an experimental examination of labor supply and work intensities estimated negative substitution effects on work hours question the empirical validity of the classical labor supply model estimates are reconciled by allowing a dual choice of hours and effort for piecerate workers in such a model these negative substitution effects result from substituting on and off the job leisure we test our model using controlled experimentation on human subjects these experiments while not naturally occurring environments represent real economic choices and can generate data unavailable elsewhere e g effort data the results support our model and they have implications both for labor management and for empirical research focusing only on the hours choice the classical static model of the labor leisure choice offers positive compensated wage effects on hours of work as its main testable implication previous attempts to test this hypothesis with field data have cast doubt on the empirical validity of the static labor supply model due to the frequency of negative estimated compensated wage elasticities a limitation of the model is that it views the choice of hours of work as the only

why invest in wind energy career incentives and chinese renewable energy politics we study wind development at the provincial level in china modelling installed wind capacities as a function of both economics and politics we assume that the top provincial officials desire to maximize their chances of promotion under the chinese cadre evaluation system we expect that those with the strongest incentives to perform in order to achieve promotion would work harder to comply with the central government s policy agenda to promote renewable energy collecting and testing data on provincial leaders characteristics we find that provinces governed by party secretaries who were approaching the age of 65 are associated with significantly higher level of wind installed capacities this result supports the political tournaments theory of chinese politics we also find that better educated party secretaries are likely to be more supportive of renewable energy implying that education acts to encourage provincial leaders to support the central government s policy

individual risk attitudes measurement determinants and behavioral consequences this paper studies risk attitudes using a large representative survey and a complementary experiment conducted with a representative subject pool in subjects homes using a question asking people about their willingness to take risks in general we find that gender age height and parental background have an economically significant impact on willingness to take risks the experiment confirms the behavioral validity of this measure using paid lottery choices turning to other questions about risk attitudes in specific contexts we find similar results on the determinants of risk attitudes and also shed light on the deeper question of stability of risk attitudes across contexts we conduct a horse race of the ability of different measures to explain risky behaviors such as holdings stocks occupational choice and smoking the question about risk taking in general generates the best all round predictor of risky behavior

are women more attracted to co operation than men we conduct a real effort experiment where participants choose between individual compensation and team based pay in contrast to tournaments we find that women choose team based pay at least as frequently as men in all our conditions and significantly more often in a well defined subset of conditions women s greater attraction to co operative incentives results in part from their more optimistic assessments of their prospective teammate s ability women also respond differently to alternative rules for team formation in a manner that is consistent with advantageous inequity aversion in contrast men show a greater responsiveness to efficiency gains associated with team production

the effects of energy related policies on energy consumption in china abstract this paper examines the effects of different types of energy related policies on different types of energy consumption in china we collect and construct a novel comprehensive and detailed data set on province level energy related policies that includes specific types of energy related command and control policies financial incentives awards intellectual property rights and education and information policies our econometric method employs instruments to address the potential endogeneity of the policies according to our results some types of energy related policies have been effective in reducing energy consumption however many other policies have the possibly unintended or even perverse consequence of increasing rather than decreasing energy consumption our results on the mixed effectiveness of energy related policies in china in reducing energy consumption have important implications for the design of energy related policies in china and elsewhere

prospects for global market expansion of china s wind turbine manufacturing industry abstract emerging economies are increasingly contributing to global innovation including clean tech innovation the development of china s wind power sector has often been used to illustrate this point china s domestic wind power market is the largest in the world and is largely supplied by domestic manufacturers competition for market share in the domestic market may pressure firms to innovate which consecutively improves prospects for global expansion this paper reviews developments in china s domestic wind turbine market using the technological innovation system framework we analyze the pressure to innovate arising from market competition and assess the prospects for global expansion of chinese wind turbine manufacturers we conclude that domestic customers are not pressured or incentivized to perform with respect to power output such that turbine manufacturers are not pressured to perform with respect to turbine efficiency or maintenance needs pressure to innovate is further reduced by formalizing connections between wind farm developers and turbine manufacturers chinese turbine manufacturers cannot yet compete with leading global brands in technological leadership the prospects for exports are improved however by the preferential supply of project financing from institutional investors such as the china development bank from chinese utilities that seek global expansion and from the manufacturers themselves

handling financial resource mobilisation in technological innovation systems the case of chinese wind power to mitigate climate change a rapid and large scale expansion of sustainable innovations such as renewable energy technologies is crucial china s track record of wind power development shows both speed and scale that can provide valuable knowledge of how to stimulate and maintain transformation of energy systems the growth was made possible partly by ample access to financial capital however the rapid growth also led to growing pains and made the industry face increasing financial constraints while these constraints partly relate to structures and trends that are external to the wind power innovation system they were also a consequence of the particular path taken in chinese wind power development the case demonstrates that if a full fledged industry is to be developed and sustained a balanced growth is required and all innovation system functions need due attention sooner or later conceptually the article contributes by further exploring how mobilisation of financial resources affect and is affected by overall system dynamics

