A Psychological Reexamination of the Bertrand Paradox

The Bertrand paradox describes a situation in which two competing firms reach an outcome where both price at marginal cost. In laboratory experiments, this equilibrium is not generally observed. Existing empirical works on Bertrand competition have found evidence for boundedly rational models. We find that such models are useful in organizing behavior in early stages of the game, but less so in later stages. We show that a new model, coarse grid Nash equilibrium, based on the assumption that subjects discretize the strategy space, explains the data better.     

An experimental analysis of team production in networks

Experimental and empirical evidence highlights the role of networks on social outcomes. This paper tests the properties of exogenously fixed networks in team production. Subjects make the same decisions in a team work environment under four different organizational networks: the line, the circle, the star, and the complete network. In all the networks, links make information available to neighbors. This design allows us to analyze decisions across networks and a variety of subject types in a standard linear team production game. Contribution levels differ significantly across networks and the star is the most efficient incomplete network. Moreover, our results suggest that subjects act as conditional cooperators with respect to the information received from the network.     

欧洲工商管理学院 阻碍中国经济持续增长的壁垒

中国经济增长能持续多久？我们认为,除非中国政府进行深度的机构改革,否则中国经济增长将不会持续太长时间。众所周知,国家的经济表现与其机构质量（institutional quality）有关。而机构质量由多个指标衡量,如政治稳定性、政府效率和腐败程度等。     

On Constraining Fiscal Policy Discretion in EMU

We review the theoretical and empirical literature on the benefitsand costs of imposing restrictions on fiscal policy. We emphasizethat the arguments in favour of restricting discretion of fiscalpolicy go beyond the notion of avoiding unsustainable budgetaryplans that can lead to pressure on the central bank. Restrictionson fiscal policy can also be justified on the grounds that discretionarychanges in spending or taxes can lead to unnecessary volatilityin output and lower economic growth. Empirically, there is evidencethat implicit constraints on governments can be as effectiveas explicit constraints (i.e. rules). From the analysis in EMUcountries in the last 10 years we conclude that there has beena significant change in the conduct of fiscal policy in termsof increased discipline and less use of discretion. However,since 1999 there are clear signs of fatigue in this processas previous trends have either stopped or even reversed.     

Not all group members are created equal: heterogeneous abilities in inter-group contests

Experimental Economics - Competition between groups is ubiquitous in social and economic life, and typically occurs between groups that are not created equal. Here we experimentally investigate the...     

Stock and Mobility of Researchers and Industrial Leadership

We propose an evolutionary model which shows the relevance of the stock and mobility of researchers in explaining industrial leadership and catch‐up. Likewise, it shows how leading firms and nations may benefit from their competitors' investments in scientific training. On the other hand, international knowledge diffusion may jeopardize apparently solid leadership positions. Thus, under certain conditions, technological convergence at a worldwide level mitigates the migrant‐sending role of emergent nations. In fact, taking advantage of knowledge diffusion to make the transition from migrant‐sending to migrant‐receiving nation proves to be a source of leadership in the model.     

Leadership and overcoming coordination failure with asymmetric costs

We study how the heterogeneity of agents affects the extent to which changes in financial incentives can pull a group out of a situation of coordination failure. We focus on the connections between cost asymmetries and leadership. Experimental subjects interact in groups of four in a series of weak-link games. The treatment variable is the distribution of high and low effort cost across subjects. We present data for one, two and three low-cost subjects as well as control sessions with symmetric costs. The overall pattern of coordination improvement is common across treatments. Early coordination improvements depend on the distribution of high and low effort costs across subjects, but these differences disappear with time. We find that initial leadership in overcoming coordination failure is not driven by low-cost subjects but by subjects with the most common cost type. This conformity effect may be due to a kind of group identity or to the cognitive simplicity of acting with identical others.      

How Politicians Make Decisions: A Political Choice Experiment

The present paper reports on a political choice experiment with elected real-world politicians. A questionnaire on political and public issues is used to examine whether prospect theory predicts the responses of experts from the field better than rational choice theory. The results indicate that framing effects do not disappear with expertise.      

Are low-price promises collusion guarantees? An experimental test of price matching policies

In a symmetric differentiated experimental duopoly we test the ability of Price Matching Guarantees (PMG) to raise prices above the competitive levels. PMG are introduced both as a market rule (the selling price is always the lowest posted price) and as a business strategy (subjects decide whether or not to offer them). Our results show that PMG lead to a clear collusive outcome as markets quickly and fully converge to the collusive prediction if PMG are imposed as a market rule. Whenever subjects are allowed to decide whether to adopt PMG or not we observe that almost all subjects decide to adopt them and prices get very close to the collusive ones.      

Do Business Cycles Cast Long Shadows? Short-Run Persistence and Economic Growth

Thisarticle explores the links between cyclical fluctuations andlong-run growth in the context of an endogenous growth modelwith aggregate demand externalities. In this model, aggregatedemand and growth rates are positively correlated. In the presenceof exogenous cyclical shocks, the model is able to generate persistentfluctuations through the effects that business cycles have onaggregate demand, profits and technological progress. Persistencebecomes a measure of the response to business cycles of growth-relatedvariables. Empirical evidence from a large sample of countriessuggests that there is indeed a correlation between how persistentfluctuations are and the long-term growth rates of GDP.