Collusive dominant-strategy truthfulness

We show that collusion and wrong beliefs may cause a dramatic efficiency loss in the Vickrey mechanism for auctioning a single good in limited supply. We thus put forward a new mechanism guaranteeing efficiency in a very adversarial collusion model, where the players can partition themselves into arbitrarily many coalitions, exchange money with each other, and perfectly coordinate their actions. Our mechanism bypasses classic impossibility results (such as those of Green and Laffont, and of Schummer) by providing the players with a richer set of strategies, making it dominant for every coalition C to instruct each of its members to report truthfully not only his own valuation, but also his belonging to C. Our mechanism is coalitionally rational, which implies being individually rational for independent players.     

Collusive behaviour under cost asymmetries when firms compete in supply functions

This paper investigates the effect of cost heterogeneity in cartel formation and its sustainability over time when firms compete in supply functions under uncertainty. We find that cartel formation and collusion sustainability are hindered as cost differences increase. Efficiency losses caused by collusive behaviour are shown to decrease as asymmetry increases and, therefore, welfare losses also decrease. We compare our results with those obtained under Cournot and Bertrand competition.     

Collusive outcomes in price competition

In this paper we provide a sufficient condition for collusive outcomes in a single-shot game of simultaneous price choice in a homogeneous product market with symmetric firms and strictly convex costs. We also prove the counterintuitive result: if the second derivative of the cost function is nonincreasing in output, it is easier to sustain collusion when the number of firms increases.     

Collusive Long-Run Investments Under Transmission Price-Caps

In the short run, constraints in the electricity transmission system may give market power to generators. This paper examines whether the constraints themselves are a long-run equilibrium outcome in a competitive environment. We show that independent transmission companies and generators can tacitly collude to raise prices to consumers and divide the resulting profits. We also show that price cap regulation does not prevent this behavior and may in fact contribute to it. The mechanism for collusion is that generators locate their plants so that a capacity-constrained transmission line lies between them and their consumer market. We show that this constraint-based collusion can be sustained in a static game without any punishment strategies.     

Strictness of leniency programs and asymmetric punishment effect

We analyze the impact of leniency programs on the behavior of firms participating in illegal cartel agreements in a two-stage repeated game model. Our approach takes into account asymmetric punishment effect and allows to discuss the design of leniency programs in the setting with asymmetries. The main contribution of the paper is that we consider heterogeneous firms. This heterogeneity results in additional costs in case of disclosure of the cartel, which are caused by asymmetric punishments. Next, following current antitrust rules, we analyze effects of the strictness of leniency programs, which reflects the likelihood of getting a complete exemption from fine even in case many firms self-report simultaneously. Our main conclusion is that leniency programs work better for small companies, since a lower rate of law enforcement is needed in order to induce self-reporting by smaller firms, while big firms are less likely to start a cartel in the first place given the possibility of self-reporting in future. Finally, we analyze optimal enforcement strategies of the antitrust authority and conclude that the authority with limited resources should implement more generous leniency rules the more cartelized the economy is.     

The effect of leniency programs on endogenous collusion

The objective of a leniency program is to reduce sanctions against collusion if a participant voluntarily confesses his behavior or cooperates with the public authority’s investigation. Constructing a model in which the detection probability varies over time, Harrington (2008) pointed out that there are three channels through which the leniency program can affect the collusion amount; furthermore, he presented a sufficient condition under which the maximum leniency is optimal. After extending the model by endogenizing the degree of collusion as well as equilibrium selection in the self-reporting stage, we revealed that the Race to the Courthouse effect disappears and that the maximum reduction is always optimal.     

Legal liability under an IDM program

Integrated disability management (IDM) programs offer employers a simple, strategic approach to managing health and lost time. However, components of these programs also present potential liabilities under federal, and sometimes, state law. This article reviews the sources of these liabilities and summarizes techniques for minimizing the risk of employers (and managers individually).     

