Monitoring your Friends, not your Foes: Strategic Ignorance and the Delegation of Real Authority

In this laboratory experiment we study the use of strategic ignorance to delegate real authority within a firm. A worker can gather information on investment projects, while a manager makes the implementation decision. The manager can monitor the worker. This allows her to better exploit the information gathered by the worker, but also reduces the worker's incentives to gather information in the first place. Both effects of monitoring are influenced by the interest alignment between manager and worker. Our data confirms the theoretical predictions that optimal monitoring depends non-monotonically on the level of interest alignment. We also find evidence for hidden costs of control and preferences for control, but these have no substantial effects on organizational outcomes.delegation, real authority, strategic ignorance

Core Labour Standards and FDI: Friends or Foes? The Case of Child Labour

We test the often-cited hypothesis that high levels of child labour attract foreign investors. Using panel data we show the overall effect, which child labour has on foreign direct investment (FDI), to be a (small) negative one. We find strong evidence for the theoretical prediction that child labour deters FDI by slowing down economic development. Weaker evidence is provided for our theoretical prediction that child labour can discourage FDI via its impact on the availability of a skilled labour force in an economy. The data do not indicate that high levels of child labour drive down the factor share of labour, thereby increasing the attractiveness of an economy for foreign investors.child labour, FDI, core labour standards

A Note on the Design of Experiments Involving Public Goods

Concern about potential free riding in the provision of public goods has a long history. More recently, experimental economists have turned their attention to the conditions under which free riding would be expected to occur. A model of free riding is provided here which demonstrates that existing experimental approaches fail to explore a potentially important real-world dimension of free riding. In a cash-in-advance economy, free riding becomes a two-stage problem, while existing experiments only address the second stage. That is, one would expect households with high demands for public goods relative to private goods to generate less income than households preferring ordinary private goods, because the former are unable to individually increment the public good and leisure is valuable. Existing experiments start with a given number of “tokens” for each decision-maker, effectively only addressing the second stage of the free riding problem, namely, under what conditions free riding becomes a problem out of a given income. A recommended solution to this problem is to incorporate the potential to generate income prior to (or simultaneously with) the decision of how to allocate that income between private and public goods.decision making, choice behavior, public goods, experimental economics, altruism, fairness, conditional reciprocity

Bank Competition, Asset Allocations and Risk of Failure: An Empirical Investigation

This study is an empirical investigation of theoretical predictions concerning the impact of bank competition on bank risk and asset allocations. Recent work (Boyd, De Nicolò and Jalal, 2009, BDNJ henceforth) predicts that as competition in banking increases, the loan-to-asset ratio will rise (under reasonable assumptions), but the probability of bank failure can either increase or decrease. However, the probability of bank failure will fall if and only if borrowers’ response to take on less risk as loan rates decline is sufficiently strong. We test these predictions using two samples with radically different attributes. With both, we find that banks’ probability of failure is negatively and significantly related to measures of competition. We also find that as competition intensifies, borrower risk decreases and the loan-to-asset ratio increases. These results are consistent with the predictions of the BDNJ model.

The german Regiogeld system and its handling in everyday life

This paper introduces a special form of a community currency, the German Regiogeld System. Firstly it describes what it is, its origin and current status. Generally Regiogeld is a private monetary system with a regional validity and a non-profit-agenda. In detail the present 73 Regiogeld projects in Germany are quite different. This results from the fact that Regiogeld is originated in the fusing of different movements which affect its constructions and its objectives, its organizational, financial and personnel resources. Secondly, this paper focuses on the actual way of working in practice. It describes why consumers use this limited and costly form of money at all. In an interpretative process they earmark Regiogeld, by what qualitative different meanings and patterns of usages evolve. Thus Regiogeld can be used as affirmation of moral attitudes or as a sign for a symbolic community of ‘better’ people as well as an instrument of power that forces others into a local buying behaviour. Altogether, in the hands of the consumers Regiogeld multiplies to a bunch of different special monies. Understanding this process helps to understand how complementary currencies can be conceived, established and operated successfully

Newspapers and the Internet: friends or foes? : evidence of concentration of choice in Korea

Thesis (M.B.A.)--Massachusetts Institute of Technology, Sloan School of Management, 2010.Cataloged from PDF version of thesis.Includes bibliographical references (p. 27).Does the expansion of the Internet provide opportunities for newspapers to attract more readers, or does it threaten their sustainability by cannibalizing subscription revenue from print circulation? To examine these competing hypotheses, I analyzed a unique data set of the monthly number of clicks on the homepages of the Web sites of four economic newspapers in Korea between 2001 and 2009. Using a unique quasi-experimental observation of the Korean media industry, I illustrated the differential impact of the Internet on leading newspapers and their followers. By attracting people to a common "playground" and providing inference information-namely information on others' decisions-the Internet has a significant impact on consumer choice of information products, reinforcing informational cascades through the inference effect. My findings reveal that since the advent of the Internet, customer preference has consistently been dominated by market leaders, strengthening the brand image of the leaders. This phenomenon will, over time, widen the gap between leading newspaper groups and laggards, providing new opportunities for market leaders only. Thus, my findings point to significant marketing strategies based on consumer choice.by Jun Mo Park.M.B.A

Competition and Relationship Lending: Friends or Foes?

Recent empirical findings by Elsas (2005) and Degryse and Ongena (2007) document a U-shaped effect of market concentration on relationship lending which cannot be easily accommodated by the investment and strategic theories of relationship lending. In this paper, we suggest that this non-monotonicity can be explained by looking at the organizational structure of local credit markets. We provide evidence that marginal increases in interbank competition are detrimental to relationship lending in markets where large and out-of-market banks are predominant. On the contrary, where relational-based lending technologies are al-ready widely in use in the market by a large group of small mutual banks, an increase in competition may drive banks to further cultivate their extensive ties with customers.interbank competition, market organizational structure, relationship lending