Knowledge Accumulation within an Organization

We develop a simple model of task allocation for knowledge workers over their career within an organization. The human capital theory initiated by Becker (1962, 1964) has o¤ered a rich analysis of an individuals life cycle investment in human capital. One of the main result of this literature states that human capital investments are undertaken at the early stage of the career because workers have then a longer period of time over which they can bene…t from the return of their investments. In this paper, we consider a knowledge accumulation problem within an organization that cannot prevent the worker from quitting and using the knowledge outside the organization. In the …rst best situation, we show a similar result as in the human capital theory, i.e. the share of time allocated to knowledge creation tasks decreases over time. We then ask how this pattern is a¤ected when the knowledge worker can leave the organization and bene…t from this knowledge outside the organization. In this case, we obtain the novel result that the time path of the fraction of working time allocated to knowledge creation tasks is non-monotone. This fraction is highest at the early career stage, falls gradually, then rises again, before falling …nally toward zero. We also show that an increase in the …rm-speci…city of knowledge can increase or decrease the life-time income of the knowledge worker.

The Pace of Technology Transfer in Anticipation of Joint Venture Breakup

This paper studies the properties of joint-venture relationship between a technologically advanced multinational firm and a local firm operating in a developing economy where the ability to enforce contracts is weak. We formulate a dynamic model of principal-agent relationship in which at any point of time the local firm can quit without legal penalties. An early breakup may be prevented if the multinational designs a suitable scheme in which both the pace and aggregate amount of technology transfer deviate from the first-best, and a suitable flow of side payments to encourage the local firm to stay longer.Technology Transfer, Joint Venture, Developing Economies

Contest with Attack and Defence: Does Negative Campaigning Increase or Decrease Voters' Turnout?

We present a general model of two players contest with two types of efforts. Contrary to the classical models of contest, where each player chooses a unique effort, and where the outcome depends on the efforts of all the players, contestants are allowed to reduce the effort of the opponent. Defence increases one's chance of winning while attack annihilates the defence of the opponent. This model has many applications like political campaigning, wars, competition among lobbies, job promotion competitions, or sport contests. We study the general model of contest with attacks and defence and propose an application to negative political campaigns, where two candidates arbitrate between disparaging their opponent or enhancing their own image. We propose sufficient conditions for the existence and uniqueness of a symmetric Nash equilibrium of the contest game. In the application, we contribute to the empirically debated question dealing with the effect of attack on voters turnout, and show that the conclusion depends on the distribution of voters sensitivity to defence and attack. Furthermore, contrary to the literature, we show that an underdog candidate may be less aggressive than his opponent.Contest, Rent-seeking, Negative Campaigning, Turnout, Sabotage.

Valence Advantages and Public Goods Consumption: Does a Disadvantaged Candidate Choose an Extremist Position?

Does a disadvantaged candidate always choose an extremist program? When does a less competent candidate have an incentive to move to extreme positions in order to differentiate himself from the more competent candidate? If the answer to these questions were positive, as suggested in recent work (Ansolabehere and Snyder (2000), Aragones and Palfrey (2002), Groseclose (1999), and Aragones and Palfrey (2003)), this would mean that extremist candidates are bad politicians. We consider a two candidates electoral competition over public consumption, with a two dimensional policy space and two dimensions of candidates heterogeneity. In this setting, we show that the conclusion depends on candidates relative competences over the two public goods and distinguish between two types of advantages (an absolute advantage and comparative advantage in providing the two public goods).Candidate Quality, Extremism, Public Goods Consumption

Does a Disadvantaged Candidate Choose an Extremist Position?

Does a disadvantaged candidate always choose an extremist program? When does a less competent candidate have an incentive to move to extreme positions in order to differentiate himself from the more competent candidate? Recent works answer by the affirmative (Groseclose 1999, Ansolabehere and Snyder 2000, Aragones and Palfrey 2002, 2003). We consider a two candidates electoral competition over public consumption, with a two dimensional policy space and two dimensions of candidates heterogeneity. In this setting, we show that the conclusion depends on candidates relative competences over the two public goods and distinguish between two types of advantages (an absolute advantage and comparative advantage in providing the two public goods). ...French Abstract : Cet article traite de l'entrée dans une industrie dans laquelle les firmes partagent une réputation collective. Premièrement, nous montrons que l'entrée libre n'est pas socialement optimale, il existe un besoin de régulation à travers l'imposition d'un standard minimum de qualité (par exemple). Deuxièmement, nous montrons qu'un standard minimum de qualité peut inciter des firmes à entrer sur le marché. Contrairement à la pensée commune, un standard minimum de qualité ne doit pas être toujours considéré comme une barrière à l'entrée.CANDIDATE QUALITY; EXTREMISM; PUBLIC GOODS CONSUMPTION

When Inertia Generates Political Cycles

We propose a simple infinite horizon of repeated elections with two candidates. Furthermore we suppose that the government policy presents some degree of inertia, i.e. a new government cannot completely change the policy implemented by the incumbent. When the policy inertia is strong enough, no party can win the election a consecutive infinite number of times.Political Cycles, Inertia

When Inertia Generates Political Cycles

In this note, we propose a simple infinite horizon of elections with two candidates. We suppose that the government policy presents some degree of inertia, i.e. a new government cannot completely change the policy implemented by the incumbent. When the policy inertia is strong enough, no party can win the elections a consecutive infinite number of times.Policy inertia

Financial Regulation in the Crisis Regulation, Market Discipline, Internal Control: The Big Three in turmoil

The financial crisis has revealed the dysfunction of all banking and financial regulatory mechanisms. Prudential regulation failed to prevent the meltdown. Market discipline neglected to send any warning signals. Internal control was seriously undermined by doubtful dealings, in France as elsewhere. Does the crisis call the big three into question? No regulation mechanism is omniscient, whether it be state, market or self-regulation. As such, none of three can operate without the other two, with the corollary that they can only function together. It means that splitting up the big three can therefore not be the answer to the crisis. By contrast, since each one of them has shown its weaknesses, the only solution is to work on reinforcing each one. Unfortunately there is no guarantee that the reforms go far enough.Prudential supervision; market discipline; internal control; financial regulation

On the (In-)Efficiency of Unanimity in Multilateral Bargaining with Endogenous Recognition

In this paper, we study the (symmetric) equilibria of a model of multilateral bar- gaining where players are heterogeneous regarding their time preferences, and make costly efforts at the beginning of the process in order to inuence their probabilities of being the proposer for all stages of the negotiation process. We analyse whether the optimality of the unanimity rule (as the voting rule minimizing the social cost resulting from the agents' willingness to buy inuence) characterised in Yildirim (2007) extends to the present situation. In the case of weakly heterogeneous agents, we show that k-majority rules may actually become strictly optimal. Then we provide numerical ex- amples that suggest that there are situations where each type of voting rule (unanimity and strict k-majority) may be socially optimal.

Drought and Civil War in Sub-Saharan Africa

We show that civil war is strongly related to drought in sub-Saharan Africa. We consider the eect of variations in the Palmer Drought Severity Index (Palmer 1965) - a cumulative index that combines precipitation, temperature and the local characteristics of the soil - on the risk of civil war. While the recent, contentious debate on the link between climate and civil war has mainly focused on precipitation and temperature, without obtaining converging results, the Palmer index describes social exposure to water stress in a more ecient way. We show that it is a key factor of civil war in sub-Saharan Africa and that this result is robust to various specications and passes a series of sensitivity tests. Also, our results indicate that agriculture, ethnic diversity and institutional quality are important factors to link climate and civil war.