Rater Bias and Incentive Provision

The tendency of supervisors to judge an employee as either good or bad and then to seek out evidence supporting that earlier established opinion is regarded as one of the major problems of performance appraisal. We investigate the implications of this rater bias in a dynamic moral hazard model with a wealth‐constrained agent. Although rater bias weakens the agent's incentives to exert effort in late periods, at the same time it strengthens implicit incentives in early periods. Under the optimal contract, as long as rater bias is not overly strong, its adverse effect on late‐period incentives is fully offset by exploitation of stronger early‐period incentives and thereby leaves the principal's profits unchanged.     

One for all and all for one: privatization and Universal Service provision in the postal sector

Universal Service provision has a special role for the public utilities sector in many Organization for Economic Co-operation and Development (OECD) countries. These public utilities have largely been subject to privatization during the last 3 decades. Efficiency effects of privatization are widely documented while the impacts on the quality and accessibility of the Universal Service are not much examined. By using a unique dataset on privatization for 21 countries over the period 1980–2007 for the postal sector, we are able to show that privatization, in particular formal privatization, has led to a decrease in the quality of the Universal Service.     

The impact of redistributive policies on inequality in OECD countries

Due to behavioural effects triggered by redistributional interventions, it is still an open question whether government policies are able to effectively reduce income inequality. We contribute to this research question by using different country-level data sources to study inequality trends in OECD countries since 1980. We first investigate the development of inequality over time before analysing the question of whether governments can effectively reduce inequality. Different identification strategies, using fixed effects and instrumental variables models, provide some evidence that governments are capable of reducing income inequality despite countervailing behavioural responses. The effect is stronger for social expenditure policies than for progressive taxation.     

Gambling in contests

This paper presents a strategic model of risk-taking behavior in contests. Formally, we analyze an n-player winner-take-all contest in which each player decides when to stop a privately observed Brownian motion with drift. A player whose process reaches zero has to stop. The player with the highest stopping point wins. Unlike the explicit cost for a higher stopping time in a war of attrition, here, higher stopping times are riskier, because players can go bankrupt. We derive a closed-form solution of a Nash equilibrium outcome. In equilibrium, highest expected losses occur at an intermediate negative value of the drift.     

The effect of capital requirement regulation on the transmission of monetary policy: evidence from Austria

This paper analyzes the role of banks’ regulatory capitalization in the transmission of monetary policy. We use a confidential dataset for Austrian banks spanning from the first quarter of 1997 to the fourth quarter of 2003. We find evidence that Austrian banks react in an asymmetric way to monetary policy depending on their regulatory excess capitalization, i.e. low capitalized banks react more restrictively to a monetary tightening than their highly capitalized peers.

Is inequality an inevitable by-product of skill-biased technical change?

This article examines trends in relative wages between high- and medium-skilled workers and between medium- and low-skilled workers in Finland, Germany, Italy, South Korea and the US over the period 1970–2005. It is found that there are large differences in the evolution wage inequality across the countries in our sample, with some countries showing a long-run upward trend in relative wages (such as the US, Germany and Italy) and others showing a long-run downward trend (such as Finland and Korea). The main conclusion from our results is that inequality is not an inevitable by-product of technological change.     

The impact of stakeholder orientation on sustainability and cost prevalence in supplier selection decisions

The stakeholder approach has taken a prominent role in the discussion of sustainability measures at varying strategic levels and corporate functions. Literature on sustainability suggests that firms have to cope with enhanced pressure from different stakeholder groups regarding their upstream supply management practices. At the same time purchasing managers face the trade-off between sustainability and cost prevalence in selecting new suppliers. Thus, it is of major concern for companies in general and purchasing organizations in particular to know and understand how purchasing managers react to the influence of specific stakeholder groups when it comes to supplier selection decisions. Following this notion we formulate six sets of hypotheses linking the adoption of ethical business culture to the prevalence of sustainability and cost criteria in supplier selection decisions to be tested in a path analytical model.Based on the results of an empirical study conducted with purchasing managers from multi-national firms located in Germany, this paper makes two major contributions: first, it sheds light on direct effects of shareholder, public, and customer orientation on the evaluation of the outlined-trade off; second, it investigates the indirect effects by introducing the formalization of ethical culture as a mediating variable to assess the impact of the three kinds of shareholder orientation on the propensity to select suppliers based on their performance in terms of social and environmental criteria as well as cost performance.     

Empirical studies of trade marks – The existing economic literature

This paper surveys empirical studies employing trade mark data that exist in the economic literature to date. In the introductory section we summarise the theory of trade marks. Section 2 documents the use of trade marks by firms of different size and industry and by firms in several advanced countries, including Australia, the UK, and the USA. Section 3 reviews various attempts to gauge the function of a trade mark as an indicator of innovation and product differentiation. Section 4 surveys studies that have demonstrated firms' incentives to use trade marks, including transferring information to consumers, realising synergies between different types of intellectual property rights, strategies to raise rivals' costs and using trade mark portfolios as debt collateral. In Section 5, we provide an overview of the importance of trade-mark-use for firm survival and the association of trade marks with several dimensions of firm performance, including productivity and their ability to generate well-paid jobs.