Bundling and Optimal Auctions of Multiple Products

We study the optimal ( i.e. revenue maximizing) auction of multiple products. We make three major points. First, we extend the relationship between price discrimination and optimal auctions from the single-product case to the multiple-product case. A monopolist setting prices for multiple products may offer discounts on purchases of bundles of products; similarly, the optimal auction of multiple products facilitates price discrimination by allocating products inefficiently to customers who are willing to purchase both products. Second, we demonstrate that optimal auctions are qualitatively distinct from monopoly sales of multiple products. Because of uncertainty about the values of other consumers, two products are bundled probabilistically in an optimal auction for a customer who is willing to buy both of them. A customer may then receive a discount on a lower-valued product without receiving a higher-valued product. Third, we show that in an optimal auction of two products the allocation of one product may vary with the amount of competition for the other product.     

Corruption and culture: An experimental analysis

Why do some people choose corruption over honesty and others not? Do the social norms and values prevailing in the societies in which they grew up affect their decisions? In 2005, we conducted a bribery experiment and found that, among undergraduates, we could predict who would act corruptly with reference to the level of corruption in their home country. Among graduate students we could not. In 2007, we replicated our result and also found that time spent in the UK was associated with a decline in the propensity to bribe, although this does not explain our inability to predict graduate behaviour. We conclude that, while corruption may, in part, be a cultural phenomenon, individuals should not be prejudged with reference to their country of origin.     

The intertemporal substitution effect of government purchases on the interest rate: Empirical estimates for the Netherlands

In an intertemporal equilibrium setting, temporary government purchases may affect the real interest rate. A temporary change in the level of government spending does not affect the optimal intertemporal allocation of rational consumers, who will therefore try to maintain their consumption plans. Assuming no change in the supply of goods, there is an excess demand for goods and in a closed economy the real interest rate has to rise to maintain equilibrium at the goods market. In this paper it is examined whether predictions of intertemporal substitution models hold up to the experience of the Netherlands. We extend Barro's empirical work in three ways. First, we construct a new measure of temporary government outlays. Second, we take the time series behaviour of the data concerned into account and employ a less restrictive specification for the equation to be estimated. Third, we examine the intertemporal substitution effect of government purchases onreal interest rates. Our results provide only mixed support for the hypothesis that temporary government purchases raise real interest rates. It turns out that only temporary military outlays affect the nominal and real interest rate.     

Individualism and the adoption of clean energy technology

Why do 20% of Swedes report having adopted a clean energy system while the corresponding share of Spaniards equals 0.4%? Using data for about 25,000 individuals across 33 countries, this study tests which cultural trait, individualism or collectivism, is associated with greater levels of clean technology adoption. Our fractional probit estimates suggest that individualistic individuals are more inclined to adopt clean energy systems for home and transport purposes. In particular, the adoption probability rises by an estimated 2% if a person exhibits individualistic values. This finding is not driven by country-specific tax or subsidy policies or market-specific determinants and is robust to controlling for individual and household characteristics, attitudes, social and personal norms and other significant dimensions of cultural differences. The results, therefore, facilitate an understanding of how the decision to adopt clean energy technologies can be driven by cultural factors.     

Native–immigrant employment differentials in The Netherlands: the role of assimilation and discrimination

This article presents an empirical analysis of the employment probabilities of immigrant men from The Netherlands' Antilles, Surinam, Turkey and Morocco living in The Netherlands. The main themes are the roles of assimilation and discrimination. The findings indicate that assimilation contributes significantly to the employment opportunities of the Antilleans and Turks. They also suggest that discrimination against the Surinamese and Turks is responsible for a substantial proportion of their employment gap with natives.     

