Preference intensities and risk aversion in school choice: a laboratory experiment

We experimentally investigate in the laboratory prominent mechanisms that are employed in school choice programs to assign students to public schools and study how individual behavior is influenced by preference intensities and risk aversion. Our main results show that (a) the Gale–Shapley mechanism is more robust to changes in cardinal preferences than the Boston mechanism independently of whether individuals can submit a complete or only a restricted ranking of the schools and (b) subjects with a higher degree of risk aversion are more likely to play “safer” strategies under the Gale–Shapley but not under the Boston mechanism. Both results have important implications for enrollment planning and the possible protection risk averse agents seek.     

Dividend timing and behavior in laboratory asset markets

Summary. This paper investigates the effect of dividend timing on price bubbles and endogenous expectations in twenty-six laboratory asset markets. In ten "A1" markets, a single dividend is paid at the end of the trading horizon. In nine "A2" markets, dividends are paid at the end of each trading period. In seven "A3" markets, some of the dividends are paid at the end of the trading horizon, and the rest are paid on a per-period basis. The results indicate that price bubbles are most likely in A2 markets, less likely in A3 markets, and least likely in A1 markets. Six distinct hypotheses are considered. The data suggest that the concentration of dividend value at a single point in time helps to create common expectations, and thus significantly reduce the incidence of bubbles. Also, the results underscore the difficulty facing econometric tests on field data where fundamental value has to be approximated.     

Compensation payments for habitat heterogeneity: Existence, efficiency, and fairness considerations

Compensation payments for voluntary conservation measures have become an important tool for biodiversity conservation worldwide. Each year substantial financial resources are spent on such measures, particularly in the context of agri-environmental schemes. In Europe, a debate has started on whether this money is spent effectively. In response to this debate it has been suggested that a portfolio of measures leading to habitat heterogeneity be implemented. Although payments for heterogeneous conservation measures have been analysed in the literature, it has never been questioned that payments can be designed in a way that encourages enough land users to carry out each conservation measure within a portfolio of measures. The purpose of this paper is to demonstrate that such payments do not always exist. Moreover, in cases where payments for habitat heterogeneity exist the payment scheme may require overcompensation of the land users, posing a limit to both efficiency and fairness considerations.     

Endogenous timing and the choice of quality in a vertically differentiated duopoly

The endogenous choice of timing is discussed in a vertically differentiated duopoly where quality improvement requires a fixed convex cost. The timing decision concerns the quality stage. Using an extended game with observable delay, it is shown that only simultaneous equilibria can arise. This puts into question the ability of Stackelberg games to describe the entry process.     

The endowment effect and intertemporal choice: a laboratory investigation

We present a laboratory investigation of intertemporal choice (i.e., elicited discount rates) allowing for the influence of the endowment effect. Consistent with the previous literature, we hypothesize that the endowment effect in an intertemporal choice setting results in substantially higher discount rates relative to when individuals treat the resources in question as found money. Our results support this hypothesis and our experimental design provides a new protocol for conducting choice experiments wherein the endowment effect is an important determinant of behaviour.     

Experiments on centralized school choice and college admissions: a survey

Experimental Economics - The paper surveys the experimental literature on centralized matching markets, covering school choice and college admissions models. In the school choice model, one side of...     

On the choice of regularization parameters in specification testing: a critical discussion

This article reviews and discusses the problem of choosing smoothing parameters and resampling schemes for specification tests in econometrics. While smoothing is used for the regularization of the non-specified parts of the null hypothesis and omnibus alternatives, the resampling serves for determining the critical value. Several of the existing selection methods are discussed, implemented, and compared. This has been done for cross-sectional data along the example of additivity testing. Doubtless, all problems considered here carry over to specification testing with dependent data. Intensive simulations illustrate that this is still an open problem that easily corrupts these tests in practice. Possible ways out of the dilemma are proposed.     

在科学发展观下坚持效率和公平的统一

在收入分配领域,效率和公平的关系从根本上看是统一的。树立全面、科学的效率观,是落实科学发展观的基础。更加注重社会公平,有利于扩大内需、缓解收入分配差距和促进经济结构的调整,为转变经济发展方式创造有利条件。当前促进社会公平的重点,是落实初次分配的公平。在理顺分配关系的基础上,采取多种措施提高低收入群体的劳动报酬,并提高劳动报酬在初次分配中的比重。     

Sectoral differences in the use of information technology and matching efficiency in the US labour market

The present study examines how the heterogeneity of use of information technology in production affects the probability that an unemployed worker will be matched with a vacancy. Using US time series from 1967 to 2007, I construct measures of dispersion of the stocks of software and hardware per worker across 13 industries. The measures exhibit three waves whose timing roughly corresponds to the diffusion of mainframe computers in the 1960s and 1970s, personal computers in the 1980s and the Internet in the late 1990s. After controlling for other influences, I find that the probability of transitioning from unemployment to employment responds negatively to an increase in either measure. The results imply that by enhancing technical heterogeneity, the diffusion of a new technology may suppress the job finding rate.     

