Matching mechanisms and matching quality: Evidence from a top university in China

We compare competing college admission matching mechanisms that differ in preference submission timing (pre-exam, post-exam but pre-score, or post-score) and in matching procedure (Boston (BOS) and serial dictatorship (SD) matching). Pre-exam submission asks students to submit college preferences before entrance exam scores are known, whereas post-score (post-exam) submission removes (reduces) score uncertainties. Theoretical analyses show that although mechanisms with post-score submission or SD matching are ex-post fair and efficient, they are not so ex-ante. Instead, the mechanism with pre-exam submission and BOS matching can be more fair and efficient ex-ante. These hypotheses are supported by empirical test on data from a top school at a top-ranked Chinese university with identification based on temporal and provincial changes. We find that although students admitted under the pre-exam BOS mechanism have lower college entrance exam scores than students admitted through other mechanisms on average, they exhibit similar or even better college academic performance.     

The Alchemy of the Can Opener: How an Austrian Economist Found Himself Supporting Dictatorial Imposition of a Liberal Order

Why would Hayek, the great critic of ‘rational constructivism’ and defender of spontaneous orders, think a transitional dictatorship could work? Here I attempt to dissect the alchemy of ‘turning a constitution into a can opener’ as Farrant &; McPhail (2014 Farrant, A., &; McPhail, E. (2014) Can a Dictator Turn a Constitution into a Can-opener: F. A. Hayek and the Alchemy of Transitional Dictatorship in Chile, Review of Political Economy, 26(3), pp. 331–348.[Taylor &; Francis Online] , [Google Scholar]) put it. Hayek argues against the imposition by an external source of order upon a society. He stresses the importance of an evolving culture and tradition, noting that they should be spontaneous orders not command systems, and that the culture of a society must be accepting and supportive of its institutions. Sometimes the culture is more important than the formal institutions of a society for efficiency. So why would Hayek argue that a transitional dictator could impose a constitution upon the people? It will be argued here that if Hayek had pursued the theoretical line set out in his Constitution of Liberty, he might have responded to the situation in Chile differently.     

On two kinds of manipulation for school choice problems

Many school districts in the US. employ centralized clearing houses to assign students to public schools. An important potential threat against any school choice mechanism is the tendency of schools to circumvent the procedure via two kinds of strategic manipulation: manipulation via capacities and manipulation via pre-arranged matches. This paper studies the extent of the vulnerability of three prominent school choice mechanisms that have been adopted (or, considered for adoption) by some school districts in the US. We find that the highly debated Boston mechanism as well as the top trading cycles mechanism are immune to manipulation via capacities, unlike the student-optimal stable mechanism (SOSM). We show that SOSM is immune to manipulation via capacities if and only if the priority structure satisfies an acyclicity condition proposed by Ergin (Econometrica 70:2489?C2497, 2002). On the other hand, we show that essentially no mechanism is immune to manipulation via pre-arranged matches.     

Constrained school choice

Recently, several school districts in the US have adopted or consider adopting the Student-Optimal Stable mechanism or the Top Trading Cycles mechanism to assign children to public schools. There is evidence that for school districts that employ (variants of) the so-called Boston mechanism the transition would lead to efficiency gains. The first two mechanisms are strategy-proof, but in practice student assignment procedures typically impede a student to submit a preference list that contains all his acceptable schools. We study the preference revelation game where students can only declare up to a fixed number of schools to be acceptable. We focus on the stability and efficiency of the Nash equilibrium outcomes. Our main results identify rather stringent necessary and sufficient conditions on the priorities to guarantee stability or efficiency of either of the two mechanisms. This stands in sharp contrast with the Boston mechanism which has been abandoned in many US school districts but nevertheless yields stable Nash equilibrium outcomes.     

