Sovereign debt: Reputation, seizure and reputation

The interaction between a creditor and a sovereign debtor is described as a ‘one-shot’ game with discrete actions—total or no debt-repudiation and seizure of asset holding abroad. Possible Nash equilibria where each player chooses an action as to maximize his expected payoff given his beliefs about the other player’s action and the implications of those actions on the players’ trustworthy reputation are identified. However, if reputation losses rise convexly with the players’ relative hostility, partial repudiation and seizure can be the preferred strategies. The preferred repudiation and seizure rates are analyzed under asymmetric and symmetric information about the state of the world. (JEL classification F34)     

The public release of information in first-price sealed-bid auctions

We determine the conditions under which the seller in a first-price sealed-bid auction has an incentive to reveal his private information about the mean of bidders’ valuations in order to increase his expected revenue. With risk-neutral bidders, we show that the seller’s expected revenue is higher when information is revealed. However, when bidders are risk-averse, this result does not necessarily hold; it depends on the bidders’ risk-aversion level and on the number of bidders.     

Self-organized criticality in a herd behavior model of financial markets

This paper explains the fat-tail distribution of asset transaction volumes and prices by a model of rational herd behavior of traders. Each trader decides whether to buy an asset by observing private information and other traders’ actions. A trader’s buying action reveals his positive private information and affects the other traders’ beliefs in favor of buying, leading to strategic complementarity. A power-law distribution emerges for the number of buying actions in a static Nash equilibrium. This model provides an economic reason as to why the stock market has to exhibit a criticality in the connectivity of the traders’ actions. I am benefited by comments from the seminar participants at University of Tokyo and the Econophysics Colloquium 2006 at International Christian University, the editors of the special issue, and particularly an anonymous referee.     

Anticipation of Auction Fever: Entry Decision,Reserve Price and the Choice of Auction Design

This paper analyzes the entry decision of rational bidders who expect to experience auction fever in English auctions. It shows that nonparticipation decision reduces seller's expected profit and this effect may outweigh the positive effect of the auction fever. We analyze the choice between English and second‐price sealed‐bid auctions and the optimal reserve price in English auctions. We show that it might be optimal for the seller to set a reserve price below her own valuation of the object. Finally, we show that the order in which bidders place their bids matters and the first bidder always has an advantage. Copyright © 2011 John Wiley & Sons, Ltd.     

Information Precision and Common Value Partnership Dissolution: An Experimental Study

This paper develops a simple model of ½ auctions in a partnership dissolution game with common values, analyzes how information precision affects the equilibrium, and uses a laboratory study to test the model's predictions. Consistent with the model's prediction, the study shows that when bidders have the same quality information, higher precision leads to more extreme bids. In the case of unequal precision, bidders must use the same bidding functions regardless of their own information quality, and thus, the equilibrium strategy should be the same for both bidders. The experimental results, however, contradicts this prediction. Copyright © 2016 John Wiley & Sons, Ltd.     

On the informed seller problem: optimal information disclosure

We consider a revenue-maximizing seller who, before proposing a mechanism to sell her object(s), observes a vector of signals correlated with buyers’ valuations. Each buyer knows only the signal that the seller observes about him, but not the signals she observes about other buyers. The seller first chooses how to disclose her information and then chooses a revenue-maximizing mechanism. We allow for very general disclosure policies, that can be random, public, private, or any mixture of these possibilities. Through the disclosure of information privately, the seller can create correlation in buyers’ private information, which then consist of valuations plus beliefs. For the standard independent private values model, we show that information revelation is irrelevant: irrespective of the disclosure policy an optimal mechanism for this informed seller generates expected revenue that is equal to her maximal revenue under full information disclosure. For more general allocation environments that allow also for interdependent, for common values, and for multiple items, disclosure policies may matter, and the best the seller can do is to disclose no information at all.     

Political disagreement in the classroom: testing cultural theory through structured observation

The cultural theory pioneered by Dame Mary Douglas has been tested with a range of research methods, but it has not yet been made subject to a ‘structured observation’. This method has been developed in psychology and management studies, and is especially useful for testing cultural theory’s prediction that fatalistic, hierarchical, egalitarian, and individualistic ways of perceiving and justifying tend to emerge in group debates about pressing social and environmental issues. We present the results of a structured observation of this prediction. Groups of high school students (aged 17–19) were asked for their opinions concerning three to five ‘wicked’ (i.e., highly complex) problems, and to discuss how to resolve them. Each utterance was coded according to the rationalities proposed by cultural theory. The results confirm cultural theory’s hypothesis that all four specific ways of defining, perceiving and resolving a wicked problem emerge when a number of people debate such an issue. We also discuss how Douglas’ cultural theory can be further developed and tested. Finally, we use our study to outline how the method of structured observation can contribute to political culture research in general.     