the response of worker effort to piece rates we measure the elasticity of worker effort with respect to changes in the piece rate using panel data collected from the payroll records of a british columbia tree planting firm our data contain information on daily worker productivity and the piece rate received over a five month period using a structural model to control for the endogeneity of the piece rate we estimate this elasticity to be approximately 2 14 we also calculate a nonstructural lower bound to this elasticity equal to 0 77 structural estimation also allows us to perform policy experiments and to compare firm profits under alternative compensation systems our results suggest that profits would increase by at least 17 percent were the firm to implement the optimal static contract as predicted by principal agent theory this increase in profits would be due to capturing worker rents after the revelation of private information over ability yet only a negligible proportion of these rents could be captured while inducing workers to reveal ability truthfully suggesting that dynamic considerations were important in determining the firm s actual choice of contract

internal competition for corporate resources and incentives in teams invoking thefree rider problem in teams many observersfind profit sharing in large organizations puzzling because it should have negligible incentive effects we show that a firm can be decomposed into two separate teams whose outputs can be observed thenprofit sharing combined with competition between these two teamsfor internal resourcesfrequently solves thefree rider problem using this result we endogenize thefirm s organizational structure and show that in the presence of economies of scale small firms tend to organize as unita y firms while largefirms choose the multidivisional organizationalform

grid connected renewable energy in china policies and institutions under gradualism developmentalism and socialism abstract this communication displays some of our on going research on the incompleteness of china s advances toward best practice in policy making and institution building for renewables in particular this paper 1 summarizes how chinese policies and institutions for the deployment of renewable electricity are only partially compliant with what is internationally recognized as best practice and 2 contextualizes chinese policies and institutions for renewables in the broader picture of china s political economy much as a political economy perspective has aided the understanding of why chinese economic reforms were partial and unique the said contextualization might help explain why china s policies and institutions for renewables diverge from best practice further given that china proved successful in promoting its economic growth with partial and unique reforms the partiality and uniqueness of its renewables policies and institutions need not impede the rapid development of renewable electricity this on going research has so far combined a review of specialized literature and the business press with semi structured interviews held with relevant actors in policy business and research related to renewable energies

pay performance sensitivity and production uncertainty abstract the pay performance sensitivity of linear incentive contracts can increase with increasing production uncertainty depending upon the timing and nature of this uncertainty this provides a possible explanation for the failure of empirical tests to yield convincing support for a negative relationship

an empirical analysis of risk incentives and the delegation of worker authority the authors empirically test prendergast s 2002 theory that incorporates the delegation of worker authority into the principal agent model to explain the lack of consistent empirical support for a tradeoff between risk and incentives using data from the 1998 british wers the authors investigate whether there is 1 evidence of a risk incentives tradeoff as predicted by the principal agent model 2 evidence of a positive relationship between incentive pay and the delegation of worker authority 3 evidence of a positive relationship between risk and authority 4 support for the main testable implication of prendergast s model namely that the evidence favoring a risk incentives tradeoff should strengthen when authority controls are added to the empirical model the answers are affirmative for all four questions thereby providing evidence clarifying the relationship between risk and incentive pay and how managers optimally bundle incentive pay and the delegation of worker decision rights to cope with

analysis and recommendations for onshore wind power policies in china abstract recently china s wind power industry is challenged by many problems such as wind power integration and wind curtailment which seriously hinders the development of onshore wind power since china s policy has a direct and significant influence on wind power industry it is vital to analyze and evaluate published policies this paper explores in detail 134 china s onshore wind power policies from 2005 to 2015 so as to provide analytical support for future formulation and implementation of wind power policy based on policy summary from equipment manufacturing industry wind farms and power grid industry this paper evaluates the policies from the perspective of overall plan support policy and policy implementation using fitting method game theory and empirical analysis the results indicate that china s wind policy is gradually becoming perfected for example there are more reasonable objectives and improved support policies however many problems remain to be solved like unreasonable planning imperfect support policies immature trading systems and uncoordinated actions among interest related parties furthermore combined with international experiences suggestions on improving china s wind power policy are proposed from seven aspects

cooperation and competition in intergenerational experiments in the field and the laboratory there is economic pressure towards the postponement of the retirement age but employers are still reluctant to employ older workers we investigate the comparative behavior of juniors and seniors in experiments conducted both onsite with the employees of two large firms and in a conventional laboratory environment with students and retirees we show that seniors are no more risk averse than juniors and are typically more cooperative both juniors and working seniors respond strongly to competition the implication is that it may be beneficial to define additional incentives near the end of the career to motivate and retain older workers

performance measurement expectancy and agency theory an experimental study theoretical analyses of optimal performance measures are typically performed within the realm of the linear agency model this model implies that for a given compensation scheme the agent s optimal effort is unrelated to the amount of noise in the performance measure in contrast expectancy theory as developed by psychologists predicts lower effort levels for noisier performance measures we conduct a real effort laboratory experiment and find that effort levels are invariant to changes in the distribution of the noise term i e to expectancy this suggests that enriching the economic linear agency model commonly applied within this area by including an expectancy parameter is not needed

multiplicative background risk although there has been much attention in recent years on the effects of additive background risks the same is not true for its multiplicative counterpart we consider random wealth of the multiplicative form xy where x and y are statistically independent random variables we assume that x is endogenous to the economic agent but that y is an exogenous and nontradable background risk that represents a type of market incompleteness our main focus is on how the presence of the multiplicative background risk y affects risk taking behavior for decisions on the choice of x we extend the results of gollier and pratt 1996 to characterize conditions on preferences that lead to more cautious behavior

