Organization of R&D With Two Agents and Principal

In order to deliver an innovation principals employ competing agents in some circumstances, while employing research team in other circumstances. This paper compares various structures of R&D to provide a rational behind this observation. It is assumed, that the principal can employ either one agent, two competing agents or two agents, cooperating in a team. Which of the available structures will be chosen by principal, depends on value of prize in stake, technological benefits of team production and team structure. Due to the positive effect on incentives, competing agents always generate larger profit to the principal, than a single agent. Further, they often perform better than the team, even when the latter has significant technological benefits. However, the performance of the team may be improved, if it is organized as a hierarchy with the team leader (who is responsible for allocation of resources) and his subordinate. The paper provides conditions on parameters, which determine whether the principal should employ a team or competing agents for performing R&D.moral hazard, hierarchy, team production, competition, organization of R&D

How Best to Auction Natural Resources

I study the design of auctions of natural resources, such as oil or mineral rights. A good auction design promotes both an efficient assignment of rights and competitive revenues for the seller. The structure of bidder preferences and the degree of competition are key factors in determining the best design. With weak competition and simple value structures, a simultaneous first-price sealed-bid auction may suffice. With more complex value structures, a dynamic auction with package bids likely is needed to promote efficiency and revenue objectives. Bidding on production shares, rather than bonuses, typically increases government take by reducing oil or mining company risk.Auctions, natural resource auctions, oil auctions

The European UMTS/IMT-2000 License Auctions

We survey the recent European UMTS license auctions and compare their outcomes with the predictions of a simple model that emphasizes future market structure as a main determinant of valuations for licenses. Since the main goal of most spectrum allocation procedures is economic efficiency, and since consumers (who are affected by the ensuing market structure) do not participate at the auction stage, good designs must alleviate the asymmetry among incumbents and potential entrants by actively encouraging entry.

Size and the Not-So-Single Sex: Disentangling the Effects of Size and Budget on Sex Allocation in Hermaphrodites

Sex allocation theory explains how size-related variations in male and female fitness may favor the evolution of size-dependent sex allocation in hermaphrodites. Although empirical studies show that sex allocation changes gradually with size in many species, theoretical studies tend to predict an abrupt sex reversal from one sex to the other, that is, single-sexed sequential hermaphrodites. We show that this discrepancy between data and theory collapses if one takes into account that size affects male and female fitness through distinct routes. Using the classification of budget (larger individuals spend a greater budget on reproduction) and direct (e.g., larger plants are taller and may disperse pollen more efficiently) effects of size suggested by Klinkhamer et al., we propose a simple general framework appropriately incorporating these two categories of size effects in male and female fitness expressions. Analytical and numerical results show that a gradual sex change is evolutionarily stable for a large set of parameter values. Sex reversal is selected only in the absence of budget effects of size. We provide further predictions on size-dependent sex allocation and assess the relative importance of budget and direct effect for creating different patterns

The Power of Primary Schools to Change and Sustain Handwashing with Soap among Children: The Cases of Vietnam and Peru

World Bank Water and Sanitation Program's Global Scaling up Handwashing Project, funded by the Bill and Melinda Gates Foundation, is an effort to expand handwashing among women and children by using innovative promotional approaches. This working paper provides case studies of the project in Vietnam and Peru. Both used entertainment education and teacher capacity building, but as a result of differences in government and education contexts, as well as child-focused research that revealed important cultural differences, programs varied substantially among the two locations. In both cases, the primary school setting was found to be an effective site for improving handwashing

The Role of Auctions in Allocating Public Resources

This paper provides an economic framework within which to consider the effectiveness and limitations of auction markets. The paper looks at the use of auctions as a policy instrument and the effects of auction design on consumer interests, the efficient allocation of resources, and industry competitiveness.Australia; Research; Ascending-bid auction; Auctions; Bidders; Conservation funds; Descending-bid auction; Dutch auction; English auction; Environmental Management; First-price sealed-bid auction; Infrastructure; Markets; Oral auction; Outcry auction; Pollutant emission permits; Power supply contracts; Public resources; Radio- spectrum; Second-price sealed-bid auction Spectrum licences; Vickrey auction; Water rights;

