Wage Bargaining, Labor Turnover, and the Business Cycle: A Model with Asymmetric Information

This paper presents a wage bargaining model in which the employer and employee are each uncertain about the other's reservation wage. Under specified circumstances, the model's equilibrium is shown to involve unilateral wage setting and inefficient labor turnover. In addition, aggregate demand shocks affect the equilibrium in a way that produces procyclical quits and countercyclical layoffs.These results are obtained without resorting to assumptions of nominal wage rigidity, long-term contracting, or aggregate price misperceptions.

Tournaments with Midterm Reviews

In many tournaments investments are made over time and conducting a review only once at the end, or also at points midway through, is a strategic decision of the tournament designer. If the latter is chosen, then a rule according to which the results of the different reviews are aggregated into a ranking must also be determined. This paper takes a first step in the direction of answering how such rules are optimally designed. A characterization of the optimal aggregation rule is provided for a two-agent two-stage tournament. In particular, we show that treating the two reviews symmetrically may result in an equilibrium effort level that is inferior to the one in which only a final review is conducted. However, treating the two reviews lexicographically by first looking at the final review, and then using the midterm review only as a tie-breaking rule, strictly dominates the option of conducting a final review only. The optimal mechanism falls somewhere in between these two extreme mechanisms. It is shown that the more effective the first-stage effort is in determining the final review’s outcome, the smaller is the weight that should be assigned to the midterm review in determining the agents’ ranking.

Tournaments with Midterm Reviews

In many tournaments investments are made over time and conducting a review only once at the end, or also at points midway through, is a strategic decision of the tournament designer. If the latter is chosen, then a rule according to which the results of the different reviews are aggregated into a ranking must also be determined. This paper takes a first step in the direction of answering how such rules are optimally designed. A characterization of the optimal aggregation rule is provided for a two-agent two-stage tournament. In particular, we show that treating the two reviews symmetrically may result in an equilibrium effort level that is inferior to the one in which only a final review is conducted. However, treating the two reviews lexicographically by first looking at the final review, and then using the midterm review only as a tie-breaking rule, strictly dominates the option of conducting a final review only. The optimal mechanism falls somewhere in between these two extreme mechanisms. It is shown that the more effective the first-stage effort is in determining the final review’s outcome, the smaller is the weight that should be assigned to the midterm review in determining the agents’ ranking

On the Origin of the Family

This paper presents an overlapping generations model to explain why humans live in families rather than in other pair groupings. Since most non-human species are not familial, something special must be behind the family. It is shown that the two necessary features that explain the origin of the family are given by uncertain paternity and overlapping cohorts of dependent children. With such two features built into our model, and under the assumption that individuals care only for the propagation of their own genes, our analysis indicates that fidelity families dominate promiscuous pair bonding, in the sense that they can achieve greater survivorship and enhanced genetic fitness. The explanation lies in the free riding behavior that characterizes the interactions between competing fathers in the same promiscuous pair grouping. Kin ties could also be related to the emergence of the family. When we consider a kinship system in which an adult male transfers resources not just to his offspring but also to his younger siblings, we find that kin ties never emerge as an equilibrium outcome in a promiscuous environment. In a fidelity family environment, instead, kinship can occur in equilibrium and, when it does, it is efficiency enhancing in terms of greater survivorship and fitness. The model can also be used to shed light on the issue as to why virtually all major world religions are centered around the importance of the family.fatherhood uncertainty, free riding, kinship systems, religion, overlapping generations, divorce and blended families

On the Origin of the Family

This paper presents an overlapping generations model to explain why humans live in families rather than in other pair groupings. Since most non-human species are not familial, something special must be behind the family. It is shown that the two necessary features that explain the origin of the family are given by uncertain paternity and overlapping cohorts of dependent children. With such two features built into our model, and under the assumption that individuals care only for the propagation of their own genes, our analysis indicates that fidelity families dominate promiscuous pair bonding, in the sense that they can achieve greater survivorship and enhanced genetic fitness. The explanation lies in the free riding behavior that characterizes the interactions between competing fathers in the same promiscuous pair grouping. Kin ties could also be related to the emergence of the family. When we consider a kinship system in which an adult male transfers resources not just to his offspring but also to his younger siblings, we find that kin ties never emerge as an equilibrium outcome in a promiscuous environment. In a fidelity family environment, instead, kinship can occur in equilibrium and, when it does, it is efficiency enhancing in terms of greater survivorship and fitness. The model can also be used to shed light on the issue as to why virtually all major world religions are centered around the importance of the family

A Sealed-Bid Auction that Matches the English Auction

This paper analyzes a two-stage sealed-bid auction that is frequently employed in privatization, takeover, and merger and acquisition contests. This auction format yields the same expected revenue as the open ascending (English) auction, yet is less susceptible to preemptive bidding and collusion.Auctions

How to count citations if you must

Citation indices are regularly used to inform critical decisions about promotion, tenure, and the allocation of billions of research dollars. Nevertheless, most indices (e.g., the h-index) are motivated by intuition and rules of thumb, resulting in undesirable conclusions. In contrast, five natural properties lead us to a unique new index, the Euclidean index, that avoids several shortcomings of the h-index and its successors. The Euclidean index is simply the Euclidean length of an individual's citation list. Two empirical tests suggest that the Euclidean index outperforms the h-index in practice