development policy for non grid connected wind power in china an analysis based on institutional change abstract government policy continues to play a crucial role in the development of wind power industry in china the 2005 renewable energy law and related policies have driven the rapid increase in wind power installed capacity in china over the past half decade with capacity doubling annually since 2005 however a large number of wind farms generate electricity well below their installed capacity resulting in considerable wastage of resources non grid connected wind power theory proposes that large scale wind power output does not necessarily have to be fed into the grid but can be used directly in industrial production thus the use of the theory can promote the sustainable development of the wind power industry by obviating the need for power grid in this paper we analyze the influence of government policy on wind power industry from the perspective of institutional change by employing the basic theories of new institutional economics a development model for non grid connected wind power is proposed in order to implement institutional change in accordance with the specific characteristics of wind power industry in china this model requires the government to play an active role in institutional development by increasing economic efficiency in order to promote the sustainable development of wind power

intergenerational transmission of risk attitudes a revealed preference approach using data the german socio economic panel gsoep we investigate whether the willingness to take risks which is revealed via observed choices of occupation is transmitted from parents to children our approach resembles the one by dohmen et al 2008 who investigate the same question using stated preferences as risk variable we use earnings risk measured by the cross sectional coecient of residual variation obtained from mincerian wage regressions we nd that fathers riskiness of the job chosen is a signicant determinant of sons occupational risk our results are robust to dierent specications underpinning the hypothesis of intergenerational transmission of risk preferences

gender and competition at a young age gender gaps may be observed in a variety of economic and social environments one of the possible determining factors is that men are more competitive than women and so when the competitiveness of the environment increases the performance of men increases relative to that of women we test this hypothesis in a field study conducted with 9 year old children running on a track they first run alone and then in pairs over a short distance with different gender composition of the pairs the results support the hypothesis that performance in competition varies according to gender when children ran alone there was no difference in performance in competition boys but not girls improved their performance this finding relates to the discussion regarding single sex schools the outcomes of examinations in a mixed sex school can show a gender gap in favor of boys even when this gap does not reflect actual abilities girls who are as talented as boys will end up performing worse just because they are not as competitive and will not achieve as high scores in examinations as boys

agency theory and franchising some empirical results this article provides an empirical assessment of various agency theoretic explanations for franchising including risk sharing one sided moral hazard and two sided moral hazard the empirical models use proxies for factors such as risk moral hazard and franchisors need for capital to explain both franchisors decisions about the terms of their contracts royalty rates and up front franchise fees and the extent to which they use franchising in this article i exploit several new sources of data on franchising to construct a cross section of 548 franchisors involved in various business activities in the united states in 1986 the data are most consistent with a model based on two sided moral hazard the empirical models are also more successful at explaining the extent to which franchisors choose to franchise stores than at explaining the terms of franchise contracts finally contrary to the predictions of several theoretical models i find that royalty rates and franchise fees are not negatively related

gift giving and worker productivity evidence from a firm level experiment abstract we present results from a field experiment designed to measure worker response to a monetary gift from their employer the experiment took place inside a tree planting firm paying its workforce incentive contracts firm managers told a crew of tree planters they would receive a pay raise for one day as a result of a surplus not attributable to past planting productivity we compare planter productivity the number of trees planted per day on the day the gift was handed out with productivity on previous and subsequent days of planting on the same block and thus under similar planting conditions we find direct evidence that the gift had a significant and positive effect on daily planter productivity controlling for planter fixed effects weather conditions and other random daily shocks

risk attitudes and heterogeneity in simultaneous and sequential contests we prove existence and uniqueness of equilibrium in rent seeking contests in which players are heterogeneous in both risk preferences and production technology given identical linear production technology if the number of risk loving players is large enough the aggregate investment in equilibrium will exceed the rent and all risk neutral and risk averse players will exit the contest in simultaneous and sequential contests with two players we can identify the favorite and underdog based on both players preference parameters our theoretical results suggest that subjects in some recent contest experiments behaved as if they were risk loving

piece rates fixed wages and incentives evidence from a field experiment data from a field experiment are used to estimate the gain in productivity that is realized when workers are paid piece rates rather than fixed wages the experiment was conducted within a tree planting firm and provides daily observations on individual worker productivity under both compensation systems unrestricted statistical methods estimate the productivity gain to be 20 since planting conditions potentially affect incentives structural econometric methods are used to generalize the experimental results to out of sample conditions the structural results suggest that the average productivity gain outside of the experimental conditions would be at least 21 7

uncertainty risk and incentives theory and evidence uncertainty has qualitatively different implications than risk in studying executive incentives we study the interplay between profitability uncertainty and moral hazard where profitability is multiplicative with managerial effort investors who face greater uncertainty desire faster learning and consequently offer higher managerial incentives to induce higher effort from the manager in contrast to the standard negative risk incentive trade off this learning by doing effect generates a positive relation between profitability uncertainty and incentives we document empirical support for this prediction this paper was accepted by wei jiang finance

do women shy away from competition do men compete too much we examine whether men and women of the same ability differ in their selection into a competitive environment participants in a laboratory experiment solve a real task first under a noncompetitive piece rate and then a competitive tournament incentive scheme although there are no gender differences in performance men select the tournament twice as much as women when choosing their compensation scheme for the next performance while 73 percent of the men select the tournament only 35 percent of the women make this choice this gender gap in tournament entry is not explained by performance and factors such as risk and feedback aversion only playa negligible role instead the tournament entry gap is driven by men being more overconfident and by gender differences in preferences for performing in a competition the result is that women shy away from competition and men embrace it