Which norms are strong reciprocators supposed to enforce? Not all norms are psychologically the same

Gintis’ (2000) analysis of strong reciprocity in terms of group survival leads to the conclusion that any norm, be it cooperative or prudential, that potentially enhances group survival will be enforced by a significant subset of individuals (strong reciprocators) who enforce norms even at their own individual expense. Gintis’ assumption that the human mind is an initially structureless receptacle for cultural norms further reinforces this view. In contrast, I argue that humans possess a natural domain-specific competence for social cooperation that is distinct from our prudential competence in dealing with potential hazards. I review a range of psychological evidence including multidimensional scaling studies, studies of emotional reactions, reasoning, functional MRI and judgments about punishment suggesting that not all norms are psychologically equivalent, with only a subset of norm violations eliciting punitive sentiments.     

A technology replacement model with variable market potential — An empirical study of CRT and LCD TV

The rapidly changing economic environment and increasingly fierce competition indicate that companies must innovate in both their products and marketing strategies if they are to continue to flourish. Specifically, the ability to accurately predict the demand for products is crucial when firms decide to allocate their resources, especially in the fast moving high technology industries, where there is very high investment in R&D and production facilities. This study establishes a forecast model for technology replacement based on the diffusion model with population growth used for the variable market potential. The proposed model is then applied to investigate the CRT and LCD TV market.The results suggest that the new model is more accurate than the constant market potential model in fitting and forecasting performance. Consumers who purchase a TV for the first time are likely more attracted to LCD TV rather than CRT TV. As for those individuals who already own a CRT TV, the attraction is not strong enough to encourage them to replace their current CRT TV with a new LCD TV. Moreover, it is noted that the falling price of LCD TV is an essential factor in encouraging purchases.     

Public Preferences and Private Choices: Effect of Altruism and Free Riding on Demand for Environmentally Certified Pork

Sales of private goods with affiliated public good attributes have markedly risen in recent years. This fact is difficult to explain within the paradigm of purely self-interested behavior. This paper investigates factors influencing consumer demand for pork products with certifications related to the environment, animal welfare, and antibiotics. Using psychometric scaling techniques, we measure individuals’ degree of altruism and propensity toward free riding. Results of a random parameter logit model applied to choice data obtained from a nationwide survey in the United States indicates that more altruistic individuals are willing to pay more for pork products with public good attributes than less altruistic individuals and free riders. These results indicate that private purchases of goods with public-good attributes are not simply a result of individuals’ perceptions of the ability to mitigate private risks such as food safety, but that individuals are making private choices to affect public outcomes. Results have implications for policy makers weighing the relative costs and benefits of food labeling policies versus bans related to certain livestock production practices.     

Tax evasion and tax morale: A social network analysis

We study the effects of tax morale and social norms on tax evasion when individuals interact in a network. We present a model that incorporates incentives for tax compliance in the form of punishment and fines, tax morale, and reputation for social behaviour. We assume that individuals adjust their tax morale by observing the neighbours' tax morale. We simulate the model for different values of the parameters and show that the steady-state share of taxpayers as opposed to tax-evaders is affected by the probability of finding like-minded peers in the reference group (network integration), the weight that individuals attribute to reputation, and the share of individuals who update their tax morale. Last, we consider the possibility of a fiscal authority using the knowledge of the network structure and targeting ‘central’ individuals. We show that by positively affecting the tax morale of individuals whose influence within the network is high, a fiscal authority can increase tax compliance.     

Cultural determinants of human capital accumulation: Evidence from the European Social Survey

Although economists commonly view the accumulation of human capital as a key driver of economic development, what drives cross-country differences in human capital accumulation remains poorly understood. I use an epidemiological approach involving second-generation migrants to test for a possible cultural gradient in individuals’ propensity towards human capital accumulation. Results indicate a strong relationship between country-of-origin culture and human capital accumulation and are robust to using years of education instead of individuals’ engagement in human capital accumulation as the dependent variable. Drawing on dimensions of cultural differences identified in culture frameworks developed by cross-cultural researchers, results further suggest that cultural emphasis on intellectual autonomy helps explain part of the observed differences in human capital accumulation. However, further work is needed to complete our understanding of the cultural roots of individuals’ propensity towards human capital accumulation.     

