Is parity good? Externalities in professional sports

In professional sports there are externalities. If one team acquires too much talent then that may impact the quality of the competition negatively. This means that the league can improve social welfare by distorting the competitive equilibrium allocation. This idea has been used to explain that there should be parity among teams to improve social welfare. We develop a theoretical model based on Biner's (2009) empirical results to capture the effect of this externality on the revenue levels and wages when local fans care about winning only. Social Planner's Problem for stadium revenues implies that it is possible to increase the total revenue made in the league compared to competitive equilibrium levels by increasing big market teams' talent level, therefore less parity. In other words due to externalities competitive market allocation is too equal compared to SPP allocation. We show when local audience is mainly interested in seeing their local team dominating the visiting team and national audience only interested in watching a close game on TV, the only way in the model for it ever to be efficient to enforce parity is if we introduce a national TV market into the analysis. For the national TV market, parity is going to lead to a wider TV audience. The greater the weight on this revenue stream, the more likely it is a parity policy can increase league revenues.     

On public opinion polls and voters' turnout

This paper studies the effects that the revelation of information on the electorate's preferences has on voters' turnout. The experimental data show that closeness in the division of preferences induces a significant increase in turnout. Moreover, for closely divided electorates (and only for these electorates), the provision of information significantly raises the participation of subjects supporting the slightly larger team relative to the smaller team. We show that the heterogeneous effect of information on the participation of subjects in different teams is driven by the subjects' (incorrect) beliefs of casting a pivotal vote. Simply put, subjects overestimate the probability of casting a pivotal vote when they belong to the team with a slight majority, and choose the strategy that maximizes their utility based on their inflated probability assessment. Empirical evidence on gubernatorial elections in the United States between 1990 and 2005 is consistent with our main experimental result. Namely, we observe that the difference in the actual vote tally between the party leading according to the polls and the other party is larger than the one predicted by the polls only in closely divided electorates. We provide a behavioral model that explains the main findings of our experimental and empirical analyses.     

基于双重委托-代理的科研团队成员知识创新激励机制研究

采用双重委托-代理关系模型研究科研团队成员知识创新激励机制,强化主体创新参与意识和知识贡献精神。在团队知识创新个体成员角色划分的基础上,论述团队知识创新中的双重委托-代理关系,进而分析双重关系中的知识创新激励机制,并提出基于人力资本价值差异的激励措施。团队层面的委托-代理关系表明,个体成员的拟线性效用令有效努力水平与其收益独立分配,符合科斯定理的“行动有效,与利益分配无关”的思想;个体层面的委托-代理关系分析表明,实施基于人力资本价值的差异化激励合约,其数值模拟和参数分析结果验证了知识贡献者的产出份额、努力程度以及确定性等价收入明显得到优化。     

Public Debt, Migration, and Shortsighted Politicians

We analyze a model where local public debt levels are set by politicians who are chosen in local elections. Migration causes an externality across districts, and leads to overaccumulation of local public debt. Since debt is a strategic substitute, the median voters in each district prefer shortsighted political leaders who “borrow and spend,” thereby exacerbating the problem of overaccumulation of local public debt.     

The Augmented Solow Model with Mincerian Schooling and Externalities

Abstract. We combine the augmented Solow model with the Mincer equation to derive a specification that identifies an education externality within a production function framework. The previous empirical literature has not reached a consensus about the size of the education externality, which is given by the difference between the microeconomic and the macroeconomic return to education. Relative to our benchmark value that is based on a parameterization of the derived specification, we find that the estimated education externality is too large when the empirical model is not properly restricted, and appears to be absent when all control variables of the empirical model are properly accounted for. We note that the absence of an education externality is difficult to reconcile with observed levels of education subsidies for efficiency reasons.     

Divided government versus incumbency externality effect—Quasi-experimental evidence on multiple voting decisions

This paper explores the causal relationship between vote outcomes in different elections. We ask: (1) Does the partisan identity of the mayor influence the voter's decision in subsequent town council elections? (2) Do voters condition their vote for the mayor on the result of the last council election? The analysis mainProd. Type: FLPly relies on a regression discontinuity design focusing on close election outcomes based on municipal level data for Germany. We find that the party of the mayor can receive a significant bonus in the next town council election. Moreover, voters punish mayor candidates of parties that performed strongly in earlier council elections. Throughout the paper, we highlight how these findings can be related to an incumbency externality effect and to the theory of divided government.     

Costly information acquisition. Is it better to toss a coin?

This paper presents a strategic model of common value elections with endogenous information acquisition. It proves that majoritarian elections can fail to aggregate information when voters have heterogeneous skills and provides necessary and sufficient conditions for information aggregation. Inefficiencies can be partially corrected by limiting participation to the most competent citizens, a result which provides a rational foundation for epistocratic government.     