Public choice and the development of modern laboratory experimental methods in economics and political science

The paper is an account of the development of laboratory experimental methods in the early 1970s as influenced by the fields of Public Choice and Social Choice. Just a few key experiments conducted during a period when no experimental markets research was taking place, provide a bridge with the subsequent, rapid, growth of experimental economics. A new focus on public goods and externalities, as opposed to private goods traditionally used in economics experiments, required new representations of the commodity space and preference inducement methods. The importance of voting and collective decision making processes dictated the testing of equilibrium concepts from political science and cooperative game theory as opposed to the competitive equilibrium and Nash equilibria found in economics. The existence of many theories from multiple disciplines required new experimental designs and experimental tests. The Public Choice and Social Choice emphasis on comparing the performance of different types of collective decision processes induced early experiments related to institutional design and testing.     

Energy efficiency and heating technology investments: Manipulating financial information in a discrete choice experiment

We elicit homeowners’ willingness to pay (WTP) for energy efficiency and low-carbon technologies in the context of heating appliance replacement. We employ a within-between subject design that involves manipulating information in a two-stage discrete choice experiment (DCE) and use WTP space estimation to identify the role of financial information in reducing fossil fuel use. We find that homeowners’ average valuation of energy efficiency exceeds associated heating cost savings, suggesting that they also consider non-monetary benefits when evaluating this type of investment, whereas information about private and pro-social benefits of investments only has a limited impact on WTP. Evidence also suggests that homeowners have a strong preference for the existing technology. Consequently, fossil fuel users’ WTP for switching to low-carbon technologies does not cover respective investment cost differentials, and we derive evidence on how combined subsidies and information can induce these users to opt out of fossil technologies.     

The impact of school choice on student outcomes: an analysis of the Chicago Public Schools

We explore the impact of school choice on student outcomes in the context of open enrollment within the Chicago Public Schools (CPS). Roughly half of the students opt out of their assigned high school to attend a different CPS school, and these students are much more likely than those who remain in their assigned schools to graduate. To determine the source of this apparent benefit, we compare outcomes across (i) similar students with differential access to schooling options and (ii) travelers and non-travelers within the same school. The results suggest that, other than for students who select career academies, the observed cross-sectional benefits are likely spurious.     

The effects of generalized school choice on achievement and stratification: Evidence from Chile's voucher program

In 1981, Chile introduced nationwide school choice by providing vouchers to any student wishing to attend private school. As a result, more than 1000 private schools entered the market, and the private enrollment rate increased by 20 percentage points, with greater impacts in larger, more urban, and wealthier communities. We use this differential impact to measure the effects of unrestricted choice on educational outcomes. Using panel data for about 150 municipalities, we find no evidence that choice improved average educational outcomes as measured by test scores, repetition rates, and years of schooling. However, we find evidence that the voucher program led to increased sorting, as the “best” public school students left for the private sector.     

On the efficiency of a global market for carbon dioxide emission permits: Type of externality and timing of policymaking

We demonstrate that global permit markets are Pareto efficient despite the externality type, production or consumption, when income redistribution occurs after regional environmental policymaking. Ex-ante income redistribution is neutral if emissions affect production only, but non-neutral if emissions affect consumption.     

Yield management and perceptions of fairness in the hotel business

For the last two decades “yield management” (also called “revenue management”) has been increasingly employed in the hospitality sector in order to improve the yield from hotel structures. What’s more, the focus is progressively more centred on the customer instead of the room inventory. However, up to now, little research has investigated the effects of these practices on the relationships between hotels and their clients. This paper firstly examines the nature and the various aspects of customer perceptions regarding yield management practices, focusing especially on perceptions of fairness. Secondly, the paper analyses the variety of actions that hotel companies may design and implement in order to properly anticipate, face and manage customer conflicts resulting from perceived unfairness due to the use of the revenue management levers. Finally, these managerial techniques adopted by the hotel companies are considered in the framework of a business ethics approach. (JEL: M19, M31) This article is based on a paper presented at the 9th “Toulon-Verona” Conference - Excellence in services, University of Paisley, Scotland, 7^th-8^th September 2006.     

Contractual preferences and moral biases: social identity and procedural fairness in the exclusion game experiment

Many people may suffer from moral biases when making allocation decisions having consequences to others. This means that some factors hinder people from finding, or constructing, their true social preferences in those situations. As a counterforce to this, numerous devices of moral priming have evolved—such as parenting, formal education as well as various formal and informal contracting procedures. This paper focuses on the influences of social identity and the perceived fairness of contracting procedures on subjects’ behaviour in situations of allocation decisions. The analysis of experimental data suggest, first, that males are less likely than females to engage in other-regarding behaviour in a pre-agreement situation where two active players divide an endowment among themselves and a third, passive, player. However, this difference disappeared after the joint contract of the rule of dividing the endowment was made. Second, it was found that students of economics are less likely than other students to behave in an other-regarding way before the contract; this difference remained also in decisions after the contract was made. Finally, both a random selection mechanism and a majority voting mechanism were rated fair by the majority of the subjects. However, the data suggests that fairness ratings are positively associated with compliant behavior only in the case of the majority voting mechanism.     

Flip a coin or vote? An experiment on the implementation and efficiency of social choice mechanisms

Experimental Economics - Corporate boards, experts panels, parliaments, cabinets, and even nations all take important decisions as a group. Selecting an efficient decision rule to aggregate...