On the informational content of wage offers

This article investigates signaling and screening roles of wage offers in a single-play matching model with two-sided unobservable characteristics. It generates the following predictions as matching equilibrium outcomes: (i) “good” jobs offer premia if “high-quality” worker population is large; (ii) “bad” jobs pay compensating differentials if the proportion of “good” jobs to “low-quality” workers is large; (iii) all firms may offer a pooling wage in markets dominated by “high-quality” workers and firms; or (iv) Gresham’s Law prevails: “good” types withdraw if “bad” types dominate the population. The screening/signaling motive thus has the potential of explaining a variety of wage patterns

A theoretical and computational basis for CATNETS

The main content of this report is the identification and definition of market mechanisms for Application Layer Networks (ALNs). On basis of the structured Market Engineering process, the work comprises the identification of requirements which adequate market mechanisms for ALNs have to fulfill. Subsequently, two mechanisms for each, the centralized and the decentralized case are described in this document. These build the theoretical foundation for the work within the following two years of the CATNETS project. --Grid Computing

Individual vs. collective contracts: An experimental investigation using the gift exchange game

This paper compares individual with collective contracts using modified repeated gift exchange games. The game had two variations, both following a partner design. In the individual variation different workers in the same firm can receive separate wages, and in the collective variation all workers in the same firm receive the same wage. These two variations are played altering the order. Thus the experiment has four treatments, two within subjects (regarding the games played) and two between subjects (regarding the order in which the games are played). We did not find significant differences between the two variations of the game when subjects had no experience. However, individual agreements turned out to be more efficient when subjects have previously experienced collective agreements. This result suggests subjects learned to reciprocate when they played the collective variation followed by the individual variation of the gift exchange game.laboratory experiments, gift exchange, collective contracts.

Essays on Economic Decision Making

My dissertation consists of three chapters and I take different approach in each chapter to investigate economic decision making behavior. The first chapter analyzes individuals strategic decisionmaking when players have replaceable identities and private information in a repeated prisoners dillmma game. The second chapter studies individuals non-strategic decision making when she has incomplete information about her underlying preference in a sequential choice situation. The third chapter experimentally examines a link between an individuals strategic thinking and nonstrategic decision making in a setting designed to elicit beliefs about independent random variables. In the first chapter, I focus on strategic decision making of economic agents when they are replaceable in a repeated prisoners dilemma. I assume that agents have different private information that restricts their set of actions, and that replacement of agent involves change of such private information. In this environment, some agents are required to signal their own private information to induce their opponents cooperative response, which may induce Pareto improvement of their expected continuation payoffs. Except for a trivial equilibrium, we can have non-trivial equilibria supporting cooperative action as a part of the equilibrium play; however, different from the environment with two long-run agents, replaceable agents environment puts a restriction on an existence of the equilibrium in which agents share the risk of type uncertainty equally regardless of the past history. Because of replacement, agents can avoid a full cost of signaling by shifting it to their successor upon their own replacement. As replacement incurs such a situation with a strictly positive probability, the equilibrium cannot avoid failure. In the second chapter I focus on an economic agents optimal decision making in a non-strategic environment. Especially, I study a sequential choice problem where an agents preferences evolve over time. I assume that an agent has an underlying preference, and she learns about her underlying preference depending on her choice histories. Given that an agent makes an optimal decision upon her current available menu, I characterize the sequential choice behavior that follows a Sequential Weak Axiom of Revealed Preference (WARP-S). Using this characterization, I provide criteria for sequential choice data that recovers agents underlying preference. In the third chapter I and my co-author, Duk-Gyoo Kim, focus on a link between an optimal decision making in a non-strategic environment and strategic environment. Our research investigates whether an individual decision maker follows own subjective optimization in a non-strategic decision making, and such a difference in subjective optimization is correlated with strategic decision making pattern. We conducted two separate sessions in the same subject. Each session is designed to identify subjects behavioral pattern in strategic and non-strategic decision making environment respectively. From the data, we observed that subjects behavioral pattern shows significant similarity in two sessions

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

Theoretical and Computational Basis for Economical Ressource Allocation in Application Layer Networks - Annual Report Year 1

This paper identifies and defines suitable market mechanisms for Application Layer Networks (ALNs). On basis of the structured Market Engineering process, the work comprises the identification of requirements which adequate market mechanisms for ALNs have to fulfill. Subsequently, two mechanisms for each, the centralized and the decentralized case are described in this document. --Grid Computing

Ambiguous correlation

Many decisions are made in environments where outcomes are determined by the realization of multiple random events. A decision maker may be uncertain how these events are related. We identify and experimentally substantiate behavior that intuitively reflects a lack of confidence in their joint distribution. Our findings suggest a dimension of ambiguity which is different from that in the classical distinction between risk and "Knightian uncertainty"

Incentives and Two-Sided Matching - Engineering Coordination Mechanisms for Social Clouds

The Social Cloud framework leverages existing relationships between members of a social network for the exchange of resources. This thesis focuses on the design of coordination mechanisms to address two challenges in this scenario. In the first part, user participation incentives are studied. In the second part, heuristics for two-sided matching-based resource allocation are designed and evaluated