Complexity and biases

We examine experimentally how complexity affects decision-making, when individuals choose among different products with varying benefits and costs. We find that complexity in costs leads to choosing a high-benefit product, with high costs and overall lower payoffs. In contrast, when complexity is in the benefits of the product, we cannot reject the hypothesis of random mistakes. We also examine the role of heterogeneous complexity. We find that individuals still (mistakenly) choose the high-benefit but costly product, even if cheaper and simple products are available. Our results suggest that salience is a main driver of choices under different forms of complexity.     

On the historical roots of women's empowerment across Italian provinces: religion or family culture?

Why do women's economic decision-making and political empowerment vary so widely? What are the main potential determinants of such variations? Over a cross-section of Italian provincial data, we analyze the association between two specific facets of women's empowerment, the percentage of women holding office in local political bodies and the percentage of women in high-ranking jobs, and the religious and cultural conditions which facilitate or hinder women's inclusion. Our hypothesis is that culture, in particular those values embodied by religious culture, plays a central role in shaping norms and beliefs about the role and involvement of women in society. Moreover we suggest that these cultural norms are inherited from the past and therefore have a high degree of inertia. Both OLS and IV results indicate that our measures of women's empowerment are strongly associated with religious culture, as proxied by religious marriages. These results are robust and consistent across specifications.     

Quality of judicial institutions,crimes, misdemeanors,and dishonesty

We investigate the extent to which quality of judicial institutions has an impact on individuals’ propensity for criminal and dishonest behavior and on their views regarding the acceptability of dishonesty and law-breaking. We use micro data on residents of 25 European countries and employ alternative measures of judicial quality as perceived by the residents of these countries. As an instrument for judicial quality we employ the procedures with which prosecutors and judges are appointed to their posts in each country. As alternative instruments, we employ an index of de jure institutional quality as well as its components, which provide similar results. The findings show that an increase in the perception of the quality of judicial institutions, such as an improvement in judicial independence or the impartiality of the courts, has a deterrent effect on dishonest and criminal acts. A higher perceived quality of the judicial system also makes individuals less likely to find acceptable a variety of dishonest and illicit behaviors, suggesting that institutions help shape the beliefs of the society. We obtain the same results when we analyze the sample of immigrants, whose cultural attributes should be (more) related to their countries of origin, rather than their countries of residence, and thus should be arguably uncorrelated with the factors that can impact the instrument. We show that people’s beliefs in the importance of the family, in the fairness of others, and the importance of being rich are not impacted by judicial quality, suggesting that judicial quality is not a blanket representation of underlying cultural norms and beliefs in the society.     

Funding Public Goods with Lotteries: Experimental Evidence

Why do individuals participate in charitable gambling activities? We conduct a laboratory investigation of a model that predicts risk-neutral expected utility maximizers will participate in lotteries when they recognize that lotteries are being used to finance public goods. As predicted by the model, we find that public goods provision is higher when financed by lottery proceeds than when financed by voluntary contributions. We also find support for other comparative static predictions of the model. In particular we find that ticket purchases vary with the size of the fixed prize and with the return from the public good: lotteries with large prizes are more effective, and ticket purchases drop dramatically when the public good is not valued by subjects.     

Individual values and household finances

We create individual cultural values measures for households and show that this is an important determinant of their financial behaviour. To date, personal cultural values have only been indirectly measured through religion and trust. But these are, at best, an approximation of true cultural values. Applying a holistic framework from the World Values Survey (WVS), we create individual measures of cultural values, and show that the self-expression values of this framework are positively associated with households’ financial decisions. Examining the individual cultural values that make up the WVS model, we further show that happiness, trust, and playing an active role in society, are individually important determinants of household financial decision-making. Our study shows that cultural values can be brought from a generalized national level to the individual level in order to improve our understanding of household financial decision-making.     

