Bidding for Firms with Unknown Characteristics

When a region successfully attracts a firm by offering subsidies, the firm often commits itself to performance targets in terms of employment. In this paper, we interpret these firm‐specific targets as a consequence of incomplete information. We analyze a model of two regions that compete for a firm, assuming that the firm's productivity is ex ante unknown. We show that performance targets often induce overemployment in high‐productivity firms, and that tax credits are often superior to lump‐sum payments. Moreover, when regions differ in wage rates, the low‐wage region wins the bid and has a higher surplus than under complete information. Finally, we show that, under incomplete information, bidding might not lead to efficient firm location.     

The co-occurrence of self-observed norm-conforming behavior,reduction of zero observations and remaining measurement quality

Norm-violating behavior is characterized by clear social norms which prescribe the non-occurrence of that behavior. From the theoretical framework of Allport it is derived that specifically norm-conformation is consistent, while violating norms is expected to be inconsistent and more circumstantial. This is in contrast to test-theoretic approaches of delinquent behavior that assume that various norm-violating responses form a consistent answer pattern that is scalable and reliable. In this study we study the inter-correlations, scalability and reliability of norm-violating responses and their relation with the reduction of zero observations. In concordance with Allport’s view it is expected that different norm-violating self-report items have limited interrelatedness and are limited in scalability and reliability in the norm-violating sub-population. The NLSY98 self-report data show that a large majority of respondents (69 %) conform systematically to all ten different norms, while only nine percent admits more than two different violations. The results show that in subsamples of norm-violating respondents, the correlations between items become closer to zero, dependent on the amount of zero reduction. Furthermore, both Loevinger’s H coefficient of scalability and scale reliability become unsatisfactorily low, when 35 % or more strict norm-conforming subjects are removed.     

Economic Aspects of Loneliness in Australia

We highlight the problem of loneliness, and argue that it is not only a public health issue but also an economic problem. We provide a brief review of findings from the key literature on the associations between loneliness, mental and physical health, and healthcare costs; and then present some evidence on its trends, the extent of socioeconomic inequalities and its links with health and healthcare usage, in Australia. We hope to encourage further economics research on loneliness, and related issues of social isolation and poor social support, to aid the design of policies and interventions to reduce loneliness.     

The role of leadership in salespeople’s price negotiation behavior

Salespeople assume a key role in defending firms’ price levels in price negotiations with customers. The degree to which salespeople defend prices should critically depend upon their leaders’ influence. However, the influence of leadership on salespeople’s price defense behavior is barely understood, conceptually or empirically. Therefore, building on social learning theory, the authors propose that salespeople might adopt their leaders’ price defense behavior given a transformational leadership style. Furthermore, drawing on the contingency leadership perspective, the authors argue that this adoption fundamentally depends on three variables deduced from the motivation–ability–opportunity (MAO) framework, that is, salespeople’s learning motivation, negotiation efficacy, and perceived customer lenience. Results of a multi-level model using data from 92 salespeople and 264 salesperson–customer interactions confirm these predictions. The first to explore contingencies of salespeople’s adoption of their transformational leaders’ price negotiation behaviors, this study extends marketing theory and provides actionable guidance to practitioners.     

The warnings puzzle: an upstream explanation

Enforcement agencies issuing warnings are an empirical regularity in the enforcement of laws and regulations, but a challenge to the standard economic theory of public enforcement. A number of recent contributions explain the popularity of warnings as a response to information asymmetries between regulator and regulatee. We offer a distinct, but complementary explanation: Warnings can serve as a signaling device in the interaction between the enforcement agency and its budget-setting authority. By using costly warnings for minor offenses that would otherwise not be pursued, the agency can generate observable activity to escape budget cuts in subsequent periods. We show in a stylized model that warnings may indeed occur in an equilibrium of a game in which warnings are entirely unproductive in the agency-regulatee interaction, and thereby derive a testable hypothesis on regulatory agency behavior.