Anger and enforcement

Observers who are angered by rule violations and punish violators often play a critical role in enforcement. Hence a key question is: when will noncompliance provoke anger, and when will it be excused? This paper develops a theory of rule compliance as the outcome of a two-person Bayesian game. The core of the model is its description of what constitutes an excuse. Noncompliance is excused when a “reasonable person” in similar circumstances would also have failed to comply. Phenomena explained include the role of “legitimacy” in enforcement; corruption traps; graduated sanctions for repeat offenders; and tolerance of self-interestedness in markets

“We thinking” and its consequences

Increasingly, economists are drawing on concepts from outside economics--such as "norms," "esteem," and "identity"--to model agents' social natures. A key reason for studying such social motivation is to shed light on the conditions that facilitate--or deter--collective action. It has been widely observed, for instance, that groups are more able to engage in collective action when they have a common, group identity. This paper gives one explanation for such a link. The paper develops a new concept, "we thinking"; and it also provides a deeper understanding of the concepts of norms, identity, and esteem

The importance of legitimacy

Within organizations, there are typically limits to leaders' legitimacy. This article explores how organizations are structured in the face of such constraints. The concept of legitimacy is formalized in the context of a single-agent moral hazard model. The principal can give the agent monetary incentives; in addition, he can give the agent an order. The agent finds it costly to disobey orders provided they are legitimate. We find that it may be optimal for the principal to take costly actions to bolster legitimacy. We argue that many organizational phenomena can be understood as attempts to bolster legitimacy. Examples include: rejection of overqualified workers, bureaucracy, merger decisions, and above-market-clearing wages

Movers and shakers

Most projects, in most walks of life, require the participation of multiple parties. While it is difficult to unite individuals in a common endeavor, some people, who we call “movers and shakers,” seem able to do it. The paper specifically examines moving and shaking of an investment project, whose return depends both on its quality and the total capital invested in it. We analyze a model with two types of agents: managers and investors. Managers and investors initially form social connections. Managers then bid to buy control of the project and the winning bidder puts effort into making investors aware of it. Finally, a subset of aware investors are given the chance to invest and they decide whether to do so after receiving private signals of the project’s quality. We first show that connections are valuable since they make it easier for a manager to “move and shake” the project (i.e., obtain capital from investors). When we endogenize the network, we find that, while managers are identical ex ante, a single manager emerges as most connected; he consequently earns a rent. In extensions, we move away from the assumption of ex ante identical managers to highlight forces that lead one manager or another to become a mover and shaker. Our theory sheds light on a range of topics including: entrepreneurship, venture capital, and anchor investments

On the Rates of Type Ia Supernovae in Dwarf and Giant Hosts with ROTSE-IIIb

We present a sample of 23 spectroscopically confirmed Type Ia supernovae that were discovered in the background of galaxy clusters targeted by ROTSE-IIIb and use up to 18 of these to determine the local (z = 0.05) volumetric rate. Since our survey is flux limited and thus biased against fainter objects, the pseudo-absolute magnitude distribution (pAMD) of SNeIa in a given volume is an important concern, especially the relative frequency of high to low-luminosity SNeIa. We find that the pAMD derived from the volume limited Lick Observatory Supernova Search (LOSS) sample is incompatible with the distribution of SNeIa in a volume limited (z<0.12) sub sample of the SDSS-II. The LOSS sample requires far more low-luminosity SNeIa than the SDSS-II can accommodate. Even though LOSS and SDSS-II have sampled different SNeIa populations, their volumetric rates are surprisingly similar. Using the same model pAMD adopted in the SDSS-II SNeIa rate calculation and excluding two high-luminosity SNeIa from our sample, we derive a rate that is marginally higher than previous low-redshift determinations. With our full sample and the LOSS pAMD our rate is more than double the canonical value. We also find that 5 of our 18 SNeIa are hosted by very low-luminosity (M_B > -16) galaxies, whereas only 1 out 79 nearby SDSS-II SNeIa have such faint hosts. It is possible that previous works have under-counted either low luminosity SNeIa, SNeIa in low luminosity hosts, or peculiar SNeIa (sometimes explicitly), and the total SNeIa rate may be higher than the canonical value.Comment: 18 pages; accepted for publication in The Astronomical Journa

Value formation : the role of esteem

People’s values are a critical determinant of their behavior. But, how do values form and what causes them to change? This paper proposes a theory of value formation. In the model, agents choose values, motivated by economic considerations and, crucially, also by the desire for esteem. The comparative statics are driven by the following tension: agents obtain more esteem from peers if they conform in their choice of values; but they may obtain more self-esteem if they differentiate. This tension explains why, for instance, peer effects are sometimes positive and sometimes negative. Three applications are considered, related to: schools, inner cities, and organizational resistanc