeta, Timothy W. Shields

ESI Working Papers

Due to the high costs of conflict both in theory and practice, we examine and experimentally test the conditions under which conflict between asymmetric agents can be resolved. We model conflict as a two-agent rent-seeking contest for an indivisible prize. Before conflict arises, both agents may agree to allocate the prize by fair coin flip to avoid the costs of conflict. The model predicts that “parity promotes peace”: in the pure-strategy equilibrium, agents with relatively symmetric conflict capabilities agree to resolve the conflict by using a random device; however, with sufficiently asymmetric capabilities, conflicts are unavoidable because the stronger agent …

Cheap Talk With Two Audiences: An Experiment, Mikhail Drugov, Roberto Hérnan-Gonzalez, Praveen Kujal, Marta Troya Martinez

ESI Working Papers

In this paper we experimentally test strategic information transmission between one informed and two uninformed agents in a cheap-talk game. We find evidence of the "disciplining" effect of public communication as compared to private; however, it is much weaker than predicted by the theory. Adding a second receiver naturally increases the complexity of strategic thinking when communication is public. Using the level-k model, we exploit the within subject design to show how individuals decrease their level-k in public communication. Surprisingly, we find that individuals become more sophisticated when they communicate privately with two receivers rather than one.

Do Prediction Markets Aid Defenders In A Weak‐Link Contest?, Cary Deck, Li Hao, David Porter

ESI Working Papers

Laboratory experiments have demonstrated that prediction market prices weakly aggregate the disparate information of the traders about states (moves) of nature. However, in many practical applications one might want to predict the move of a strategic participant. This is particularly important in aggressor‐defender contests. This paper reports a set of such experiments where the defender may have the advantage of observing a prediction market on the aggressor’s action. The results of the experiments indicate that: the use of prediction markets does not increase the defender’s win rate; prediction markets contain reliable information regarding aggressors’ decisions, namely excess bid information, that …

Religious Identity And The Provision Of Public Goods: Evidence From The Indian Princely States, Latika Chaudhary, Jared Rubin

ESI Working Papers

Religious identity affects preferences and can consequently affect policy. We propose two mechanisms through which a ruler's religious identity can affect public good provision: i) greater provision of goods in regions where more subjects are the ruler's co-religionists, and ii) lower provision of goods where private markets provide a substitute to the ruler's co-religionists. Empirically, identifying the causal effect of religious identity on policy is often impossible, since the religious identity of rulers rarely changes over time and place. We address this problem by exploiting the variation in the religion of rulers in the Indian Princely States in the early …

The Organization Of Banking And Supervision, Introduction And Overview, Clas Wihlborg

Business Faculty Articles and Research

"The focus of this Special Issue is on organizational reforms in the financial sector in the aftermath of the financial crisis 2007-2009 and the subsequent euro-zone crisis. In particular, the perception that many banks were too big and too complex to fail during the crisis, which led to very costly bailouts at tax-payers expense in several countries, has fueled a number of proposals to limit the size and the complexity of financial institutions, as well as proposals to reorganize public authorities responsible for supervision and crisis management."

La Competitividad Y Sus Componentes: Hacia La Construcción De Un Índice De Competitividad Municipal, Ramiro Esqueda-Walle

Ramiro Esqueda-Walle

The Power Of Stereotyping And Confirmation Bias To Overwhelm Accurate Assessment: The Case Of Economics, Gender, And Risk Aversion, Julie A. Nelson

Julie A. Nelson

Behavioral research has revealed how normal human cognitive processes can tend to lead us astray. But do these affect economic researchers, ourselves? This article explores the consequences of stereotyping and confirmation bias using a sample of published articles from the economics literature on gender and risk aversion. The results demonstrate that the supposedly “robust” claim that “women are more risk averse than men” is far less empirically supported than has been claimed. The questions of how these cognitive biases arise and why they have such power are discussed, and methodological practices that may help to attenuate these biases are outlined.

The Evolution Of Environmental And Labour Productivity Dynamics, Massimiliano Mazzanti

Massimiliano Mazzanti

No abstract provided.

La Dolarización De La Economía Mexicana En La Etapa De Apertura Comercial, Vicente German-Soto, Oliver J. Sifuentes Herrera

Vicente German-Soto

An Empirical Exploration Of The Effects Of Medical Marijuana Laws, Ben Ehrens

Economics Theses

This exploration into the multiple effects of medical marijuana laws on regional marketplaces uses a novel data set and contributes three unique and important findings. First, in states with medical marijuana legislation the price of marijuana is significantly lower than states without similar legislation, this is likely due to measures that allow for legalized avenues of production and distribution. Secondly, because of price breaks for bulk purchases, retail level distributers operate on a downward sloping supply curve that is less steep in medical marijuana states; this is likely due to decreased risk of distribution which may reduce preference for lower …

Salary Determination In The National Hockey League: Restricted, Unrestricted, Forwards, And Defensemen, Kevin Peck

Honors Theses

This thesis will attempt to estimate the relationships between salary and measures of the marginal productivity of hockey players, or performance indicators. Salary determination, as in most other sports leagues, is determined in a labor market. Each player has a marginal revenue product of labor (MRPL) and this MRPL varies from player to player, and from team to team. Firms, in this case teams, seek to add players with a high MRPLin order to increase the quantity and quality of product they sell, in this case wins. Among other things, a player has a MRPLthat will equate to the additional …

Modernization, Sexual Risk-Taking, And Gynecological Morbidity Among Bolivian Forager-Horticulturalists, Jonathan Stieglitz, Aaron D. Blackwell, Raúl Quispe Gutierrez, Edhitt Cortez Linares, Michael Gurven, Hillard Kaplan

ESI Publications

Sexual risk-taking and reproductive morbidity are common among rapidly modernizing populations with little material wealth, limited schooling, minimal access to modern contraception and healthcare, and gendered inequalities in resource access that limit female autonomy in cohabiting relationships. Few studies have examined how modernization influences sexual risk-taking and reproductive health early in demographic transition. Tsimane are a natural fertility population of Bolivian forager-farmers; they are not urbanized, reside in small-scale villages, and lack public health infrastructure. We test whether modernization is associated with greater sexual risk-taking, report prevalence of gynecological morbidity (GM), and test whether modernization, sexual risk-taking and parity are …

Waste Dynamics, Country Heterogeneity And The European Environmental Policy Effectiveness, Massimiliano Mazzanti

Massimiliano Mazzanti

No abstract provided.