endogenous matching and the empirical determinants of contract form empirical work on contracts typically regresses contract choice on observed principal and agent characteristics if i some of these characteristics are unobserved or partially observed and ii there are incentives whereby particular types of agents end up contracting with particular types of principals estimated coefficients on the observed characteristics may be misleading we address this endogenous matching problem using a data set on agricultural contracts between landlords and tenants in early renaissance tuscany controlling for endogenous matching has an impact on parameters of interest and tenants risk aversion appears to have influenced contract choice

chinese investment in the eu renewable energy sector motives synergies and policy implications abstract this paper addresses three questions how have trade and investment in wind and solar sectors evolved between the eu and china in recent years is there a link between rising trade conflicts and trade and investment trends and what wider motivations and synergies can be identified in chinese investments in the eu s re sector to address these questions we analyze trade and investment data as well as qualitative data including information from media and company reports large increases in trade and investment were followed by rapid falls since 2012 13 trade tensions have not led to increases in investment rather the inverse we find that chinese investment in these two sectors is very concentrated in germany the key motivation for investment is market seeking although r d is also important especially for wind most investments are greenfield a preference that has persisted over time our qualitative analysis of several key acquisitions indicates that technology integration and the consolidation of capacities across the supply chain were key motivations in most of the cases studied we conclude with some policy orientations

wind turbine manufacturing in china a review abstract domestic wind turbine manufacturing sector in china has experienced development stages starting from scratch to mass production during the 11th fyp period 2006 2010 the main goal of wind power policy in china is to promote the commercialization of wind power by large scale deployment of wind farms this goal has been realized to a great extent and now the cost of wind power generation is nearly comparable to coal fired power generation in china the industry policy which devotes to mass production of domestic wind turbines is also largely successful the purpose of the paper is to provide an overview on wind turbine manufacturing sector in china the policy evolution in different stages achievements and challenges pertinent to the sector are addressed in the paper key findings are that the misleading industry policy which provides strong incentive to blind entrance and competition for scale and price and restrains innovation as well is the key obstacle for the sustainable development of the sector deficient technology standard and qualification system and the misplaced franchise bidding system also indulge vicious competition and oversupply creating a level playground for all turbine supplies providing strong incentive to innovative manufacturers establishing thorough and practicable standard and qualification system and fine tuning the directive of the franchise bidding system towards technology and service are the primary policy implications proposed by our study

evidence for countercyclical risk aversion an experiment with financial professionals countercyclical risk aversion can explain major puzzles such as the high volatility of asset prices evidence for its existence is however scarce because of the host of factors that simultaneously change during financial cycles we circumvent these problems by priming financial professionals with either a boom or a bust scenario subjects primed with a financial bust were substantially more fearful and risk averse than those primed with a boom suggesting that fear may play an important role in countercyclical risk aversion the mechanism described here is relevant for theory and may explain self reinforcing processes that amplify market dynamics jel e32 e44 g01 g11 g12

evidence on performance pay and risk aversion abstract making use of a unique representative data set we find clear evidence that risk aversion has a highly significant and substantial negative impact on the probability that an employee s pay is performance contingent which confirms the well known risk incentive trade off

optimal sales force compensation in dynamic settings commissions vs bonuses this paper studies optimal sales force compensation plans in a multiperiod moral hazard model when the firm wants to implement high effort in every period but only obtains aggregate information on sales the sales agent chooses effort each period after observing previous sales and his incentive responsiveness might change over time the paper derives conditions under which a linear incentive scheme a pure commission dominates a bonus plan and vice versa a commission is optimal if the agent is most difficult to motivate in the last period otherwise combining the commission with a bonus plan can lower the firm s cost of providing incentives in earlier periods the results are robust to different types of cost externalities and demand externalities across periods however if the firm obtains intermediate sales information bonus plans dominate commissions this paper was accepted by j miguel villas boas marketing

between fragmented authoritarianism and policy coordination creating a chinese market for wind energy abstract the chinese grid connected wind energy sector has undergone a number of fundamental changes during its 20 years of existence the scope of this article is to track the reforms of the energy bureaucracy and its policy approach on the one hand and changes in wind energy installations on the other by comparing three historically distinct phases of wind energy in china it is shown how policy reforms have changed largely from a state of fragmented authoritarianism towards policy coordination in the initial phase 1986 1993 wind energy was expanding very slowly with disjointed policy making and in the incremental phase 1994 1999 the energy authorities were in dispute over the strategy and launched conflicting policy initiatives with poor results in wind energy output the latest coordinated phase 2000 2006 however developed a coherent renewable energy agenda and policy regime for the wind power sector it is found that this phase with coordinated market regulations and incentives has helped give birth to a take off in chinese wind energy installations and substantial cost reductions although the latter is threatening the profitability of wind farms the article contributes to the academic debate over the role of policy making in renewable energy development and argues that china should continue and improve the coordination of regulations and incentives

executive compensation and principal agent theory the empirical literature on executive compensation generally fails to specify a model of executive pay on which to base and test hypotheses regarding its determinants in contrast this paper analy

