Hayek's Theory of Cultural Evolution Revisited: Rules, Morality, and the Sensory Order

One of the most controversial parts of F. A. Hayek's work is his theory of cultural evolution. By starting with current discussions on biological and cultural selection theories we bring individual, kin and group selection aspects together and shed some light on Hayek's thoughts on the Theory of Mind. We find that these thoughts traced out from his work on the "Sensory Order", need to be combined with his thoughts on cultural evolution. Both works can be backed by kin selection arguments and extended by a theory of cultural learning in which individual selection plays an important role. In doing so, we offer a more integrated view on Hayek's theory of cultural selection with respect to moral rules and collective choice processes in societies.Cultural Evolution, Morality, Theory of Mind, Learning, Kin selection

Little Firms and Big Patents: The Incentives To Disclose Competencies

This paper offers a theoretical treatment of information disclosure through patenting. We consider a signaling model in which two domestic firms disclose their competencies to a foreign firm. Conditions are discussed under which separating and pooling equilibria occur, together with a domination-based re-finement. Depending on the payoff situation of the foreign firm, separating and semi-separating equilibria occur in which the firm with the higher competencies discloses. We show that subsidizing the costs of patent applications has no impact on the outcome.Patenting, Disclosure, R&D Cooperations, Asymmetric Information.

Optimal Auditing Under Intermediated Contracting

This paper builds on Faure-Grimaud and Martimort’s [Economics Letters 71 (2001) 75-82] analysis of intermediated contracting. I argue that intermediated contracting permits one form of auditing, in which the sub-contract offered to the firm is examined, contingent on the intermediary’s report. Auditing reduces the intermediary’s rent and increases allocative efficiency.Intermediated Contracting, Grand Contract, Optimal Auditing.

A Theory of Delegated Contracting

Delegated contracting describes a widely observable vertical contractual relationship where a top principal (program designer) hires an intermediary to offer a predesigned screening contract to a downstream agent who should produce a quantity depending on his true marginal cost type. The principal has no direct access to the downstream agent and utilizes budgeting in the sequence of contracts. This paper proposes a general theory of delegated contracting where information acquisition is limited to the (sub-)contract offer stage. To reach delegation proofness, the principal designs information rents accordingly. The solution concept follows the convexity of rent pro le. The paper shows that the optimal contract is fully separating over the subcontracting interval, leading to strictly decreasing output targets

Vertikale Integration und informations- und kommunikationsintensive Dienstleistungen

The ongoing debate on the ``service gap'' in Germany has lead to empirical findings bolstering the argument of a lack of outsourcing activities.Hence, there is still a need to back these findings from an organisational point of view. After a short overview on empirical findings, the present paper focuses on the impact of information and communication technologies (ICTs) inside organizations providing ICT-related services. Starting with the organizational literature it shows that ICTs may lower the monitoring costs within incentive contracts. In addition, the paper tries to develop a viewpoint on the degree of applicability of hierarchies as a sefeguard against risks stemming from the outsourcing of ICT-related activities. Thus it tries to shed some light on the explanations for an in-house production of ICT-related services.Organisationstheorie, Transaktionskosten, Anreizvertraege, IuK-Technologien.

Bayesian Persuasion By Stress Test Disclosure

This paper argues that stress tests encompassing the entire banking sector (macro stress tests) can be designed to improve welfare. We develop a multi-receiver framework of Bayesian persuasion to show that a banking supervisor can create value when he commits to disclose the stress-testing methodology (signal-generating process) together with the stress test result (signal). By optimally choosing the two signals, supervisors can deliver superior information that will deliver a higher expected utility to prudent investors when acting accordingly. The paper uses an equilibrium construction with a continuum of receivers. We find that banking supervisors create welfare as optimal disclosure reduces uncertainty and leads to better risk-adjusted behavior on the investors' side and to less financial market volatility

The Stock Market Evaluation of IPO-Firm Takeovers

We conduct an event study to assess the stock market evaluation of public takeover announcements. Unlike the majority of previous research, we specifically focus on acquisitions targeted at newly public IPO-firms and show that the stock market positively evaluates these M&As as R&D. However, bidders' abnormal announcement returns are significantly lower for takeovers directed at targets with critical intangible assets and innovative capabilities inalienably bound to their initial owners than for those that have internally accumulated respective resources and capabilities. We explain these findings with the acquirer's post-acquisition dependence on continued access to the IPO-firm founders' target-specific human capital. Our results contribute to literature in that they show that the stock market perceives these potential impediments to successful exploitation of acquired strategic resources and thus identify a potential cause for heretofore mostly inconsistent evidence on bidder abnormal returns in corporate takeovers found in previous research

A theory of delegated contracting

Delegated contracting describes a widely observable agency mode where a top principal, who has no direct access to a productive downstream agent, hires an intermediary to forward a sub-contract with specified output targets and payments. The principal makes the payment to the intermediary contingent on production taking place; the intermediary is protected by limited liability and paid a bonus. I characterize the optimal grand-contract with a continuum of agent types by using optimal control techniques with a scrap value function. Delegation proofness is reached through paying the intermediary what she could obtain by deviating. This rent is shown to be convex and increasing in the contracting space. There is internal verification of the ex-post state to reach compliance. The principal uses cutoff structures instead of additional output distortions. A leftbound incentive alignment principle between principal and intermediary applies. The paper so delivers a general analysis of the loss of control in vertical hierarchies