Leadership and overcoming coordination failure with asymmetric costs

We study how the heterogeneity of agents affects the extent to which changes in financial incentives can pull a group out of a situation of coordination failure. We focus on the connections between cost asymmetries and leadership. Experimental subjects interact in groups of four in a series of weak-link games. The treatment variable is the distribution of high and low effort cost across subjects. We present data for one, two and three low-cost subjects as well as control sessions with symmetric costs. The overall pattern of coordination improvement is common across treatments. Early coordination improvements depend on the distribution of high and low effort costs across subjects, but these differences disappear with time. We find that initial leadership in overcoming coordination failure is not driven by low-cost subjects but by subjects with the most common cost type. This conformity effect may be due to a kind of group identity or to the cognitive simplicity of acting with identical others.      

Asymmetric Competition on Commuter Routes: The Case of Gasoline Pricing

The intensity of competition among firms depends on commuting patterns, as has been noted, because commuters can reach any store located on their route to work without incurring any incremental travel costs. We incorporate this insight into our estimation of a retail gasoline price function for Lexington, Kentucky, by treating each commuter route as a separate market. Competition in these markets, however, displays an asymmetry because all the commuters travel to the Central Business District (CBD). To accommodate this asymmetry, we treat the market segments on each side of a firm as distinct submarkets and include independent variables (number of competitors and submarket length) from each submarket. Both sets of structural variables influence gasoline prices in the expected direction, but the variables representing the submarket near the CBD have significantly stronger effects. Refinements show that a firm's strongest competition comes from sellers of different brands and from its nearest neighbor.     

Business and Professional Ethics in Transitional Economies and Beyond: Considerations for the Insurance Industries of Poland, the Czech Republic and Hungary

This paper examines several key aspects of the ethical environment facing the insurance industries of Poland, The Czech Republic and Hungary as they complete the transition from Communist insurance systems built upon state-owned monopolies to viable private domestic insurance markets, and then seek to harmonize their markets with the single insurance market of the European Union. Since many types of ethical problems encountered during the transition are unlikely to diminish significantly as a result of either privatization or regulation of the insurance markets of these countries, measures are identified that should help to improve the ethical environments of these markets.