Clever agents in adaptive learning

Saez-Marti and Weibull (J. Econom. Theory 86 (1999) 268) investigate the consequences of letting some agents play a myopic best reply to the myopic best reply in Young's (J. Econom. Theory 59 (1993) 145) bargaining model, which is how they introduce “cleverness” of players. I analyze such clever agents in general finite two-player games and show Young's (Individual Strategy and Social Structure, Princeton University Press, Princeton, NJ, 1998) prediction to be robust: adaptive learning with clever agents does select the same minimal curb set as in the absence of clever agents, if their population share is less than one. However, the long-run strategy distribution in such a curb set may vary with the share of clever agents.     

Post‐Cameralist Governance: Towards a Robust Political Economy of Bureaucracy

I develop a robust political economy of bureaucracy by highlighting the conditions necessary for hierarchical administrative bodies to govern protectively and productively, but not predatorily. These conditions are residual claimancy and jurisdictional competition. I make this argument by exploring a post‐cameralist interpretation of governance. Cameralism arose as a governance philosophy in the fractured principalities of seventeenth‐century Germany following the Thirty Years' War. Post‐cameralism focuses not on particular cameralist governance strategies but on a paradigm which sees governance as an activity provided within a larger exchange order, rather than imposing itself on that order as in more conventional treatments of public economics. While a post‐cameralist conception of governance comes with its own challenges, such as tensions with normative visions that promote self‐governance, it nonetheless presents an intriguing synthesis of monocentric and polycentric insights.     

THEORY AND PRACTICE OF GVAR MODELLING

The Global Vector Autoregressive (GVAR) approach has proven to be a very useful approach to analyse interactions in the global macroeconomy and other data networks where both the cross‐section and the time dimensions are large. This paper surveys the latest developments in the GVAR modelling, examining both the theoretical foundations of the approach and its numerous empirical applications. We provide a synthesis of existing literature and highlight areas for future research.     

Past experience of uncertainty affects risk aversion

In an experiment with more than 500 participants we study how past experience of uncertainty (imperfect knowledge of the state space) affects risk preferences. Participants in our experiment choose between a sure outcome and a lottery in 32 periods. All treatments are exactly identical in periods 17–32 but differ in periods 1–16. In the early periods of the risk treatment there is perfect information about the lottery; in the ambiguity Treatment participants perfectly know the outcome space but not the associated probabilities; in the unawareness treatment participants have imperfect knowledge about both outcomes and probabilities. We observe strong treatment effects on behavior in periods 17–32. In particular, participants who have been exposed to an environment with very imperfect knowledge of the state space subsequently choose lotteries with high (low) variance less (more) often compared to other participants. Estimating individual risk attitudes from choices in periods 17–32 we find that the distribution of risk attitude parameters across our treatments can be ranked in terms of first order stochastic dominance. Our results show how exposure to environments with different degrees of uncertainty can affect individuals’ subsequent risk-taking behavior.     

Environmental Policy in Open Economies and Monopolistic Competition

This paper analyses the implications of international trade for non-cooperative environmental policy in the case of local production externalities. A particular focus is on the potential effects of regulations on the variety of goods and the resulting international spillover caused by trade. A tougher domestic standard negatively affects the utility of the households abroad, since such a policy reduces their variety of imports (due to fewer domestic product inventions) or their consumption of each imported brand (due to higher import prices). Ignoring the negative spillover, non-cooperative governments implement inefficiently strict standards in equilibrium. In contrast to this clear-cut inefficiency result, the impact of international trade on the state of the environment is ambiguous.     

A critical review of empirical research on open innovation adoption

The open innovation approach has been one of the most discussed topics in innovation management literature in the 2000s. Over the past few years, academic publications on open innovation have increased substantially. This paper attempts to summarize and review the state-of-the-art of empirical open innovation research and develop new opportunities for open innovation research in the future. In order to make the papers more comparable, a clear focus on large-scale quantitative-oriented studies was set. From a total of 282 documents, 30 studies were analyzed in detail along four key dimensions: Firstly, different methods of measuring open innovation adoption are compared. Then, the level of open innovation adoption is analyzed on a general basis. Thirdly, the level of adoption is compared at the level of the open innovation mode (inbound and outbound). Finally, the study results regarding the variables that influence open innovation adoption are compared and conclusions for future research directions are drawn.     

OPTIONS TO THE REALM: A COST NEUTRAL PROPOSAL TO IMPROVE POLITICAL INCENTIVES

In this article, we draw on the literature on political property rights, political accountability, and strategic management and entrepreneurship to propose a cost neutral reform aimed at promoting long‐run economic prosperity. We propose replacing politicians' defined benefit pensions with a financial contract that is tied to economic performance. In particular, we propose a contract that pays out a lump sum to a politician 30 years after their election if real gross domestic product per capita is above some preset benchmark. Furthermore, we show that the contract can be priced such that it is cost neutral in terms of present value with a defined‐benefit pension. We argue that this contract provides a net benefit to society. (JEL D70, D72)     

Autocracies and regional integration: the Eurasian case

The establishment of the Customs Union of Russia, Belarus and Kazakhstan in 2010, succeeded by the Eurasian Economic Union in 2015, constituted an important discontinuity in the development of post-Soviet regionalism: while the preceding organisations remained cases of ‘ink-on-paper’ regional integration, in the case of the Customs Union the members actually implemented their commitments. This creates an important theoretical challenge: the literature (which the previous experience of Eurasian regionalism was very much in line with) conjectures that authoritarian states are unable to successfully implement an economic regional integration agreement (RIA). The aim of the article is to explore the conditions under which implementation of economic RIAs by autocracies happens. We argue that the implementation is influenced by the extent of economic, social and political ties between member states, and suggest that, unlike democratic states, which are more likely to implement a RIA where there are strong economic ties, non-democracies are more likely to do so in the case of intermediate economic dependence.     

Monetary policy tradeoffs between financial stability and price stability

We analyze the impact of interest rate policy on financial stability in an environment where banks can experience runs on their short‐term liabilities forcing them to sell assets at fire‐sale prices. Price adjustment frictions and a state‐dependent risk of financial crisis create the possibility of a policy tradeoff between price stability and financial stability. Focusing on Taylor rules with monetary policy possibly reacting to banks’ short‐term liabilities, we find that the optimized policy uses the extra tool to support investment at the expense of higher inflation and output volatility.