Credible assignments in coordination games

This paper uses the experimental method to examine an arbiter's ability to determine the outcome of two-person coordination games. All of the arbiter's assignments in the experiments were strict equilibrium points, but some assignments violated payoff-dominance or symmetry. An assignment that corresponds to the game's outcome is a credible assignment. The experiments test the hypothesis that an assignment to a strict equilibrium is a credible assignment. Our subjects did not find the individual rationality and mutual consistency of an equilibrium assignment to be sufficient reason for implementing the assignment when doing so conflicts with payoff-dominance or symmetry.     

The contributions of W. H. Hutt

Conclusions We feel that we understand another when his points seem consistent with our prior beliefs. The great difficulty that Hutt faced was that the concepts comprising the macroeconomic superstructure, in which—by now—so many have so much invested, are difficult to integrate with an understanding of how a money-using catallaxy functions. He believed that he had to go beneath them, to some kind of foundation on which we could all agree, and then construct almost a parallel universe, a new (which he always insisted was old) conceptual structure adequate to the task.His exposition is considerably less unfamiliar to those already well acquainted with the subjectivist analysis of catallactic processes. William Hutt was driven by his understanding that the market excels at producing and equitably distributing wealth. Economists could help, or at least not get in the way, only if they understood the functioning of a monetary catallaxy. Developing and conveying that understanding was Hutt's life work, and in it there is much of value that the well-read Austrian cannot afford to miss.An earlier version of this paper was presented at the History of Economics Society meeting in Richmond, Virginia, June 1989.     

Monetary incentives and environmental concern. Effects of a differentiated garbage fee

Market-based instruments, i.e., economic incentives and disincentives, are gaining popularity in environmental policy. However, research on the effectiveness of economic incentives for regulating environmentally relevant consumer behaviour demonstrates convincingly that the implementation of this instrument is based on inadequate assumptions concerning the motivation guiding consumer behaviour. In this paper it is argued that stronger focus should be placed on studying how the regulation instrument influences the perception of the environmentally relevant activity that it was meant to regulate. The attitudes of Danish citizens towards differentiated garbage fees (implying a relatively small economic incentive) and the impact of its implementation on the attitude towards recycling are analysed. The attitude towards differentiated garbage fees is primarily determined by the perceived equity of differentiated garbage fees and its perceived effectiveness with regard to combating waste problems. The most important determinant of the attitudes towards recycling activities is the expected environmental and public benefits. However, empirical support is found for the hypothesis that the use of monetary incentives at the consumer level may re-frame the recycling issue into the sphere where private cost-benefit calculations apply. The negative effects of this re-framing can more than outweigh the positive impact of the monetary incentive on attitudes and behaviour.

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Zusammenfassung Monetäre Anreize und Umweltbewutsein. Die Wirkung differenzierter Müllgebühren. Marktkonforme Instrumente wie ökonomische Anreize oder Strafen werden in der Umweltpolitik immer populärer. Allerdings zeigen Forschungsergebnisse über die Wirksamkeit ökonomischer Anreize für die Regulierung umweltrelevanten Konsumentenverhaltens, da\ die Anwendung dieses Instrumentes auf unzweckmä\igen Annahmen über die Motivation beruht, die dem Verbraucherverhalten zugrunde liegt. In diesem Beitrag wird gefordert, da\ die Frage stärker in den Mittelpunkt gerückt werden mu\, wie das Regulierungsintrument die Wahrnehmung des umweltrelevanten Verhaltens beeinflu\t, das reguliert werden soll. Eine empirische Studie untersucht die Einstellungen dänischer Bürger gegenüber differenzierten Abfallgebühren (die einen relativ kleinen ökonomischen Anreiz bieten) und die Wirkung dieser Ma\nahme auf die Einstellung gegenüber der Wiederverwertung. Die Einstellung zu differenzierten Müllgebühren wird in erster Linie durch ihre wahrgenommene Gerechtigkeit bestimmt und durch ihre wahrgenommene Wirksamkeit gegenüber den Müllproblemen. Die wichtigsten Determinanten der Einstellung gegenüber der Müllwiederverwertung sind ihre erwarteten allgemeinen Umweltvorteile. Allerdings sprechen die Daten für die Hypothese, da\ monetäre Anreize das Thema der Müllwiederverwertung auf Verbraucherebene auf das Niveau privater Nutzen-Kosten-Kalkulationen herunterdrücken. Die negativen Effekte dieser Verschiebung könnten die positiven Wirkungen monetärer Anreize auf Einstellung und Verhalten sogar überkompensieren.

