Limited Depth of Reasoning and Failure of Cascade Formation in the Laboratory

We examine the robustness of information cascades in laboratory experiments. Apart from the situation in which each player can obtain a signal for free (as in the experiment by Anderson and Holt (1997) , American Economic Review , 87 (5), 847–862), the case of costly signals is studied where players decide whether or not to obtain private information, at a small but positive cost. In the equilibrium of this game, only the first player buys a signal and makes a decision based on this information whereas all following players do not buy a signal and herd behind the first player. The experimental results show that too many signals are bought and the equilibrium prediction performs poorly. To explain these observations, the depth of the subjects' reasoning process is estimated, using a statistical error-rate model. Allowing for different error rates on different levels of reasoning, we find that the subjects' inferences become significantly more noisy on higher levels of the thought process, and that only short chains of reasoning are applied by the subjects.     

Is Tax Harmonization Useful?

It is a widely acknowledged result of the literature on international tax competition that an inefficient provision of public goods can only be avoided, if taxes are sufficiently coordinated. In this paper we use a model where governments use commodity and factor taxes in the tax competition game. We show that governments will always choose a second-best efficient tax structure in the Nash equilibrium if they have access to a residence-based capital tax and either a destination-based commodity tax or a labor tax. Moreover, we show that tax competition need not foreclose third-best efficiency in a world with a restricted tax policy toolkit.     

A Business Cycle Indicator for Abu Dhabi

According to the Abu Dhabi Economic Vision 2030, the main objective is to diversify its production base, and widen non-oil production. In addition to this growth strategy cyclical fluctuations are also a concern. Economic measures to increase the periods of economic prosperity and reduce the slowdown periods are implemented. To do so there is also a need for reliable tools to monitor the cyclical economic development. The composite indicator approach for economic change assessment, therefore, is seen as a proper method taken up by the Department of Economic Development （DED） in Abu Dhabi as a tool to assess actual short-term economic changes. However, there are no quarterly national accounts for Abu Dhabi at the moment and only a few short-term statistics. A suitable quarterly reference series for indicator assessment has to be constructed with temporal disaggregation methods. Since Abu Dhabi has a huge oil sector real income is used as a reference, because it reflects the economic situation better than real GDP. For the construction of the composite indicators various data sources are exploited.     

A characterization of the distributions that imply existence of linear equilibria in the Kyle-model

The existence of a linear equilibrium in Kyle’s model of market making with multiple, symmetrically informed strategic traders is implied for any number of strategic traders if the joint distribution of the underlying exogenous random variables is elliptical. The reverse implication has been shown for the case in which the random variables are independent and have finite second moments. Here we extend this result to the case in which the underlying random variables are not necessarily independent and their joint distribution is determined by its moments. We thank two anonymous referees for their comments. Financial support by the Deutsche Forschungsgemeinschaft, SFB-TR 15, is gratefully acknowledged.     

Controlling im Kloster — ein Praxisbericht aus der Benediktinerabtei Plankstetten

Ohne Zusammenfassung Dipl.-Kfm. Wolfgang Gehra ist Gesch?ftsführer der Klosterbetriebe Plankstetten GmbH Bischof Dr. Gregor M. Hanke OSB ¹ ist Bischof des Bistums Eichst?tt, Bisch?fliches Sekretariat Prof. Dr. Hans-Ludwig Schmidt ist Inhaber des Lehrstuhls für Sozialund Gesundheitsp?dagogik Pater Godehard Schuster OSB ¹ ist Gesch?ftsführer der Klosterbetriebe Plankstetten GmbH, Prior der Benediktinerabtei Plankstetten und Dekan in der Di?zese Eichst?tt     

Introduction: How to Deal with Uncertainty in Population Forecasting?

Demographers can no more be held responsible for inaccuracy in forecasting population 20 years ahead than geologists, meteorologists, or economists when they fail to announce earthquakes, cold winters, or depressions 20 years ahead. What we can be held responsible for is warning one another and our public what the error of our estimates is likely to be.–Nathan Keyfitz (1981)     

Market Concentration and Product Variety under Spatial Competition: Evidence from Retail Gasoline

We show that for a spatially differentiated economy reduced product variety is the likely outcome of mergers except in cases where exit costs in relation to (outlet specific) fixed costs are high. Our empirical analysis of the Austrian retail gasoline market confirms that increases in concentration reduce product variety. Ignoring this product variety effect is likely to lead to an underestimate of market power in structural merger analysis.     

Georg Charasoff: A Pioneer in the Theory of Linear Production Systems

This paper exposes mathematically Charasoff s results on linear production systems. Charasoff developed an algorithm for the iterative calculation of the Leontief inverse, the concepts of basic and non-basic commodities, as well as the Srajfian standard system. This allowed him, given the real wage rate, to calculate the profit rate independently of prices as the ratio of two physically homogeneous magnitudes, and then the prices for an already given profit rate. Therefore, as early as 1910, Charasoff had developed significant concepts of the theory of linear production systems, which long afterwards became more broadly known through the works of Leontief and Sraffa.     

Symmetric Tax Competition under Formula Apportionment

This paper compares property taxation to a corporate income tax based on formula apportionment in a model where identical countries compete to attract capital. We find that if countries can pair a residence–based capital tax with a property tax (source tax on capital) the tax equilibrium is efficient. In contrast, the use of a 2–factor FA scheme based on sales and capital combined with a residence–based capital tax leads to an inefficient outcome.