A New Database on the Structure and Development of the Financial Sector

This article introduces a new database of indicators of financialstructure and financial development across countries and overtime. The database is unique in that it combines a wide varietyof indicators that measure the size, activity, and efficiencyof financial intermediaries and markets. It improves on previousefforts by presenting data on the public share of commercialbanks, introducing indicators of the size and activity of nonbankfinancial institutions, and constructing measures of the sizeof bond and primary equity markets.     

When is reputation bad?

In traditional reputation models, the ability to build a reputation is good for the long-run player. In [Ely, J., Valimaki, J., 2003. Bad reputation. NAJ Econ. 4, 2; http://www.najecon.org/v4.htm. Quart. J. Econ. 118 (2003) 785–814], Ely and Valimaki give an example in which reputation is unambiguously bad. This paper characterizes a class of games in which that insight holds. The key to bad reputation is that participation is optional for the short-run players, and that every action of the long-run player that makes the short-run players want to participate has a chance of being interpreted as a signal that the long-run player is “bad.” We allow a broad set of commitment types, allowing many types, including the “Stackelberg type” used to prove positive results on reputation. Although reputation need not be bad if the probability of the Stackelberg type is too high, the relative probability of the Stackelberg type can be high when all commitment types are unlikely.     

A model of racially changing neighborhoods

The present paper describes a simple mathematical model for neighborhoods under-going a racial transition. It is shown that such neighborhoods can be described by 2 parameters which take into account a wide diversity of situations.     

Does Competition Affect Bank Risk?

Although policymakers often discuss trade-offs between bank competition and stability, past research provides differing theoretical perspectives and empirical results on the impact of competition on risk. We employ a new approach for identifying exogenous changes in the competitive pressures facing individual banks and discover that an intensification of competition materially boosts bank risk. With respect to the mechanisms, we find that competition reduces banks’ profits, pricing power, and charter values and increases banks’ provision of nontraditional, riskier banking services and lending to riskier firms.     

The influence of chatbot humour on consumer evaluations of services

Technological advances have enabled firms to automate customer service by employing artificial intelligence (AI) chatbots. Despite their many potential benefits, interactions with chatbots may still feel machine-like and cold. The current study proposes the use of humour by chatbots as a gateway to humanizing them and thereby enhancing the customer experience. Across three experimental studies, the results reveal that (i) the use of humour enhances service satisfaction when it is used by a chatbot but not when it is used by a human agent, (ii) this chatbot humour effect is serially mediated by enhanced perceptions of anthropomorphism and interestingness of the interactions with the chatbot, and (iii) whilst both positively and negatively valenced chatbot humour may enhance the interestingness of the interactions, socially appropriate (i.e., affiliative) humour as opposed to inappropriate (i.e., aggressive) humour leads to enhanced service satisfaction. This study extends the understanding of the humanization processes of chatbots and provides guidelines for how firms should use chatbot humour to positively influence consumers' service satisfaction.     

Twin peaks: Expressive externality in group participation

We introduce a model of group behavior that combines expressive participation with strategic participation. Building on the idea that expressive voting in elections is much like rooting for a sports team, we give applications to both sporting events and elections. In our model there is an expressive externality: an individual enjoys an event more when more of her peers come out to support her preferred party or team. We show that this results in the possibility of “tipping”—that participation may jump up discontinuously when the externality becomes strong enough. We examine the implications for pricing by sports teams and for voter turnout.