Information, Knowledge and Belief

The paper models information as possibilities consistent with signals received from the environment. Knowledge is obtained by reasoning about the signals received as well as those that might have been received but were not. The term 'knowledge' is used to refer to those beliefs that are obtained by reasoning about the available information, and nothing else . That is, one ought to be able to fully justify what one knows by means of the information that is available. The term 'belief' is used to refer to those beliefs that are based on information but not necessarily only on information. The author investigates the relationship between information, knowledge and belief, as well as the issue of updating knowledge and belief in response to changes in information.     

Monopoly with resale

We examine the intricacies associated with the design of revenue‐maximizing mechanisms for a monopolist who expects her buyers to resell. We consider two cases: resale to a third party who does not participate in the primary market and interbidder resale, where the winner resells to the losers. To influence the resale outcome, the monopolist must design an allocation rule and a disclosure policy that optimally fashion the beliefs of the participants in the secondary market. Our results show that the revenue‐maximizing mechanism may require a stochastic selling procedure and a disclosure policy richer than the simple announcement of the decision to sell to a particular buyer.     

Recruitment and selection services: Efficiency and competitive reasons in the outsourcing of HR practices

While human resource (HR) activities have traditionally been performed internally, the outsourcing of HR practices is a rapidly increasing phenomenon. The accelerated rate of HR outsourcing also corresponds to a sweeping change in which non-transactional activities, such as recruitment, selection and training, are among the most outsourced HR practices. This article investigates the outsourcing decisions of recruiting and selection (R&S). It develops a predictive model based on efficiency drivers, rooted in transaction cost economy (TCE), and competitive motivations, derived from the resource-based view. The model has been tested in a sample of 276 medium and large enterprises in two specific contexts: the outsourcing of administrative R&S practices (job advertisement and pre-screening) and that of the more strategic R&S practices (colloquia and selection). Findings confirm the relevance of both categories of predictors, but they reveal how efficiency motivations are more important for the decisions to outsource administrative R&S practices while competitive issues matter more for the strategic side of R&S activity. Theoretical and managerial implications are offered on the basis of such evidence.     

How diverse are national banking systems? An analysis on banking business models,profitability, and riskiness

In this paper, we apply an algorithm developed by Martin Weitzman to quantify the extent of diversity among the business models of financial intermediaries at an international level. In particular, we investigate the relationship between the diversity of the business models of EU national banking systems and their profitability and riskiness. We show how Weitzman's approach can be generally applied to the issue at hand; as a by-product, the analysis allows us to assess whether the diversity among banking systems was affected by the imported systemic financial crises of 2007/8 as well as its domestic sequel centered on the sovereign debt crisis that occurred in 2010–12. The motivation for this paper is twofold. First, we provide an operational measure of the diversity of business models among banking sectors. Second, we enrich the economic literature relating to banking business models by providing a macro-founded analysis. To this end, we highlight the range of diversity of national banking business models correlated with high performances in terms of profitability and riskiness.     

Family networks and school enrolment: Evidence from a randomized social experiment

We present evidence on whether and how a household's behavior is influenced by the presence and characteristics of its extended family. Using data from the PROGRESA program in Mexico, we exploit information on the paternal and maternal surnames of heads and spouses in conjunction with the Spanish naming convention to identify the inter- and intra-generational family links of each household to others in the same village. We then exploit the randomized research design of the PROGRESA evaluation data to identify whether the treatment effects of PROGRESA transfers on secondary school enrolment vary according to the characteristics of extended family. We find PROGRESA only raises secondary enrolment among households that are embedded in a family network. Eligible but isolated households do not respond. The mechanism through which the extended family influences household schooling choices is the redistribution of resources within the family network from eligibles that receive de facto unconditional cash transfers from PROGRESA, towards eligibles on the margin of enrolling children into secondary school.     

Cross-national differences in stakeholder management: Applying institutional theory and comparative capitalism framework

Drawing upon the research in institutional theory and comparative capitalism, the present study investigates how cross-national differences in the political, business, and economic institutional contexts of the United States, Italy, and Japan are associated with the ways in which companies in each of these countries prioritize and engage in their stakeholder engagement activities (SEAs). Using Porter and Kramer's framework, which classifies corporate social responsibility (CSR) activities as falling into four categories (good citizenship, mitigating harm from value chain, transforming value chain activities, and strategic philanthropy), we investigate how companies in the United States, Japan, and Italy prioritize and engage in these four SEAs. An analysis of data collected from 340 companies across these countries reveals that while companies in each of these three countries undertake the four types of SEAs, the prioritization and prevalence of the four types of SEAs vary from one country to the other, in ways that align with the prevailing institutional contexts of each country. The results contribute to a more nuanced understanding of why and how companies' approaches to CSR differ across countries. From a practitioner's perspective, the findings highlight the cultural specificity of CSR, implying that despite the global nature of CSR, the implementation of CSR needs to be tailored to a country's context.     

Attending to inattention: Identification of deadweight loss under nonsalient taxes

Recent developments in behavioral public economics have shown that heterogeneous biases prevent point identification of deadweight loss. We replicate this result for an arbitrary (closed) consumption set, whereas previous results on heterogeneous attention focused on binary choice. We find that one can bound the efficiency costs of taxation based on aggregate features of demand. When individuals have linear demand functions, the bounds for deadweight loss are easy to calculate from linear regressions.     

Design limits and dynamic policy analysis

This paper characterizes the frequency domain properties of feedback control rules in linear systems in order to better understand how different policies affect outcomes frequency by frequency. We are especially concerned in understanding how reductions of variance at some frequencies induce increases in variance at others. Tradeoffs of this type are known in the control literature as design limits. Design limits are important in understanding the full range of effects of macroeconomic stabilization policies. We extend existing results to account for discrete time bivariate systems with rational expectations. Application is made to the evaluation of monetary policy rules.