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The research reported in this paper was sponsored by grants from the Danish Environmental Protection Agency and the Danish Social Science Research Council.     

Book Reviews

W.T. Woo, B. Glassburner and Anwar Nasution, Macroeconomic Policies, Crises, and Long-term Growth in Indonesia, 1965–90, Comparative Economic Studies, The World Bank, Washington DC, 1994, pp. xiii + 216. Paper: $13.95.

Hal Hill (ed.), Indonesia's New Order; The Dynamics of Socio-Economic Transformation, Allen and Unwin, Sydney, 1994, pp. xxxv + 364. Paper: A$29.95.

J. Thomas Lindblad (ed.), New Challenges in the Modern Economic History of Indonesia: Proceedings of the First Conference on Indonesia 's Modern Economic History, Jakarta, October 1–4, 1991, Programme of Indonesian Studies, Leiden University, Leiden, 1993, pp. viii + 306.

Thee Kian Wie, Explorations in Indonesia's Economic History, Lembaga Penerbit Fakultas Ekonomi Universitas Indonesia, Jakarta, 1994, pp. xv + 187.

Nancy Lee Peluso, Rich Forests, Poor People: Resource Control and Resistance in Java, University of California Press, Berkeley, 1992, pp. xv + 321.

Effendi Pasandaran, Agus Pakpahan, Edwin B. Oyer and Norman Uphoff (eds), Poverty Alleviation with Sustainable Agricultural and Rural Development in Indonesia, Published jointly by the Center for Agro-Socioeconomic Research (CASER) (Bogor), and the Cornell International Institute for Food, Agriculture and Development (CIIFAD) (Ithaca), Bogor 1992, pp. vi + 233.

Eric Thorbecke and Theodore van der Pluijm, Rural Indonesia: Socio-Economic Development in a Changing Environment, IFAD (International Fund for Agricultural Development) Studies in Rural Development no. 3, New York University Press, New York, 1993, pp. xxix + 360.

Niels Mulder, Inside Southeast Asia: Thai, Javanese and Filipino Interpretations of Everyday Life, Duang Kamol, Bangkok, 1992, pp. xiii + 178.

M.C. Ricklefs, War, Culture and Economy in Java, 1677–1726: Asian and European Imperialism in the Early Kartasura Period, ASAA Southeast Asia Publications Series no. 24, Allen & Unwin, Sydney, 1993, pp. xi + 425. A$29.95.

Ken Young, Islamic Peasants and the State: The 1908 Anti-Tax Rebellion in West Sumatra, Yale Southeast Asia Studies Monograph 40, Yale Center for International and Area Studies, New Haven, pp. xviii + 361.

Saya Shiraishi and Takashi Shiraishi (eds), The Japanese in Colonial Southeast Asia, Translation Series, Translation of Contemporary Japanese Scholarship on Southeast Asia, vol. 3, Southeast Asia Program, Cornell University, Ithaca, 1993, pp. 172.     

Spark innovation through empathic design

Companies are used to bringing in customers to participate in focus groups, usability laboratories, and market research surveys in order to help in the development of new products and services. And for improving products that customers know well, those tools are highly sophisticated. For example, knowledgeable customers are adept at identifying the specific scent of leather they expect in a luxury vehicle or at helping to tune the sound of a motorcycle engine to just the timbre that evokes feelings of power. But to go beyond improvements to the familiar, companies need to identify and meet needs that customers may not yet recognize. To accomplish that task, a set of techniques called empathic design can help. Rather than bring the customers to the company, empathic design calls for company representatives to watch customers using products and services in the context of their own environments. By doing so, managers can often identify unexpected uses for their products, just as the product manager of a cooking oil did when he observed a neighbor spraying the oil on the blades of a lawn mower to reduce grass buildup. They can also uncover problems that customers don't mention in surveys, as the president of Nissan Design did when he watched a couple struggling to remove the backseat of a competitor's minivan in order to transport a couch. The five-step process Dorothy Leonard and Jeffrey Rayport describe in detail is a relatively low-cost, low-risk way to identify customer needs, and it has the potential to redirect a company's existing technological capabilities toward entirely new businesses.     