Does Trade Liberalization Cause a Long Run Economic Growth in Turkey

Based on ‘endogenous’ growth theory, the paper examines the effect of trade liberalization on long-run income per capita and economic growth in Turkey. Although the presumption must be that free trade has a beneficial effect on long run growth, counter examples can also be found. This controversy increases the importance of empirical work in this area. Using the most recent data we employ multivariate cointegration analysis to test the long run relationship among the variables in hand. In a multivariate context, the effect of determinants such as increasing returns to scale, investment in human and physical capital are also included in both theoretical and empirical works. Our causality evidence between the long run growth and a number of indicators of trade liberalizations confirms the predictions of the ‘new growth theory’. However, the overall effect of the possible breaks and/or policy change and unsustainability in the 1990s looks contradictory and deserves further investigation.     

The Reliability of Family Background Effects on Status Attainment: Multiple Informant Models

This article sets out to investigate to what extent conventional retrospective measurement of family background leads to biases in the effects of family background in status attainment research. Multiple informant models show that the effect of father’s educational attainment on respondent’s educational attainment is 41% greater than conventional research suggests, and that the effect of father’s occupational status on respondent’s educational attainment becomes zero. The direct effect of respondent’s educational attainment on respondent’s occupational status is 21% greater after the unreliability in the respondent’s answers has been taken into account. We conclude that measurement error seriously biases conclusions about the status attainment process in the Netherlands.     

Optimal speculative trade among large traders

A collection of large traders holds heterogeneous prior beliefs regarding market fundamentals. This gives them a motive to engage in speculative trade with respect to market prices. Rather than assuming a particular institution or market for speculative trade, we take a mechanism-design approach by attempting to characterize the mechanism that maximizes the traders’ gains from speculative trade, subject to the incentive constraints that result from the traders’ ability to manipulate market prices. Within a stylized market model, we show that this mechanism affects price volatility without destroying ex-post efficient allocations. We also characterize the implementability of optimal speculative trade when the traders’ prior beliefs are private information. Financial support from the US-Israel Binational Science Foundation, Grant No. 2002298 is gratefully acknowledged.     

First-price auctions where one of the bidders’ valuations is common knowledge

We analyze a private and independent valuation first-price auction under the assumption that one of the bidders’ valuations is common knowledge. We show that no pure strategy equilibrium exists and we characterize a mixed strategy equilibrium in which the bidder whose valuation is common knowledge randomizes her bid while the other bidders play pure strategies. In an example with the uniform distribution, we compare the expected profits of seller and buyers in this auction with those in a standard symmetric private valuation model.     

Measuring opinion distributions

In this study it will be argued that the perceived distribution of opinions among others is important for opinion research. Three different ways of measuring the perception of opinion distributions in survey research are compared: (a) by means of a questionwhat most people think about an issue, (b) by means of a questionhow many people are perceived to agree with an issue-statement, (c) by means of ‘line-production-boxes’, a special version ofmagnitude estimation. The results indicate that ‘line-production-boxes’ can improve data quality, but have also some drawbacks which will have to be dealt with. ‘Line-production-boxes’ give a wealth of information about individual differences in the forms of perceived opinion distributions. Although the normal distribution is used often, many other distribution forms are also used. The method of ‘line-production-boxes’ is compared with the method of estimating percentage points. Although high correlations suggest a good concurrent validity, some systematic differences do exist. New research directions are suggested.     

Assessing legitimation in mixed research: a new framework

In this article, we have merged or intersected two typologies: Greene’s (Res Sch 13(1):93–98, 2006) four-domain typology for developing a methodological or research paradigm in the social and behavioral sciences and Onwuegbuzie and Johnson’s (Res Sch 13(1):48–63, 2006) nine-component typology for assessing mixed research legitimation. We argue that merging or interconnecting these typologies present a framework for assessing legitimation in mixed research. Specifically, we demonstrate how the nine types of legitimation map onto Greene’s (Res Sch 13(1):93–98, 2006) four methodological domains and illustrate how legitimation in mixed research, rather than being viewed as a procedure that occurs at a specific step of the mixed research process, is better conceptualized as a continuous iterative, interactive, and dynamic process. Additionally, in presenting this framework, we hope to reduce misperceptions that some researchers have voiced about mixed research.     

