The Ultimatum Game and Expected Utility Maximization – In View of Attachment Theory

In this paper we import a mainstream psycholgical theory, known as attachment theory, into economics and show the implications of this theory for economic behavior by individuals in the ultimatum bargaining game. Attachment theory examines the psychological tendency to seek proximity to another person, to feel secure when that person is present, and to feel anxious when that person is absent. An individual's attachment style can be classified along two-dimensional axes, one representing attachment "avoidance" and one representing attachment "anxiety". Avoidant people generally feel discomfort when being close to others, have trouble trusting people and distance themselves from intimate or revealing situations. Anxious people have a fear of abandonment and of not being loved. Utilizing attachment theory, we evaluate the connection between attachment types and economic decision making, and find that in an Ultimatum Game both proposers' and responders' behavior can be explained by their attachment styles, as explained by the theory. We believe this theory has implications for economic behavior in different settings, such as negotiations, in general, and more specifically, may help explain behavior, and perhaps even anomalies, in other experimental settings.Attachment Theory, Experimental Economics, Behavioral Economics, Ultimatum Game, Psychology and Economics

Cooperation and Competition in a Duopoly R&D Market

In a general setting with uncertainty and spillovers in R&D activity, we consider the incentive to cooperate among firms at any or all of the following three stages. Firms can jointly agree on the level of R&D expenditures, they can set up joint research facilities, and/or they can engage in an information sharing agreements, by which they agree to share any findings with the other firm. We compare expenditures on R&D, profit levels, and welfare levels across the different possible cooperative and competitive setups and offer antitrust implications. Our model differs from previous analyses in three important ways. First, most studies consider only research aimed at lowering production costs, and therefore consider only situations where total profits fall as spillovers increase. We allow for the possibility of product innovation, and define the concepts of offsetting spillovers (falling total profits) and incremental spillovers (when total profits increase as spillovers increase). Second, we consider a wider variety of cooperation possibilities than do most prior studies. Finally, we use far more general functional forms than is usual in the literature.

The Why, When and How of Immigration Amnesties

This paper presents some of the many issues involved in the granting of an amnesty to illegal immigrants. Complementing studies by Chau (2001, 2003), Karlson and Katz (2003) and Gang and Yun (2006), we consider government behavior with respect to allocations on limiting infiltration (border control) and apprehending infiltrators (internal control) and with respect to the granting of amnesties, the timing of amnesties, and limitations on eligibility for those amnesties. We demonstrate the effects of government actions on allocations and the flow of immigrants, and how the interactions between these factors combine to yield an optimal amnesty policy. We also consider two extensions – intertemporal transfers of policing funds and “fuzziness” in declarations regarding eligibility for an amnesty aimed at apprehending and deporting undesirables.Amnesty, Immigration, Illegal Immigration, Border Controls, Internal Controls

A Theory of Immigration Amnesties

This paper presents a first attempt at understanding some of the many issues involved in the granting of an amnesty to illegal immigrants. We consider government behavior with respect to allocations on limiting infiltration (border control) and apprehending infiltrators (internal control) and with respect to the granting of amnesties, the timing of amnesties, and limitations on eligibility for those amnesties. We demonstrate the effects of government actions on allocations and the flow of immigrants, and how the interactions between these factors combine to yield an optimal amnesty policy. We also consider various extensions such as intertemporal transfers of policing funds, risk-aversion, and -fuzziness, in declarations regarding eligibility for an amnesty aimed at apprehending and deporting undesirables.Amnesty, Immigration, Illegal Immigration, Border Controls, Internal Controls.

Coordination and Critical Mass in a Network Market: An Experimental Investigation

A network market is a market in which the benefit each consumer derives from a good is an increasing function of the number of consumers who own the same or similar goods. A major obstacle that plagues the introduction of a network good is the ability to reach critical mass, namely, the minimum number of buyers required to render purchase worthwhile. This can be likened to a coordination game with multiple Pareto-ranked equilibria. We introduce an experimental paradigm to study consumers' ability to coordinate on purchasing the network good. Our results highlight the central importance of the level of the critical mass.Experimental economics, network goods, coordination game, critical mass

Coordination and Critical Mass in a Network Market: An Experimental Investigation

A network market is a market in which the benefit each consumer derives from a good is an increasing function of the number of consumers who own the same or similar goods. A major obstacle that plagues the introduction of a network good is the ability to reach critical mass, namely, the minimum number of buyers required to render purchase worthwhile. This can be likened to a coordination game with multiple Pareto-ranked equilibria. We introduce an experimental paradigm to study consumers' ability to coordinate on purchasing the network good. Our results highlight the central importance of the level of the critical mass.experimental economics, network goods, coordination game, critical mass

The Economics of Religion, Jewish Survival and Jewish Attitudes Toward Competition in Torah Education

This paper examines the attitude of Jewish law to competition in light of the economist's understanding of the benefits of competition and of the beneficiaries from intervention in the competitive process. The punchline of this paper is simple. Although Judaism has used a whole host of restrictions on competition and has had its share of legislation to promote private interests, there has been one area that has generally been a consistent exception to impediments to competition -- the teaching of Torah. This exception is all the more remarkable because those who were in a position to influence the legislation often stood to benefit from such restrictions. From this stress on teaching, we show that the foundation was laid for the survival and perpetuation of Judaism.

Endogenous Market Formation and Monetary Trade: An Experiment

The theory of money assumes decentralized bilateral exchange and excludes centralized multilateral exchange. However, endogenizing the exchange process is critical for understanding the conditions that support the use of money. We develop a “travelling game” to study the emergence of decentralized and centralized exchange, theoretically and experimentally. Players located on separate islands can either trade locally, or pay a cost to trade elsewhere, so decentralized and centralized markets can both emerge in equilibrium. The former minimize trade costs through monetary exchange; the latter maximizes overall surplus through non-monetary exchange. Monetary trade emerges when coordination is problematic, while centralized trade emerges otherwise. This shows that to understand the emergence of money it is important to amend standard theory such that the market structure is endogenized

Polynomial-Time Verification and Testing of Implementations of the Snapshot Data Structure

We analyze correctness of implementations of the snapshot data structure in terms of linearizability. We show that such implementations can be verified in polynomial time. Additionally, we identify a set of representative executions for testing and show that the correctness of each of these executions can be validated in linear time. These results present a significant speedup considering that verifying linearizability of implementations of concurrent data structures, in general, is EXPSPACE-complete in the number of program-states, and testing linearizability is NP-complete in the length of the tested execution. The crux of our approach is identifying a class of executions, which we call simple, such that a snapshot implementation is linearizable if and only if all of its simple executions are linearizable. We then divide all possible non-linearizable simple executions into three categories and construct a small automaton that recognizes each category. We describe two implementations (one for verification and one for testing) of an automata-based approach that we develop based on this result and an evaluation that demonstrates significant improvements over existing tools. For verification, we show that restricting a state-of-the-art tool to analyzing only simple executions saves resources and allows the analysis of more complex cases. Specifically, restricting attention to simple executions finds bugs in 27 instances, whereas, without this restriction, we were only able to find 14 of the 30 bugs in the instances we examined. We also show that our technique accelerates testing performance significantly. Specifically, our implementation solves the complete set of 900 problems we generated, whereas the state-of-the-art linearizability testing tool solves only 554 problems