THE BROTHER‐IN‐LAW EFFECT*

When a firm is forced to pay abnormally high wages, hiring transfers rents. This effectively endows the employer with the ability to grant favors, and he may wish to do so even at some cost to efficient production. We refer to this as the brother‐in‐law effect. This article analyzes its consequences. When the brother‐in‐law effect is due to unionization, decisions regarding both the number and type of workers employed could be inefficient; overemployment could obtain even relative to the workforce that would be employed without unionization. We also identify cases in which nepotism improves efficiency.     

Energy Saving and Tourism Sustainability: Solar Control Window Film in Hotel Rooms

This paper investigates solar control film as an energy saver in the fast growing hotel sector in southern China. It investigates claims made for this low-cost retrofitted material in hotel rooms, calibrating reductions in solar gain in summer. It provides reliable and independent data about the performance and economic viability of solar control film in real hotel environments. The study found that, by limiting solar gain, the film helps limit tourism's impact on global warming and climate change. The paper also foreshadows new technical glazing developments.     

Ruin Problems for Phase-Type(2) Risk Processes

In this paper we consider a risk process in which claim inter-arrival times have a phase-type(2) distribution, a distribution with a density satisfying a second order linear differential equation. We consider some ruin related problems. In particular, we consider the compound geometric representation of the infinite time survival probability, as well as the (defective) distributions of the surplus immediately prior to ruin and of the deficit at ruin. We also consider explicit solutions for the infinite time ruin probability in the case where the individual claim amount distribution is phase-type.     

The gift of advice: communication in a bilateral gift exchange game

We augment a standard bilateral gift exchange game so employees can send messages at the same time as choosing an effort level. Employee effort (controlling for wages) is unaffected by allowing messages, but wages dramatically increase. Messages affect wages because employees give managers advice to set higher wages, usually explaining that this will result in higher effort. This advice prompts managers to try higher wages, helping them learn that raising wages increases their payoffs. In a follow-up experiment, we directly provide managers with additional information about the relationship between wages and effort. This too causes wages to increase, but to a lesser extent than allowing messages. Our results highlight the critical role of learning in generating gains from positive gift exchange.     

Managing health authorities: One member's view

The Government have devoted a lot of energy to improving the quality of management in the Civil Service. Most of this effort has gone on internal management, leaving relatively untouched the management of Departmental and broader government programmes and of outside organisations such as the national health service ‐ with all its regions, districts, family practitioner committees, and medical practitioners. One reason for this imbalance may be that, as successive National Audit Office reports have shown, management in the broader sense is actually rather difficult.