Information Channels in Labor Markets. On the Resilience of Referral Hiring

Economists and sociologists disagree over markets' potential to assume functions typically performed by networks of personal connections, first among them the transmission of information. This paper begins from a model of labor markets where social ties are stronger between similar individuals and firms employing productive workers prefer to rely on personal referrals than to hire on the anonymous market (Montgomery (1991). However, we allow workers in the market to engage in a costly action that can signal their high productivity, and ask whether the possibility of signaling reduces the reliance on the network. We find that the network is remarkably resilient. To be effective signaling must fulfill two contradictory requirements: unless the signal is extremely precise, it must be expensive or it is not informative; but it must be cheap, or the network can undercut it.Networks, Signaling, Referral hiring, Referral premium

Marriage relationships among households in the mid 19th century Tama, Japan

This paper studies the formation of marriage relationships between two households in 19th century, Tama, Japan. Previous studies on marriage market or partner selection in the Japanese past tended to rely either on information from a single village in case of statistical analysis, or on collection of oral histories. By using the information from a household register that covers 35 villages, and applying the method of social network analysis, this paper goes beyond the limitation of previous studies. Our empirical results show that there was a tendency for socio-economic homogamy and endogamy (within kinship and within village) among peasants in the mid 19th century Tama, Japan.Marriage, Japan, Network, Household, Household registers

Marriage Relationships Among Households in the mid 19th Century Tama, Japan

This paper studies the formation of marriage relationships between two households in 19th century, Tama, Japan. Previous studies on marriage market or partner selection in the Japanese past tended to rely either on information from a single village in case of statistical analysis, or on collection of oral histories. By using the information from a household register that covers 35 villages, and applying the method of social network analysis, this paper goes beyond the limitation of previous studies. Our empirical results show that there was a tendency for socio-economic homogamy and endogamy (within kinship and within village) among peasants in the mid 19th century Tama, Japan.

Firm Structure, Search and Environmental Complexity

In this paper we explore the information processing problem of the firm by modeling the firm as type of network, which is comprised of two kinds of agents, 'searchers' and 'managers.' The searchers explore the external environment and report the information to the managers. We explore the role of centralization/decentralization in organizational structure to see how it affects firm performance. Centralization is defined in terms of the level at which decisions are made. We assume the information processing organization is arranged hierarchically, but that decisions can be made at different levels, and thus centralization directly relates to the quantity of information used in making a decision. We model the external environment as an NK landscape. Via simulations, we explore which type of organizational structure and level of decision making maximizes firm profits, given the complexity of the environmentOrganizational Structure, Decentralization, NK Landscape, Firm Search

Complexity, Uncertainty, and Organizational Congruency

Many scholars in the fields of organization theory and management strategy have argued that there is a tension between the two types of organizational learning activities, exploration and exploitation. They appear to be substitutes: the greater the skill at one, the harder it is to do the other well. It is often argued that the two activities compete for scarce resources when firms need different capabilities and management policies to promote one over the other. We present another explanation that attributes the phenomenon to the dynamic interactions among the activities, search, knowledge sharing, evaluation, and alignment within organizations relying on the NK Landscape framework (Kauffman 1993). Our results show that successful organizations tend to bifurcate into two types: those that always promote individual initiatives and build organizational strengths on individual learning and those good at aligning the individual knowledge base and exploiting shared knowledge. Straddling between the two types often fails. The intuition is that an equal mixture of individual search and organizational alignment slows down individual learning compared to the first orga nization type while making it difficult to update institutionalized knowledge because individuals' knowledge base is not so sufficiently aligned as in the second type. In such gstraddlingh organizations, once individuals get stuck with locally-best solutions in an uncoordinated manner, they cannot agree on how to improve the organizational knowledge. Straddling is especially inefficient when the operation is sufficiently complex (in other words, the interdependency is high) or when the business environment is sufficiently uncertain.

Cognitive ability and observed behavior in laboratory experiments: implications for macroeconomic theory

This paper discusses the relationships between the “measured” cognitive ability of participants and their behavior as observed during laboratory experiments. Based on such relationships, macroeconomic implications of micro-level “boundedly rational” individual behavior will be discussed. The paper also addresses potential problems that arise when insufficient attention is paid to large differences in the measured cognitive ability of participants across several experimental laboratories, influencing the replicability of existing experimental results but also the interpretation of results from cross-country experimental analyses, and proposes to complement participants’ database with individual characteristics.This version of the article has been accepted for publication, after peer review and is subject to Springer Nature’s AM terms of use, but is not the Version of Record and does not reflect post-acceptance improvements, or any corrections. The Version of Record is available online at: https://doi.org/10.1007/s42973-019-00018-

Born Under a Lucky Star?

This paper suggests that people can learn to behave in a way which makes them unlucky or lucky. Learning from experience will lead them to make choices which may lead to "luckier" outcomes than others. By so doing they may reinforce the choices of those who find themselves with unlucky outcomes. In this situation, people have reasonably learned to behave as they do and their behaviour is consistent with their experience. The lucky ones were not "born under a lucky star" they learned to be lucky.

Marriage relationships among households in the mid 19th century Tama, Japan

This paper studies the formation of marriage relationships between two households in 19th century, Tama, Japan. Previous studies on marriage market or partner selection in the Japanese past tended to rely either on information from a single village in case of statistical analysis, or on collection of oral histories. By using the information from a household register that covers 35 villages, and applying the method of social network analysis, this paper goes beyond the limitation of previous studies. Our empirical results show that there was a tendency for socio-economic homogamy and endogamy (within kinship and within village) among peasants in the mid 19th century Tama, Japan

Information channels in labor markets: On the resilience of referral hiring

Economists and sociologists disagree over markets' potential to assume functions typically performed by networks of personal connections, first among them the transmission of information. This paper begins from a model of labor markets where social ties are stronger between similar individuals and firms employing productive workers prefer to rely on personal referrals than to hire on the anonymous market (Montgomery (1991)). However, we allow workers in the market to engage in a costly action that can signal their high productivity, and ask whether the possibility of signaling reduces the reliance on the network. We find that the network is remarkably resilient. To be effective signaling must fulfill two contradictory requirements: unless the signal is extremely precise, it must be expensive or it is not informative; but it must be cheap, or the network can undercut it

Effect of Uncertainty about Others' Rationality in Experimental Asset Markets: An Experimental Analysis

We investigate the extent to which price deviations from fundamental values in an experimental asset market are due to the uncertainty of subjects regarding others' rationality. We do so by comparing the price forecasts submitted by subjects in two market environments: (a) all six traders are human subjects (6H), and (b) one human subject interacts with five profit-maximizing computer traders who assume all the traders are also maximizing profit (1H5C). The subjects are told explicitly about the behavioral assumption of the computer traders (in both 6H and 1H5C) as well as which environment they are in. Results from our experiments show that there is no significant difference between the distributions of the initial deviations of the forecast prices from the fundamental values in the two markets. However, as subjects learn by observing the realized prices, the magnitude of deviations becomes significantly smaller in 1H5C than in 6H markets. We also conduct additional experiments where subjects who have experienced the 1H5C market interact with five inexperienced subjects. The price forecasts initially submitted by the experienced subjects follow the fundamental value despite the fact that the subjects are explicitly told that the five other traders in the market are inexperienced subjects. These findings do not support the hypothesis that uncertainty about others' rationality plays a major role in causing substantial deviation of forecast prices from the fundamental values in these asset market experiments