minimum effort coordination games stochastic potential and logit equilibrium abstract this paper revisits the minimum effort coordination game with a continuum of pareto ranked nash equilibria noise is introduced via a logit probabilistic choice function the resulting logit equilibrium distribution of decisions is unique and maximizes a stochastic potential function in the limit as the noise vanishes the distribution converges to an outcome that is analogous to the risk dominant outcome for 2 2 games in accordance with experimental evidence logit equilibrium efforts decrease with increases in effort costs and the number of players even though these parameters do not affect the nash equilibria journal of economic literature classification numbers c72 c92

ten little treasures of game theory and ten intuitive contradictions this paper reports laboratory data for games that are played only once these games span the standard categories static and dynamic games with complete and incomplete information for each game the treasure is a treatment in which behavior conforms nicely to predictions of the nash equilibrium or relevant refinement in each case however a change in the payoff structure produces a large inconsistency between theoretical predictions and observed behavior these contradictions are generally consistent with simple intuition based on the interaction of payoff asymmetries and noisy introspection about others decisions

highly skilled and well connected migrant inventors in cross border m as based on a relational view of international business we investigate the role of migrant inventors in cross border mergers and acquisitions undertaken by r d active firms we hypothesize that the migrant inventors international social networks can be leveraged by their employers in order to identify and or integrate relevant knowledge bases of acquisition targets in the inventors home country we nuance our hypothesis by means of several conditional logistic regressions on a large matched sample of deals and control cases the impact of migrant inventors increases with the distance between countries and for targets located in countries with weak administrative legal systems as well as when targets are either innovative or belong to high tech sectors or to the same sector as the acquirer and for full versus partial acquisitions

importer behavior the neglected counterpart of international exchange international exchange is a two sided coin involving exporters and importers however a systematic search of the academic literature reveals a striking imbalance while exporter behavior has been extensively studied importer behavior remains a largely neglected area of study even though importers are playing an ever more important often dominant role in consummating trade transactions in this article we assert that this neglect stems from two critical but flawed assumptions the first is that exporters are the driving force behind international trade transactions and the second is that importers follow the neoclassical economics theory of rational choice in international sourcing

social capital informal governance and post ipo firm performance a study of chinese entrepreneurial firms social capital can serve as informal governance in weak investor protection regimes using hand collected data on entrepreneurs political connections and firm ownership we construct several original measures of social capital and examine their effect on the performance of entrepreneurial firms in china after their initial public offerings political connections or a high percentage of external investors tend to enhance firm performance but intragroup related party transactions commonly lead to performance decline these forms of social capital have a strong influence on the performance of chinese firms whereas formal governance variables such as board size or board independence have little effect although social capital may serve as an informal governance mechanism and effectively substitute for formal governance mechanisms in an emerging market this role of social capital raises several ethical concerns notably the development of rent seeking and crony capitalism

a theoretical analysis of altruism and decision error in public goods games abstract we formalize an equilibrium model in which altruism and decision error parameters determine the distribution of contributions for linear and quadratic public goods games the equilibrium density is exponential for linear games and normal for quadratic games our model implies i contributions increase with the marginal value of the public good ii total contributions increase with the number of participants iii mean contributions lie between the nash prediction and half the endowment these predictions which are not implied by a nash analysis are consistent with laboratory data maximum likelihood estimates of altruism and error parameters are significant and plausible

rent seeking with bounded rationality an analysis of the all pay auction the winner take all nature of all pay auctions makes the outcome sensitive to decision errors which we introduce with a logit formulation the equilibrium bid distribution is a fixed point the belief distributions that determine expected payoffs equal the choice distributions determined by expected payoffs we prove existence uniqueness and symmetry properties in contrast to the nash equilibrium the comparative statics of the logit equilibrium are intuitive rent dissipation increases with the number of players and the bid cost overdissipation of rents is impossible under full rationality but is observed in laboratory experiments our model predicts this property