Present bias and the inefficiency of the centralized economy: The role of the elasticity of intertemporal substitution

We analyze an endogenous growth model considering agents with an isoelastic utility. Preferences are characterized by a utility affected by a negative externality, and a level of impatience which decays with the time distance from the present. Agents who cannot commit the actions of their future selves, play a game against them. The stationary equilibrium of this game defines a balanced growth path with a slower growth when played by subsequent central planners than when played by decision makers in the market economy. First, we prove that the fast growing market economy implies higher welfare if the negative externality is small, while the centralized economy is welfare improving above a given threshold for the externality (obtained for a specific family of non-constant discount functions). Secondly, we observe that this threshold increases with the elasticity of intertemporal substitution in consumption. Therefore, the greater this elasticity the more likely it is that the externality lies below this threshold, where policy interventions would not be adequate. Finally, as one would expect, the range of values of the externality for which the market equilibrium provides higher welfare widens the more different from constant discounting time preferences are, due either to a wider range of variation for the instantaneous discount rates or because these decay more slowly.     

Political trust as rational belief: Evidence from Chinese village elections

Democratic governance is believed to improve government responsiveness to citizens’ demand for public goods. In China, villagers’ committee elections represent a major progress in China’s development toward good governance. We develop a rational model to explain villagers’ participation. Utilizing a national survey of rural residents in 2005, this paper tests the insights of the model. Two findings are of interest to the students of voting and elections. First, there is disagreement over the causal relationship between political trust and voting. This paper offers a rational interpretation of political trust by emphasizing the informational aspect of the concept. Second, voting is generally theorized as a process of overcoming various costs. The prospect of benefits figures more prominently in Chinese village elections. Our findings highlight the pivotal role of township governments in China’s rural politics and reveal the inner dilemma of democratization in China.     

Heterogeneous sports participation and labour market outcomes in England

Based on a unique composite dataset measuring heterogeneous sports participation, labour market outcomes and local facilities provision, this article examines for the first time the association between different types of sports participation and employment and earnings in England. Clear associations between labour market outcomes and sports participation are established through matching estimation while controlling for some important confounding factors. The results, which are supplemented and supported by a formal sensitivity analysis, suggest a link between different types of sports participation to initial access to employment and then higher income opportunities with ageing. However, these vary between the genders and across sports. Specifically, the results suggest that team sports contribute most to employability, but that this varies by age across genders and that outdoor activities contribute most towards higher incomes.     

Sport event attendance as a function of education: evidence from the UK

This article studies the role of education in the decision to attend sporting events. The overall objective is to verify whether more educated individuals are more likely to go to sports events than their less educated counterparts. If education socializes persons to focus on sports, it would then partially offset negative alternatives such as alcohol, drug abuse and unlawful behaviours, creating a positive externality. Sport events consumption is extensive, highlighting the potential economic importance of the sports-education externality. To establish the role of education in sport attendance, this article applies a probabilistic linear regression model to data from the UK. The econometric formulation associates sport event attendance in the left hand side with education in the right hand side, while controlling for the socioeconomic variables that are known to affect a consumer’s decision to go to a sport event: gender, age, income, employment status, children, marital status, and geographical location, among others. These findings add to a somewhat limited literature on both the effect of education on sports attendance and secondarily, on the impact of other socioeconomic variables on attendance.     

Repeated price competition between individuals and between teams

We conducted an experimental study of price competition in a duopolistic market. The market was operationalized as a repeated game between two “teams” with one, two, or three players in each team. We found that asking (and winning) prices were significantly higher in competition between individuals than in competition between two- or three-person teams. There were no general effects of team size, but prices increased with time when each team member was paid his or her own asking price and decreased when the team's profits were divided equally. This result is consistent with a simple model of individual learning.     

Sequential teamwork in competitive environments: Theory and evidence from swimming data

Many tasks require the input by more than one person very often with members of the team contributing sequentially. However, team production is plagued by disincentive problems. We investigate individual incentives to team production with sequential contributions and competing teams. We show that earlier contributors free-ride on team members contributing later on. We test our predictions on sports data using an athlete's performance in the individual race as a natural control for his relay performance. Our empirical findings strongly support the theoretical claims.     

