Relative versus Absolute Speed of Adjustment in Strategic Environments: Responder Behavior in Ultimatum Games

Learning models predict that the relative speed at which players in a game adjust their behavior has a critical influence on long term behavior. In an ultimatum game, the prediction is that proposers learn not to make small offers faster than responders learn not to reject them. We experimentally test whether relative speed of learning has the predicted effect, by manipulating the amount of experience accumulated by proposers and responders. The experiment allows the predicted learning by responders to be observed, for the first time.     

If you are offered the Right of First Refusal,should you accept? An investigation of contract design

Rights of first refusal are contract clauses intended to provide the holder of a license or lease with some protection when the contract ends. The simplest version gives the right holder the ability to act after potential competitors. However, another common implementation requires the right holder to accept or reject some offers before potential competitors are given the same offer, and, if the right holder rejects the initial offer, allows the right to be exercised affirmatively only if competitors are subsequently offered a better deal (e.g. a lower price).We explore, theoretically and experimentally, the impact this latter form of right of first refusal can have on the outcome of negotiation. Counterintuitively, this “right” of first refusal can be disadvantageous to its holder. This suggests that applied contract design may benefit from the same kind of attention to detail that has begun to be given to practical market design.     

Incentives in two-sided matching with random stable mechanisms

Summary This paper considers the incentives confronting agents who face the prospect of being matched by some sort of random stable mechanism, such as that discussed in Roth and Vande Vate (1990). A one period game is studied in which all stable matchings can be achieved as equilibria in a natural class of undominated strategies, and in which certain unstable matchings can also arise in this way. A multi-period extension of this game is then considered in which all subgame perfect equilibria must result in stable matchings. These results suggest avenues to explore markets in which matching is organized in a decentralized way.     

Knowledge Spillovers and Growth in the Disagglomeration of the Us Advertising-Agency Industry

We investigate knowledge spillovers and externalities in the disagglomeration and growth of the advertising-agency industry. A simple model of high demand, low wages, and externalities associated with clusters of related industries can explain the dispersion of advertising agency employment across states. Other factors affected the industry growth rate within states. Consistent with Jacobs and Porter but contrary to Marshall, Arrow, and Romer, competition, but not specialization, enhanced growth. In accord with Porter (1990), growth increased with buyer cluster size. Diversity had no effect on growth. Despite improvements in telecommunications and transportation reducing effective distances, location still matters.     

Independence of irrelevant alternatives,and solutions to Nash's bargaining problem

Several variants of the axiom of independence of irrelevant alternatives are considered, in the context of Nash's bargaining problem.     

A Theoretical Reexamination of Privatization: Assessing its Welfare Impacts

Privatization has been one of the significant public policies adopted in the last two decades. Previous studies have focussed on efficacy gains at the firm and industry levels. This paper intends to reconsider the distributive impacts of privatization on the economy as a whole from a theoretical perspective. Specifically, it supposes an economy with two goods, two producers and two consumers, in which it is assumed that one of the consumers is not able to obtain one good that is regarded as a necessity. Since one basis of government intervention is to provide necessity to people who would not otherwise be able to obtain it, government intervention into production is assumed to satisfy this purpose. Using comparative statics, the paper analyzes how the welfare of two consumers is affected by this intervention, and shows that intervention can increase the welfare of some consumers and social welfare in general.     

What buyers like from salesmen

This study applies content analysis to determine the attributes or factors of salespeople that provide industrial purchasers with the greatest level of satisfaction. The results provide valuable information to industrial marketers in their selection of salespeople, developing sales training programs, and understanding buyer characteristics, as well as formulating and developing strategies.