The Refined Best Reply Correspondence and Backward Induction

Fixed points of the (most) refined best reply correspondence, introduced in Balkenborg et al. (2013), in the agent normal form of extensive form games with perfect recall have a remarkable property. They induce fixed points of the same correspondence in the agent normal form of every subgame. Furthermore, in a well‐defined sense, fixed points of this correspondence refine even trembling hand perfect equilibria, while, on the other hand, reasonable equilibria that are not weak perfect Bayesian equilibria are fixed points of this correspondence.     

National levels of corruption and foreign direct investment

We model the relationship between bilateral foreign direct investment (FDI) and the level of corruption in multinational firms’ (MCNs’) home and host countries. We construct and test a model of bilateral FDI between countries that differ in their levels of corruption. FDI is affected negatively both by the level of corruption in the host country and by differences in home- and host-country corruption. Our model emphasizes that MNCs develop skills for dealing with home-country corruption, and these skills become a competitive advantage in similarly corrupt host countries. We test the model using data on bilateral FDI stocks among a large number of home and host countries, using a variety of specifications and estimation strategies to provide robustness. Our results show that the effects of host-country corruption and of differences in corruption levels between home and host countries are statistically and economically significant.     

On the assignment of students to topics: A Variable Neighborhood Search approach

This article presents a study of a practical assignment problem found in teaching within higher education. Here, students are assigned to scientific topics for which written papers must be submitted. Often, preferences across topics exist among other side constraints that should be considered in solving the problem of interest. Characterizing attributes of real-world problems were studied for scientific departments in Economics and Business Administration at German universities by sending out 800 questionnaires, and analyzing the 203 responses.Based on earlier studies, a Variable Neighborhood Search (VNS) approach was formulated to solve the resulting assignment problem. Several neighborhood search operators were tested, and numerical results are reported for a range of problem scenarios taken from real-world cases. It was observed that VNS leads to superior results vs. single operator local search approaches. Furthermore, we were able to show that in the studied problem, the effectiveness of certain neighborhoods was, to a large extent, dependent on the structures of the underlying problem.An extension of the problem was formulated by integrating a second objective function, which simultaneously balances the workload of staff members while maximizing student utility. The VNS approach was implemented in a computer system, available free of charge, providing decision support for selected other institutions within higher education.     

Governance and strategy of entrepreneurial networks: an introduction

This special issue focuses on empirical and theoretical papers that help us to better understand the strategy and governance of entrepreneurial networks, such as franchise chains, alliances, and cooperative networks. The following central themes are covered: (I) Which formal governance mechanisms do entrepreneurial networks use in order to reduce transaction cost/agency cost and to increase strategic value? (II) What is the role of relational governance mechanisms (such as information exchange and social ties) for the performance outcomes in franchise chains and cooperatives? (III) Which alliance strategies do entrepreneurial firms pursue to realize a competitive advantage, and what is the impact of resources and capabilities on performance outcomes of entrepreneurial firms. To address these issues, insights from organizational economics (transaction cost theory, agency theory, signaling theory), strategic management perspectives (resource-based, knowledge-based and organizational capabilities theory), entrepreneurship theory and the relational governance view are used.     

Schumpeterian Entrepreneurs Meet Engel's Law: The Impact of Inequality on Innovation-Driven Growth

This article analyzes the impactof inequality on growth when consumers have hierarchic preferencesand technical progress is driven by innovations. With hierarchicpreferences, the poor consume predominantly basic goods, whereasthe rich consume also luxury goods. Inequality has an impacton growth because it affects the level and the dynamics of aninnovator's demand. It is shown that redistribution from veryrich to very poor consumers can be beneficial for growth. Ingeneral, the growth effect depends on the nature of redistribution.Due to a demand externality from R&D activities, multipleequilibria are possible.