Behavior in one-shot traveler’s dilemma games: model and experiments with advice

We report results of one-shot traveler’s dilemma game experiments to test the predictions of a model of introspection. The model describes a noisy out-of-equilibrium process by which players reach a decision of what to do in one-shot games. To test the robustness of the model and to compare it to other models of introspection without noise, we introduce non-binding advice. Advice has the effect of coordinating all players’ beliefs onto a common strategy. Experimentally, advice is implemented by asking subjects who participated in a repeated traveler’s dilemma game to recommend an action to subjects playing one-shot games with identical parameters. In contrast to observations, models based on best-response dynamics would predict lower claims than the advised. We show that our model’s predictions with and without advice are consistent with the data.      

The Legislator as Political Entrepreneur: Investment in Political Capital

This paper applies the standard Austrian theory of capital investment to the standard interest group model of legislator behavior. Distinguishing between reputational capital and representative capital as interdependent forms of political capital, I argue that legislator behavior (specifically roll call voting) can be explained as entrepreneurial investment in political capital under uncertainty. I discuss several examples in which this approach can potentially add predictive power regarding legislative voting.     

Trees and decisions

Summary. The traditional model of sequential decision making, for instance, in extensive form games, is a tree. Most texts define a tree as a connected directed graph without loops and a distinguished node, called the root. But an abstract graph is not a domain for decision theory. Decision theory perceives of acts as functions from states to consequences. Sequential decisions, accordingly, get conceptualized by mappings from sets of states to sets of consequences. Thus, the question arises whether a natural definition of a tree can be given, where nodes are sets of states. We show that, indeed, trees can be defined as specific collections of sets. Without loss of generality the elements of these sets can be interpreted as representing plays. Therefore, the elements can serve as states and consequences at the same time.Received: 23 January 2003, Revised: 2 November 2003, JEL Classification Numbers: C72, D70. Correspondence to: Klaus RitzbergerWe are grateful to Larry Blume, Ariel Rubinstein, Jörgen Weibull, an anonymous referee, and seminar participants at the universities of Vienna, Salamanca, and Heidelberg for helpful comments. Financial support from the Austrian Science Fund (FWF) under project P15281 is also gratefully acknowledged.     

Testing for Seasonal Fractional Roots in German Real Output

Abstract. This paper examines the seasonal structure of German real GNP per capita by using a version of Robinson's (1994) tests which is suitable in the context of seasonality. This method has several advantages over alternative approaches when testing for seasonal unit roots. First, unlike standard tests, which are nested in AR alternatives, it is embedded in fractional alternatives. Second, it allows testing at the zero frequency and at each of the seasonal frequencies separately. Third, it makes it possible to test for different orders of integration at each of the frequencies simultaneously. The empirical analysis suggests that the real output series may have a unit root at the zero frequency, and fractional rather than unit roots at the seasonal ones. This is in contrast to the findings reported by Lutkepohl et al. (1999) in their study on German money demand, and shows the importance of modelling the seasonal features of the data in alternative ways.     

Prescribed conditional interaction structure models with application to the analysis of mobility tables

The present paper considers some new models for the analysis of multidimensional contigency tables. Although the theoretical background used here appeared already in Haberman (1974), prescribed conditional interaction (PCIN) models were introduced by Rudas (1987) and their mathematical properties were worked out by Leimer and Rudas (1988). These models are defined by prescribing the values of certain conditional interactions in the contingency table. Conditional interaction is defined here as the logarithm of an appropriately defined conditional odds ratio. This conditional odds ratio is a conditional version of a generalization of the well known odds ratio of a 2×2 table and that of the three factor interaction term of a 2×2×2 table and applies to any number of dimensions and any number of categories of the variables. The well known log-linear (LL) models are special PCIN models. Estimated frequencies under PCIN models and tests of fit can be computed using existing statistical software (e.g. BMDP). The paper describes the class of PCIN models and compares it to the class of association models of Goodman (1981). As LL models are widely used in the analysis of social mobility tables, application of more general PCIN models is illustrated.     

Sectoral and aggregate technology growth in Spain

In this paper we analyze technological change in the Spanish economy by constructing adjusted Solow residuals, where the adjustment attempts to correct for the bias associated with the potential presence of imperfect competition, increasing returns, variable input utilization and, especially, sectoral reallocation of inputs across sectors. We refer to this modified Solow residual as a technology index. Sectoral reallocations and variable input utilization are key determinants of the differences between the aggregate Solow residual and the technology index resulting from the aggregation of estimated sectoral technological growth. We show that starting in the mid nineties, there has been a deceleration in the aggregate growth rate of technology which is basically due to the behaviour of the manufacturing sectors. Finally, our results imply that aggregate technology growth is less volatile than aggregate productivity as measured by the Solow residual.     

On the generic impossibility of truthful behavior: A simple approach

Summary We provide an elementary proof showing how in economies with an arbitrary number of agents an arbitrary number of public goods and utility functions quasi-linear in money, any efficient and individually rational mechanism is not strategy-proof for any economy satisfying a mild regularity requirement.The authors wish to thank William Thomson, Salvadpr Barberá, José Angel Silva and an anonymous referee for helpful comments. The remaining errors are our exclusive responsibility. Financial support from DGICYT under project PB 91-0756 and the Instituto Valenciano de Investigaciones Económicas is gratefully acknowledged.     

Geometrical Interpretation of the Mean and the Constant in a Box-Jenkins Time Series Model

Certain manuals and computer programs mistakenly identify the mean with the constant in Box-Jenkins time series models. In this paper, it will be shown that (a) the mean and the constant have different values in autoregressive models, and (b) they have an algebraic and graphical relationship.