the lucas critique and the volcker deflation this paper examines in light of the lucas critique the behavior of the phillips curve and of the term structure of interest rates after october 1979 it starts with an informal account of the policy change and then discusses how we might expect these two relations to shift after such a change it finds little evidence of a direct effect of the policy change on the phillips curve at least until 1982 it finds substantial evidence of a direct effect on term structure this abstract was borrowed from another version of this item

games with unique mixed strategy equilibria an experimental study abstract the results of an experiment studying the choices of subjects playing mixed extensions of three variants of simple 2 2 non constant sum strictly competitive games of the same form matching pennies are presented subjects exhibited a variety of behavioral adaptive learning strategies this heterogeneity of individual behavior produced aggregate dynamics whose estimated steady states are quite different from those predicted by the nash equilibria of those stage games with asymmetrical payoff functions the observed aggregative dynamics are well accounted for both by a quantal equilibrium model of mckelvey and palfrey and by a learning model of roth and erev journal of economic literature classification number c72

non additive beliefs and strategic equilibria abstract this paper studies n player games where players beliefs about their opponents behaviour are modelled as non additive probabilities the concept of an equilibrium under uncertainty which is introduced in this paper extends the equilibrium notion of dow and werlang 1994 j econom theory 64 305 324 to n player games in strategic form existence of such an equilibrium is demonstrated under usual conditions for low degrees of ambiguity equilibria under uncertainty approximate nash equilibria at the other extreme with a low degree of confidence maximin equilibria appear finally robustness against a lack of confidence may be viewed as a refinement for nash equilibria journal of economic literature classification numbers c72 d81

internationalisation conceptualising an entrepreneurial process of behaviour in time this paper presents a three stage process of conceptual development in response to the call for a unifying direction for research in the emergent field of international entrepreneurship drawing on classic approaches to internationalisation and importing insight from entrepreneurship as a separate and distinct field of study the paper develops three potential models of internationalisation as a time based process of entrepreneurial behaviour the models evolve from the simple through general to precise levels of conceptualisation research implications are discussed

connections to distant knowledge interpersonal ties between more and less developed countries less developed countries benefit from being connected to technologically and economically advanced countries the well documented mechanisms for this cross national flow of knowledge all involve interfirm connections such as trade foreign direct investment fdi and alliances we examine the potential of a different mechanism interpersonal ties abroad that has only recently become practicable owing to advances in communication and transportation technologies globalization and increased migration we investigate when business knowledge obtained from interpersonal ties in more developed countries is more useful than locally sourced knowledge using a sample of south african managers we find that knowledge from more developed countries is not always more useful rather overseas knowledge is preferable when novel and accessible that is when new to the industry knowledge is needed when there is already a strong tie and when the knowledge does not involve a long discussion conversely local knowledge is preferable when new to the industry knowledge is not needed when the interpersonal tie is a weak tie and when a longer discussion is warranted this study demonstrates the value of connections between individuals in countries at different levels of development as sources of useful knowledge and suggests that international business research will benefit from exploring further the networks of individuals in addition to those of firms

social ties and international entrepreneurship opportunities and constraints affecting firm internationalization international entrepreneurship involves the identification and exploitation of opportunities for international exchange yet little is known about the entrepreneurial methods used for opportunity recognition while previous work emphasizes effects operating at the level of the business network i propose that the recognition of exchange opportunities is a highly subjective process shaped by entrepreneurs existing ties with others based on interview data collected from 41 managers i develop a comprehensive measure for classifying different methods of opportunity recognition i then use this measure to classify 665 international exchange ventures set up by entrepreneurs in four chinese cities in contrast with past research i find virtually no role for blind luck although the majority of exchange opportunities were discovered rather than sought these discoveries were intentional rather than accidental i also find that entrepreneurs idiosyncratic connections with others both promote and inhibit international exchange tie based opportunities lead to higher quality and more valuable exchanges that are constrained in terms of geographic psychic and linguistic distance from this i conclude that entrepreneurial networks have distinct opportunity horizons that limit the reach of tie based exchanges and potentially lead to sub optimal internationalization trajectories