A Theory of Bureaucratization Based on Reciprocity and Collusive Behavior

This paper addresses how an organization becomes a bureaucracy . Bureaucratization emerges from a self-enforced norm of reciprocity between agents in an organization who exchange favors and promote subgoals which differ from the objective of the firm. Such collusive behavior becomes harder and harder to prevent over time. As a result, incentive schemes lose their flexibility and bureaucratization becomes a necessary equilibrium phenomenon in the long run. The distribution of agents' private information, their preferences for the future and the force of the social norm of reciprocity are analyzed in terms of their effects on the long-run behavior of the organization and on the speed of the bureaucratization process.     

Innovation under the Climate Wise program

This paper examines the impact of participation in the Climate Wise program, one of the largest voluntary programs enacted in the US, on innovative activity by firms. In operation from 1993 to 2000, the Climate Wise program was designed to reduce greenhouse gas emissions by promoting innovation in energy efficiency and energy related activities. We begin by examining what types of firms were most likely to participate in this voluntary initiative. We find that the Climate Wise program was attractive to large firms, more R&D intensive firms, and firms with more financial resources. To consider the impact of Climate Wise participation on the innovative behavior of firms, we investigate whether participants and non-participants differed in the number of successful environmental and non-environmental patent applications between 1993 and 2003. We find some evidence that participation in the Climate Wise leads to a change in environmental patenting but only among less R&D intensive firms.     

Harmonization of Corporate Tax Systems and Its Effect on Collusive Behavior

We study how harmonization of corporate tax systems affects the stability of international cartels. We show that tax base harmonization reinforces collusive agreements, while harmonization of corporate tax rates may destabilize or stabilize cartels. We also find that bilateral and full harmonization to a common standard is worse from society's point of view than unilateral harmonization to a minimum tax standard.     

股权分置改革后大股东与管理者合谋的博弈分析

股权分置改革完成后,中国上市公司的股权结构将发生重大变化,即实现股份全流通和股权分散化,特别是在上市公司实行股权激励计划后,出于和大股东相同的追求股权价值最大化的目的,管理层有可能成为虚假信息披露的直接提供者,与大股东合谋损害中小股东利益。利用核以及类Shapley值概念分析了两者合谋的根源和实现条件,结果表明:除了加强各自的收益、成本控制外,对其中一方参数(如持股比例)的控制会影响到另一方参与合谋的积极性,通过相互约束可以维护中小股东利益,从而实现上市公司的良性发展。     

Mergers,cartels and leniency programs: The role of capital stocks

This paper examines the impact of mergers on collusion, depending on the endowment of capital assets among firms. We show that mergers render collusion easier to sustain when an asymmetric capital stock is combined with less-efficient insiders, due to more symmetric conditions and tighter incentive constraints. Moreover, the model allows us to determine an optimal threshold of asymmetry between insiders and outsiders such that mergers have pro-competitive effects; we compare this value with that which would generate perfect symmetry between firms after the merger.     

Plant domestication more rapid under optimizing behavior

We assume that early Neolithic cultivators had an optimizing behavior aiming yield maximization and labor efficiency. Then we conduct a hypothetical optimization exercise by examining which consequences such behavior would have if applied to the cultivation of Near-Eastern wild cereals, especially on their rate of domestication measured by the frequency of non-shattering seeds. Two stages of the cultivation process are analyzed, the harvest and the processing. The harvest stage requires two strategies, one about the state of ripeness at the harvest and the other about the harvesting method. We demonstrate that under an optimizing behavior most mature seeds are harvested—by combining two technologies, ground collection and sickling—and thus this stage leads to no selective pressure. On the contrary, the processing stage, from threshing to storage, leads to positive selection when the products of the two harvests are processed separately, a strategy resulting from labor efficiency and risk minimization. Therefore, and from a theoretical point of view, an optimizing behavior tends to support a rapid pathway toward plant domestication, even though the latter is an unconscious outcome of human behavior.     

