Is Busy Really Busy? Board Governance Revisited

We investigate the relationship between firm governance and the board's position in the social network of directors. Using a sample of 133 German firms over the four‐year period from 2003 to 2006, we find that firms with intensely connected supervisory boards are (1) associated with lower firm performance, and (2) pay their executives significantly more. We interpret these results as evidence of poor monitoring in firms with directors who are more embedded in the social network. In both cases, simple measures for busy directors that were used by other studies in the past fail to show any significant pattern. The findings suggest that the quality and structural position of additional board seats may play a bigger role than simply the number of board appointments.     

Integer programming on domains containing inseparable ordered pairs

Using the integer programming approach introduced by Sethuraman et al. (2003), we extend the analysis of the preference domains containing an inseparable ordered pair, initiated by Kalai and Ritz (1978). We show that these domains admit not only Arrovian social welfare functions “without ties,” but also Arrovian social welfare functions “with ties,” since they satisfy the strictly decomposability condition introduced by Busetto et al. (2015). Moreover, we go further in the comparison between Kalai and Ritz (1978)’s inseparability and Arrow (1963)’s single-peak restrictions, showing that the former condition is more “respectable,” in the sense of Muller and Satterthwaite (1985).     

Chebyshev interpolation for parametric option pricing

Recurrent tasks such as pricing, calibration and risk assessment need to be executed accurately and in real time. We concentrate on parametric option pricing (POP) as a generic instance of parametric conditional expectations and show that polynomial interpolation in the parameter space promises to considerably reduce run-times while maintaining accuracy. The attractive properties of Chebyshev interpolation and its tensorized extension enable us to identify broadly applicable criteria for (sub)exponential convergence and explicit error bounds. The method is most promising when the computation of the prices is most challenging. We therefore investigate its combination with Monte Carlo simulation and analyze the effect of (stochastic) approximations of the interpolation. For a wide and important range of problems, the Chebyshev method turns out to be more efficient than parametric multilevel Monte Carlo. We conclude with a numerical efficiency study.     

Kalai and Muller’s possibility theorem: a simplified integer programming version

We provide a respecification of an integer programming characterization of Arrovian social welfare functions introduced by Sethuraman et al. (Math Oper Res 28:309–326, 2003). By exploiting this respecification, we give a new and simpler proof of Theorem 2 in Kalai and Muller (J Econ Theory 16:457–469, 1977).     

In-work benefits and unemployment

In-work benefits are becoming an increasingly relevant labour market policy, gradually expanding in scope and geographical coverage. This paper investigates the equilibrium impact of in-work benefits and contrasts it with the traditional partial equilibrium analysis. We find under which conditions accounting for equilibrium wage adjustments amplifies the impact of in-work benefits on search intensity, participation, employment, and unemployment, compared to a framework in which wages are fixed. We also account for the financing of these benefits and determine the level of benefits necessary to achieve efficiency in a labour market characterized by search externalities.     

POINTS OR PRISON? THE EFFECTS OF DIFFERENT SANCTIONS ON DRIVING BEHAVIOR

We compare two reforms aimed at reducing road accidents in Italy. The Penalty Points System (PPS) provides drivers with a score and curtails points after infractions. The license is temporarily suspended when points are exhausted. Losing points is easy, but the penalty is mild. The Road Homicide (RH) introduces heavy penalties in the rare event of injuries and/or fatalities. In terms of probability and intensity of the penalty the two policies are therefore diametrically opposed. We find that injuries and fatalities decrease more with PPS than with RH. Comparing costs and benefits, we conclude that strong penalties are not beneficial. (JEL D91, K14, K42, R41)     

Reporting import tariffs (and other taxes)

This paper derives the implications for compliance and fiscal revenues of a tax base that is the product of several factors. For instance, in the case of import tariffs, the tax base is the product of quantity and unit value, both reported to, and during an audit assessed by, the custom authority. Import tariffs are particularly interesting as custom receipts represent an important share of government revenues in many developing countries and there has recently been a surge in empirical studies showing how evasion in this field is a pervasive phenomenon. I show that, with a multiplicative tax base, when the fiscal authority has an imperfect detection technology a greater declaration in one dimension actually increases the fine when evasion in the other dimension is detected. Therefore, there is an additional incentive for the taxpayer to underdeclare and a multiplicative tax base is subject to more evasion, compared to a tax base that can be assessed directly. As a result, fiscal revenues decrease with the dimensionality of the tax base. Also, voluntary compliance and fiscal revenues may be higher when the importer is required to declare only the total value of imports instead of quantity and unit value separately. This paper provides an argument in favour of uniform or specific tariffs and a reason for why a flat tax may improve compliance.     

Disentangling the sources of pro-socially motivated effort: A field experiment

This paper presents evidence from a field experiment, which aims to identify the two sources of workers' pro-social motivation that have been considered in the literature: warm glow altruism and pure altruism. We employ an experimental design that first measures the level of effort exerted by student workers on a data entry task in an environment that elicits purely selfish behavior and we compare it to effort exerted in an environment that also induces warm glow altruism. We then compare the latter to effort exerted in an environment where both types of altruistic preferences are elicited. We find evidence that women increase effort due to warm glow altruism while we do not find any additional impact due to pure altruism. On the other hand, men in our sample are not responsive to any of the treatments.     

La legislación protectora del empleo y la estabilidad laboral. Análisis transnacional europeo

Los autores estudian la antigüedad en la empresa en toda la Unión Europea con datos relativos al período 1999–2006. La antigüedad no descendió durante esos años en muchos países europeos, con una excepción: los trabajadores de 15 a 24 años de edad. Según el análisis de regresión que efectúan, ello guarda relación con el debilitamiento de las leyes de empleo y de los sindicatos. Dado que los trabajadores jóvenes tienen poca capacidad de negociar personalmente sus condiciones laborales, la individualización de la relación de trabajo puede perjudicarles más que al resto.