progress in behavioral game theory i s game theory meant to describe actual choices by people and institutions or not it is remarkable how much game theory has been done while largely ignoring this question the seminal book by von neumann and morgenstern the theory of games and economic behavior was clearly about how rational players would play against others they knew were rational in more recent work game theorists are not always explicit about what they aim to describe or advise at one extreme highly mathematical analyses have proposed rationality requirements that people and firms are probably not smart enough to satisfy in everyday decisions at the other extreme adaptive and evolutionary approaches use very simple modelsmostly developed to describe nonhuman animals in which players may not realize they are playing a game at all when game theory does aim to describe behavior it often proceeds with a disturbingly low ratio of careful observation to theorizing this paper describes an approach called behavioral game theory which aims to describe actual behavior is driven by empirical observation mostly experiments and charts a middle course between over rational equilibrium analyses and under rational adaptive analyses the recipe for behavioral game theory i will describe has three steps start with a game or naturally occurring situation in which standard game theory makes a bold prediction based on one or two crucial principles if behavior differs from interested readers familiar with game theory should read crawford 1997 whose approach is more eclectic than mine he concludes p 236 that most strategic behavior can be understood via a synthesis that combines elements from each of the leading theoretical frameworks traditional game theory evolutionary game theory and adaptive learning with a modicum of empirical information about behavior behavioral game theory adds psychological interpretations to this synthesis

business networks and cooperation in international business relationships cooperative relationships between firms can be better understood if they are examined in the context of a network of connected business relationships based on research on business relationships and business networks this paper formulates a lisrel model that analyses cooperation in international business relationships between suppliers and customer firms theory suggests that cooperation can raise the value of business relationships and that business network connections have an impact on cooperation the model is investigated in a sample of 136 international business relationships the analysis shows that relationship profitability is directly affected by relationship commitment and indirectly through commitment by business network connections

towards more realistic conceptualisations of foreign operation modes we address a long standing discrepancy between theory and practice regarding how firms choose use and modify their modes of operation in foreign markets theory typically treats foreign operation modes as choices between well specified discrete alternatives observation of business practice reveals a messier reality we commonly observe mode packages within mode adjustments and mode role changes yet by and large these aspects of international business development have been relatively ignored in the literature and in theoretical and empirical research we propose richer and more realistic conceptualisations of foreign operation modes and look at their implications for theory and practice

on the relationship between firm size and export intensity export marketing literature supports the view that firm size is positively related to export intensity although the empirical findings have been mixed a number of theoretical arguments are used to support this proposition i e international marketing economies of scale limited managerial and financial resources of small firms decisionmaker s risk perception based on a large survey of the italian manufacturing industry the article falsifies the proposition and challenges some widely held assumptions in export marketing literature

friends acquaintances or strangers partner selection in r d alliances like governance structure and alliance scope partner selection may serve to safeguard firms intellectual assets in r d alliances we categorize potential alliance partners into friends acquainta

whole country of origin network development abroad the support that networks offer during the internationalization process is well documented in the international business literature however this work has primarily focused on firm level networks while underappreciating the cooperative behaviors that may emerge among organizations in the pursuit of common network level goals to better understand these concerted and coordinated actions we engaged in a qualitative examination of two clusters of italian organizations abroad we observed that goal directed and governed networks emerged in these clusters bounded by their common desire to support italian firms internationalization this insight underlies our contributions to the international business and whole network literatures we offer a process model outlining the emergence of a particular type of whole network the country of origin network this process is much more distributed emergent and context dependent than previously theorized our model illustrates that network development involves the active and coordinated efforts of diverse actors working to create infrastructure that can be accessed by and shared between new and existing organizations our finding that both networks were governed utilizing a distinct but context appropriate governance structure provides new insight into how networks support internationalization furthermore it illustrates that whole network level support is distinct from but complementary to the firm to firm support highlighted in previous studies