高考志愿填报机制与大学招生质量:一个基于择校机制理论的经验研究

本文关注高考志愿填报机制对优质大学学生质量的影响。我们首先论证由考前报改为考后报并引入平行志愿的改革模式可以带来事后的效率与公平("高分高就"),但未必增加事前的效率与公平("高能高就"或"高偏好高就")。基于某顶级学院的学生数据,利用各省历年志愿填报机制的变化,我们从实证上验证了这一假说:相对于考前无平行志愿的制度,该学院在考后填报制度下招收的学生高考成绩更高,但以大学学业衡量的学习能力或兴趣并没有更高。     

Are traditional timing models well specified?

Traditional timing models are affected by several biases, which generate spurious timing and stock-picking coefficients. Academics have appointed different causes as the possible sources of these biases. A negative correlation between timing and stock-picking abilities arises as a consequence of the biases in traditional timing models. This article provides evidence for one bias commonly found in traditional timing models, which is related with options. We focus on this bias in view of the scant attention it has so far received in the literature. We believe one possible cause for this bias is the failure to include the cost of the option implicit in timing activities in the timing models, and on this basis, we opt for a corrected version of the Merton and Henriksson model (1981 Merton, RC and Henriksson, RD. 1981. On market timing and investment performance II: statistical procedures for evaluating forecasting skills. Journal of Business, 54: 513–34. [Crossref] , [Google Scholar]). This study therefore is a pioneer in the assessment of the magnitude of this bias and in the measurement of the impact of its correction on fund managers’ results. Our results confirm both the existence of the bias and the correction of the problem when the cost of the option is included in timing models. The modified version of the Merton and Henriksson model, unlike the traditional model, reports positive timing and stock-picking coefficients, supporting the good performance by managers.     

An experimental study on the incentives of the probabilistic serial mechanism

We report an experiment on the Probabilistic Serial (PS) mechanism for allocating indivisible goods. The PS mechanism, a recently discovered alternative to the widely used Random Serial Dictatorship mechanism, has attractive fairness and efficiency properties if people report their preferences truthfully. However, the mechanism is not strategy-proof, so participants may not truthfully report their preferences. We investigate misreporting in a set of simple applications of the PS mechanism. We confront subjects with situations in which the theory suggests that there is an incentive or no incentive to misreport. We find little misreporting in situations where misreporting is a Nash equilibrium. However, we also find a significant degree of misreporting in situations where there is actually no benefit to doing so. These findings suggest that the PS mechanism may have problems in terms of truthful elicitation.     

Motivating energy suppliers to promote energy conservation

We examine the design of regulatory policy to induce electric utilities to deliver the surplus-maximizing level of energy efficiency services, $e^{*}$ . The rebound effect (whereby increased energy efficiency stimulates the demand for energy) typically renders revenue decoupling insufficient in this regard. The additional financial incentive required to induce $e^{*}$ is shown to vary with such factors as the prevailing price of energy, the magnitude of the rebound effect, the extent of observable energy efficiency investments, and the utility’s objective.     

Taking,giving, and impure altruism in dictator games

We show that, if giving is equivalent to not taking, impure altruism could account for List’s (in Journal of Political Economy 115(3):482–493, 2007) finding that the payoff to recipients in a dictator game decreases when the dictator has the option to take. We examine behavior in dictator games with different taking options but equivalent final payoff possibilities. We find that recipients tend to earn more as the amount the dictator must take to achieve a given final payoff increases, a result consistent with the hypothesis that the cold prickle of taking is stronger than the warm glow of giving. We conclude that not taking is not equivalent to giving and agree with List (in Journal of Political Economy 115(3):482–493, 2007) that the current social preference models fail to rationalize the observed data.     

