Price,quality, and reputation: evidence from an online field experiment

We examine the link between price, quality, seller claims, and seller reputation in Internet auctions. After purchasing actual baseball cards and having them professionally graded, we find that some buyers in the online graded market are misled by incredible claims of quality. They pay higher prices but do not receive better quality and, in fact, are defrauded more often. Online seller reputation is effective for identifying good‐faith sellers. But conditional on completed auctions, reputable sellers do not provide better quality. Evidence also suggests that high‐claim sellers target less‐experienced buyers. We attribute these patterns to two loopholes in the eBay rating system. We benefited from the comments of Austan Goolsbee, Raphael Thomadsen, John Shea, Dan Vincent, David Reiley, Larry Ausubel, Peter Cramton, V. Joseph Hotz, Jeff Smith, Jimmy Chan, Vincent Crawford, Mark Duggan, and attendees at numerous seminars and conferences. We are particularly grateful to Seth Sanders and John List for their constructive advice at the early stage of the research, to Timothy Bresnahan, Rachel Kranton, and Thomas Hubbard for their detailed suggestions in reshaping earlier versions, and to Editor Ariel Pakes and two anonymous referees for their careful readings. Special thanks to eight friends who acted as our agents in purchasing baseball cards in retail markets, and to numerous sports card store owners who shared their insights on the sportscard industry. Excellent research assistance from Randy Alexander Moore and Krzysztof Fizyta is gratefully acknowledged. Any remaining errors are ours.     

Voice matters in a dictator game

We conducted a laboratory experiment to study the effects of communication in a dictator game, while maintaining subjects’ anonymity. In the experiment, the recipient has an opportunity to state a payoff-irrelevant request for his/her share before the dictator dictates his/her offer. We found that the independence hypothesis that voice does not matter is rejected. In particular, if the request is for less than half of the pie, the dictator’s offer increases as the recipient’s request increases. Additionally, there is no dictator who is other-regarding and, at the same time, does not react to the recipient’s request.

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Asymptotics for panel quantile regression models with individual effects

This paper studies panel quantile regression models with individual fixed effects. We formally establish sufficient conditions for consistency and asymptotic normality of the quantile regression estimator when the number of individuals, n$n$, and the number of time periods, T$T$, jointly go to infinity. The estimator is shown to be consistent under similar conditions to those found in the nonlinear panel data literature. Nevertheless, due to the non-smoothness of the objective function, we had to impose a more restrictive condition on T$T$ to prove asymptotic normality than that usually found in the literature. The finite sample performance of the estimator is evaluated by Monte Carlo simulations.     

Do collective bargaining institutions crowd out discussion and implementation of firm‐related training programs? Evidence from Japan

The paper empirically examines labor‐management communication concerning in‐house training programs and its relation to the actual on‐ and off‐the‐job training policy and wage structure. Using governmental datasets from Japan, we study how different labor‐management communication institutions may affect the training interests of employers and employees differently. We classify these institutions in terms of whether they have a legal (i.e. statutory) foundation (‘de jure’) or not (‘de facto’). We find that collective bargaining, with legal grounds, may crowd out employees’ willingness to communicate about training. However, the existence of ‘de facto’ communication channels such as joint labor‐management councils or shop floor committees is positively correlated with both on‐ and off‐the‐job of training. At the same time, the existence of unions is positively correlated with the steepness of wage profiles for mid‐career workers, which is consistent with the fact that employers and employees assume a long‐term relationship. Thus, we show that a multi‐tiered structure of labor‐management communication, together with a long‐term orientation toward the employment relationship, contributes to strengthen employees’ voice in training matters.     

