Lab Labor: What Can Labor Economists Learn from the Lab?

This paper surveys the contributions of laboratory experiments to labor economics. We begin with a discussion of methodological issues: why (and when) is a lab experiment the best approach; how do laboratory experiments compare to field experiments; and what are the main design issues? We then summarize the substantive contributions of laboratory experiments to our understanding of principal-agent interactions, social preferences, union-firm bargaining, arbitration, gender differentials, discrimination, job search, and labor markets more generally.personnel economics, principal-agent theory, laboratory experiments, labor economics

Dynamics of Social Networks: Multi-agent Information Fusion, Anticipatory Decision Making and Polling

This paper surveys mathematical models, structural results and algorithms in controlled sensing with social learning in social networks. Part 1, namely Bayesian Social Learning with Controlled Sensing addresses the following questions: How does risk averse behavior in social learning affect quickest change detection? How can information fusion be priced? How is the convergence rate of state estimation affected by social learning? The aim is to develop and extend structural results in stochastic control and Bayesian estimation to answer these questions. Such structural results yield fundamental bounds on the optimal performance, give insight into what parameters affect the optimal policies, and yield computationally efficient algorithms. Part 2, namely, Multi-agent Information Fusion with Behavioral Economics Constraints generalizes Part 1. The agents exhibit sophisticated decision making in a behavioral economics sense; namely the agents make anticipatory decisions (thus the decision strategies are time inconsistent and interpreted as subgame Bayesian Nash equilibria). Part 3, namely {\em Interactive Sensing in Large Networks}, addresses the following questions: How to track the degree distribution of an infinite random graph with dynamics (via a stochastic approximation on a Hilbert space)? How can the infected degree distribution of a Markov modulated power law network and its mean field dynamics be tracked via Bayesian filtering given incomplete information obtained by sampling the network? We also briefly discuss how the glass ceiling effect emerges in social networks. Part 4, namely \emph{Efficient Network Polling} deals with polling in large scale social networks. In such networks, only a fraction of nodes can be polled to determine their decisions. Which nodes should be polled to achieve a statistically accurate estimates

The Market for Preclusion in Merger Litigation

The recent finding that corporate litigation involving Delaware companies very often takes place outside of Delaware has disturbed the long-settled understanding of how merger litigation works. With many, even most, cases being filed and ultimately resolved outside of Delaware, commentators warn that the trend is a threat to shareholders, to Delaware, and to the integrity of corporate law generally. Although the out-of-Delaware trend suggests that litigants are seeking to use the procedural rules of other jurisdictions to their advantage, we argue that the result need not threaten the interests of any of the stakeholders in deal litigation. We reframe the process of resolving merger litigation as a market for preclusion, in which plaintiffs seek to sell and defendants seek to buy an important element of transactional certainty. Moreover, this market has the potential to efficiently process and price shareholder complaints while also providing benefits to Delaware and to corporate law more generally. We are not blind to reality, however, and also address how a well-functioning market for preclusion can be distorted by the opportunistic conduct of plaintiffs’ and defense attorneys alike. Greater judicial oversight is necessary to preserve the benefits of this market while preventing the distortions brought on through opportunistic conduct. In order to make this a reality, however, judges in different courts must have a means of communicating and coordinating across state lines. We therefore offer a theory of horizontal comity in which judges build trust and cooperation through communication across jurisdictional boundaries. We use this theory to suggest a set of concrete policy proposals designed to provide for a more efficient market for preclusion

The institutional determinants of private equity involvement in business groups – the case of Africa

This study examines the governance attributes of post-IPO (initial public offering) retained ownership of private equity in business group constituent firms in contrast to their unaffiliated counterparts, in 202 newly listed firms in 22 emerging African economies. We adopt an actor centered institutional-theoretic perspective in rationalizing institutional voids and the advantages of maintained governance by both business angels (BA) and venture capital (VC) private equity. Our findings reveal private equity retain higher post-IPO ownership in business group constituents compared to unaffiliated firms and that this is inversely moderated in the context of improving institutional quality – where this is particularly strong in case of foreign VC as opposed to domestic VC or BA. Our result adds to the literature on multifocal corporate governance mechanisms and the institutional determinants of private equity investment

Structures for Sophisticated Behaviour: Feudal Hierarchies and World Models

This thesis explores structured, reward-based behaviour in artificial agents and in animals. In Part I we investigate how reinforcement learning agents can learn to cooperate. Drawing inspiration from the hierarchical organisation of human societies, we propose the framework of Feudal Multi-agent Hierarchies (FMH), in which coordination of many agents is facilitated by a manager agent. We outline the structure of FMH and demonstrate its potential for decentralised learning and control. We show that, given an adequate set of subgoals from which to choose, FMH performs, and particularly scales, substantially better than cooperative approaches that use shared rewards. We next investigate training FMH in simulation to solve a complex information gathering task. Our approach introduces a ‘Centralised Policy Actor-Critic’ (CPAC) and an alteration to the conventional multi-agent policy gradient, which allows one multi-agent system to advise the training of another. We further exploit this idea for communicating agents with shared rewards and demonstrate its efficacy. In Part II we examine how animals discover and exploit underlying statistical structure in their environments, even when such structure is difficult to learn and use. By analysing behavioural data from an extended experiment with rats, we show that such hidden structure can indeed be learned, but also that subjects suffer from imperfections in their ability to infer their current state. We account for their behaviour using a Hidden Markov Model, in which recent observations are integrated imperfectly with evidence from the past. We find that over the course of training, subjects learn to track their progress through the task more accurately, a change that our model largely attributes to the more reliable integration of past evidenc

Integrity and Efficiency in the EU: The Case Against the European Economic Constitution. CES Working Paper, no. 130, 2006

The European Constitutional Treaty (ECT) was presented by its drafters as an explicit constitution for the European Union (EU 25). A possible explanation for its rejection by the French and Dutch citizens in the course of spring 2005 is that it did not sufficiently amend the implicit constitution of the EU 25, the European Union Treaty (EUT), which was truly the object of voters’ aversion. Assuming this to be true, there should be a thorough debate on the relevance and viability of the de facto current constitution of the European Union. In this paper, we engage in this debate by identifying what is essentially wrong with the economic provisions of the EUT, which we designate as the “European economic constitution.” Using a constitutional political economy approach, we first attempt to demonstrate that both what we define as the “principle of integrity” and the “principle of efficiency” of collective action appear to be violated by the European economic constitution. This occurs, respectively, because its provisions are not neutral, nor revisable, and because they do not sufficiently allow for the possibility of cooperative collective decision (leading to convergence in welfare) in a more than ever numerous and heterogeneous EU. Our essential argument in this respect regards the implications of the structurally different economic performances and incentives of small and large countries under the European economic constitution. Finally, since the present European trade-off between “integrity” and “efficiency” appears sub-optimal, we present two original ways of achieving potentially better ones in the EU, through a “Great compromise” or “Economic constitution(s),” expressing a preference for the latter