Second chance offers versus sequential auctions: theory and behavior

Second chance offers in online marketplaces involve a seller conducting an auction for a single object and then using information from the auction to offer a losing bidder a take-it-or-leave-it price for another unit. We theoretically and experimentally investigate this practice and compare it to two sequential auctions. We show that the equilibrium bidding strategy in the second chance offer mechanism only exists in mixed strategies, and we observe that this mechanism generates more profit for the auctioneer than two sequential auctions. We also observe virtually no rejections of profitable offers in the ultimatum bargaining stage.      

Do protest responses to a contingent valuation question and a choice experiment differ?

It is suggested that the number of protest responses in stated preference surveys depends, inter alia, on the valuation method used. Choice Experiments (CE) are said to generate a lower number of protest responses than Contingent Valuation (CV). However, no comparison of both methods with respect to protest responses has been conducted to date. We used both CE and CV in a survey on forest biodiversity in two German regions. Protest beliefs were measured for all respondents irrespective of whether they were willing to pay or not. The results show no clear pattern of differences between CE and CV regarding protest beliefs and protest responses. Using an attitude scale based on respondents’ protest beliefs, we see a significant negative effect of this attitude on willingness to pay in both methods. However, in one of the two study regions, the effect is weaker in CE than in CV.      

Training,migration, and regional income disparities

"It is assumed that there are two regions, that production requires both skilled and unskilled labour, and that one region is innately more productive than the other. Workers, who differ in their migration or training costs, make individually rational decisions. In equilibrium the ratio of skilled workers to unskilled workers is always higher in the more productive region. Average incomes differ between regions because regional differences in wage rates are reinforced by regional differences in the structure of employment. The model is also used to analyse the effects of policies intended to equalize the distribution of income."     

POVERTY AND INCOME INEQUALITY IN PUERTO RICO, 1969–89: TRENDS AND SOURCES

The paper examines Puerto Rican trends in income distribution during the 1970s and 1980s, then attempts to ascertain the source of the changes in income inequality through a decomposition of the Gini coefficient by factor income source. The study finds that poverty and inequality declined unambiguously during the twenty-year period. The source of the fall in income concentration was found to have been tied, not to changes in the distribution or share of earned income, but to that of unearned income, particularly transfers. These appear to have also accounted for the decline in poverty.     

The origins of terrorism: Cross-country estimates of socio-economic determinants of terrorism

Prior research has concluded that socio-economic development does not significantly affect terrorism. We take an alternative view. First, we note that a country's socio-economic circumstances affect terrorists' behavior through terrorism's opportunity costs. We argue that this reasoning also holds for the case of supreme value terrorism. Then, we run a series of negative binomial regressions for 110 countries between 1971 and 2007 to test the hypothesis that poor socio-economic development is conducive to terrorism. We find that socio-economic variables indeed matter to terrorism, contrary to other results. Our findings imply that countries can benefit from economic development and growth in terms of a reduction in terrorism.     

The dynamics of responder behavior in ultimatum games: a meta-study

Using data aggregated from seven papers that study repeated play in standard ultimatum games with either stranger or absolute stranger matching, we show that the behavior of responders changes with experience. High offers are more likely to be accepted with experience and low offers are more likely to be rejected. At the individual level, there is a negative relationship between the likelihood that a given offer is accepted and the size of the preceding offer. We compare the results with predictions generated by static models of distributional preferences, implicitly dynamic models of preferences with reciprocity, and explicitly dynamic models of adaptive learning. The data is most consistent with models of preferences with reciprocity.     

Financial amplification of foreign exchange risk premia

Theories of financial frictions in international capital markets suggest that financial intermediaries' balance sheet constraints amplify fundamental shocks. We present empirical evidence for such theories by decomposing the U.S. dollar risk premium into components associated with macroeconomic fundamentals, and a component associated with financial intermediary balance sheets. Relative to the benchmark model with only macroeconomic state variables, balance sheets amplify the U.S. dollar risk premium. We discuss applications to financial stability monitoring.