Mises’ democracy–dictatorship equivalence theorem: A critique

Ludwig von Mises argues that public opinion, not the form of government, is the ultimate determinant of policy. The implication is that, holding public opinion constant, democracies and dictatorships will have the same policies—a result I call Mises’ Democracy–Dictatorship Equivalence Theorem. According to Mises, dictators have to comply with public opinion or else they will be overthrown. I argue that he seriously overestimates the power of revolution to discipline dictators. Mises was perceptive to note that, in practice, “dictatorially imposed” policies are often democratically sustainable, but he neglected several mechanisms—all more plausible than the threat of revolution—capable of explaining this fact.

Is per capita real GDP stationary in five southeastern European countries? Fourier unit root test

This study uses the newly developed Fourier unit root test advanced by Enders and Lee (2004, 2009) to investigate the time-series properties of real GDP (Gross Domestic Product) for five Southeastern European countries for the period from 1969 to 2009. The empirical results from several conventional unit root tests indicate that the per capita real GDP for all of the countries studied are non-stationary; however, when Enders and Lee (2004, 2009) Fourier unit root tests are conducted, one rejects the unit root hypothesis of real GDP per capita in all countries under study. These results have important policy implications for these five Southeastern European countries under study.     

Correcting the Merton and Henriksson timing model

This article provides evidence of a common bias found in traditional timing models, which is related with a negative correlation between timing and stock-picking abilities resulting in spurious coefficients. We consider as a possible cause for this bias the failure to include in the timing models the cost of the option implied in timing activities, and on this basis we opt for a corrected version of the Merton and Henriksson's model (1981 Merton, R. C. and Henriksson, R. D. 1981. On market timing and investment performance II: statistical procedures for evaluating forecasting skills. Journal of Business, 54: 513–34. [Crossref] , [Google Scholar]). As far as we know, this correction has not previously been applied. Our results confirm both the existence of this bias and the correction of the problem when the cost of the option is included in timing models.     

Preference intensities and risk aversion in school choice: a laboratory experiment

We experimentally investigate in the laboratory prominent mechanisms that are employed in school choice programs to assign students to public schools and study how individual behavior is influenced by preference intensities and risk aversion. Our main results show that (a) the Gale–Shapley mechanism is more robust to changes in cardinal preferences than the Boston mechanism independently of whether individuals can submit a complete or only a restricted ranking of the schools and (b) subjects with a higher degree of risk aversion are more likely to play “safer” strategies under the Gale–Shapley but not under the Boston mechanism. Both results have important implications for enrollment planning and the possible protection risk averse agents seek.     

Exploring the relationship between university and innovation: evidence from the Italian food industry

This study provides empirical evidence on the role of universities’ technological transfer (TT) activities in the Italian manufacturing sector, with particular attention to the food industry. Using the UniCredit-Capitalia database (2008 UniCredit-Capitalia. 2008. Decima Indagine Sulle Imprese Manifatturiere Italiane. Rapporto Corporate. [Google Scholar]) for firms and data from the Ministry of Education, University and Research (MIUR) to obtain the university TT indicator, we estimate a probit model to assess the effect of universities’ TT activities on a firm’s likelihood to innovate. The role of proximity in knowledge spillovers from TT activities is also investigated. Results show that university TT activities seem to stimulate food industry firms innovation and the impact appears significantly higher than for the manufacturing sector. Moreover, the effect of TT activities on innovation appears to be geographically bounded. As regards policy implications, this study provides two insights which may help promote innovation in the food sector. First, the factors that influence innovative capability in the food sector are different from those in other sectors, suggesting the need for sector specific instruments for promoting innovation. Second, science is important in the food industry and this raises questions about the policy of mainly considering high-tech industries when promoting a closer relationship between firms and universities.     

