The New Italian Road Code and the Virtues of the ‘Shame Lane’

In July 2003 a new Road Code was approved by the Italian parliament. Among many reforms whose validity is not questioned here, the new law states that on three-lane motorways the right lane should not be reserved anymore to slow vehicles alone. As in two-lane roads, all vehicles must now drive on the right lane, as long as it is not occupied by other vehicles. The model developed in this paper casts doubts on the validity of such a change, suggesting that the old rule generally performs better, in terms of number of accidents, average speed and motorway capacity, than the new one. This conclusion is shown to be extremely robust to refinements of the main assumptions concerning driving attitudes and the stochastic arrival of accidents.Traffic, Simulation, Italian Road Code.

Should (and Could) We Ban Prescriptions?

In a simple model of social interaction I analyze the welfare effects of positive (prescriptive) and negative (proscriptive) social norms, together with the private incentives for their enactment. I find that imposing no law is socially optimal when individual actions have no significant externalities, while bans become socially optimal as the externalities increase. Prescriptions are generally the worst choice, but when the externalities involved are very high. However, in the political arena support is rarely won for non intervention or for a ban, since an alternative majority will generally be found in favor of some prescription. This remains true even when strategic voting is considered, and provides an argument for the idea that a liberal state cannot be liberally enforced by rational voters.Norms, Bans, Liberalism, Anarchy, Strategic voting.

The Promises and Perils of Agent-Based Computational Economics

In this paper I analyse the main strengths and weaknesses of agent-based computational models. I first describe how agent-based simulations can complement more traditional modelling techniques. Then, I rationalise the main theoretical critiques against the use of simulation, which point to the following problematic areas: (i) interpretation of the simulation dynamics, (ii) estimation of the simulation model, and (iii) generalisation of the results. I show that there exist solutions for all these issues. Along the way, I clarify some confounding differences in terminology between the computer science and the economic literature.Agent-based, Simulation, Microsimulation, Computational Economics, Structural Estimation, Economic methodology

The New Italian Road Code and the virtues of the ‘shame lane’

In July 2003 a new Road Code was approved by the Italian parliament. Among many reforms whose validity is not questioned here, the new law states that on three-lane motorways the right lane should not be reserved anymore to slow vehicles alone. As in two-lane roads, all vehicles must now drive on the right lane, as long as it is not occupied by other vehicles. The model developed in this paper casts doubts on the validity of such a change, suggesting that the old rule generally performs better, in terms of number of accidents, average speed and motorway capacity, than the new one. This conclusion is shown to be extremely robust to refinements of the main assumptions concerning driving attitudes and the stochastic arrival of accidents.Traffic, Simulation, Italian Road Code

What Does the ECHP Tell Us About Labour Status Misperception: a Journey in Less Known Regions of Labour Discomfort

This study uses ECHP data to give insights on the characteristics of people whose self-assessment of labour status differs from that of the LFS. We do some ‘labour accounting’, in order to clarify the connection between individual perception and LFS categorisation. We find that discrepancies are frequent, regional differences are extremely relevant in explaining them and thus traditional statistics may be strongly biased in capturing people’s well being in relationship with their labour status. We concentrate then on the most relevant perception errors, above all those connected with searching behaviour, in order to explain their determinants. What emerges is a map of social characteristics explaining discouragement and passive behaviour. Such an attitude is (paradoxically) reinforced by assistance from the state itself, such that it becomes – to a certain extent – ‘institutionalised’. Finally, we show that our understanding of the relationship between misclassification and individual characteristics leads to a reduction in the measurement error to be dealt with in transition flows analysis.

Towards a Non-Equilibrium Unemployment Theory

This paper presents a non-equilibrium, agent-based model of workers and firms, with on-the-job searching, endogenous entrepreneurial decisions and endogenous wage and income determination. Workers and firms are heterogeneous, and learn their strategy in the labor market. The model is able to reproduce a number of stylized facts generally accepted in labor economics and industrial organization, such as the Wage, Beveridge and Okun curve, and the skewness of wage, income and firm size distribution. Most interestingly, important stylized facts such as a negatively sloped Wage Curve and a constant returns to scale matching function emerge only out-of-equilibrium, during the adjustment processes toward the stationary state. The results stress three points. First, the use of non-equilibrium computational models allows for a more comprehensive investigation of the labor market, by considering the endogenous character of many relevant variables. Second, it may be the case that (some) of the stylized facts upon which many equilibrium models have been built may be just out-of-equilibrium properties of the real economies. Third, the joint determination of all aggregate relationships and their dependence on the equilibrium or non-equilibrium state of the system suggest to move from the investigation of empirical regularities in isolation one from the other to a joint analysis.Unemployment, Entrepreneurship, Firm demography, Simulation, Beveridge, Okun, Wage Curve.

Generalizing Gibrat Reasonable Stochastic Multiplicative Models of Firm Dynamics with Entry and Exit

Multiplicative models of firm dynamics ‘à la Gibrat’ have become a standard reference in industrial organization. However, some unpleasant properties of their implied dynamics – namely, their explosive or implosive behaviour (firm size and number collapsing to zero or increasing indefinitely) - have been given only very little attention. In this paper I investigate using simulations which modifications to the standard multiplicative model of firm dynamics lead to stable (and reasonable) distributions of firm size. I show that in order to obtain stable systems for a wide range of average growth rate, either heteroskedasticity in the growth rates has to be assumed, or entry and exit mechanisms included. In particular I show that combining the broad class of threshold entry mechanisms and the more restricted class of threshold exit mechanisms with overcapacity penalizing all firms (where entry and exit are determined with reference to an exogenously defined total capacity of the market), lead to stable distributions even in the case of growth rate homoskedasticity, given a non-zero minimum threshold for firm size.Firm growth, Gibrat’s Law, Entry, Exit, Simulation.

Sequential Teamwork in Competitive Environments: Theory and Evidence from Swimming Data

The aim of the paper is to assess whether there is free-riding in teams when team production is sequential and when there is competition between teams. This a common case, which, however, has not been considered in the literature so far. We develop a model where team members contributing earlier have an incentive to free-ride more even when there is competition between teams. These predictions are tested on more than 300.000 observations on swimmers’ performance at competitions from all over the world. We find that swimmers in relays perform weaker as compared to their individual performance, and that earlier swimmers’ performance in relays is weaker relative to later swimmers. Our results suggest that competition does not solve the free-riding problem in team production with sequential contributions.team production, contest, intergroup competition, sequential contribution, free-riding, swimming