A network experiment in continuous time: The influence of link costs

In recent work on non-cooperative network formation star-shaped networks play an important role. In a particular theoretical model of Bala and Goyal (2000) center-sponsored stars are the only strict Nash networks. In testing this theoretical model, Falk and Kosfeld (2003) do not find experimental evidence that players select the center-sponsored star. Based on a slight modification of Bala and Goyal’s model, we design a network formation experiment in which, depending on link costs, periphery-sponsored stars and the empty network are the only strict Nash networks. We observe that almost all groups not only reach a strict Nash network once but also switch the center player in periphery-sponsored stars several times. The main innovation in our experiment is to use a continuous time framework which we believe to be a more realistic setting to study behavior in network formation situations and which makes coordination on stars much easier than simultaneous strategy adaptation in discrete time. Electronic Supplementary Material Supplementary material is available in the online version of this article at http://dx.doi.org/10.1007/s10683-006-9125-1. JEL Classification C72 · C92 · D81     

The Lévy LIBOR model

Models driven by Lévy processes are attractive because of their greater flexibility compared to classical diffusion models. First we derive the dynamics of the LIBOR rate process in a semimartingale as well as a Lévy Heath-Jarrow-Morton setting. Then we introduce a Lévy LIBOR market model. In order to guarantee positive rates, the LIBOR rate process is constructed as an ordinary exponential. Via backward induction we get that the rates are martingales under the corresponding forward measures. An explicit formula to price caps and floors which uses bilateral Laplace transforms is derived.     

PAALiativ: Technik als Chance?

Assistenztechnologie im Wohnumfeld — Die Terminalphase des Lebens in h?uslicher Umgebung verbringen zu k?nnen entspricht dem Wunsch der meisten Menschen. In Oldenburg startete mit PAALiativ ein Projekt, mit dem exemplarisch nach M?glichkeiten der technischen Unterstützung für ein selbstbestimmtes Leben Schwerstkranker gesucht wird.     

Land use and the state of the natural environment

Land use and land cover are important determinants of the state of the natural environment. As a result, measures of land use and land cover change have been widely used as indicators of environmental condition and quality. This review explores the range of measures that have been applied in the UK at national, regional and local scales, and their sensitivity to particular drivers of change. The extent to which these indicators are important properties in themselves or are surrogates for wider environmental qualities is considered.The discussion focuses on the evolving frameworks used to analyse the relationships between land use and the state of the natural environment. The limitations and strengths of the DPSIR reporting and analytical framework are explored. Recent approaches to the assessment of the impacts of future land use change on the natural environment using model-based scenario methods are examined, and the need to develop new types of aggregate measure of land use function is identified. There is also a pressing need to link assessments of trends to the analysis of sustainability thresholds or limits. It is concluded that the concept of a socio-ecological system offers a more fruitful approach to the analysis of the relationships between land use and the state of the natural environment than the simplistic cause–effect models that have been used in the past.     

Unbounded liabilities,capital reserve requirements and the taxpayer put option

When firms access unbounded liability exposures and are granted limited liability, then an all equity firm holds a call option, whereby it receives a free option to put losses back to the taxpayers. We call this option the taxpayer put, where the strike is the negative of the level of reserve capital at stake in the firm. We contribute by (i) valuing this taxpayer put, and (ii) determining the level for reserve capital without a reference to ratings. Reserve capital levels are designed to mitigate the adverse incentives for unnecessary risk introduced by the taxpayer put at the firm level. In our approach, the level of reserve capital is set to make the aggregate risk of the firm externally acceptable, where the specific form of acceptability employed is positive expectation under a concave distortion of the cash flow distribution. It is observed that, in the presence of the taxpayer put, debt holders may not be relied upon to monitor risk as their interests are partially aligned with equity holders by participating in the taxpayer put. Furthermore, the taxpayer put leads to an equity pricing model associated with a market discipline that punishes perceived cash shortfalls.     