Income Redistribution with Well-Informed Local Governments

This paper examines the problem of redistributing incomeacross jurisdictions and to mobile workers within jurisdictionswhen local governments have better information than the centralgovernment about local production conditions. Under the centralgovernments optimal policy, the subsidies or taxes that localgovernments provide to mobile workers normally depend on whetherthese governments are net recipients or net donors of interjurisdictionalincome transfers. Moreover, the public-input decisions of somelocal governments are distorted. The analysis demonstrates thatit may not be desirable to harmonize social policies across jurisdictions,even when the beneficiaries are quite mobile.     

Business Ethics in Australia and New Zealand

The scandals of the 1980s, extending into the 1990s, came as a profound shock to Australians and New Zealanders. Both countries have prided themselves – somewhat smugly and naively – on being open, fair and honest societies. So it was very disillusioning to see both corruption and gross dereliction of duty exposed in virtually every sphere of public life. Perhaps the most positive outcome, however, amidst an almost daily diet of amazing revelations, has been the ability of the system – and especially the judiciary and the media – to expose and deal with corruption even at the highest level.Following an extensive survey and literature review, it is clear that there is now widespread awareness of the need for reform in many areas of public administration, corporate governance and professional behaviour. However, a continuing cause for concern is the lack of leadership in identifying and addressing complex ethical dilemmas, particularly in the areas of conflict of interest and disclosure.Feedback from professional bodies, industry associations and university business schools indicates slow but uneven progress in ethics education. While several ethic centres and prominent individual ethicists have introduced innovative programs and given ethical issues greater prominence in the media, narrow vocationalism still takes precedence over personal values in the business and management curriculum.     

Book Reviews

Ruth McVey (ed.), Southeast Asian Capitalists, Ithaca: Southeast Asia Program, Cornell University, 1992, pp. 218.

Joan Hardjono (ed.), Indonesia: Resources, Ecology and Environment, Singapore: Oxford University Press, 1991, pp. xvi + 262. Cloth: A$50; £25.

Chris Dixon, South East Asia in the World-Economy: A Regional Geography, Cambridge: Cambridge University Press, 1991, pp. xv + 281. Paper: A$29.95; Cloth: npg.

Kym Anderson (ed.), New Silk Roads: East Asia and World Textile Markets, Cambridge: Cambridge University Press, for the Trade and Development Series, National Centre for Development Studies, Australian National University, 1992, pp. xxvi + 24. A559.50.

K. S. Sandhu et al. (comps), The ASEAN Reader, Singapore: Institute of Southeast Asian Studies, 1992, pp. xxvi + 582.

Kim Seung Jin and Suh Jang-Won (eds), Cooperation in Small and Medium-Scale Industries in ASEAN, Kuala Lumpur: Asian and Pacific Development Centre, 1992, pp. xiv + 389.     

TNCs and the corruption of GATT: Free trade versus fair trade

In order to enrich global corporate culture, a distinction must be made between the economic ideology of free trade and the moral ideology of fair trade. GATT has failed to make this distinction. Its sole ethos of free trade is only applicable among developmentally equivalent nations, and has been used by TNCs as a means for attaining their commercial ends in the third world. GATT's lack of commitment to an objective of fair trade necessitates its replacement. This article suggests a replacement in the form of a network of trade organizations. The network takes the form of a hub-and-spoke arrangement, in which the hub would be the Global Trade Organization, and the spokes would each represent Regional Trade Organizations.John Dobson is currently an Associate Professor of Finance at California Polytechnic State University in San Luis Obispo. His primary research interests are Agency Theory and Financial Ethics. His publications include articles and letters inJournal of Business Ethics, Financial Management, Business in the Contemporary World andBusiness and Society.     

Ethical theory and practice: Is there a gap?

Archie Bahm argued recently that there is a gap between theoretical and applied ethics, and that those working in applied ethics must assume the burden of bridging it. Evidence of a gap is considerable, but it seems also partly due to much ethical theory having relatively little to offer to those grappling with practical moral problems. Some aspects of utilitarian theory are examined in this connection. Finally it is suggested that other areas of theory developing new models of man may partly bridge the gap and aid those dealing with problems of moral decision-making. John Hoaglund is Professor of Philosophy at Christopher Newport College. He is at present Chairman of Philosophy. He was formerly Lecturer at the Free University of Berlin. He is Fulbright Fellow, University of Bergen, Norway, 1980. He is the author of: The Voluntary One-Parent Family, in A. C. Cafagna et al. (eds.), Philosophy, Children, and the Family, New York, 1982, pp. 43–50 and published several articles on aesthetics in Journal of Aesthetic Education, British Journal of Aesthetics, Zeitschrift für Aesthetik and Allgemeine Kunstkritik, and Studia Estetyczne.