Saving and retirement behavior under quasi-hyperbolic discounting

This paper investigates saving and retirement behavior using a quasi-hyperbolic discounting model with endogenous labor supply. The behavior of quasi-hyperbolic-discounting consumers is compared with optimal behavior, which is obtained under exponential discounting. The quasi-hyperbolic discounters, whether naïve or sophisticated, under-save and retire early compared with an exponential discounter, if and only if the present-biased marginal utility of future consumption decreases with stronger present bias. Logarithmic utility functions and constant-absolute-risk-aversion utility functions can both exhibit this property. In other words, quasi-hyperbolic discounting explains why, consistent with previous empirical studies, under-savers might also be early retirers. Under logarithmic utility, a wage tax and an interest subsidy can counteract the under-saving and early retirement and improve consumer welfare.     

Insurance and the behavior of competitive firms under revenue risks: a note

This paper re-examines the model of Ford, Mpuku, and Pattanaik [“Revenue Risks, Insurance, and the Behavior of Competitive Firms”.Journal of Economics 64 (1996): 233–246] wherein a risk-averse competitive firm faces insurable revenue risk. The optimal output and insurance cover of the firm are shown to be deterministically related in that the marginal costs of self-insurance and market insurance are equated. In response to increasing risk aversion, the firm always takes a higher insurance cover. Increasing fixed costs generate an income effect which induces the firm to take a higher insurance cover should the preference of the firm satisfy decreasing absolute risk aversion. Market insurance and self-insurance can be either substitutes or complements, depending on the shape of the variable insurance-premium schedule.     

Tenure system and its impact on grading leniency,teaching effectiveness and student effort

This study provides new evidence of the causal effect of the tenure system on grading leniency, teaching effectiveness, and student effort by taking advantage of a natural experiment in one public university in Taiwan. The results show that assistant professors subject to the tenure system tend to grade more leniently and fail fewer students, as opposed to assistant professors not affected by the policy. The tenure policy lowers the probability of failing a class by 15%. Teaching effectiveness measured by the valued-added model also falls significantly by 0.32 standard deviation of the average grades in subsequent courses, roughly 6.6% of the sample means. The effect on student effort also is significant. Study time and class absences decline by 3 and 10%, respectively. The results suggest that the tenure system reduces teaching effectiveness and leads to lenient grading. Moreover, although used as a measure of teaching effectiveness in tenure promotion, student evaluation of teaching cannot truly reflect teaching quality.     

Joint implementation under asymmetric information and strategic behavior

Joint Implementation (JI) under the Framework Convention on Climate Change means that countries could partly offset their national abatement commitments by investing in CO₂ abatement projects abroad. JI is introduced as a mechanism for achieving a certain global abatement target less costly by separating the commitments from the implementation of measures. This paper studies the design of a JI contract when the investor has incomplete information about the foreign firm which carries out the JI project (the host). Asymmetric information leads to a decrease in the potential cost savings from JI. Furthermore, private information held by the potential host firm could give the firm a significant positive utility of participating in JI projects. The possibility of being a host for a JI project in the future can prevent potential host firms from investing in profitable abatement projects today. The paper analyzes the impact on emissions of CO₂ of strategic behavior among potential hosts for JI projects.     

Implementing a medical self-care program

Medical self-care is a type of wellness program that encourages employees to decide what to do for themselves with or without provider assistance. This article provides a tool for assessing the value of such a program for cost containment.     

Group decision-making theory and behavior under performance-based water quality payments

Two theoretical models explaining group allocation decisions under watershed level, performance-based payments are explored: (I) reward and penalize individual contributors; and (II) reduce the problem with cost-sharing and cooperative abatement. Under Model I, an optimal amount of pollution from individual contributors can be achieved with proper payment incentive and group allocation formula. Model II represents a cost effective solution to pollution reduction where the group optimizes its return from group payments, but does not necessarily achieve an optimal level of pollution. Field experiment observations support farmer behavior closer to Model II.