EDUCATION AND FAMILY INCOME: CAN POOR CHILDREN SIGNAL THEIR TALENT?

The aim of this paper is to explain how financial constraints and family background characteristics affect the signalling educational investments of individuals born in low-income families. We show that talented students who are poor are unable to signal their talent, as the maximum level of education they can attain may also be achieved by less talented students who are rich. Under this approach, a de-crease in inequalities across generations cannot be expected. The paper also shows that an increase in educational standards would help poor individuals with high-ability if it is combined with other non-monetary measures.Market selection hypothesis, General Equilibrium with Incomplete markets, Wealth accumulation

Forward induction in a wage repeated negotiation

We present a finitely repeated bargaining game with complete information. The stage game is asimultaneous demand game with a fall-back position for both parties, in which we allow one party(say, the union) to estabilish a credible commitment to strike if it is not offered a determinedwage. We try to refine the equilibrium set of the repeated game using a formulation of ForwardInduction. In particular, we say that a path of Nash Equilibria in the repeated game is Consistentwith Forward Induction (CFI) if for all period t the cost of deviation (if it is strictly positive) is greateror equal than the maximal net gain in CFI paths with t-1 horizon. We present several cases in which the average payoff for the union in any CFI path, when thehorizon tends to infinity, is his preferred wage. These results are similar to those obtained with thereputation effects approach and reveal some connection between the FI notion and the approachconsisting of perturbing the game with some incomplete information.Repeated bargaining, forward induction, commitment

SIGNALLING GAMES AND INCENTIVE DOMINANCE

We present a new refinement for signalling games: the Introspective Equilibrium. It is based on both a procedure for beliefs formation -called Incentive Dominance- and a global consistence requirement, closely related to that of the Undefeated equilibrium of mailath, Okuno-Fujiwara and Postlewaite. The incentive Dominance criterion captures the principie of forward induction through explicitly modelling the players thought process when forming preliminary beliefs. The main idea is that they should exploit the information contained in the best reply structure about the incentives of the different types of a a rational Bayesian sender. Our criterion subsumes very intuitive ones as equilibrium dorninance and divinity. The Introspective Equilibrium asks for an unambigous explanation of any deviation from a given equilibrium. This means that the explanation should be unique, part of a sequential equilibrium and achievable from the preliminary beliefs defined by the Incentive Dominance Cnterion.Forward Induction; Incentive Doniinance; Global Consistency.

Corresponsabilización fiscal de dos niveles de gobierno: relaciones principal-agente

This paper analyzes the problems in designing a tax sharing system when there are two governments levels with rights over the same taxes. Using a principal-agent model, the optimality of the different tax sharing systems is discussed. The presence of efficiency problems derived from the lack of cooperation between governments is proved, using Bernheim & Winstons (1986) common agency theorems. It is finally shown how a cooperative result can be institutionally induced by creating, for example, a Common Tax Agency in which all implicated governments participate. El trabajo analiza los problemas de diseño de un sistema de participación en la gestión tributaria cuando existen dos niveles de gobierno con derechos sobre los mismos tributos. Con la ayuda de un esquema principal-agente, se discute la optimalidad de los resultados de los distintos sistemas de participación tributaria. Haciendo uso de los teoremas sobre agencia común de Bernheim y Winston (1986) se prueba la existencia de problemas de eficiencia derivados de la falta de cooperación entre los gobiernos. Finalmente se muestra cómo el resultado cooperativo podría ser inducido mediante algún remedio institucional, como la creación de una Agencia Tributaria Común, participada por todos los gobiernos implicados.

INTROSPECTION AND EQUILIBRIUM SELECTION IN 2x2 MATRIX GAMES

Game theory lacks an explanation of how players' beliefs are formed and why they are in equilibrium. This is the reason why it has failed to make significant advances with the problem of equilibrium selection even for quite siniple games, as 2x2 games with two strict Nash equilibria. Our paper models the introspection process by which the selected equilibrium is achieved in this class of games. Players begin their analysis with imprecise priors, obtained under weak restrictions formulated as Axioms. For a large class of reasoning dynamics we obtain as the solution the risk dominant Nash equilibrium.

