Organizations and overlapping generations games: Memory,communication, and altruism

This paper studies the role of memory and communication in overlapping generations (OLG) games between ongoing organizations. In each organization, each individual, upon entry into the game, replaces his predecessor who has the same preferences and faces the same strategic possibilities. An individual has no prior memory - that is, he does not directly witness the events that occur before his tenure. Instead, each individual relies on information about the past from his predecessor via cheap talk. This paper highlights the role of communication as a surrogate for memory.It has been shown elsewhere that Folk Theorems hold in OLG games with long enough lived individuals who can perfectly observe the past. However, the Folk Theorem fails for many games when individuals have no prior memory. We show that for OLG games without prior memory but with costly communication, a Folk Theorem holds only when there is some altruistic link between cohorts in an organization. Our main result asserts that if communication costs are sufficiently small, or if altruistic weights on successors are sufficiently large, then a strongly stationary Folk Theorem (i.e., equilibrium payoffs are time invariant) obtains if a managers message is public information. The equilibria in this Folk Theorem require a special form of intergenerational sanctions. In these sanctions, punishment is sometimes carried out long after both victim and perpetrator have left the game. Without this special structure, altruism may in fact destroy cooperation when it would otherwise be possible.Received: 18 April 2003, Accepted: 20 October 2003, JEL Classification: C72, C73, D74, D82We have benefitted from helpful comments and conversations with Luca Anderlini, Kirk Bailey, Hans Haller, Matthew Jackson, and Takashi Shimizu, and numerous seminar participants. This research is partially supported by the National Science Foundation, and by grants-in-aid for scientific research of the Ministry of Education of Japan. Of course, any remaining error is our own.     

Models of regional growth: An empirical evaluation

Cross section data are used to test two types of regional growth models: the demand and the supply based models. While the demand based model explained twice as much of the interregional variations in growth rates as did the supply model, we found that the basic element of the supply model, factor mobility, contributes significantly to the determination of regional growth. A model combining both demand and supply is developed and fitted tothe data. The performance of this model as judged by goodness of fit and dynamic simulations is remarkable. Long-run implications are derived from dynamic simulations.     

Conjoint analysis of demand for IP telephony: the case of Japan

With the recent diffusion of broadband (BB) services, Internet protocol (IP) telephony is expected to spread significantly in Japan. This article investigates the demand for IP telephony by using conjoint analysis. Projecting IP telephony demand also contributes to Japanese info-communication policy discussions. Two points are made. First, IP telephony is still currently considered an optional supplement or an add-on service option of high-speed BB Internet access services in Japan rather than a close substitute of existing plain old telephone service (POTS). At this point, we find little evidence that many households will promptly forsake their fixed line service for IP telephony. Second, we conclude that the key condition for the proliferation of IP telephony is the complete guarantee of quality of service (QoS), including voice quality, number portability, fax usage and emergency access, comparable to or exceeding that of existing POTS.     

Voice matters in a dictator game

We conducted a laboratory experiment to study the effects of communication in a dictator game, while maintaining subjects’ anonymity. In the experiment, the recipient has an opportunity to state a payoff-irrelevant request for his/her share before the dictator dictates his/her offer. We found that the independence hypothesis that voice does not matter is rejected. In particular, if the request is for less than half of the pie, the dictator’s offer increases as the recipient’s request increases. Additionally, there is no dictator who is other-regarding and, at the same time, does not react to the recipient’s request.

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