The matrix approach to evaluating demand equations

This study explores a new data set that contains information both on inputs and outputs for a sample of Portuguese secondary schools. An FDH reference technology is used to determine radial technical efficiency scores and slacks. Although it is known that there is no reason to assume convexity in the study of education efficiency frontiers, this is the first study ever to use FDH at the school level, effectively relaxing the convexity assumption. A two–stage approach is used, whereby the significant environmental variables that explain FDH efficiency scores and slacks are identified. For the purpose of statistical inference, the first application of the bootstrapping algorithms suggested by Simar and Wilson (2003 Simar, L and Wilson, PW. 2000. A general methodology for bootstrapping in nonparametric frontier models. Journal of Applied Statistics, 27: 779–802.  ) is conducted. The study concludes that the unemployment rate, access to health care services, adult education and living infrastructures are determinants of school efficiency. The differences between the coast and the interior of Portugal seem to be more relevant, as far as school efficiency is concerned, than whether or not the school belongs to one of the major coast metropolitan areas.     

Implementation in undominated strategies by bounded mechanisms: Some results on compromise alternatives

We consider an impossibility result in Börgers (1991), which says in a restricted environment with two players or three alternatives it is impossible to implement a social choice correspondence that is efficient, enforces compromises at a profile and is implementable in undominated strategies by a bounded mechanism. We extend and refine this result in many ways- we generalize the impossibility result for any number of players and alternatives when the compromises are enforced at a near-unanimous preference profile. We further show that the impossibility result in Börgers (1991) holds good if we replace efficiency of SCCs by neutrality. Also the impossibility result holds good for two agents and any number of alternatives when the SCC is unanimous and minimal. Interestingly, we get a possibility result when we relax the assumption of minimality.     

Interest rate pass-through and illiquidity shocks in the US

This study examines the US interest rate pass-through mechanism and considers the illiquidity shocks upon retail interest rate correlations caused by financial crises between 1986 and 2011. We estimate a bi-variable EGARCH model using a dynamic conditional correlation model developed by Engle (2002 Engle, R. F. 2002. Dynamic Conditional Correlation: A Simple Class of Multivariate Generalized Autoregressive Conditional Heteroskedasticity Models. Journal of Business and Economic Statistics, 20: 339–350. [Taylor & Francis Online], [Web of Science ®] , [Google Scholar]) in order to analyze how asymmetric monetary policy influences interest rate pass-through. We test the risks to the dynamic condition and changes in the correlation coefficient. The main empirical results are as follows. First, the long-run interest rate pass-through mechanism is unstable in the US. Second, expected monetary policy impulses are greater than the unexpected ones in the short-run. Finally, according to the one-step and N-step forecast tests, the illiquidity shocks caused by financial crises demonstrate a significant change in retail interest rate risks, but not in correlations between retail interest rates. We conclude that when the interest rate pass-through mechanism is unstable, banks may stop helping each other and will not provide loans to firms and consumers, thereby exhausting the capital of all economic systems. The characteristics of illiquidity enter into the interest rate pass-through mechanism; therefore, the relationship between illiquidity and the interest rate pass-through needs to be investigated.     

Consumer decision making,E-commerce and perceived risks

This article studies how adoption and usage behaviour of the Internet and online shopping, respectively influence the preference to use electronic commerce to purchase different types of products. We empirically model the preference for electronic commerce when consumers have to buy different types of products and thus face different types of risks (Cox and Rich, 1964 Cox, D and Rich, S. 1964. Perceived risk and consumer decision making-the case of telephone survey. Journal of Marketing Research, 1: 32–9. [Crossref], [Web of Science ®] , [Google Scholar]). Unlike previous research, we find that consumers who have previously shopped online, display stronger preferences to buy products on the Internet irrespective of the perceived level of product-specific risks of online shopping. This article provides an interesting and novel insight into how both adoption and usage of electronic commerce impact on the attitude and risk perception of buying less predictable (more risky) products on the Internet.     

A full characterization of nash implementation with strategy space reduction

The paper fully characterizes the class of Nash implementable social choice correspondences (SCCs) by mechanisms endowed with Saijo’s message space specification— $s$ -mechanisms. This class of SCCs is equivalent to the class of Nash implementable SCCs, though any game form involving ‘one less’ preference announcements breaks this equivalence relationship down.