Dogville or an illustration of some properties of general equilibrium

Lars von Trier's movie 'Dogville' illustrates some illuminating and poignant comparative statics of equilibrium allocations, according to Heike Harmgart and Steffen Huck

The miracle as a randomization device: a lesson from Richard Wagner's romantic opera Tannhauser und der Sankerkrieg auf Wartburg

In this paper we provide textual evidence on the sophistication of medieval deterrence strategies. Drawing on one of the great opera librettos based on medieval sources, Wagner’s Tannhäuser, we shall illustrate the use of optimal randomization strategies that can be derived by applying notions of dominance or trembling-hand perfection. Particular attention is paid to the employed randomization device

“Though this be madness, yet there is method in’t.” A counterfactual analysis of Richard Wagner’s Tannhäuser

Much like Wagner himself, the eponymous hero of Tannhäuser treads a path of stark contrasts and rapid swings. From Wartburg to the Venusberg and to the Vatican, the gifted bard transforms from self-centered artist to seduced disciple, disillusioned devotee, hopeful lover, self-loathing pilgrim and finally redeemed martyr. He tries everything and everything is trying. These contrasts reach a peak in the opera‟s central episode, the song contest at Wartburg. Tannhäuser has just been welcomed at the court, received Elisabeth‟s favor and affection, and is ready to compete for the contest‟s prize, one as lofty as possibly the princess‟ hand. Instead of securing his reintegration to Wartburg with a brilliant performance, however, he spoils the event with insolent remarks and the exhibitionist disclosure of his Venusberg experience. His behavior offends his peers, scandalizes the court, breaks Elisabeth‟s heart, and brings him to the edge of death. Why would Tannhäuser sacrifice everything for nothing

Learning trust

We examine the effects of different forms of feedback information on the performance of markets that suffer from moral hazard problems due to sequential exchange. As orthodox theory would predict, we find that providing buyers with information about sellers' trading history boosts market performance. More surprisingly, this beneficial effect of incentives for reputation building is considerably enhanced if sellers, too, can observe other sellers' trading history. This suggests that two-sided market transparency is an important ingredient for the design of well-functioning markets that are prone to moral hazard

Consumer behaviour, feedback information and the supermarket industry.

The purpose of this thesis is threefold: First, to explain how learning shapes consumer behaviour over a comestible (experience) good. Second, to examine the role of feedback information and information aggregation for consumer choices and market performance in markets for experience goods. Third, to understand how firms react to heterogeneous consumer choices in the supermarket industry when faced with institutional constraints. To shed light on how learning influences consumer choices over time in particular when new products or new characteristics are introduced, we employ in Chapter 2 a model of reinforcement learning over products as well as characteristics and apply it to yoghurt drink purchases from a large British consumer panel. We find that learning over both, products and characteristics, is important in explaining consumer choices over time. How consumer choices are influenced by the choice of others is analysed in Chapter 3 which introduces and studies a new model of aggregate information cascades. We find that if only one of two possible actions is observable say, how many others bought a particular product but not how many chose not to buy it only one type of cascade arises in equilibrium. Herding only takes place on the observable action. A different angle on how the provision of information bears on choices is taken in Chapter 4 on learning trust. Here we examine the effect of different forms of feedback information to consumers and sellers in a market with sequential exchange. Experimental evidence shows that both feedback information on sellers' history to consumers but also feedback information about sellers trading history to other sellers improves market efficiency. How firms optimally react to institutional constraints when consumer choice heterogeneity is important is developed in Chapter 5 in a model of supermarket entry into different store formats and applied to data from the UK. We are interested in estimating the cost of the institutional constraint of restrictive planning regulation. We find that the institutional set up matters but the impact of restrictive planning regulation on firm profits is small and increases barriers to entry for large supermarkets only

Retail Productivity

Recent attention has focused on the UK's productivity gap in the retail sector. Figure 1 shows an estimate of labour productivity in retail across countries, using output per hour worked. The UK lies well behind the US, France and Germany. Reynolds at al (2005) contribute to this debate by providing a discussion of the literature, along side interviews with several UK and US retail firms. The conclusions of their paper are that, while there are many measurement issues, most of the evidence points to the fact that, on average, productivity in this sector in the UK is low and has grown slowly over recent years when compared to the US. They rightly point out that a more thorough understanding of what drives productivity in the retail sector requires a better understanding of the 'complex mix of urban characteristics, consumer preferences and competitive rivalries'. In this article we discuss some of the main issues involved in the measurement of productivity in retail, how these problems can be tackled, and we consider the interpretation of these statistics. We then discuss new work using microdata on the UK supermarket industry and conclude with a short discussion of where future research needs to look to answer the important policy questions around why the UK's productivity performance remains low in this important sector