Searching for a bargain: power of strategic commitment

This paper shows that in a multilateral bargaining setting where the sellers compete a la Bertrand, a range of prices that includes the monopoly price and 0 are compatible with equilibrium, even in the limit where the reputational concerns and frictions vanish. In particular, the incentive of committing to a specific demand, the opportunity of building reputation about inflexibility, and the anxiety of preserving their reputation can tilt players' bargaining power in such a way that being deemed as a tough bargainer is bad for the competing players, and thus, price undercutting is not optimal for the sellers

Audience costs and reputation in crisis bargaining

In crisis bargaining literature, it is conventional wisdom that the ability of generating higher audience costs is an advantage for a leader of a state. However, empirical studies show that democratic states use this mechanism only occasionally. This paper formally shows that higher audience costs may be good or bad depending on (1) the benefit-cost ratio of the crisis, (2) initial probability of resolve, and (3) how fast states generate audience costs with time. In particular, if the value of the prize over the cost of attacking is low or the initial probability of resolve is high enough, then having greater ability to generate audience costs may undermine democratic states' diplomatic success

Deception, exploitation and lifespan of buyer-seller relationship in experience goods markets

A market where short-lived customers, i.e., one-time shoppers, interact with a long-lived expert is considered. The expert privately observes whether or not a particular treatment is necessary for his customers and has incentive to recommend the treatment even if it is unnecessary. When the expert is known to be opportunist, i.e., rational in the usual sense, his best equilibrium payoff can be achieved by being honest at all times. However, if the customers believe that the expert is a commitment type who recommends the treatment only when it is necessary, then the expert can build reputation as an honest seller and exploit his customers to achieve higher payoffs. Exploiting customers for a long period of time is extremely unlikely even if the seller's past actions are imperfectly observed. However, this behavior is a part of many equilibria when the expert's customer is also a long-lived agent

Upping the ante: the equilibrium effects of unconditional grants to private schools

We test for financial constraints as a market failure in education by experimentally allocating unconditional cash grants to either one (L) or to all (H) private schools in a village. Enrollment increases in both treatment arms, but test scores, accompanied by fees, increase only in H. This pattern is consistent with a greater focus on infrastructure in L and teacher remuneration in H. It also follows from a canonical oligopoly model of capacity constraints with endogenous quality. Higher social surplus in H, but greater private returns in L underscores the role of competitive forces for the design of educational subsidies

Parental psychological distress associated with COVID-19 outbreak: A large-scale multicenter survey from Turkey

Aims: Pandemics can cause substantial psychological distress; however, we do not know the impact of the COVID-19 related lockdown and mental health burden on the parents of school age children. We aimed to comparatively examine the COVID-19 related the stress and psychological burden of the parents with different occupational, locational, and mental health status related backgrounds. Methods: A large-scale multicenter online survey was completed by the parents (n = 3,278) of children aged 6 to 18 years, parents with different occupational (health care workers—HCW [18.2%] vs. others), geographical (İstanbul [38.2%] vs. others), and psychiatric (child with a mental disorder [37.8%]) backgrounds. Results: Multivariable logistic regression analysis showed that being a HCW parent (odds ratio 1.79, p <.001), a mother (odds ratio 1.67, p <.001), and a younger parent (odds ratio 0.98, p =.012); living with an adult with a chronic physical illness (odds ratio 1.38, p <.001), having an acquaintance diagnosed with COVID-19 (odds ratio 1.22, p =.043), positive psychiatric history (odds ratio 1.29, p <.001), and living with a child with moderate or high emotional distress (odds ratio 1.29, p <.001; vs. odds ratio 2.61, p <.001) were independently associated with significant parental distress. Conclusions: Parents report significant psychological distress associated with COVID-19 pandemic and further research is needed to investigate its wider impact including on the whole family unit. © The Author(s) 2020