COOPERACION ENTRE GOBIERNOS PARA LA RECAUDACION DE IMPUESTOS COMPARTIDOS

This paper deals with the problem of fiscal corresponsability of twogovemment levels in a game theory context. It is assumed that Nash equilibriaof the non-cooperative game between both Govemments are not Pareto optimal.Then, assurning the existence of non-equilibrium strategies, which would allowboth of them to improve, it is questioned whether the introduction ofinterposed agents (Tax Agencies) would be a way of getting the necessaryincentives for cooperation. Two results are proved. If each govemment createsits own Tax Agency, results replicate the ones derived from the initial game.Yet, if a Common Tax Agency is created, it behaves as an indirect mechanism,which allows the emergence of cooperation as an equilibrium of this newgame En este trabajo se plantea el problema de la corresponsabilización fiscalde dos niveles de gobierno en un contexto de teoría de juegos. En primer lugarse supone que los equilibrios Nash del juego no-cooperativo entre ambosGobiernos no son Pareto óptimos. En el supuesto de que existan estrategias, node equilibrio, que permitan mejorar a ambos, se plantea la pregunta de si lacreación de agentes interpuestos (Agencia Recaudadoras) sería una forma deconseguir los incentivos necesarios para la cooperación. Se demuestran dosresultados. Si cada gobierno crea una Agencia Recaudadora particular losresultados no varían respecto al juego inicial entre los gobiernos. Pero, síse crea una Agencia Recaudadora Común, ésta actúa como un mecanismo indirectoque posibilita la emergencia de cooperación como equilibrio de este nuevojuego.

Testing, hold up and the dynamics of preferences

Este trabajo presenta un modelo de generaciones solapadas, donde se produce una transmisión cultural de preferencias en una economía en la cual los jugadores se enfrentan a un problema de oportunismo post-contractual (hold up problem). Uno de los jugadores, la empresa, puede usar una tecnología de control que le permite observar imperfectamente el comportamiento de su oponente. Esta tecnología es completamente inservible con preferencias homogéneas. En este trabajo se obtiene que en el estado estacionario de la economía existe una distribución heterogénea de preferencias. El principal resultado es que en una economía con una tecnología de control efectiva el estado estacionario se caracteriza por el resultado de first -best

Cultural transmission and the evolution of trust and reciprocity in the labor market

The labor contract usually assigns significant authority to the employer (hierarchical governance). The threat of hold-up of the employee by the employer, caused by this asymmetric distribution of decision rights, can be mitigated by a preference for reciprocity on the part of the employer or by a balance of power arising from the credible threat by the employee to retaliate if he or she is exploited. The authors of this working paper investigate the interaction between the employer s preferences for reciprocity and the feasibility and willingness to punish hostile behavior by the employee in an overlapping generations model where there is cultural transmission of preferences. The results show that if the net gains from specific investment are high enough, and the quantity of feasible punishment (i.e., the worker s power) is also high, the economy will converge from any initial condition to an efficient cooperative equilibrium. If either of these conditions does not hold, the market will settle down in an inefficient equilibrium where not all types of workers make specific investment or, even if they do, there is surplus destruction, because selfish firms offer low wages. Positive reciprocity on the part of the employer is not enough to achieve an efficient labor culture. There is also a need for a significant allocation of power to the workers, so as to make the threat of punishment a powerful tool to enhance efficiency and cooperation.Cultural transmission, trust and punishment, labor power, social preferences, specific investment.

Education and Job Competition in a Signalling Game

This paper presents a matching model with workers and jobs in a labour market with private information. Workers invest in education to signal their ability to obtain higher wages and better jobs. Firms o¿er both a wage and a job allocation in the company¿s hierarchy. Workers competition, to get the best job, leads to di¿erences in the education level with respect to that predicted by the model of Spence (pecuniary model). We show that the pecuniary model overvalue the impact of a modi¿cation in the education cost on workers¿ education. Moreover if workers¿ability were not retributed they still will invest in signalling education to guaranty a position in the jobs¿ hierarchy

Habilidad, clases sociales y educación: un modelo de señalización

En este trabajo se presenta un modelo de señalización en el mercado de trabajo en el que se relajan dos supuestos implícitos en el modelo original de Spence. Se considera que los individuos se distinguen tanto por su capacidad innata como por su nivel de renta y, por otra parte, se supone que existen dos tipos de puestos de trabajo con distinta productividad. La solución del modelo es un equilibrio semiagrupador en el que la educación no es señal perfecta de la capacidad del individuo. Además, cuando las diferencias de renta entre las familias son signi¿cativas y los puestos con salario alto relativamente abundantes, sólo los individuos de mayor capacidad y renta invierten en educación no productiva para señalizarse