multidimensional heterogeneity and the economic importance of risk and matching evidence from contractual data and field experiments we measure the cost of risk and the benefits of matching heterogeneous workers to risk levels within a firm that pays its workers piece rates the workers of this firm are heterogeneous in two dimensions risk preferences and ability our results suggest that workers willingness to pay to avoid risk is heterogeneous it can attain 40 of their expected net earnings but averages to only 1 moreover the benefits to the firm of matching are relatively small profits are predicted to increase by only 2 3 4 if we restrict attention to cases where matching is possible although labor market sorting contributes to this result the workers in this firm are relatively risk tolerant it is not the primary cause more important is the relative homogeneity of risk conditions in this firm that give rise to limited opportunities for matching

the tenuous trade off between risk and incentives empirical work testing for a negative trade off between risk and incentives has not had much success the data suggest a positive relationship between measures of uncertainty and incentives rather than the posited negative trade off i argue that the existing literature fails to account for an important effect of uncertainty on incentives through the allocation of responsibility to employees when workers operate in certain settings firms are content to assign tasks to workers and monitor their inputs by contrast when the situation is more uncertain they delegate responsibility to workers but to constrain their discretion base compensation on observed output

uncertainty task environment and organization design an empirical investigation the paper addresses two broad research questions 1 how do internal uncertainty associated with the task environment and external uncertainty arising from market volatility impact organization design 2 what are the relationships among various elements of organization design delegation of decision making incentives monitoring and internal labor market practices promotion training employment security we expand on prendergast 2002a who challenged the conventional view of a tradeoff between risk and incentives and build a single unified framework for answering our two research questions using a uniquely rich dataset that contains detailed information about the task environment of core employees and organization design at the individual group and firms levels in 530 minnesota firms in the mid 1990s we first find support for prendergast s key argument that internal uncertainty over which employees have control affects directly the allocation of decision making and only indirectly incentives via allocation of decision making this confirms similar findings by foss and laursen 2005 devaro and kurtulus 2010 and shi 2011 we also find that internal uncertainty has much impact on organization design through the choice of delegation of decision making at the employee level less so at the group level and very little at the firm level whereas external market uncertainty has little effect on organization design especially at the individual and group level decision making monitoring various internal labor market practices and incentives are strongly related to each other through substitution and complementarity

the sales agent problem effort leisure allocation under performance pay as behavior towards risk the choice between safe and risky assets represents behavior towards risk more risk averse investors buy more safe assets we develop and test a general model that applies this intuition to the time allocation between risky effort and risk free leisure under linear incentives when risk increases with effort risk averse agents choose less effort but when risk is independent of effort effort choice is unaffected by risk preferences in many incentive contracts income risk is multiplicative with rather than additive to effort sales commissions being one example in such cases lower effort by the risk averse is a hitherto undocumented behavior towards risk jel c91 m52 j33

are people risk vulnerable we report on a within subject experiment with substantial monetary incentives designed to test whether or not people are risk vulnerable in the experiment subjects face the standard portfolio choice problem in which the investor has to allocate part of his wealth between one safe asset and one risky asset we elicit risk vulnerability by observing each subject s portfolio choice in two different contexts that differ only by the presence or absence of an actuarially neutral background risk our main result is that most of the subjects are risk vulnerable 81 chose a less risky portfolio when exposed to background risk more precisely 47 invested a strictly smaller amount in the risky asset whereas 34 were indifferent furthermore contrasting the predictions provided by competing decision theoretic models we conclude that expected utility theory best fits our experimental data this paper was accepted by uri gneezy behavioral economics

the evolving role of carbon finance in promoting renewable energy development in china abstract the world is negotiating what the international climate change regime will look like after 2012 the year that current kyoto protocol greenhouse gas emissions reduction targets expire and the future of the clean development mechanism cdm is under discussion critics claim the scale of reductions that the cdm is driving in the developing world is insufficient from a scientific perspective if we are to avoid dangerous climate change that the project by project crediting process is inefficient and that the reductions being achieved are not additional meaning they would have happened anyway and thus should not be financially supported yet the efficacy of cdm must be examined in the broader context of carbon mitigation in the developing world and the actions that are taking place this paper examines the role that the cdm has played in promoting renewable energy development in china in order to assess how international carbon finance can best be used to help promote emissions mitigation in the developing world it also assesses how several options under consideration for reforming the current structure of the cdm in particular and developing country engagement in general may impact renewable energy development in china in the coming years

clean evidence on peer effects we study subjects who were asked to fill letters into envelopes with a remuneration independent of output in the pair treatment two subjects worked at the same time in the same room and peer effects were possible in the single treatment subjects worked alone and peer effects were ruled out we find evidence of peer effects in the pair treatment because the standard deviations of output are smaller within pairs than between pairs moreover average output is higher in the pair treatment thus peer effects raise productivity finally low productivity workers are the most sensitive to the behavior of peers

limited liability contracts between principal and agent abstract the optimal strategy of the principal is examined in an environment where there are ex post limitations on the maximum penalty that can be imposed on a riskneutral agent contrary to the case in which such limitations are not imposed it is in the principal s interest to deliberately forego the opportunity to induce socially efficient behavior and to instead design a contract that induces the agent to realize an efficient outcome only in the most productive state of nature and perhaps in certain very unproductive states the properties of the contract are examined in detail