Implementation of HACCP in the risk management of medical waste generated from endoscopy

Medical waste poses health hazards, increases the environmental load and is costly to dispose of. To solve the above problems, we applied the hazard analysis and critical control point system (HACCP) to the management of wastes generated from endoscopy. First, the wastes in three hospitals were quantified. The number and weight of waste per case differed significantly among the three hospitals. Second, HACCP was applied to the endoscopy unit of Hospital X for a year. Wastes were segregated into five types and weighed. We found that 25.8% of ‘infectious waste’ was in fact ‘non‐infectious waste’ and ‘non‐infectious plastic waste’. The numbers of needles and needle caps did not correspond in two occasions (needle‐loss rate: 0.42%). Bacterial counts of the waste container were determined to investigate infection hazard. The counts were 0 cfu/cm² in all examinations except one occasion. The waste control manifests were reviewed, and all entries were consistent with the waste sent for disposal. In Hospital X where implementation of HACCP was attempted, reduction of environmental load and cutting of disposal cost are anticipated by changing the categories of waste segregation. The results suggest that hospital wastes should be managed more safely by HACCP.     

Lobbying and tax competition in an oligopolistic industry: a reverse home-market effect

This paper studies tax competition between two asymmetrical countries for an oligopolistic industry with many firms. Each government sets its tax rate strategically to maximize the weighted sum of residents’ welfare and political contributions by owners of firms. It is shown that if the governments care deeply about contributions and trade costs are low, the small country attracts a more than proportionate share of firms by setting a lower tax rate. The well-known home-market effect, which states that countries with a larger market attract a more-than-proportionate share of firms, may be reversed as a result of tax competition by politically interested governments.     

The Nature and the Determinants of Labor Market Transitions in Former Socialist Economies: Evidence from Bulgaria

To generate stylized facts on transitions between different labor market states during early transition, panel data for a sample of the registered unemployed in Bulgaria were collected. We find that about 60 percent of the unemployed are long-term unemployed. From logit regressions we find that women who had higher education and had not received unemployment benefits are more likely to be reemployed. For men, these factors are not significant, although participation in a training program is significant.     

Re-examining Cointegration, Unit Roots and Efficiency in Foreign Exchange Rates

This paper examines the cointegrating relationships in seven foreign exchange rates for a sample period from 1974 to 1991 by utilizing Johansen's (1991) method. Three subperiods are also examined to confirm the intertemporal stability of the test results. In addition, subgroups of the seven exchange rates are analyzed to determine the consistency of the empirical results with respect to different dimensions in the system. We find that the test results are sensitive to the choice of test statistics, time trends, subperiods as well as subgroups. All results indicate either one or no cointegrating relationship exists. Further, we study time series properties of twenty one cross-currency rates and the corresponding exchange rates in terms of a common currency. None of cross-currency rates are stationary and hence the pairs of exchange rates are not cointegrated.     

Forward Hedging the Exchange Risks of U.S. Equity Investments in the U.K., Germany and France

This paper simulates forward hedging of foreign exchange risks for U.S. investments in U.K., German and French equities. Rolling OLS and SUR regressions are used to obtain monthly exposure coefficients (hedge ratios), and the micro-market mechanics of the exchange rate bid-ask spread are considered throughout. While the coefficient of variation favors not hedging, no statistically significant differences are found between no hedge and hedge strategies. However, hedging produces a nontrivial incidence of cases where liquidated foreign equity values are less than amounts sold forward. The results, robust to rising and falling dollar sub-periods, do not support forward hedging.     

An optimal execution problem with market impact

We study an optimal execution problem in a continuous-time market model that considers market impact. We formulate the problem as a stochastic control problem and investigate properties of the corresponding value function. We find that right-continuity at the time origin is associated with the strength of market impact for large sales; otherwise the value function is continuous. Moreover, we show the semigroup property (Bellman principle) and characterise the value function as a viscosity solution of the corresponding Hamilton–Jacobi–Bellman equation. We present some examples where the form of the optimal strategy changes completely, depending on the amount of the trader’s security holdings, and where optimal strategies in the Black–Scholes type market with nonlinear market impact are not block liquidation but gradual liquidation, even when the trader is risk-neutral.