international exchange a foundation for theory building in international business there does not appear to be a consensus concerning what is the conceptual domain of international business this paper argues that this is due in part to an emphasis on the firm as the unit of analysis it is further argued that a comprehensive generative and theoretically integrative definition of international business could be established if exchange were made the unit of analysis by using the political economy paradigm and the various concepts of exchange adopted by the social sciences nine characteristics are identified and developed which uniquely define the conceptual domain of international business

on the optimal design of lotteries is globally concave since thearguments against the plausibility of a convex utility function advanced in the previous sectionin relation to eu theory apply with equal force to the rdeu model by contrast as is shownbelow these arguments do not apply to risk seeking behavior associated with the possibility that

extensive form games with uncertainty averse players abstract nash equilibrium presumes that the beliefs of a player are represented by a probability measure motivated by the ellsberg paradox and relevant experimental findings demonstrating that this representation of beliefs may be unrealistic this paper generalizes nash equilibrium in finite extensive form games to allow for preferences conforming to the multiple priors model developed by gilboa and schmeidler journal of mathematical economics 18 1989 141 153 the implications of this generalization for strategy choices and welfare are studied journal of economic literature classification numbers c72 d81

entrepreneurial proclivity capability upgrading and performance advantage of newness among international new ventures in spite of a notable interest surrounding the learning advantages of newness lan centered on the emergent international entrepreneurship literature we have only limited understanding of how young international new ventures invs acquire learning advantages and avoid the liabilities of newness and foreignness in order to achieve lan related performance from early internationalization in this article two related but conceptually distinct capability upgrading constructs knowledge capability upgrading and network capability upgrading are identified to serve as mediating mechanisms that link entrepreneurial proclivity and lan related performance our findings from a sample of 436 young invs from china provide supporting evidence for the mediating effect of capability upgrading particularly among relatively larger new ventures and those operating with cost price advantages in the international marketplace this study fills a gap in the under researched area of literature surrounding invs from emerging economies and demonstrates how young international venturing firms can leverage the entrepreneurial dynamics of learning to achieve growth opportunities from early internationalization

the effects of within country linguistic and religious diversity on foreign acquisitions this article explores how within country diversity of both language and religion influences the ownership structure of foreign acquisitions commentators have acknowledged the potential importance of within country diversity but to date this issue has received minimal empirical attention we propose that diversity plays two distinct roles namely diversity within the host country may be an additional source of behavioral uncertainty and information asymmetry over and above the effects arising from cross national differences moreover diversity within the home country may increase the cognitive complexity of the decision makers moderating the firm s response to the distance and diversity of the host country results based on foreign acquisitions across 67 acquirer and 69 target countries confirm both of these roles while the main focus of this article is on the role that within country diversity plays in international business decisions it also makes contributions in terms of expanding the range of dimensions of distance investigated in the cross border acquisition literature in highlighting a potentially positive role that diversity might play in such acquisitions and in providing a potential explanation for asymmetries in distance that is differences in cognitive complexity

capabilities as a mediator linking resources and the international performance of entrepreneurial firms in an emerging economy this study investigates an under researched topic the relationships between capabilities resources and international performance among entrepreneurial firms in an emerging economy we combine the resource based view of the firm and the capability building perspective of rent creation to shed light on the crucial role of firm specific capabilities that transform key resources into performance outcomes employing a large sample of chinese entrepreneurial firms our investigation demonstrates that while the resources of institutional capital and managerial ties are important in the internationalization effort their effects on international performance are channeled through each firm s adaptive capability this adaptive capability is the firm s ability to coordinate recombine and allocate resources to meet the different requirements of foreign markets specifically our research is able to demonstrate support for the mediating role of capabilities in the relationship between resources and international performance the implications of these findings for theoretical development and future research are discussed

do people play nash equilibrium lessons from evolutionary game theory evolutionary game theory provides an answer to two of the central questions in economic modeling when is it reasonable to assume that people are rational and when is it reasonable to assume that behavior is part of a nash equilibrium and if it is reasonable which equilibrium the traditional answers are not compelling and much of evolutionary modeling is motivated by the need for a better answer evolutionary game theory suggests that in a range of settings agents do eventually play a nash equilibrium moreover evolutionary modeling has shed light on the relative plausibility of different nash equilibria

