Mechanism design goes to war: peaceful outcomes with interdependent and correlated types

In this paper, we consider the possibility of identifying peaceful mechanisms such as bargaining protocols, international institutions, or norms that can enable countries to settle disputes in the absence of binding contracts. In particular, we are interested in the existence of mechanisms with zero probability of war. Here, we focus on situations where the countries’ payoffs to war are interdependent or correlated and where efficient settlements are not required but subsidies are unavailable. Most importantly, countries can choose to go to war at any time and can use information learned from the negotiation process in making this choice. We characterize the conditions under which no peaceful mechanisms exist and discuss how weakening our war consistency condition can change this result. We thank Massimo Morelli, Adam Meirowitz, Hein Goemans and two anonymous reviewers for helpful advice and comments and John Duggan and Dan Bernhardt for encouraging this direction of inquiry.     

Market novelty, competence-seeking and innovation networking

Studies of innovation networking have frequently been concerned with the occurrence of dyadic relationships and with their apparent impact on simple measures of firm-level innovation outputs. This paper takes a more detailed look by analyzing the connection between different types of innovation and forms of networking. Based on the market novelty of innovation outcomes and the extent to which innovation activities require new competences, four types of innovation are identified. It is proposed that these types correlate with various innovation network dimensions, including the volume of networks, the strength and content of ties, and the specificity of ties. Drawing on survey data of 594 innovations realized by Dutch small firms, it is observed that the requirement to access new competences for innovation correlates positively with the number of network partners involved. We also note more subtle connections between types of innovation and networking, including that novel innovation outputs correlate with using network partners as a source of inspiration, whilst new competences associate with networking for knowledge capital. In the latter case, these activities also draw on new and intended ties relatively often, i.e. network partners which are actively sought out for the specific contributions they may make to the innovation process. Finally, innovation which is simultaneously new-to-the market and requires new competences uses strong ties relatively often. Implications for innovation policy and practice are discussed.     

Do parents,teachers and children use the SDQ in a similar fashion?

Few studies have investigated whether parents’, teachers’ and children’s responses to the strengths and difficulties questionnaire (SDQ) have equivalence. In this study, data from 854 matched questionnaires collected in Malaysia were subjected to tau equivalence confirmatory factor analysis, to assess if all three groups responded to the same target (the child) similarly. We first fitted Goodman’s (Journal of Child Psychology and Psychiatry, 38, 581–586, (1997a); Journal of Child Psychology and Psychiatry, 40, 791–801, 1997b) five factor model, but found that this did not fit the model despite attempts to improve and rectify model fit. We thereafter attempted to fit Dickey and Blumberg (Journal of the American Academy of Child Adolescent Psychiatry, 43, 1159–1167, 2004) three factor model, but similarly found a lack of fit. We then undertook an exploratory model with a random half of the data, obtaining a three factor solution, and tested this in a confirmatory tau equivalence model. The Unconstrained Model provided a fit to the data, revealing a similar structure across the three informant groups. As this fit was for the Unconstrained Model, it reveals that groups differ in the value they place on each of the variables but overall that held a similar underlying factor structure. The findings are discussed in relation to the possible cultural issues involved and the use of the SDQ.     

Regulated firms in pollution permit markets with banking

This paper examines a competitive intertemporal market for bankable emission permits, such as sulfur dioxide allowances. Without profit regulation, firms are willing to bank permits if permit prices rise over time with the rate of interest, but will not bank if prices rise more slowly.The market achieves aggregate emission targets at least total cost if there is no profit regulation, but may not do so if firms are subject to profit regulation. Firms must arbitrage differences both in abatement cost and in the regulatory treatment of permits to achieve least total cost.The impetus for this work came from research we initiated during the Summer of 1990 for the Energy Information Agency. We would like to thank Chuck Howe for his detailed comments and enthusiasm, and Jim Alm, Dave Bjornstad, Charles deBartolome, Mike Greenwood, Robert Hahn, Douglas Hale, Carolyn Lang, Jim Markusen, Edward Morey, Till Requate, and Tom Tietenberg. We are grateful to the editor and two anonymous referees for stressing the importance of regulation in these markets and for their helpful and clarifying advice.     

Dividend timing and behavior in laboratory asset markets

Summary. This paper investigates the effect of dividend timing on price bubbles and endogenous expectations in twenty-six laboratory asset markets. In ten "A1" markets, a single dividend is paid at the end of the trading horizon. In nine "A2" markets, dividends are paid at the end of each trading period. In seven "A3" markets, some of the dividends are paid at the end of the trading horizon, and the rest are paid on a per-period basis. The results indicate that price bubbles are most likely in A2 markets, less likely in A3 markets, and least likely in A1 markets. Six distinct hypotheses are considered. The data suggest that the concentration of dividend value at a single point in time helps to create common expectations, and thus significantly reduce the incidence of bubbles. Also, the results underscore the difficulty facing econometric tests on field data where fundamental value has to be approximated.     

Stores

Summary There is scope and incentive for stores to endogenously arise in an exchange economy when agents possess different levels of bargaining power and coalition formation is costly. In the absence of stores, agents face a trading lottery where the expected outcome for an individual agent depends upon his relative bargaining strength. By setting appropriate, preannounced prices, a store can profitably offer relatively weak bargainers trading opportunities which they prefer to the trading lottery. While relatively weak bargainers are attracted to the store, relatively strong bargainers prefer the trading lottery to the store. Thus, the simultaneous existence of barter and mediated trade is explained.The work reported here was conceived while both authors were visiting the University of Southern California. We thank Martine Quinzii and two anonymous referees for helpful comments.     

Groupware adoption in a distributed organization: transporting and transforming technology through social worlds

In this paper, we draw on theory from social worlds to analyze how different organizational contexts affect groupware adoption. We report on a study of the adoption of data conferencing in a large distributed organization. Our data show that the diffusion process, which was driven by the users, was a result of communication and transformation of the technology across different social worlds. We also discovered that membership in multiple social worlds in an organization creates a tension for the potential adopter who is in a distributed team. To function effectively, team members must uniformly adopt the technology, yet some may face resistance from other social worlds to which they belong. Our study showed that adoption was affected by organizational sites having conflicting views of the value of collaboration, different amounts and needs for resources, and different acceptance of technology standards. Potential technology adopters on distributed teams are faced with conflicting loyalties, constraints, and requirements between their distributed collaborations and organizational homes.