Entrepreneurs Seeking Gains: Profit Motives and Risk Aversion in Inventors’ Commercialization Decisions

Direct evidence has been lacking on entrepreneurs’ response to individual‐specific opportunities, and recent work suggests that entrepreneurship may be a non‐profit‐seeking activity and that entrepreneurs evaluate risk oddly. We model heterogeneous inventors and inventions, outside opportunities, sunk and nonsunk costs, and risk, to guide data analysis. We use assessment data from a center paid to assess the inventions’ economic potential. Inventors’ choices whether to commercialize their inventions and later whether to remain in production were consistent with profit‐seeking motives and risk aversion.     

Liability Insurance and Choice of Cars: A Large Game Approach

If a car, already on the road, is replaced by another one, more expensive to collide with, a negative externality spills over to other drivers. This paper studies such externalities, relating them to insurance and incentives. It formalizes links from liability rules to choice of car. By assumption, insurance is cooperative but car acquisition is noncooperative. Construing drivers' interaction as a large game, the paper considers how a Nash equilibrium—and its efficiency or fairness—is shaped by the underlying liability regime.     

Environmental Valuation – To Use or Not to Use? A Comparative Study of the United States and Europe

Valuation methods have been used for five main purposes in environmental decision-making. Cost–benefit analysis (CBA) of projects, CBA of new regulations, natural resource damage assessment, environmental costing, and environmental accounting. The relatively lower importance attached to economic efficiency in environmental decision-making in most European countries compared to the U.S.A., both legally and in practice, might account for our general finding that there are very few valuation studies in Europe which have served as a decisive basis for environmental policy and regulations. However, with EU's goal to establish environmentally adjusted national accounts and to apply CBA to environmental policy and regulations, time seems ripe for an increased use of valuation techniques in Europe.     

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Ohne Zusammenfassung     

Performance Pay and Adverse Selection*

It is well known in personnel economics that firms may improve the quality of their workforce by offering performance pay. We analyze an equilibrium model where worker productivity is private information and show that the firms’ gain from worker self‐selection may not be matched by a corresponding social gain. In particular, the equilibrium incentive contracts are excessively high‐powered, thereby inducing the more productive workers to exert too much effort and increasing agency costs stemming from the misallocation of effort.     

Advertising “like a girl”: Toward a better understanding of “femvertising” and its effects

This paper investigates the impact of femvertising (female empowerment advertising). More specifically, it hypothesizes that femvertising (vs. traditional portrayals of females in advertising) will reduce ad reactance among a female target audience, and that this in turn will enhance ad and brand attitudes. The results of three experimental studies indicate that this is indeed the case, and that the results hold across print and digital media, for five different product categories, and for femvertising focusing on challenging female stereotypes in terms of physical characteristics as well as the roles and occupations used to portray women in advertising. Although previous studies of the effects of female portrayals tend to focus on social comparison and self‐identity, the current paper considers the role of psychological reactance to (more or less) stereotypical portrayals in explaining these effects. The results suggest that marketers have much to gain from adapting a more proactive and mindful approach to the female portrayals they use in their ads.     

Does Poaching Distort Training?

We analyse the efficiency of the labour market outcome in a competitive search equilibrium model with endogenous turnover and endogenous general human capital formation. We show that search frictions do not distort training decisions if firms and their employees are able to coordinate efficiently, for instance, by using long-term contracts. In the absence of efficient coordination devices there is too much turnover and too little investment in general training. Nonetheless, the number of training firms and the amount of training provided are constrained optimal, and training subsidies therefore reduce welfare.