immigrant links to the home country empirical implications for u s bilateral trade flows immigrants ties to their home countries can play a key role in fostering bilateral trade linkages immigrant ties include knowledge of home country markets language preferences and business contacts that have the potential to decrease trading transaction costs empirical results for the united states suggest that immigrant links have historically been important in increasing bilateral trade flows with immigrants home countries copyright 1994 by mit press

the international entrepreneurial dynamics of accelerated internationalisation the initial stages of internationalisation prior to firms having established their definitive sources of advantage remain the relatively unexplored area of the international business ib literature at these early stages where firms are seeking to establish themselves and new multinational firms are appearing to exploit new opportunities created by globalisation the entrepreneurial aspects of internationalisation come to the fore in this paper we aim to delineate an emerging field of ib scholarship we use the appearance of international new ventures and the phenomenon of accelerated internationalisation that they feature to identify a set of issues that has slipped through the net of some of the existing ib frameworks we propose that the salient features of accelerated and early internationalisation by the newly internationalising firm are best captured in a framework that is found at the intersection of entrepreneurial and internationalisation perspectives which we propose be known as international entrepreneurial dynamics we discuss such a framework in terms of entry points and pathways mapped by firms as they probe the ib arena and the key factors that impinge on behaviour and strategic choices in line with recent developments in the entrepreneurship literature these are grouped into three milestones of entrepreneurial processes that extend across national boundaries 1 the discovery of new opportunities 2 the deployment of resources in the exploitation of these opportunities and 3 the engagement with competitors implications for mne and internationalisation theory are discussed

explaining the internationalization of ibusiness firms information and communication technologies have given rise to a new type of firm the ibusiness firm these firms offer a platform that allows users to interact with each other and generate value through user co creation of content because of this ibusiness firms face different challenges when they internationalize compared with traditional firms even those online in this article we extend existing internationalization theory to encompass this new type of organization we theorize that because ibusiness firms produce value through the creation and coordination of a network of users these firms tend to suffer greater liabilities of outsidership when expanding abroad and therefore concentrate on network and diffusion based user adoption processes as they internationalize based on a multi case investigation of a sample of ibusiness firms we develop new theory and testable hypotheses thus we make an important contribution by expanding internationalization theory to a new set of firms

network centrality and organizational aspirations a behavioral interaction in the context of international strategic alliances the authors wish to acknowledge the financial support provided by the spanish ministry of science and education under projects eco2013 48496 c4 2 r eco2013 48496 c4 4 r and eco2017 48496 c4 4 r

violations of belief persistence in dempster shafer equilibrium abstract belief persistence is a standard rationality axiom in formal models of belief change it requires that new information be accommodated with the smallest possible change to existing beliefs this note shows that violations of belief persistence are possible in j eichberger and d kelsey s 1999a signalling games with uncertainty unpublished university of birmingham 1999b in beliefs interactions and preferences in decision making m j machina and b munier eds pp 135 157 dordrecht kluwer academic dempster shafer equilibrium dse a solution concept for signaling games based on choquet expected utility such violations may lead to implausible equilibria so a refinement of dse is proposed journal of economic literature classification numbers c72 d81

asset specificity and foreign market entry mode choice of small and medium sized enterprises the moderating influence of knowledge safeguards and institutional safeguards according to transaction cost economics tce reasoning firms choose equity as opposed to non equity foreign market entry modes to safeguard specific assets the present paper contextualizes the well researched relationship between asset specificity and foreign market entry mode choice by introducing knowledge safeguards international experience host country networks and imitation and institutional safeguards property rights protection and cultural proximity as alternative mechanisms for securing a firm s specific assets testing our hypotheses on a sample of 206 small and medium sized enterprises we find that knowledge safeguards and institutional safeguards weaken the effect of asset specificity on the choice of equity foreign market entry modes contextualizing the relationship between asset specificity and foreign market entry mode choice helps to enhance our understanding of the scope conditions of tce based entry mode studies and beyond