an opposing responses test of classic versus market based promotion tournaments we use a systems based econometric method to show that classic and market based tournament models are empirically distinguishable since the role of risk differs across these models implementing the method using a large finnish worker firm matched panel we find support for classic tournaments given that promotions depend on relative performance the firm s wage structure is convex promotion probabilities are decreasing in the number of competitors performance is increasing in the wage spread and workers and firms adjust their choice variables in opposite directions when the variance of the stochastic component of worker performance changes

contract choice in modern agriculture cash rent versus cropshare e conomists have expended enormous effort examining the rationale for various contractual arrangements in agriculture particularly sharecropping while economists have made considerable theoretical efforts to understand agricultural contracts few empirical studies have been undertaken the dearth of empirical analyses of agricultural contracts is particularly striking for modern western agriculture this is an important omission not only because the existing empirical work tends to focus on the question of efficiency but also because the theoretical models tend to examine contracts that bear little resemblance to those found in the united states today

from lagging to leading technological innovation systems in emerging economies and the case of chinese wind power there is increasing attention for the contribution of emerging economies to global innovation including innovation of renewable energy technologies the technological innovation systems tis framework presents a list of system functions for the analysis of the development of a technology it has often been applied to renewable energy technologies but with a strong focus on advanced economies in this paper we elaborate on emerging economy innovation system formation structured according to tis functions rather than analysing development of the technology we analyse the development of the chinese tis vis a vis the global forefront key to this notion is that tis especially for clean tech are transnational phenomena lagging tis depend on the global tis whereas leading tis contribute to its formation it is concluded that china has reduced its dependence on foreign knowledge and investment but the outward contribution remains limited the main challenge to foreign market expansion lies in reforming the domestic tis to focus on turbine quality rather than cost reduction demonstration projects are needed especially for large capacity and offshore turbine models in order to build up operational history and get quality certification

gender differences in examination behavior a unique examination strategy in first year microeconomics courses is used to test for gender differences in examination behavior students have the possibility of attaining a seminar bonus on the final exam for near perfect seminar attendance and are given two voluntary initial quizzes during the semester at the final exam the scores received on initial quizzes can either be accepted as is or students can attempt to improve their marks by answering similar quiz questions on the exam results suggest that female students are more likely to take initial quizzes and receive a seminar bonus but are less likely to re take quiz questions on the final exam these results suggest higher risk aversion less overconfidence and more self discipline or less procrastination among female students relative to male students our estimated behavioral differences may have important implications in terms of final grades on the course jel i21 j16 a12 a14

changing levels or changing slopes the narrowing of the gender earnings gap 1959 1999 once educational attainment and other observable characteristics have been controlled for studies show that the gender wage gap among adult full time workers is about half the size it was in 1980

social preferences and strategic uncertainty an experiment on markets and contracts this paper reports experimental evidence on a stylized labor market the experiment is designed as a sequence of three phases in the first two phases p1 and p2 agents face simple games which we use to estimate subjects social and reciprocity concerns together with their beliefs in the last phase p3 four principals who face four teams of two agents compete by offering agents a contract from a fixed menu then each agent selects one of the available contracts i e he chooses to work for a principal production is determined by the outcome of a simple effort game induced by the chosen contract we find that heterogeneous social preferences are significant determinants of choices in all phases of the experiment since the available contracts display a trade off between fairness and strategic uncertainty we observe that the latter is a much stronger determinant of choices for both principals and agents finally we also see that social preferences explain to a large extent matching between principals and agents since agents display a marked propensity to work for principals with similar social preferences

review of china s wind power firms internationalization status quo determinants prospects and policy implications abstract in recent years an increasing number of chinese wind power firms have been going international in search of global market for development channels by employing qualitative research and case study methods this paper examines the export scale and markets of china s wind turbines the market entry modes and location choices of china s outward foreign direct investment fdi in the wind power sector identifies the determinants and prospects of chinese wind firms internationalization as well as provides policy implications it is found that chinese wind power firms has chosen to internationalize very differently from the uppsala model in that the exports and fdi of chinese wind power firms both took place around 2008 and the exports and fdi of chinese wind power firms are closely linked the determinants of chinese wind firms internationalization are the competitive advantages of leading chinese wind firms and the intensified domestic market competition followed by chinese government support for internationalization and the attractive overseas market the prospects of chinese wind firms internationalization are bright but challenging drawn on this analysis conclusions and three policy implications are provided at the end of the paper this paper contributes to the study of china s wind power sector from a new perspective

political and institutional analysis of the successes and failures of china s wind power policy this paper identifies and explains how political and institutional factors have determined the relative successes and failures of china s wind power policy over the period 2005 2011 it finds that china has made significant progress in pursuing its wind power policy in terms of cumulative installed capacity wind turbine manufacturing industry development and wind turbine cost and argues that these achievements can be attributed to the political motives and institutional arrangements of the chinese government as well as to institutional changes on the other hand the paper finds that there are two prominent policy failures namely the low proportion of grid connected capacity and the rising trend of wind turbine incidents these have undermined the efficiency and effectiveness of china s wind power program the paper holds that the institutional sources for the first policy failure lies in the preference for setting wind power development targets in terms of installed capacity rather than generation and in coordination problems while the second policy failure lies in the lack of state technical codes for wind power integration and the unfair competition from the large state owned power companies the paper contributes to the academic literature on the political and institutional roles in china s wind power policy