To dissent or not to dissent? Informative dissent and parliamentary governance

Legislative dissent has detrimental effects for both party and legislator, i.e., legislators depend on their party label for re-election, which value in turn depends in part on the party’s reputation of cohesiveness. Commonly dissent has been attributed to “extreme” preferences. I provide an informational rationale for dissent. Costly dissent allows the legislator to credibly signal information about his constituency’s preferences to the Cabinet. As a result the Cabinet can better calibrate its policies with the electorate’s preferences. Dissent is shown to depend on policy preferences as well a the legislators’ electoral strength, electoral volatility, and the cost of dissent. Finally, the results suggests that parties may sometimes benefit from tolerating some level of dissent. I am grateful to Christopher Kam, Randall Calvert, John Duggan, Mark Fey, Eduardo Leoni, Sona Golder, and the anonymous referees for their helpful comments and suggestions. I also wish to thank the Political Institutions and Public Choice Program at Michigan State University for its support. All remaining errors are mine.     

Corporate entrepreneurship and acquisitions: creating firm wealth

Acquisition is one way entrepreneurial firms have to capture the assets needed to achieve their strategic objectives. We investigate shareholder value creation of Spanish listed firms in response to announcements of acquisitions over the period 1991–2006. Similar to foreign markets, bidders earn insignificant average abnormal returns regardless of the pricing model used in the estimation procedure. When we relate these results to company and transaction characteristics our evidence suggests that the listing status of the target firm is a critical key in the strategic decision to acquire a company. This listing status effect is mainly associated with the fact that unlisted firms tend to be smaller and lesser–known firms, and thus suffer from a lack of competition in the market for corporate control. Consequently, the payment of lower premiums and the possibility of diversifying shareholders’ portfolios lead to unlisted firm acquisitions being viewed as value–orientated transactions which have major implications for managers.     

Threshold uncertainty in discrete public good games: an experimental study

A discrete public good is provided when total contributions equal or exceed the contribution threshold. Recent theoretical work shows that an increase in threshold uncertainty will increase (decrease) equilibrium contributions when the public good value is sufficiently high (low). In an experiment designed to test these predictions, I find only limited verification of the prediction. Using elicited beliefs data to represent subjects’ beliefs, I find that behavior is not consistent with expected payoff maximization, however, contributions are increasing in subjects’ subjective pivotalness. Thus, wider threshold uncertainty will sometimes—but not always—hinder collective action.     

Catching a draft: on the process of selecting quarterbacks in the National Football League amateur draft

The reverse order college draft gives the worst teams in the National Football League (NFL) the opportunity to hire the best amateur talent. For it to work effectively, teams must be able to identify the “best” talent. Our study of NFL quarterbacks highlights problems with the draft process. We find only a weak correlation between teams’ evaluations on draft day and subsequent quarterback performance in the NFL. Moreover, many of the factors that enhance a quarterback’s draft position are unrelated to future NFL performance. Our analysis highlights the difficulties in evaluating workers in the uncertain environment of professional sports.     

Qualitative analysis of feminine morality and visible personality characteristics among young adults

This article documents the perceptions and judgments of youth about character of female as ‘good’ or ‘bad’, based on her visible personality characteristics. A qualitative study is carried out among the undergraduate students in two public sector universities. This study highlights contextual factors linked with the choice of clothing and quality of physical appearance among young girls. The judgments about a girl’s character are based on immediate, apparent personality characteristics. This study found that there are two contrasting categories of clothing and visible personality associated with positive and negative feminine morality. Certain expectations are also found to be associated with the attire of young women in Pakistani society which restricts their individual choices. Pakistani and Britain national boys judged girl’s character as immoral or bad based on cosmetics usage, fashion-ability, body exposedness, physical attractiveness, friendliness, bold temperament, and easiness while interaction with boys.     

Agreement and consensus in a Q-mode research design: an empirical comparison of measures,and an application

Subject of this paper is the analysis of consensus within small groups of respondents, based on a proportionally large number of variables. The target group is researchers who are interested in Q-mode research. Measures of agreement are compared, and an application from a recent project is presented. Cohen’s κ is the preferable measure, Krippendorff’s α is an alternative, which is based on a different concept of expected disagreement. At group level, along with κ and α for multiple raters, additional measures are r _wg, intraclass correlation, and κ _SC. Predictions about level differences between groups can be assessed by a t-test and θ     

Assessment of Interjudge Reliability in the Open-Ended Questions Coding Process

In the process of coding open-ended questions, the evaluation of interjudge reliability is a critical issue. In this paper, using real data, the behavior of three coefficients of reliability among coders, Cohen’s K, Krippendorff’s α and Perreault and Leigh’s I _r are patterned, in terms of the number of judges involved and the categories of answer defined. The outcome underlines the importance of both variables in the valuations of interjudge reliability, as well as the higher adequacy of Perreault and Leigh’s I _r and Krippendorff’s α for marketing and opinion research.