OVERBIDDING AND HETEROGENEOUS BEHAVIOR IN CONTEST EXPERIMENTS: A COMMENT ON THE ENDOWMENT EFFECT

We revisit the meta-analysis of Sheremeta on overbidding in contest experiments and focus on the effect of endowment on overbidding. Sheremeta assumes, and finds evidence of, an increasing linear relationship between endowment and overbidding, Quantal Response Equilibrium (QRE) predicts an increasing concave relationship, while Baik and colleagues find an inverted U-shaped relationship in their analysis of a single experiment. We use the same data as in Sheremeta, but employ a different econometric model which leads to support for both QRE and the inverted U-shaped relationship. Following Baik and colleagues, we posit that the inverted-U relationship may be interpreted in terms of a wealth effect.     

Hukou and Graduates’ Job Search in China*

This paper presents evidence that graduates from rural areas, classified as non‐urban Hukou, choose to invest in higher levels of job‐search effort (as measured by number of different search methods used and the number of employers contacted) and also set a lower reservation wage, reflected in acceptance of a lower starting salary, than do comparable graduates of urban Hukou, in China. The former also appear to have higher probabilities of being employed, in terms of both their higher probabilities of receiving offers and, more importantly, their higher probabilities of acceptance. The evidence thus suggests that graduates with non‐urban Hukou face more intense pressure to gain employment in the period leading up to graduation, than do their urban counterparts. More generally, the evidence suggests that effort invested in job search is rewarded in the graduate labor market in China.     

A test of the rational expectations hypothesis using data from a natural experiment

Data on contestants’ choices in Italian Game Show Affari Tuoi are analysed in a way that separates the effect of risk attitude (preferences) from that of beliefs concerning the amount of money that will be offered to contestants in future rounds. This separate identification is possible by virtue of the fact that, at a certain stage of the game, beliefs are not relevant, and risk attitude is the sole determinant of choice. The rational expectations hypothesis is tested by comparing the estimated belief function with the ‘true’ offer function which is estimated extraneously using data on offers actually made to contestants. We find a close correspondence, leading us to accept the rational expectations hypothesis. The importance of belief formation is confirmed by the estimation of a mixture model which establishes that the vast majority of contestants are forward looking as opposed to myopic.     

Pricing Personal Services: An Empirical Study of Earnings in the UK Prostitution Industry

The hedonic pricing method is used to investigate the way in which the prices of prostitutes' services are determined. The data used in the analysis are extracted from an internet site, each observation being based on a report submitted by a client. The factors affecting price are identified in a regression framework, and combined with other information to provide estimates of the earnings, both aggregate and individual, for a sub‐sector of this underground service industry in the United Kingdom. Comparison of these earnings' estimates with data on earnings from alternative employment then allows us to estimate the compensating wage differential, and also to verify the theoretical prediction that prostitutes' earnings are positively related to earnings from alternative employment.     

IMC: Has anything really changed? A new perspective on an old definition

Integrated marketing communication (IMC) has emerged as a new concept in marketing in the twenty-first century. IMC is mostly thought of, taught and written about as simply the integration of advertising and promotional activities. However, this paper proposes IMC as a broader concept. It is more than a process or activity within an organisation: it is a system of belief or engagement, embedded in an organisation's culture, underpinned by communication and driven by technology and senior management. We identify seven major tenets of the integrated view of marketing communication within the IMC literature, and argue that early marketing concepts of the twentieth century are no longer valid. IMC can be seen as a new paradigm in marketing, equipped with central concepts that apply to many business environments.     

Is Giffen behaviour compatible with the axioms of consumer theory?

A family of direct utility functions is constructed which exhibit the characteristic of Giffenity, while satisfying the axioms of convexity and monotonicity. The approach starts by specifying a price offer curve, C₀, with a required backward-bending segment. Then a set of convex indifference curves is constructed having price offer curve arbitrarily close to C₀.     

Inaccurate Approximation in the Modelling of Hyperinflations

In time series macroeconometric models, the first difference in the logarithm of a variable is routinely used to represent the rate of change of that variable. It is often overlooked that the assumed approximation is accurate only if the rates of change are small. Models of hyper-inflation are a case in point, since in these models, by definition, changes in price are large. In this letter, Cagan’s model is applied to Hungarian hyper-inflation data. It is then demonstrated that use of the approximation in the formation of the price inflation variable is causing an upward bias in the model’s key parameter, and therefore an exaggeration of the effect postulated by Cagan.