the state street mile age and gender differences in competition aversion in the field i introduction gender differences in competitiveness are hypothesized to play a role in a wide array of economic outcomes including the low representation of women among fortune 500 chief executive officers bertrand and hallock 2001 niederle and vesterlund 2007 although psychologists have a long history of documenting the reluctance of girls or women to enter competitions economists have begun to study this phenomenon only recently psychologists have previously emphasized the tendency of women to underestimate their future performance on a number of different tasks deaux 1979 pallier 2003 1 careful experimental studies by economists reveal that in a laboratory setting a number of different reasons underlie women s lower inclination to compete these reasons include not only women s tendency to underestimate their own ability but also greater aversion to risk and uncertainty about their ability eckel 2008 eckel and grossman 2008 gupta poulsen and villeval 2011 niederle and yestrumskas 2008 niederle and vesterlund 2007 control for these and other factors in a carefully designed experiment that provides strong evidence of a distinct preference to avoid the act of competition against men 2 the purpose of this paper is to provide evidence of competition aversion in a natural setting somewhere between the simplicity of a laboratory experiment and the full complexity and ambiguity of a labor market the behavior of runners in a race suggests that female competition aversion can be detected even in single sex situations the state street mile race offers both male and female participants a choice between two different levels of competition those who believe they have superior ability relative to participants of the same gender are encouraged to enter a highly competitive high profile elite race with cash prizes other participants those who believe they are slower runners and those who simply prefer a lower level of competition pay the same entry fee and run the same course in age group races with no cash prize systematic gender differences are observed in the relationship between true ability as measured by actual time to run the mile observed ex post and the decision to enter the more competitive elite race while fast young men are almost certain to enter the highly competitive race a sizable minority of the fast young women do not choose to do so niederle and vesterlund 2007 argue that reluctance to compete against men is particularly costly to high ability women because this group has the most to gain from entering the competition this was true for the mixed gender tournament they studied however we find that on this single sex task the very fastest women are quite likely to enter the elite race it is the middle range above the qualifying standard but below the group most likely to win where the largest gender differences in behavior are observed thus although our results are consistent with experimental work suggesting that women tend to have competition averse preferences they also demonstrate that in some instances there might not be very much economic significance in this context the fastest women respond to financial incentives and the economic consequences of the preference for competition aversion are therefore quite small in addition to the gender difference this analysis identifies a reluctance of older qualified runners to enter the more competitive race despite the fact that over the age of 40 winners are chosen based on age graded times this finding differs from recent experimental work by charness and villeval 2009 which shows that younger and older field subjects employees below 30 years old and employees of the same firm above 50 years old were equally willing to select a competitive payment option in the state street mile the propensity to compete in the highly competitive elite race among older men is similar to that observed for younger women while older women are the least likely and young men are the most likely to enter a highly competitive elite race

aggregation and linearity in the provision of intertemporal incentives we consider the problem of providing incentives over time for an agent with constant absolute risk aversion the optimal compensation scheme is found to be a linear function of a vector of n accounts which count the number of times that each of the n kinds of observable events occurs the number n is independent of the number of time periods so the accounts may entail substantial aggregation in a continuous time version of the problem the agent controls the drift rate of a vector of accounts that is subject to frequent small random fluctuations the solution is as if the problem were the static one in which the agent controls only the mean of a multivariate normal distribution and the principal is constrained to use a linear compensation rule if the principal can observe only coarser linear aggregates such as revenues costs or profits the optimal compensation scheme is then a linear function of those aggregates the combination of exponential utility normal distributions and linear compensation schemes makes computations and comparative statics easy to do as we illustrate we interpret our linearity results as deriving in part from the richness of the agent s strategy space which makes it possible for the agent to undermine and exploit complicated nonlinear functions of the accounting aggregates

to what extent does wind power deployment affect vested interests a case study of the northeast china grid abstract china s wind power is in an embarrassing state along with its dramatic development since 2005 its curtailment ratio has been rising although this could be attributed to both physical and institutional factors it is the institutional obstacles mainly resulting from the adjustment difficulties of interests distribution that have exercised a greater impact the stakeholders relating to wind power integration are thermal power companies grid companies and local governments the extent to which wind power deployment affects these vested interests determines the core institutional obstacles to be addressed mainly based on quantitative and case analyses we argue that currently wind deployment in china has a little impact on the interests of thermal companies moderate impact on the interests of grid companies and great impact on local governments we recommend that it is crucial to elevate the role of environmental protection and renewable energy increase while de emphasize the role of economic growth in the evaluation of local governments performance as well as provide incentives for grid companies to attend more to their social responsibilities rather than their scale expansion and revenue growth

sorting incentives and risk preferences evidence from a field experiment abstract we conducted experiments within a firm to measure the risk preferences of workers who face substantial daily income risk we find that these workers are significantly more risk tolerant than individuals from the broader population this is consistent with sorting risk tolerant workers are attracted to high risk occupations

on the relevance and composition of gifts within the firm evidence from field experiments we investigate the economic relevance and the composition of gifts within a firm where output is contractible we develop a structural behavioral model that identifies workers optimal reaction to monetary gifts received from their employer we estimate the model using data from two separate field experiments conducted within a tree planting firm we use the estimated structural parameters to generalize beyond the experiment simulating how workers would react to different gifts on the part of the firm within different labor market settings we find that gifts have a role to play within this firm increasing in importance when the workers outside alternatives deteriorate profit maximizing gifts would increase profits within slack labor markets by up to 10 on average and by up to 17 for certain types of workers

