Stability and Segregation in Group Formation

This paper presents a model of group formation based on the assumption that individuals prefer to associate with people similar to them. It is shown that, in general, if the number of groups that can be formed is bounded, then a stable partition of the society into groups may not exist. (A partition is defined as stable if none of the individuals would prefer be in a different group than the one he is in.) However, if individuals' characteristics are one-dimensional, then a stable partition always exists. We give sufficient conditions for stable partitions to be segregating (in the sense that, for example, low-characteristic individuals are in one group and high-characteristic ones are in another) and Pareto efficient. In addition, we propose a dynamic model of individual myopic behavior describing the evolution of group formation to an eventual stable, segregating, and Pareto efficient partition. Journal of Economic Literature Classification Numbers: C72, H41.     

The demand commitment bargaining and snowballing cooperation

Summary A multi-person bargaining model based on sequential demands is studied for coalitional games with increasing returns to scale for cooperation. We show that for such games the (subgame perfect) equilibrium behavior leads to a payoff distribution which approaches the Shapley value as the money unit approaches 0. Subgame consistency and strategic equilibria are the main tools used in the analysis. The model is then applied to study a problem of public good consumption.I wish to thank Reinhard Selten, who introduced me with the topic of non-cooperative coalition bargaining, for many constructive discussions. Al Roth's warm hospitality during the academic year 1990–1991, as well as many useful remarks are also gratefully acknowledged. Helpful discussions with Dieter Balkenborg, Tatsuro Ichiishi, Richard Mclean, Benny Moldovanu, Daniel Seidmann Avner Shaked are gratefully acknowledged as well. Part of this research was also supported by the Deutscheforschungsgemeinschaft SFB 303 at the University of Bonn.     

Pension Reform, Capital Markets and the Rate of Return

Abstract. This paper discusses the consequences of population aging and a fundamental pension reform – that is, a shift towards more pre‐funding – for capital markets in Germany. We use a stylized closed‐economy, overlapping‐generations model to compare the effects of the recent German pension reform with those of a more decisive reform that would freeze the current pay‐as‐you‐go contribution rate and thus result in a larger funded component of the pension system. We predict rates of return to capital under both reform scenarios over a long horizon, taking demographic projections as given. Our main finding is that the future decrease in the rate of return is much smaller than often claimed in the public debate. Our simulations show that the capital stock will decrease once the baby‐boom generations enter retirement, even if there were no fundamental pension reform. The corresponding decrease in the rate of return, the direct effect of population aging, is around 0.7 percentage points. While the capital market effects of the recent German pension reform are marginal, the rate of return to capital would decrease by an additional 0.5 percentage points under the more decisive reform proposal.     

Zielsetzungen der Versicherungsaufsicht

While financial state supervision has intensified legal supervision of insurance companies, the doctrine of the state’ s duty to protect constitutional rights of the insured has consistently been rolled back: merely legality control, the principle of subsidiarity in § 81 Insurance Supervision Act, the model of the informed consumer and the rejection of the trust models. Insurance companies are protected by national constitutional rights, European law and in particular by the principle of necessity. The aim of state supervision is not only to protect the insured, but also to guarantee a well-functioning private insurance industry. To some extent, state supervision is acquiring a merely warranting character; consensual administration is becoming more common — this does not, however, alter the aims of supervision.     

Organisational consequences of asymmetries in task dependence: the moderating role of HR practices

This study integrates recent advances in interdependence theory with the literature on commitment‐based HR practices. New research on interdependence theory suggests that differences, or asymmetries, in task dependence among organisational members can cause interests to diverge. Prior research has shown that this can negatively affect interpersonal relations, individual outcomes and team processes. However, these insights gained on the dyadic, individual and team levels of analysis have not yet been explored at the organisational level and, until now, no research had yet connected these advances in interdependence theory to the field of HRM research. Hence, the current study investigates (a) whether asymmetries in task dependence do (or do not) matter at the organisational level and affect organisational effectiveness, (b) why this relationship may work by assessing a key mediator, namely, trust climate and (c) if and how these relationships can be altered by commitment‐based HR practices. Our moderated‐mediation model was tested and fully supported by a multi‐source data set of 8,390 employees from 67 organisations.     

An Insight into the Personal and Emotive Context of Wildlife Viewing at the Penguin Place,Otago Peninsula,New Zealand

The personal and emotive context of visitors’ experiences has been neglected in much sustainable tourist attraction management. This paper applies ASEB demi-grid analysis as a consumer-orientated management tool to facilitate an understanding of the beneficial experiences gained by international visitors to a penguin-watching tourism attraction on the Otago Peninsula, New Zealand. Forty in-depth interviews with visitors showed that the main beneficial experiences gained included reported enhanced environmental awareness (cognition) and ‘mood’ benefits (affection). In addition, several consistent themes emerged from the beneficial experiences reported by tourists, including issues related to viewing, proximity, authenticity and wonder. Findings thus included the perceived importance of visitors to be able to view endangered penguins ‘up close’ in their natural habitat to elicit feelings of exploration and privilege, to appreciate the simplicity and naturalness of the setting and to increase their knowledge of the species through interaction with an experienced guide.     

The Principled Legal Firm: Insights into the Professional Ideals and Ethical Values of Partners and Lawyers

Understanding how the professional ideals and values of partners influence lawyers’ everyday life is a relatively unexplored area given the inherent difficulties of gaining access to lawyers. This case study sheds light on the professional ideals and ethical values of partners and lawyers in a mid-tier Sydney law firm. Semi-structured interviews with partners and lawyers/legal clerks reveal how partners’ professional ideals and ethical values play a pivotal role in: (1) upholding positive normative evaluations of lawyer/firm propriety (moral legitimacy), (2) stressing the importance of a balanced working life (cognitive legitimacy) and (3) satisfying younger lawyers’ needs for personal support, autonomy and responsibility (pragmatic legitimacy). The principled actions of partners are portrayed as the cornerstone of shaping a moral community in legal practise.     

Asymptotic behavior of market shares for a stochastic growth model

Consider a market with finitely many firms, each enjoying an uncertain growth. We assume the (random) growth rates of these firms are independent and identically distributed. We show that the asymptotic probability distribution of the market shares gives each firm an equal probability of dominating the market (while all other firms are almost extinguished). In particular, these conclusions are independent of the initial market shares of the firms. We conclude that sample paths fluctuate between almost domination and almost extinction. We also demonstrate that these fluctuations may be very slow. Extensions to situations where the total demand is restricted are discussed.