Cognitive ability and human behavior in experimental ultimatum games

Recent researches have shed light on the effect of cognitive ability on economic decision-making. By measuring cognitive ability applying Raven's progressive matrix test, we obtain two significant results that this effect affects decision-making in two types of experimental ultimatum games. First, the higher the cognitive ability, the larger the amount a sender offers when the offer is smaller than or equal to the half split. Second, the higher the responders’ cognitive ability, the smaller the offer they accept, when they accept it or not with the strategy method. This study not only finds new factors that affect decision-making in experimental ultimatum games, but also provides more evidences that cognitive ability influences economic decision-making.     

Public Monopoly,Mixed Oligopoly and Productive Efficiency

In general, the introduction of competition into the public sector seems to lead to higher cost‐efficiency in service production. However, there are examples of substantial cost increases in some areas. In this paper, using a mixed oligopoly model, we investigate the effects of deregulation on the cost‐reducing incentives of a public firm. Our results show that a firm that is a public monopoly has greater incentive to conduct cost‐reducing investment than a public firm within mixed oligopoly market.     

RULE CHANGES AND UNCERTAINTY IN DISCRIMINATORY AND UNIFORM PRICE AUCTIONS

The auction literature indicates that uncertainty about the value of auctioned goods increases underpricing in discriminatory price auctions. Such uncertainty has a smaller effect on uniform price auctions because the pricing rule aggregates bidders' information. We find that uncertainty resulting from inexperience with an auction mechanism has similar effects. Using initial public offering (IPO) data from Japan and Israel, we find that average underpricing increases temporarily in Japan's discriminatory price auctions after changes in the auction rules, which suggests that bidders reduce their bids in response to uncertainty. Underpricing in Israel's uniform price auctions is not affected by rule changes.     

Inefficient but Robust Public Leadership

We investigate endogenous timing in a mixed duopoly in a differentiated product market. We find that private leadership is better than public leadership from a social welfare perspective if the private firm is domestic, regardless of the degree of product differentiation. Nevertheless, the public leadership equilibrium is risk-dominant, and it is thus robust if the degree of product differentiation is high. We also find that regardless of the degree of product differentiation, the public leadership equilibrium is risk-dominant if the private firm is foreign. These results may explain the recent revival of public financial institutions in Japan.     

Experimental Multimarket Contact Inhibits Cooperation

We experimentally examine the effect of multimarket contact utilizing 2 × 2 Prisoner's Dilemma games and a strict discount factor control. We find that cooperation rates when participants play both games simultaneously are lower than or equal to when they play each game separately. This finding suggests that experimental multimarket contact may inhibit cooperation.     

Belief changes and expectation heterogeneity in buy- and sell-side professionals in the Japanese stock market

We document the determinants of the expectation heterogeneity of stock price forecasters on TOPIX. Monthly panel data collected by QUICK Corporation in the Nikkei Group via surveys is utilized in the process. We examine the determinants of expectation heterogeneity by categorizing our sample into buy-side and sell-side professionals and demonstrate that the co-existence of different types of professionals contributes to the expectation heterogeneity. We show that buy-side and the sell-side professionals, who possess different business goals, differentiate the information contents as well as their interpretations of the same information in their forecasts, contributing to the expectation heterogeneity. In addition, we investigate the interactive expectation formulation of buy-side and sell-side professionals and find that buy-side professionals incorporate the sell side's ideas regarding future stock prices into their own forecasts, but refer exclusively to their own ideas when relating foreign exchange rates to future stock prices. Meanwhile, sell-side professionals tend to utilize buy-side professionals' ideas about future prices in order to improve their research and ingratiate themselves to their clients, that is, to the buy-side professionals. We demonstrate that this interactive expectation formulation also contributes to the generation of the expectation heterogeneity.     

The dilemma of exchange rate arrangements in East Asia

This paper analyzes exchange rate flexibility in East Asia and explores what has changed since the Asian financial crisis. Our focus is not on the choice of an appropriate exchange rate regime in East Asia, but rather on exchange rate flexibility and management in the region. We find that exchange rate management in East Asia differs based on the country and the time period. We identify major concerns about current exchange rate arrangements in East Asia, including asymmetric responses to external shocks, competitive devaluation, and the dilemma of choosing between asset dollarization and liability dollarization. The paper concludes with some policy implications for an exchange rate arrangement in East Asia.