More Is Better, But Fair Is Fair: Tipping in Dictator and Ultimatum Games

This paper examines Allocators' willingness to reward and punish their paired Recipients. Recipients only compete in a skill-testing contest, the outcome of which determines the size of the surplus. In the dictator game, Allocators reward skillful Recipients, but punish unskillful ones only modestly. The punishment effect is mitigated by the belief held by some Allocators thateffortis the appropriate measure of deservingness. The ultimatum game extension reveals offerers' ability to adapt to the strategic environment. Offers to skillful Recipients in the ultimatum game, however, are shown to be motivated by a taste for fairness, and not strategic considerations.Journal of Economic LiteratureClassification Numbers: C70, C91, D63.     

Putting the learning curve in context

In implementation of change, people learn new ways of doing things, develop new skills, and adopt new organizational routines. This paper applies learning curve theory to implementation by developing a system dynamics model that includes two extensions to classic learning curve theory. First, the model includes a required output level for the individual. Second, the model includes a budget constraint on time that forces a choice between an old and a new way to achieve the output. Doing work the new way builds experience, increasing productivity and thus favoring continued use of the new skill, but model analysis demonstrates that this reinforcing process works to favor the new skill only at relatively high levels of productivity. Otherwise, the same process is a vicious cycle, driving out the new skill. The model exhibits a mode of behavior in which learning begins and then stalls and another mode in which the new skill becomes the preferred one. The paper identifies the tipping point between these two modes and characterizes the transition problem: Learning by doing is a dynamic process, a transition from use of an old way to a new way that requires accumulating experience beyond a threshold.     

ANALYST BEHAVIOR SURROUNDING TENDER OFFER ANNOUNCEMENTS

We examine the usefulness and credibility of analyst recommendations by focusing on their behavior surrounding tender offer announcements. For our 1998–2001 sample, we find analysts did not identify takeover targets through their recommendations nor did they distinguish between wealth‐increasing and wealth‐decreasing tender offers. We find some evidence of conflicts of interest in analyst recommendations, but it is confined to the 1999–2000 dot‐com period. However, the long‐run performance following recommendations suggests that these conflicts have little ultimate cost to investors.     

Price-cap regulation and market definition

One of the merits claimed for certain types of price-cap regulation is the possible long-run convergence of the prices of multi-product firms to Ramsey prices. Typically such regulated firms define commodities by such devices as dividing the day into discrete periods, customers into age-groups, distances into ranges, and so on. Allowing that such division is endogenous throws doubt on the ability of Laspeyre quantity-based price-caps to encourage an efficient market definition and hence to generate an efficient price structure.     

The Effectiveness of Gun Control Laws:

Abstract The purpose of this study is to statistically and empirically evaluate the effectiveness of the gun control laws that have been adopted by states and municipalities. States are divided into two groups: states with no restrictions as to gun use and states with restrictions (e.g., waiting periods, license, etc.). Multiple linear regression models are used to evaluate the relationship between the number of gun related deaths in 1990 and sets of determinants which include state laws and regulations governing the use of firearms. The study results indicate that gun control laws have a very mild effect on the number of gun related deaths while socioeconomic variables such as a state's poverty level, unemployment rate and alcohol consumption, have significant impact on firearm related deaths. These findings suggest that any reduction in resources spent on social programs tied to the Crime Bill may be counter-productive.     

Deviations from Expected Stakeholder Management,Firm Value,and Corporate Governance

We propose that high‐quality corporate governance may mitigate agency costs related to value‐destroying investments in stakeholder management (SM). Using an unbalanced panel of 9,051 firm‐year observations for 1,631 firms, we find that deviations from expected stakeholder management (ESM) are increasing in chief executive officer (CEO) portfolio delta. We find, however, that deviations from ESM are negatively related to proxies for effective board monitoring. We also document that the effect of governance mechanisms varies by industry (consumer or industrial orientation) and SM dimension. The results indicate that corporations with good governance pursue shareholder value maximization while constraining unnecessary investment in stakeholders.     

Investigating guanxi dimensions and relationship outcomes: Insights from Sino-Anglo business relationships

This study aims to develop and test a concept for improving Anglo-Chinese business relationships. By piecing together and incorporating both Chinese and western relationship constructs into a cohesive framework and testing this on a sample of Taiwanese importers, the study conceptually and empirically advances our understanding of the discipline further. Specifically, three facets of guanxi, namely ganqing (an affective element), renqing (reciprocation and favor), and xinren (personal trust) are conceptualized to determine cooperation and coordination, which in turn lead to improved performance. Based on a sample of 208 buyers (surveying perceptions of their relationships with Anglo suppliers), we provide empirical support for our concept and reveal that ganqing, renqing and xinren are crucial for fostering the development of such Sino-Anglo relationships. By providing an international flavor in terms of the constructs outlined and the importer-exporter context, the study provides fresh insights to help broaden our horizon further and understand more about relationships in an international context. Several implications are extracted from the study which a) western marketers importantly need to practice as they grapple to enter Chinese markets and nurture business relations, b) Chinese buyers can consider when managing their supplier portfolios and c) academics can use to help measure important relational constructs and undertaking research in a Chinese context.     

Was there policy “reform”? Evolution of EU domestic support for processed fruits and vegetables

Policy “reform” in agricultural markets is often associated with less government regulation and expenditures, or a shift towards more efficient interventions. The European Union (EU) adopted major policy changes for processed fruits and vegetables in 2001 and again in 2008, and we employ a simulation model to examine the effects of the three policy regimes in place before and after each of the changes. Our analysis incorporates the heterogeneity of processing firms in the EU and considers how they responded to the different policy regimes. Simulation results indicate that the EU subsidies increased EU tomato production by 3.8% for the regime that began in 2008 and 9.1% for the regime that began in 2001 compared to no subsidies. The policy regime that was in place from 2001 through 2007 led to the greatest distortions in global processing tomato markets, in part because it directed more of the benefits to EU growers and less to EU processors and consumers. Thus changes in 2001 “reformed” policy by redistributing gains within the EU, while changes in 2008 “reformed” policy by reducing distortions in global markets.     

Lean principles, learning, and knowledge work: Evidence from a software services provider

In this paper, we examine the applicability of lean production to knowledge work by investigating the implementation of a lean production system at an Indian software services firm. We first discuss specific aspects of knowledge work—task uncertainty, process invisibility, and architectural ambiguity—that call into question the relevance of lean production in this setting. Then, combining a detailed case study and empirical analysis, we find that lean software projects perform better than non-lean software projects at the company for most performance outcomes. We document the influence of the lean initiative on internal processes and examine how the techniques affect learning by improving both problem identification and problem resolution. Finally, we extend the lean production framework by highlighting the need to (1) identify problems early in the process and (2) keep problems and solutions together in time, space, and person.     

Earnings volatility in America: Evidence from matched CPS

We offer new evidence on earnings volatility of men and women in the United States over the past four decades by using matched data from the March Current Population Survey. We construct a measure of total volatility that encompasses both permanent and transitory instability, and that admits employment transitions and losses from self employment. We also present a detailed decomposition of earnings volatility to account for changing shares in employment probabilities, conditional variances of continuous workers, and conditional mean variances from employment entry and exit. Our results show that earnings volatility among men increased by 15% from the early 1970s to mid 1980s, while women's volatility fell, and each stabilized thereafter. However, this pooled series masks important heterogeneity in volatility levels and trends across education groups and marital status. We find that men's earnings volatility is increasingly accounted for by employment transitions, especially exits, while the share of women's volatility accounted for by continuous workers rose, each of which highlights the importance of allowing for periods of non-work in volatility studies.