The Employment Effects of Labor and Product Markets Deregulation and their Implications for Structural Reform

This study explores the effects of labor and product market deregulation on employment growth. Our empirical results, based on an OECD country panel from 1990-2004, suggest that lower levels of product and labor market regulation foster employment growth, including through sizable interaction effects. Based on these findings, the paper develops a theoretical framework for evaluating deregulation strategies in the presence of reform costs. Optimal deregulation takes various forms depending on the deregulation costs and the strength of reform interactions. Compared to the first best, decentralized decision-making based on a partial market-by-market perspective can lead to excessive or insufficient regulation, depending on the design of the decision process. Securing the first best requires not only coordinating deregulation activities across sectors but also overcoming the partial perspective of decision makers.product market regulation, labor market regulation, employment growth, policy coordination, sequencing

Essays on the Effects of Information on Incentives and on People’s Awareness and Assessment of Biases

The first two essays deal with the interaction between intermediate information and incentives when information asymmetries are present. While in the first essay, individuals’ types can be private information, in the second essay, moral hazard is an issue. In both essays, intermediate information arises endogenously through a change in the timing structure when individuals act sequentially instead of simultaneously. The first essay, considers contests in which two players compete for an exogenously given prize. The essay compares contests, in which players either move simultaneously or sequentially, under different information settings: Contestants' types are either publicly known or private information. In case agents act sequentially, the second mover can observe the action of the first mover. In sequential contests, overall incentives turn out to be higher (from an ex ante perspective), not only under public information (which is already known) but also under private information. Moreover, in sequential contests, incentives rise (from an ex ante perspective), when there is private information compared to public information. The second essay investigates a model of team production under moral hazard, focussing on incentive effects of intermediate information, which arises when agents act sequentially instead of simultaneously. In case agents act sequentially, the second mover can observe the performance of the first mover. Irrespective of the timing structure, the principal can condition wages only on the value of the agents’ joint project. The optimal structure for the principal depends on whether the agents' tasks are complements or substitutes: A sequential structure is optimal when the agents' tasks are perfect complements, whereas a simultaneous structure is optimal when they are perfect substitutes. Extending existing models, this essay introduces task complementarities and an intermediate value of the joint project. In this extended setting, intermediate information does not necessarily increases incentives. The last essay deals with the question how accurate people’s beliefs about other people’s beliefs are. The issue how accurate people’s beliefs are about their own abilities is considered in experiments on overconfidence. This essay goes one step further and elicits beliefs people have about the accuracy of other people’s beliefs. The essay experimentally analyzes (i) whether individuals are aware of other people's bias - over- or underconfidence - and (ii) what they believe about the relation between their own and other people's bias. More precisely, it considers people's self-assessment about their number of correct answers when answering a set of multiple choice questions. The results confirm that people tend to overestimate their ability, i.e. the population on average is biased. Remarkably, most people do not think that others have a bias. The more familiar the subjects are with the question task before they evaluate others’ self-assessment - e.g. they solved the questions themselves and assessed their number of correct answers or have seen the correct answers - the more accurate their evaluation is. Further, concerning people’s belief about the relation of their own and others’ biases, people think that they are rather unbiased themselves, while others are biased

The European UMTS/IMT-2000 license auctions

We survey the recent European UMTS license auctions and compare their outcomes with the predictions of a simple model that emphasizes future market structure as a main determinant of valuations for licenses. Since the main goal of most spectrum allocation procedures is economic efficiency, and since consumers (who are affected by the ensuing market structure) do not participate at the auction stage, good designs must alleviate the asymmetry among incumbents and potential entrants by actively encouraging entry