intergenerational attitudes towards strategic uncertainty and competition a field experiment in a swiss bank with a market entry game inspired by camerer and lovallo 1999 we study the attitudes of junior and senior employees towards strategic uncertainty and competition seniors exhibit higher entry rates compared to juniors especially when the market capacity is not too low or when earnings from entry depend on relative performance this difference persists after controlling for attitudes towards non strategic uncertainty and for beliefs on others competitiveness and on relative ability seniors are more willing to compete when they predict a higher number of competitors this contradicts the stereotype of less competitive older employees

optimal sales force compensation we analyze a dynamic moral hazard model to derive optimal sales force compensation plans without imposing any ad hoc restrictions on the class of feasible incentive contracts we explain when the compensation plans that are most common in practice fixed salaries quota based bonuses commissions or a combination thereof are optimal fixed salaries are optimal for small revenue cost ratios quota based bonuses commissions should be used if the revenue cost ratio takes intermediate large values if firms face demand uncertainty markets are rather thin and the revenue cost ratio large firms should combine a commission with a quota based bonus if word of mouth advertising affects sales a dynamic commission that increases over time can be optimal when entering a new market or launching a new product firms should install long term bonus plans

risk preferences and the economics of contracts t he literature of risk aversion and risk preference is one of the richest sources of ad hoc assumptions concerning tastes n o significant behavior has been illuminated by assumptions of differences in tastes such theories have been a convenient crutch to lean on when the analysis has bogged down they give the appearance of considered judgement yet really have only been ad hoc arguments that disguise analytical failures george j stigler and gary s becker 1977 p 89

risk uncertainty and entrepreneurship evidence from a lab in the field experiment theory predicts that entrepreneurs have distinct attitudes toward risk and uncertainty but empirical evidence is mixed to better understand the unique behavioral characteristics of entrepreneurs and the causes of these mixed results we perform a large lab in the field experiment comparing entrepreneurs to managers a suitable comparison group and employees n 2 288 the results indicate that entrepreneurs perceive themselves as less risk averse than managers and employees in line with common wisdom however when using experimental incentivized measures the differences are subtler entrepreneurs are only found to be unique in their lower degree of loss aversion and not in their risk or ambiguity aversion this combination of results might be explained by our finding that perceived risk attitude is not only correlated to risk aversion but also to loss aversion overall we therefore suggest using a broader definition of risk that captures this unique feature of entrepreneurs their willingness to risk losses this paper was accepted by uri gneezy behavioral economics

fostering a renewable energy technology industry an international comparison of wind industry policy support mechanisms this article examines the importance of national and sub national policies in supporting the development of successful global wind turbine manufacturing companies we explore the motivations behind establishing a local wind power industry and the paths that different countries have taken to develop indigenous large wind turbine manufacturing industries within their borders this is done through a cross country comparison of the policy support mechanisms that have been employed to directly and indirectly promote wind technology manufacturing in 12 countries we find that in many instances there is a clear relationship between a manufacturer s success in its home country market and its eventual success in the global wind power market whether new wind turbine manufacturing entrants are able to succeed will likely depend in part on the utilization of their turbines in their own domestic market which in turn will be influenced by the annual size and stability of that market consequently policies that support a sizable stable market for wind power in conjunction with policies that specifically provide incentives for wind power technology to be manufactured locally are most likely to result in the establishment of an internationally competitive wind industry

sorting and incentive effects of pay for performance an experimental investigation agency theory highlights losses in productivity that may occur when the interests of owners and employees are imperfectly aligned pay for performance has been proposed as a solution to this proble

profit sharing risk sharing and firm size implications of efficiency wages by taking account of output fluctuations this paper constructs a synthesis of profit sharing and efficiency wage models to highlight the role of the risk attitudes of the firm and its employees we show contrary to the traditional efficiency wage theory that in a profit sharing economy unemployment is no longer a necessary device to induce work effort and consequently the labor market equilibrium may be characterized by full employment such a result is more likely to be true when the economy is characterized by small sized firms in addition we also provide a preliminary sketch of the situations in which the firm chooses a profit sharing program or a fixed wage one and discuss how a firm determines its pay parameters and employment in response to output fluctuations

work related perks agency problems and optimal incentive contracts work related perks such as corporate jets nice offices and so forth improve the tradeoff between incentives and insurance that determines the optimal incentive contract we show that i such perks may be offered even if their direct consumption benefits are offset by their costs ii they will be offered for free iii agents in more uncertain production environments will receive more perks iv senior executives should receive more perks and v better corporate governance can lead to more perk consumption by ceos our analysis also offers insights into firms decisions about how much autonomy they should grant to their employees

moral hazard and risk spreading in partnerships partnerships provide a classic example of the tradeoff between risk spreading and moral hazard the degree to which firms choose to spread risk and sacrifice efficiency incentives depends upon risk preferences for which data are typically unavailable we use a unique dataset on medical group practice to investigate this tradeoff risk aversion leads to compensation arrangements which spread risk through greater sharing of revenues we find that compensation arrangements with greater degrees of revenue sharing significantly reduce physician effort the results imply that changing the method of physician payment from fee for service to capitation will dramatically reduce physician effort