Trust and discrimination in a segmented society: An experimental approach

discrimination;trust

Social Rewards, Externalities and Stable preferences

public choice;externalities;preferences

Strategic delegation: An experiment

delegation;game theory

Capital accumulation and entry deterrence: A clarifying note

Investment;Game Theory

The Limit of Public Policy: Endogenous Preferences

In designing public policy it is not enough to consider the possible reaction of individuals to the chosen policy.Public policy may also affect the formation of preferences and norms in a society.The endogenous evolution of preferences, in addition to introducing a conceptual difficulty in evaluating policies, may also eventually affect actual behavior.In order to demonstrate the implications of endogenous preferences on the design of optimal public policy, we present a model in which a subsidy policy is set to encourage contributions towards a public good.However this policy triggers an endogenous preference change that results in a lower level of contribution towards the public good despite the explicit monetary incentives to raise that level.public policy

Tradeable Emission Permits in Oligopoly

The paper considers an oligopolistic industry in which pollution is a by-product of production. Firms are assumed to have emission permits that restrict the amount that they pollute. These permits are assumed to be tradeable and the paper discusses a structure in which the same set of firms operates both in the product market as well as in the pollution permits market. The paper demonstrates that in such a structure allowing trade in emission permits is not necessarily beneficial. In particular it may lead to the choice of inferior production and abatement technologies, it may lead to a market equilibrium with lower output rates and higher prices and it may result in a shift of production from a low cost to a high cost firm.pollution control;oligopoly;trade;emission permit

Discrimination and nepotism: the efficiency of the anonymity rule.

The paper considers two categories of discrimination: 'discrimination against' and 'discrimination in favor', which Becker coins 'nepotism'. The paper develops an experimental test to distinguish between these two types of discrimination. The experiment compares the behavior towards individuals of different groups with the behavior towards anonymous individuals (those having no clear group affiliation). We illustrate the two attitudes by considering two segmented societies: Belgian society, with its linguistic segmentation between the Flemish and the Walloons, and Israeli society, where we focus on religious versus secular segmentation. In Belgium, we find evidence of discrimination against. Both the Walloons and the Flemish treat people of their own group in the same way as anonymous individuals while discriminating against individuals of the other group. In contrast, the behavior of ultra-orthodox religious Jews in Israel can be categorized as nepotism: they favor members of their own group while treating anonymous individuals in the same way as secular individuals. The distinction between the different types of discrimination is important in evaluating the effectiveness and the efficiency consequences of anti-discriminatory legislations.Discrimination; Efficiency; Effectiveness; Legislation;

Strategic delegation in a sequential model with multiple stages

We analyze strategic delegation in a Stackelberg model with an arbitrary number, n, of firms. We show that the n-1 last movers delegate their production decisions to managers whereas the first mover does not. Equilibrium incentive rates are increasing in the order with which managers select quantities. Letting u_i^* denote the equilibrium payoff of the firm whose manager moves in the i-th place, we show that u_n^*>u_{n-1}^*>...>u_2^*>u_1^*. We also compare the delegation outcome of our game with that of a Cournot oligopoly and show that the late (early) moving firms choose higher (lower) incentive rates than the Cournot firms.Comment: To appear in International Game Theory Review (IGTR), Vol. 13, No. 3 (2011) 1-1