Malnutrition and Child Labor

In pre‐industrial and developing economies, it is common to find (i) entire families, including children, working together in family farms or urban factories; and (ii) a positive link between a person's consumption and her productivity. This paper argues that there is a natural reason for the concurrence of (i) and (ii). As a rule, households are characterized by intra‐household altruism: an increase in the income of an individual increases the consumption of all household members. Hence, when an employer pays an adult worker a high wage to enhance her productivity, part of it ends up augmenting her children's consumption and productivity. One way for the employer to prevent this leakage and internalize the externality is to employ the children as well. This explains the higher incidence of family labor in poor societies where (ii) is more likely to be true.     

The impact of gender quotas on electoral participation: Evidence from Italian municipalities

We analyze the effect of gender quotas on electoral participation by using a dataset regarding Italian municipal elections. Gender quotas were in force in Italy from 1993 to 1995. Given the short period covered by the reform, some municipalities never voted using a gender quota. We identify a treatment and a control group and estimate the effects of gender quotas by using a Difference-in-Differences estimation strategy. Electoral turnout shows a decreasing trend, but turnout decreased significantly less in municipalities affected by the reform, suggesting that gender quotas produced an increase in electoral participation. The effect on electoral turnout is driven by an increase in valid ballots. The effect is smaller in the southern part of the country, which typically manifests more traditional gender roles. We also find that female electors react more than males.     

Revealed preferences and aspirations in warm glow theory

In warm glow models, an agent may prefer one alternative but aspire to choose another. The agent chooses her aspiration if she gets a sufficiently large warm glow payoff for acting as she aspires. This basic framework is widely used in models of turnout in elections and contributions to public goods, but is often criticized for being ad hoc. In this paper, we provide choice-theoretic foundations for warm glow theory. We characterize the empirical content of warm glow theory, show how to infer the core elements of the model from data and show that it is possible to predict behavior even when preferences and aspirations are not revealed. Our results provide support for assumptions often made in the literature and suggest new applications for warm glow models.     

An institutional analysis of voter turnout: the role of primary type and the expressive and instrumental voting hypotheses

Recent events highlight primary type as an institutional variable that merits further examination in the economics literature on voter turnout. Using panel data for U.S. gubernatorial elections and treating primary type as a proxy for candidate deviation from the median voter, we test whether primary type changes voter turnout and whether that change is dominated by instrumental or expressive voting. The results show that states with more open primaries tend to have greater voter turnout in general elections, and that this increase reflects the effect of open primaries on expressive voting.

ECONOMIC FREEDOM,SPORT POLICY,AND INDIVIDUAL PARTICIPATION IN PHYSICAL ACTIVITY: AN INTERNATIONAL COMPARISON

Many countries promote participation in physical activity among its citizens. We undertake an international comparative analysis of participation using data from 34 countries in the 2007 International Social Survey Programme Leisure Time and Sports module, augmented with country‐specific characteristics capturing economic freedom and national sport policy. Gross domestic product per capita and economic freedom are associated with higher physical activity participation; past success of the national team in the Olympics is associated with lower participation, but hosting sports mega‐events is associated with higher participation. Our findings indicate that participation in sport and physical activity falls with age and rises with education and income. (JEL H59, I12, I18, J22, L83)     

Determinants of obesity in Brazil: the effects of trade liberalization and socio-economic variables

This article aims to evaluate a possible relation between increased Brazilian trade openness and increasing observed rates of overweight and obesity during the last 25 years. We develop an economic model where formal trade barriers are eliminated, and resulting sociocultural outcomes such as the adoption of westernized lifestyle in traditional non-western countries prevails, which could imply a health externality. In order to empirically analyse the influence of trade flows on overweight and obesity in Brazil, a balanced fixed-effects panel model has been estimated. Data for the 26 Brazilian states plus the Federal District are run for 1988/1989, 2002 and 2008. We found that an increase in trade openness leads to an increase in overweight and obesity ratios in Brazil. Hence results seem to point that there is a health externality in Brazil due to trade liberalization. However, more consistent evidence may be necessary to convince politicians and policymakers that any interference will be necessary to correct this externality.     

Escaping epidemics through migration? Quarantine measures under incomplete information about infection risk

This paper explores the implications for public policy of the fact that individuals have incomplete but private information about their exposure to infectious disease when they make migration decisions. In a 2-period model we study conditions under which the presence of quarantine measures may lead to inefficient outcomes by strengthening individuals' interest in migration to escape centres of disease and thereby imposing negative externalities on other uninfected individuals. We show first that when the disease has an epicentre, the marginal migrant imposes a net negative externality. Secondly, quarantine policies may sometimes encourage migration instead of discouraging it. Thirdly, even when they succeed in discouraging migration, quarantine policies may lower social welfare, and even increase overall disease incidence, if they go too far, thereby discouraging those intra-marginal migrants for whom private benefits exceed private costs by more than the negative externality they impose on others.