the experience factor in foreign market entry behavior of service firms the paper examines the effect of international experience on service firms selection of foreign markets and entry modes the investigation utilizes survey date from 151 united states based service firms results on market selection suggest that as their experience increases and becomes geographically more diversified service firms tend to choose markets that are culturally less similar to their home country on entry mode choice the paper departs from traditional linear conceptualizations and hypothesizes a u shaped relationship between experience and propensity for integrated entry modes results generally support the hypothesis the paper explains these findings and describes how service firms resemble and differ from manufacturing firms in their foreign market entry behavior

the determinants of wage pressure some implications of a dynamic model most models of wage determination are static this paper analyzes a simple dynamic model of collective bargaining and argues that this provides insights into the determinants of wage pressure that a static model cannot provide in particular it is shown how the length of labor contracts and the dynamics of the labor market affect the level of aggregate wage pressure the policy implications of the model are very different from those traditionally put forward to moderate wage pressure copyright 1991 by the london school of economics and political science

internationalization and the performance of born global smes the mediating role of social networks this paper offers a social network explanation for the purported relationship between internationalization and firm performance in the context of born global small and medium enterprises smes we argue that home based social networks play a mediating role in the relationship between inward and outward internationalization and firm performance the mediating mechanism is attributed to three information benefits of social networks 1 knowledge of foreign market opportunities 2 advice and experiential learning and 3 referral trust and solidarity using survey data from smes in the largest emerging economy of china we found some support for this mediating role of social networks in the form of guanxi the results imply that international business managers should consider social networks as an efficient means of helping internationally oriented smes to go international more rapidly and profitably

neuroeconomics why economics needs brains neuroeconomics uses knowledge about brain mechanisms to inform economic theory it opens up the black box of the brain much as organizational economics opened up the theory of the firm neuroscientists use many tools including brain imaging behavior of patients with brain damage animal behavior and recording single neuron activity the key insight for economics is that the brain is composed of multiple systems which interact controlled systems executive function interrupt automatic ones brain evidence complicates standard assumptions about basic preference to include homeostasis and other kinds of state dependence and shows emotional activation in ambiguous choice and strategic interaction

the decision maker and export entry and expansion this paper examines the varied empirical findings of the relationship between firm individual characteristics and foreign entry expansion behavior the results support the view that such activity is neither exclusively determined by structural or managerial factors and is really the result of interaction between both types of variables the paper proposes that foreign entry and expansion can best be understood as an adoption of innovation type behavior

profit sharing wage bargaining and unemployment bertil holmlund the paper examines the effects of profit sharing in an economy with decentralized wage bargaining profit sharing makes workers income more sensitive to wage changes and this leads to wage moderation but economy wide profit sharing may also improve workers outside income opportunities and this strengthens the union s hand in bargaining and tend to raise wages it turns out that equilibrium unemployment is reduced by profit sharing as long as the elasticity of substitution between labor and capital is less than one whereas unemployment is increased if the elasticity of substitution is greater than one i introduction martin weitzman s book the share economy 1984 proposes fundamental changes in labor compensation systems the basic idea is that the traditional fixed wage remuneration should be replaced by a scheme with a fixed base wage plus a share of profits or revenues hiring decisions are assumed to rest with the employers who will expand employment until workers marginal product equals the pre determined base wage the latter is taken to be lower in the profit sharing economy than the wage level in the corresponding wage economy the lack of widespread use of profit sharing arrangements is attributed to externalities and weitzman therefore argues in favor of tax incentives to promote the sharing system does profit sharing actually lead to wage moderation this paper examines this issue within a simple model where wages are set through negotiations between unions and firms profit sharing creates a direct link between the performance of the firm and workers income and this involves incentives to settle for lower wages and higher employment an economy wide profit sharing system will however also affect workers income opportunities outside their current firm this will strengthen the union s hand in bargaining by raising its threat point i e the expected income available to workers if an agreement is not reached in the wage negotiations it turns out that the general equilibrium effect of economy wide profit sharing is crucially dependent on the elasticity of substitution between labor and capital profit sharing leads to wage moderation thereby reducing unemployment when the elasticity of substitution is less than one but increases unemployment when the elasticity of substitution is greater than one the next section of the paper outlines the bargaining model that is used in the analysis sections 3 and 4 examine profit sharing and section 5 concludes the paper ii bargaining in a wage economy imagine an economy with a perfectly competitive output market with output prices normalized to unity suppose that wage negotiations take place at the level of the firm and that the employer determines the employment level after the wage negotiations have been settled to characterize the bargaining outcome we invoke the widely used right to manage framework of nickell and andrews 1983 in this model there is bargaining over the wage in contrast to a monopoly union model in which the union simply calls out its desired wage to which firms passively respond by adjusting employment to the profit maximizing level the negotiated wage is assumed to be given by a nash bargain between the local union and the firm and the bargain pertaining to firm union pair i maximizes the product substitute mathematical expression omited 1 where lambdal sub i is workers utility from agreement and lambdal sub 0 is the union s threat point i e the utility available in case of disagreement pi sub i is the firm s profits when there is an agreement and pi sub i is the fall back level of profits the degree of union power is captured by beta if beta is equal to one we have the monopoly union case where the union simply chooses its desired point on the labor demand curve each union is assumed to care about the expected income of its members

