Private CSR Activities in Oligopolistic Markets: Is there any room for Regulation?

The present paper examines the conditions under which the regulator can complement the provision of Corporate Social Responsibility (CSR) activities by private firms in an oligopolistic market. Our main finding is that if there is no credible information disclosure about SR characteristics of the firms' products to consumers, no firm will have incentives to undertake CSR effort in equilibrium. However, if the necessary information about the CSR aspects of each firm's product, otherwise unobservable, is made available to consumers through certification provided either by a profit-maximizing certifier or by the regulator, then both firms will have incentives to engage in CSR activities. Hence in equilibrium, consumers' surplus, firms profits and total welfare increase comparing to the benchmark case without CSR activities.Corporate Social Responsibility, Oligopoly, Vertical Differentiation, Certification.

Certification of Corporate Social Responsibility Activities in Oligopolistic Markets

We investigate the impact of alternative certifying institutions on firms' incentives to engage in costly Corporate Social Responsibility (CSR) activities as well as their relative market and societal implications. We find that the CSR certification standard is the lowest under a for-profit private certifier and the highest under a Non Governmental Organization (NGO), with the standard of a welfare maximizing public certifier lying in between. Yet, regarding industry output, this ranking is reversed. Certification of CSR activities is welfare enhancing for consumers and firms and thus should be encouraged. Finally, depending on whether certification takes place before or after firms' CSR activities, a public certifier and a NGO lead to different market and societal outcomes.Corporate Social Responsibility, Oligopoly, Vertical Differentiation, Certification

Strategic delegation in experimental duopolies with endogenous incentive contracts

Often, deviations of firm behavior from profit maximization are the result of managerial incentive contracts. We study the endogenous emergence of incentive contracts used by firm owners to delegate the strategic decisions of the firm. These contracts are linear combinations either of own firm's profits and revenues, or own and rival firms' profits. A two- and three-stage game are studied depending on whether owners commit or not to a certain contract type before setting the managerial incentives and the level of output to produce in the market. We report experimental results which confirm some of the predictions of the model, especially those concerning owners' preference for relative performance incentives over profit-revenue contracts. Neglected behavioral aspects are proposed as possible explanation of some divergence between the theory and the experimental evidence, more specifically the relation between contract terms and managers' output choicesExperimental economics; Oligopoly theory; Managerial delegation; Endogenous contracts.

Rehabilitation and social behavior: Experiments in prison

Despite the economic and social significance of crime reduction and criminals’ rehabilitation, research evaluating the effects of incarceration on behavior is surprisingly scarce. We conduct an experiment with 105 prison inmates and complement it with administrative data in order to explore several aspects of their social behavior. We first perform a comprehensive analysis of behavior in three economic games, finding evidence of discrimination against a sample from outside prison. In addition, our regression analysis reveals that inmates generally become less pro-social towards this out-group the longer they remain incarcerated. Finally, we introduce and evaluate a priming intervention that asks inmates to reflect on their time spent in prison. This intervention has a very sizeable and significant impact, increasing pro-sociality towards the out-group. Hence, a simple, low-cost intervention of this sort can have desirable effects in promoting rehabilitation and integration into social and economic life after release

Psychopathy and Economic Behavior Among Prison Inmates: An Experiment

This paper investigates whether there is a connection between psychopathy and certain manifestations of social and economic behavior, measured in a lab-in-thefield experiment with prison inmates. In order to test this main hypothesis, we let inmates play four games that have often been used to measure prosocial and antisocial behavior in previous experimental economics literature. Specifically, they play a prisoner’s dilemma, a trust game, the equality equivalence test that elicits distributional preferences, and a corruption game. Psychopathy is measured by means of the Levenson Self-Report Psychopathy Scale (LSRP) questionnaire, which inmates filled out after having made their decisions in the four games. We find that higher scores in the LSRP are significantly correlated with anti-social behavior in the form of weaker reciprocity, lower cooperation, lower benevolence and more bribe-oriented decisions in the corruption game. In particular, not cooperating and bribe-maximizing decisions are associated with significantly higher LSRP primary and LSRP secondary scores. Not reciprocating is associated with higher LSRP primary and being spiteful with higher LSRP secondary score

Exchange markets with endogenous quality: When the lemons problem enchances trade

XXXI Jornadas de Economía Industrial. Palma de Mallorca, 1-2 septiembre, 2016A worrying feature of Akerlof’s (1970) model is that the existence of sufficiently many products of relatively low quality (“lemons”) in a market may not only drive those of high quality out of the market, but it may even “... drive the market out of existence ” (p. 49 5). We discuss a two - sided market framework with endogenous quality and provide experimental evidence that the “lemons problem”, rather than drivi ng the market out of existence, may lead to a more intense exchange of very low quality products

Endogenous managerial compensation contracts in experimental quantity-setting duopolies

Given the ongoing debate on managerial compensation schemes, our paper offers empirical insights on the strategic choice of firms' owners over the terms of a managerial compensation contract, as a commitment device aiming at gaining competitive advantage in the product market. In a quantity setting duopoly we experimentally test whether firms' owners compensate their managers through contracts combining own profits either with revenues or with relative performance, and the resulting managerial behaviour in the product market. Prominent among our results is that firms' owners choose relative performance over profit revenue contracts more frequently. Further, firms' owners successfully induce a more aggressive behaviour by their managers in the market, by setting incentives which deviate from strict profit maximization