Equity versus Warm Glow in Intergenerational Giving

In different treatments of an intergenerational common resource experiment, monetary payoff maximization by each generation causes either negative or positive externalities for future generations.Two behavioral types have been observed previously in single generation games: equity motivated individuals enjoy giving to the needy and taking from (not giving to) the prosperous, while warm glow altruists enjoy giving unconditionally.In the examined intergenerational game, observed behavior is not consistent with the equity motive.Roughly half of the subjects maximize own monetary payoffs, while the others exhibit altruistic behavior consistent with a model of warm glow giving with constant altruistic sacrifices across treatments.equity capital;altruism;sustainable development;natural resources

Sharing Information

Customers write book reviews for Amazon.com and rate stores at BizRate.com. Car drivers call up radio stations to report traffic jams or radar traps. In many cases individuals share their information to the benefit of an unknown group of recipients, even though doing so is costly for the provider. In contrast to a standard public good, providers have no immediate benefit from information public goods. The paper reports the results of an experimental study on information sharing under two payoff conditions (opportunity announcement and hazard warning) and two information conditions (anonymous and identified provider). The experimental results show a substantial degree of information sharing. Information on extreme opportunities and extreme hazards is significantly more often provided than information on moderate prospects. Identification only plays a role in case of extreme opportunities and not in case of hazard warnings.Information public good; online recommendation; consumer rating; word-of-mouth communication; altruism; other-regarding behavior

Sudden Termination Auctions – An Experimental Study

The design of markets has become a major issue due to the capability of online operators to implement almost any set of market rules overnight. With this study we contribute to the literature of market design by presenting a theoretical and experimental analysis of sudden termination auctions. Our main focus is on the candle auction that has a positive termination probability at any time in the course of the auction. The second price candle auction which is technically demanding and rarely implemented offline proves to be a faster and equally efficient alternative to standard hard close auctions.auctions, termination rules, electronic markets

Overconfidence and Delegated Portfolio Management

Following extensive empirical evidence about market anomalies and overconfidence, the analysis of financial markets with agents overconfident about the precision of their private information has received a lot of attention.However, all these models consider agents trading for their own account.In this article, we analyse a standard delegated portfolio management problem between a financial institution and a money manager who may be of two types: rational or overconfident.We consider several situations.In each case, we derive the optimal contract and results on the performance of financial institution hiring overconfident managers relative to institutions hiring rational agents, and results on the price impact of overconfidence.portfolio management;financial markets;financial instutions

Fair Wages When Employers Face the Risk of Losing Money

We study the behavior of employers and employees in a gift exchange game and find that employers offer lower wages when there is the risk of losing money. This, however, does not lead to lower effort level choices. In fact, effort per wage unit is significantly higher in the treatment with potential employer losses. This result can be in line with social comparison theories that are based on relative payoff differences. Alternatively, this result is also in line with the hypothesis that the risk of losing money increases the credibility of the employer's trust signal and, thus, the employee's reciprocity.fair wage, efficiency wage, social comparison, loss aversion

Online Auctions

The economic literature on online auctions is rapidly growing because of the enormous amount of freely available field data. Moreover, numerous innovations in auction-design features on platforms such as eBay have created excellent research opportunities. In this article, we survey the theoretical, empirical, and experimental research on bidder strategies (including the timing of bids and winner's-curse effects) and seller strategies (including reserve-price policies and the use of buy-now options) in online auctions, as well as some of the literature dealing with online-auction design (including stopping rules and multi-object pricing rules).

Inequality, trust and growth: An experimental study

In a three player dynamic public goods experiment, social output today determines production possibilities tomorrow.In each period, players choose to sabotage, to co-operate, or to play best response.Sabotage harms social output and growth.Mutual co-operation maximises both.The property rights to social output are distributed unequally.Extent and skew of inequality are varied. Empirical studies indicate a negative impact of inequality on trust and growth. We observe equilibrium play in most cases.There is also substantial co-operation, but little sabotage.Our exogenous variations of inequality are neutral to growth, neither negatively correlated to co-operation, nor positively correlated to sabotage.public goods;game theory

Overconfidence and Managers’ Responsibility Hoarding

Overconfidence is a well-established behavioral phenomenon that involves an overestimation of own capabilities. We introduce a model, in which managers and agents exert effort in a joint production, after the manager decides on the allocation of the tasks. A rational manager tends to delegate the critical task to the agent more often than given by the efficient task allocation. In contrast, an overconfident manager is more likely to hoard responsibility, i.e. to delegate the critical task less often than a rational manager. In fact, a manager with a sufficiently high ability and a moderate degree of overconfidence increases the total welfare by hoarding responsibility and exerting more effort than a rational manager. Finally, we derive the conditions under which responsibility hoarding can persist in an organization, showing that the bias survives as long as the overconfident manager can rationalize the observed output by underestimating the ability of the agent

Managerial Insights On The Politics Of Trade Policy And Economic Development: The Case Of Madagascar

This paper examines the challenges faced by Madagascar, and its apparel and textile sector in particular, in light of its recent suspension from the African Growth and Opportunity Act (AGOA) eligible countries, thereby ending duty free access of its products to the US. The paper provides a thorough analysis of the historic development of Madagascar‘s apparel and textile industry in the context of its creation of special economic zones or “Zones Franches” and examines other threats to its textile sector. The paper analyzes the short- as well as long-term prospects of the Zones Franches experiment, on which much hope for the development of Madagascar had been pinned and provides managerial recommendations and directions for future research