On the Competition of Asymmetric Agents

Abstract. Rank-order tournaments are usually implemented in organizations to provide incentives for eliciting employees' effort and/or to identify the agent with the higher ability, for example in promotion tournaments. We close a gap in the literature by experimentally analyzing a ceteris paribus variation of the prize spread – being the major design feature of tournaments – in a symmetric and an asymmetric setting. We find that effort significantly increases with the prize spread as predicted by standard theory. However, only for sufficiently large prize spreads weak players competing against strong players strain themselves all the more and sorting of agents is feasible.     

Herding effects in order driven markets: The rise and fall of gurus

We introduce an order driver market model with heterogeneous traders that imitate each other on a dynamic network structure. The communication structure evolves endogenously via a fitness mechanism based on agents performance. We assess under which assumptions imitation, among noise traders, can give rise to the emergence of gurus and their rise and fall in popularity over time. We study the wealth distribution of gurus, followers and non followers and show that traders have an incentive to imitate and a desire to be imitated since herding turns out to be profitable. The model is then used to study the effect that different competitive strategies (i.e. chartist & fundamentalist) have on agents performance. Our findings show that positive intelligence agents cannot invade a market populated by noise traders when herding is high.     

One size that didn’t fit all? Electoral franchise,fiscal capacity and the rise of mass schooling across Italy’s provinces, 1870–1911

Italy’s regions experienced different rates of human capital accumulation in the late nineteenth and early twentieth centuries. Although southern regions were very disadvantaged when the unification of the country took place in 1861, they caught up at a very slow pace—and a remarkable regional divide in education persisted until the interwar period. While previous hypotheses have focused on the role played by fiscal capacity, this paper sheds new light on the effect that enfranchisement had on the growth of schooling. The presence of large regional disparities in local electoral franchise is confirmed by the data; however, the relationship between voting rights, the intensity of local direct taxation and municipal fiscal capacity is weak at best. Furthermore, if the impact of these factors is analysed separately through a number of econometric models, fiscal capacity stands out as the most significant determinant of education across Italy’s provinces. Against recent hypotheses, these results show that the different distribution of political voice within Italy’s municipalities did not determine the persistence of regional inequalities in schooling in the long run: it was Italy’s national education system, together with remarkable and pre-existent regional disparities, that slowed down the development of human capital in rural and southern regions, with immense costs in terms of future prospects for economic growth and human development.     

Price competition and reputation in markets for experience goods: an experimental study

We experimentally examine the effects of price competition in markets for experience goods where sellers can build up reputations for quality. We compare price competition to monopolistic markets and markets where prices are exogenously fixed. Although oligopolies benefit consumers regardless of whether prices are fixed or endogenously chosen, we find that price competition lowers efficiency as consumers pay too little attention to reputation for quality. This provides empirical support to recent models in behavioral industrial organization that assume that consumers may, with increasing complexity of the marketplace, focus on selected dimensions of products.