Creative Destruction and Development: Institutions, Crises, and Restructuring

There is increasing empirical evidence that creative destruction, driven by experimentation and the adoption of new products and processes when investment is sunk, is a core mechanism of development. Obstacles to this process are likely to be obstacles to the progress in standards of living. Generically, underdeveloped and politicized institutions are a major impediment to a well-functioning creative destruction process, and result in sluggish creation, technological sclerosis,' and spurious reallocation. Those ills reflect the macroeconomic consequences of contracting failures in the presence of sunk investments. Recurrent crises are another major obstacle to creative destruction. The common inference that increased liquidations during crises result in increased restructuring is unwarranted. Indications are, to the contrary, that crises freeze the restructuring process and that this is associated with the tight financial-market conditions that follow. This productivity cost of recessions adds to the traditional costs of resource under-utilization.

Quantifying human engagement into playful activities

Engaging in playful activities, such as playing a musical instrument, learning a language, or performing sports, is a fundamental aspect of human life. We present a quantitative empirical analysis of the engagement dynamics into playful activities. We do so by analyzing the behavior of millions of players of casual video games and discover a scaling law governing the engagement dynamics. This power-law behavior is indicative of a multiplicative (i.e., 'happy- get-happier') mechanism of engagement characterized by a set of critical exponents. We also find, depending on the critical exponents, that there is a phase transition between the standard case where all individuals eventually quit the activity and another phase where a finite fraction of individuals never abandon the activity. The behavior that we have uncovered in this work might not be restricted only to human interaction with videogames. Instead, we believe it reflects a more general and profound behavior of how humans become engaged in challenging activities with intrinsic rewards

SLBN: A Scalable Max-min Fair Algorithm for Rate-Based Explicit Congestion Control

The growth of the Internet has increased the need for scalable congestion control mechanisms in high speed networks. In this context, we propose a rate-based explicit congestion control mechanism with which the sources are provided with the rate at which they can transmit. These rates are computed with a distributed max-min fair algorithm, SLBN. The novelty of SLBN is that it combines two interesting features not simultaneously present in existing proposals: scalability and fast convergence to the max-min fair rates, even under high session churn. SLBN is scalable because routers only maintain a constant amount of state information (only three integer variables per link) and only incur a constant amount of computation per protocol packet, independently of the number of sessions that cross the router. Additionally, SLBN does not require processing any data packet, and it converges independently of sessions' RTT. Finally, by design, the protocol is conservative when assigning rates, even in the presence of high churn, which helps preventing link overshoots in transient periods. We claim that, with all these features, our mechanism is a good candidate to be used in real deployments

Optimizing box content in try-before-you-buy business models with heterogeneous customer groups

In online retailing, try-before-you-buy business models are emerging. Customers can order items to be shipped home to try and decide which items to keep or send back to the retailer. Usually, this business model is combined with personalized recommendations. In this thesis, an optimization model for supporting the decision of what to put in a box to achieve maximum profit in a sales period is introduced. Multiple periods are simulated and overall profit is analyzed. Profit is evaluated by summing the optimum identified in each period. The optimization model treats customer groups differently based on their purchasing behaviours. Policies and busi ness rules are varied to understand the effects on overall profit and customer groups. From the results, managerial implications are drawn to follow a customer-centric approach. To maximize profit, customers with high lifetime value should be treated as preferred if market demand is high and no other factors limit shipping decisions. Notable limitations include inventory availability and market demand. In market situations with limitations, higher-valued customers should be served first. Once a certain scale of the customer base is reached, it should also be focused on other customer groups. It is shown that the prediction accuracy of input data is a crucial concern for sufficiently optimizing box content. Further works could improve the chosen approach to better understand the effect of actions taking place in future sales periods.Na venda a retalho online, estão a surgir modelos de negócio try-before-you-buy. Os clientes podem encomendar artigos a serem enviados para casa para tentarem decidir que artigos guardar ou enviar de volta para o retalhista. Normalmente, este modelo de negócio é combinado com recomendações personalizadas. Nesta tese, é introduzido um modelo de optimização para apoiar a decisão sobre o que colocar numa caixa para obter o máximo lucro num período de vendas. São simulados vários períodos e o lucro global é analisado. O modelo de optimização trata de forma diferente grupos de clientes com base nos seus comportamentos de compra. As políticas são variadas para compreender os efeitos sobre o lucro global e os grupos de clientes. A partir dos resultados, as implicações de gestão são desenhadas para seguir uma abordagem centrada no cliente. Para maximizar o lucro, os clientes com elevado valor vitalício devem ser tratados como preferidos se a procura do mercado for elevada e nenhum outro factor limitar as decisões de expedição. Em situações de mercado com limitações, os clientes de valor mais elevado devem ser ser servidos em primeiro lugar. Uma vez atingida uma certa escala da base de clientes, esta deve também ser concentrada noutros grupos de clientes. Demonstra-se que a precisão da previsão dos dados de entrada é uma preocupação crucial. Outros trabalhos poderão melhorar a abordagem escolhida para compreender melhor o efeito das acções que têm lugar em períodos de vendas futuras

The Myth of the Rational Voter: Why Democracies Choose Bad Policies

In theory, democracy is a bulwark against socially harmful policies. In practice, however, democracies frequently adopt and maintain policies that are damaging. How can this paradox be explained? The influence of special interests and voter ignorance are two leading explanations. I offer an alternative story of how and why democracy fails. The central idea is that voters are worse than ignorant; they are, in a word, irrational -- and they vote accordingly. Despite their lack of knowledge, voters are not humble agnostics; instead, they confidently embrace a long list of misconceptions. Economic policy is the primary activity of the modern state. And if there is one thing that the public deeply misunderstands, it is economics. People do not grasp the "invisible hand" of the market, with its ability to harmonize private greed and the public interest. I call this anti-market bias. They underestimate the benefits of interaction with foreigners. I call this anti-foreign bias. They equate prosperity not with production, but with employment. I call this make-work bias. Finally, they are overly prone to think that economic conditions are bad and getting worse. I call this pessimistic bias. In the minds of many, Winston Churchill's famous aphorism cuts the conversation short: "Democracy is the worst form of government, except all those other forms that have been tried from time to time." But this saying overlooks the fact that governments vary in scope as well as form. In democracies the main alternative to majority rule is not dictatorship, but markets. A better understanding of voter irrationality advises us to rely less on democracy and more on the market

Riding the subscription box wave: Understanding the landscape, challenges, and critical success factors of the subscription box industry

The subscription box e-commerce industry has experienced tremendous growth over the last 5 years. Given the growing size of the industry, this business model warrants the close attention of firms currently offering subscription services as well as companies considering entering this industry. This article presents a detailed overview of the subscription box industry and proposes a framework—the four Cs—for understanding subscription offerings. It identifies challenges and opportunities facing this industry, and it provides managers with guidance in the form of five tenets on how to navigate the subscription box economy