关系在中国的文化内涵：管理学者的视角

关系及其作用被认为是在中国从事商业活动的一个基础性变量,也被认为是中国文化主导下的企业从事商业活动的一个重要特点。虽然国内外已经积累了不少研究关系的文献,但是关系与中国文化之间联系的线索还不清晰——我们并不确定二者是如何联系起来的。依照狭义的文化概念和中国文化的核心特质,本文试图以管理学者的视角探讨这一问题,从关系状态、关系行为、关系规范和关系导向等几个方面寻找“关系”在中国的文化内涵,为管理学者更深人地探讨关系的商业功能打一个基础。本文的主要结论如下：在文化构成的三个层次中,关系状态和关系行为是人际关系的现象文化,以个性化和多样化的方式展现着中国文化的丰富性;关系导向和关系规范则体现着中国文化对人际关系的基本假设和显性价值观,具有更深刻的文化内涵和更重要的文化基因,决定着中国人际关系的共性。     

Organic food consumption in Europe: International segmentation based on value system differences

In this paper, we analyze the market for organic products in eight European countries, based on differences in their respective value systems. With a significant sample of 8014 consumers, we first identify international segments in the European organic products market using the Values Theory. Then we apply the Theory of Planned Behavior to examine how European consumers use attitudes, subjective norms and perceived behavioral control to form their purchase intention for organic products. Results show that subjective norms are the main underlying factor driving consumer behavior concerning these products. This effect is higher for the group of countries whose citizens score higher on Schwartz's value scale. In this segment of countries, people are more likely to be affected by what others think, which means that the best approach is to increase social awareness of the relevance of purchasing organic products. Organic products represent a potentially profitable opportunity for companies with an international horizon. Results are also useful for consumers and public administrations.     

Emigration,wage differentials and brain drain: the case of Suriname

In this article, we examine two hypotheses concerning emigration. The first hypothesis is that emigration is positively correlated with wage differentials. The second hypothesis concerns a positive correlation between emigration and higher education in the sending country (the so-called brain gain hypothesis). We analyse unique time-series data for Suriname for the period 1972–2009, for which we fit error correction models to disentangle short-run from long-run effects. We document moderate support for the first hypothesis, but we find strong support for the brain drain (and not brain gain) hypothesis. We conclude with implications of our findings for Suriname.     

Culture and human capital in a two-sector endogenous growth model

Recent literature in the field of cultural economics highlights a possible inversion in the usual causality relation (from economic growth to culture) and points out that culture may represent an important driver of economic growth. By viewing culture in line with Throsby’s (2001) definition of cultural capital (i.e., an asset of tangible and intangible cultural expressions), in this article we analyze one possible channel through which culture may positively affect economic growth, namely the existence of a relationship of complementarity between cultural and human capital investments. Using a two-sector endogenous growth model, we find that in the long run a higher growth rate of real per-capita income can be attained the more cultural and human capital investments are complementary for each other in the process leading to agents’ skill acquisition. We also analyze the conditions under which an increase of the cultural capital share in total GDP can be conducive to a rise of real per-capita income.     

Understanding the Remittance Gender Gap among Hispanics in the US: Gendered Norms and the Role of Expectations

Using the 2006 Latino National Survey (LNS), this study analyzes the existence of a gender gap in favor of men in the monetary remittance behavior of Hispanics residing in the United States. Findings indicate that cultural gender norms and expectations in the country of origin play a key role. The study shows that women migrants are less likely to remit than men and, when they do, they transfer smaller amounts. The remittance gender gap is not universal among subgroups, since it is only observable among Hispanics who came to the US to improve their economic situation, plan to return to their home country, and have low income and low schooling. An index on migrants’ perceptions of gender roles as a proxy for cultural gendered norms is constructed and shows that more traditional gender views are associated with a significant gender gap in favor of men in remittances.