Three very simple games and what it takes to solve them

We study experimentally the nature of dominance violations in three minimalist dominance-solvable guessing games. Only about a third of our subjects report reasoning consistent with dominance; they all make dominant choices and almost all expect others to do so. Nearly two-third of our subjects report reasoning inconsistent with dominance, yet a quarter of them actually make dominant choices and half of those expect others to do so. Reasoning errors are more likely for subjects with lower working memory, intrinsic motivation and premeditation attitude. Dominance-incompatible reasoning arises mainly from subjects misrepresenting the strategic nature (payoff structure) of the guessing games.     

Digitalization and the Labor Market

International Advances in Economic Research -     

Risk perception,regulation, and unlicensed child care: lessons from Ontario,Canada

In 2014, the Province of Ontario, Canada undertook a number of legislative changes regarding child care. Part way through the process, a series of tragic focusing events occurred: a number of infants and children died in unlicensed child care over a short period of time. Despite these events, the Province chose to allow a portion of the family child care (FCC) sector to remain unlicensed and essentially unregulated in a sector that is otherwise subject to strict licensing and regulation. Drawing on research on risk regulation, we analyse FCC regulation in comparison to other sectors and find that FCC is surprisingly under-regulated, given the health and safety risks. Legislative debate analysis reveals a number of rationales for non-regulation. In addition to pragmatic political concerns such as costs associated with licensing, analysis reveals concerns about choice and accessibility over quality and safety. We conclude with a call for a research agenda to further examine parents’ and policy-makers’ perceptions of risk.     

On dynamics in a Keynesian model of monetary and fiscal stabilization policy mix with twin debt accumulation

In this paper, a six‐dimensional model of flexible prices with the monetary and fiscal policy mix, describing the development of the firms’ private debt, the output, the expected rate of inflation, the rate of interest, government expenditure, and government bonds are analyzed. The stress put on the “twin debt accumulation” means that in our model both private debt accumulation and the public debt (government bond) accumulation are explicitly introduced. Questions concerning the existence of limit cycles around its normal equilibrium point are investigated. The bifurcation equation is found. The formulae for the calculation of its coefficients are gained. Numerical example illustrating the results attained is presented by means of numerical simulations.     

New Powers and the Distribution of Preferences in Global Trade Governance: From Deadlock and Drift to Fragmentation

ABSTRACT

Existing theories make divergent predictions about the impact of new powers on the global political economy. Some argue that a more even distribution of power will erode international cooperation, while others argue that cooperation can continue with the help of international institutions to overcome collective action problems. We argue that this debate overlooks a critical determinant of the shape of power transitions: the distribution of preferences amongst the major powers. It is primarily in the context of divergent preferences that power transitions are likely to give rise to conflict. Moreover, even where preferences diverge, the gains of cooperation provide a strong incentive to continue to pursue goals through multilateralism. This situation leads to forms of institutional change unanticipated by established theories. These include deadlock in expansive multilateral fora, institutional drift as old rules cannot keep up with the changing political and economic context, and fragmentation as countries seek minilateral solutions that reduce preference diversity. We develop this preference-based, institutional argument by examining the distribution of preferences and institutional change at the World Trade Organization (WTO) and its Doha Round, where the power transition is relatively advanced.     

Long-run risk and hidden growth persistence

An extensive literature has analyzed the implications of hidden shifts in the dividend growth rate. However, corresponding research on learning about growth persistence is completely lacking. Hidden persistence is a novel way to introduce long-run risk into standard business-cycle models of asset prices because it tightly intertwines the cyclical and long-run frequencies. Hidden persistence magnifies endogenous changes in the forecast variance of the long-run dividend growth rate despite homoscedastic consumption innovations. Not only does changing forecast variance make discrimination between protracted spells of anemic growth and brief business recessions difficult, it also endogenously induces additional variation in asset price discounts due to the preference for early uncertainty resolution.     

The role of employee participation in generating and commercialising innovations: insights from Chinese high-tech firms

To date, employee participation finds very little recognition in China in research as well as in management practice. It seems to fundamentally contradict traditional values in Chinese culture. The effect of employee participation on innovation is completely unknown, not only for China, but also for many other emerging economies. In contrast, employee participation finds a lot of recognition in the western world for quite some while. Research suggests that employee participation is particularly relevant for innovations in skilled labour contexts, which are becoming increasingly important also for China. Based on a survey of 620 medium-sized and large companies we are investigating the effect of employee participation on innovation generation and commercialisation in China. In the formulation of our hypotheses we take the moderating effects of incentives into account. The contribution of this article is to give evidence on the explanation power of the western concept of employee participation outside the western world. This allows for a better understanding of the robustness of the concept towards cultural context factors.