Trust and reciprocity: extensions and robustness of triadic design

Our paper reconsiders the triadic design proposed by Cox (Games and Economic Behavior 46:260–281, 2004) to identify trust and reciprocity in investment games. Specifically, we extend the design in two directions. First, we collect information on investors’ choices by using both the direct-response (as does Cox) and strategy methods. Using the latter, we are able to condition reciprocity on initial inequality, which is endogenous when investigating reciprocity. We demonstrate that the triadic design provides evidence for reciprocity once that initial inequality is considered. Second, we elicit expectations and test their coherence with the triadic outcomes. By examining the relationship between trust actions and expected gains, we analyze whether investors’ expectations are consistent with their behavior. Finally, we test for the existence of an emotional bias, i.e., whether expectation mismatches induce trustees to change actual choices from the planned ones.     

A note on the structural stability of the equilibrium manifold

In a smooth pure exchange economy with fixed total resources we investigate whether the smooth selection property holds when endowments are redistributed across consumers through a continuous (non-local) redistribution policy. We show that if the policy is regular then there exists a unique continuous path of equilibrium prices which support it.     

Termination clauses in partnerships

We show that when designing a partnership agreement partner firms may prefer not to specify how to allocate the commonly owned assets should there be an early termination of the contract. By not including such a clause, firms induce litigation before a Court with positive probability. Firms create this ex-post inefficiency in order to increase the levels of non-contractible investments, i.e. increase the ex-ante efficiency. The absence of an asset allocation clause works as a “discipline device” that mitigates the hold-up problem within the partnership. In our set-up, no other contract but that without an asset allocation clause can credibly create an ex-post inefficiency.     

Does player specialization predict player actions? Evidence from penalty kicks at FIFA World Cup and UEFA Euro Cup

Penalty kicks are analysed in the literature as ‘real life experiments’ for assessing the use of rational mixed strategies by professional players. However, each penalty kick cannot be considered a repetition of the same event because of the varying background conditions, in particular the heterogeneous ability of different players. Consequently, aggregate statistics over data sets composed of a large number of penalty kicks mediate the behaviour of the players in different games, and the properties of optimal mixed strategies cannot be tested directly because of aggregation bias. In this article, we model the heterogeneous ability of players. We then test the hypothesis that differently talented players randomize over different actions. To achieve this aim, we study a data set that collects penalties kicked during shoot-out series in the last editions of FIFA World Cup and UEFA Euro Cup (1994–2012) where kickers are categorized as specialists and non-specialists. The results support our theoretical predictions.     

Economic policy uncertainty in the US: Does it matter for the Euro area?

We investigate the effects of a US economic policy uncertainty shock on some Euro area macroeconomic aggregates via Structural VARs. We model the indicators of economic policy uncertainty recently developed by  Baker et al. (2013) jointly with the aggregate price indexes and alternative indicators of the business cycle for the two above indicated economic areas. According to our SVARs, a one standard deviation shock to US economic policy uncertainty leads to a statistically significant fall in the European industrial production and prices of −0.12% and −0.06%, respectively. The contribution of the US uncertainty shock on the European aggregates is shown to be quantitatively larger than the one exerted by an Euro area-specific uncertainty shock.     

Innovation in knowledge-based professional service firms. An integrated conceptual model*

ABSTRACT

The current paper offers a new conceptual model to understanding innovation processes in professional service firms, to make hidden relationships more explicit and to find out what are the issues still unexplored. The paper employs a systematic literature review, and draws upon original categorizations of extant literature, to identify main processes for each category of PSFs. It unveils connections among a wide range of factors setting a conceptual model for innovation pathways and highlighting neglected questions relevant from both the theoretical and the practical perspectives.     

Innovation and Development: The Evidence From Innovation Surveys

In this article we investigate the existing evidence on innovation produced by innovation surveys in developing and emerging countries in Europe, Asia, Africa, and Latin America. We review the relevant literature, discuss methodological issues, and analyze the results for the countries with the most comparable surveys, considering the well-established findings of innovation surveys for Europe as a benchmark. From the evidence we considered, regional patterns are identified and some stylized facts on innovation and development are proposed, pointing out the specificity of innovation processes in economies engaged in industrialization and catching up.