Does Multinationality Affect the Propensity to Innovate? An Analysis of the Third UK Community Innovation Survey

The paper is developed at the interface between internationalization and innovation studies. It utilizes data on innovation from the UK Community Innovation Surveys 3 and 2 (CIS3 and CIS2) to assess whether multinationality affects the innovation propensity of surveyed enterprises. The indicators of innovation propensity—our dependent variables—are taken from the following CIS sets of variables: innovation outputs; innovation inputs; innovation outcomes (patent applications); innovation continuity/sustainability. The latter element is considered to be the ability of the enterprise to sustain innovation over a long period of time and the relevant variable is derived from both CIS3 and 2 data. This allows the paper to introduce dynamic elements into the analysis. Four hypotheses are developed and tested. Our main hypothesis states that multinationality per se (i.e. being part of a multinational company network) affects the propensity to innovate. We also test for three sub‐hypotheses related to characteristics of multinationality: belonging to a group vs being independent; degree of multinationality; being part of a foreign vs domestic multinational. The results show that all those CIS enterprises that belong to a multinational corporation—whether UK or foreign—are more likely to exhibit innovation propensity; they are also more likely to engage in innovation activities on a continuous basis.     

Country‐Specific Profiles of Performance Management in China,Germany, and the United States—An Empirical Test

The vast majority of the literature on performance management (PM) chooses a contextual perspective, focusing on the cross‐country comparison of single elements of the PM system. Simultaneously, a conceptual basis and an encompassing comprehension of country‐specific peculiarities are lacking. Based on a suggested conceptualization of the elements of PM (criteria, actors, methods, purposes, feedback) and hypotheses developed from an encompassing literature review, the authors present empirical findings from a quantitative study including 167 managers from multinational enterprise (MNE) subsidiaries in three culturally and institutionally diverse major economies (Germany, United States, and China). Contrary to what the literature suggests about the local peculiarities of PM, the results of the present study show significant country‐specific differences in only 6 out of 16 investigated PM features. Furthermore, the analytical categorization of “Western” countries versus China cannot be empirically confirmed. In contrast, more similarities between China and Germany than between Germany and the United States are identified. © 2014 Wiley Periodicals, Inc.     

Anticipatory anthropology and world peace: a view from 2050

Norman Geras has written a searing indictment of current first-world policies related to our roles in keeping the world peace and our abilities to respond to human rights violations. This paper is partly a response to Geras's book, The contract of mutual indifference: politics since the Holocaust. Thus, genocide is the peace issue I will discuss here. I will use Bosnia, because I have had two occasions to work there and have talked with Bosnians from all walks of life as well as the humanitarian agents there to help them. Second, the paper will define the character of a fully responsive anticipatory anthropology and I will sketch out the nature of some possible peace futures. A third main purpose of this paper is to contribute to the development of the social science of peace.     

Getting Shut Out of the International Capital Markets: It Doesn't Take Much*

We use a simple model of international lending to show that an emerging market borrower who might default can be shut out of international capital markets without warning. A modest haircut on obligations, for example, can shut down lending.     

Evolution of networks—an experimental analysis

It is the main aim of our paper to study network formation in experimental setups in discrete and continuous time. Our design is inspired by the theoretical model on network formation by Bala and Goyal (Econometrica, 68(5): 1181–1229, 2000) as well as the experiments by Callander and Plott (J. Public Econ., 89: 1469–1495, 2005) and Falk and Kosfeld (IEW Working Paper, University of Zürich, Zürich, Switzerland, No. 146, 2003). In particular, we analyze the role of star-shaped networks which are strict Nash-equilibria of the corresponding network formation game. Our experimental results show that strict Nash networks prove to be a good indicator for predicting network formation, particularly in continuous time. In explaining our results, it turns out that, among others, the complexity in coordinating on stars, the inequity aversion against unequal payoff distribution in the network, and the groups’ degrees of activity are the most important determinants for the formation of strict Nash networks.