the export development process an integrative review of empirical models despite widespread research on the export behavior of firms no integrative review of the empirical work in relation to export development models exists in the extant literature this article reviews the main models on the subject identifies their structural characteristics evaluates the methodologies used for their validation and analyzes the key conceptual issues emerging from their assessment while valuable inroads into the mechanics and constituent parts of the export development process have been made this avenue of empirical inquiry has attracted criticism on structural methodological and conceptual grounds future research in the field should harness the eclectic contribution afforded by existing theory and at the same time enhance its status with contributions from marketing business and other disciplines

a theory of anticipated utility abstract a new theory of cardinal utility with an associated set of axioms is presented it is a generalization of the von neumann morgenstern expected utility theory which permits the analysis of phenomena associated with the distortion of subjective probability

anomalous behavior in a traveler s dilemma the notion of a nash equilibrium has joined supply and demand as one of the two or three techniques that economists instinctively try to use first in the analysis of economic interactions moreover the nash equilibrium and closely related game theoretic concepts are being widely applied in other social sciences and even in biology where evolutionary stability often selects a subset of the nash equilibria many people are uneasy about the stark predictions of the nash equilibrium in some contexts where the extreme rationality assumptions seem implausible kaushik basu s 1994 traveler s dilemma is a particularly convincing example of a case where the unrelenting logic of game theory is at odds with intuitive notions about human behavior the story associated with the dilemma is that two travelers purchase identical antiques while on a tropical vacation their luggage is lost on the return trip and the airline asks them to make independent claims for compensation in anticipation of excessive claims the airline representative announces

manufacturer overseas distributor relations and export performance the export arrangement which makes use of overseas distributors is examined in this article although this method is important for many manufacturers operating in foreign markets there are reservations about the performance levels that are achieved under such arrangements it is suggested that there is an important link between the performance level achieved and the very nature of the relationship that exists between the manufacturer and overseas distributor the authors assert also that the nature of the manufacturer overseas distributor relationship is associated with certain characteristics of the participating companies namely their stake in the relationship their experience and their uncertainty surrounding the relationship these propositions are tested and largely corroborated through analysis of data collected from 41 companies in canada and the uk

trade unions wage formation and macroeconomic stability an introduction the process of wage formation is a crucial aspect of the current discussion about the causes of stagflation in fact differences between various policy prescriptions usually depend on differing assumptions about wage responses proposals to reduce unemployment through expansion of monetary demand are usually based on assumptions of rigid money wages in contrast recommendations of non intervention policies often rest on the opposite assumption of rigid real wages in which case monetary expansion will cause inflation but not affect employment

dynamics of unemployment vacancies and real wages with trade unions this paper considers the response of wages unemployment and vacancies to shocks when the number of job slots and real wages are determined by a nash bargain between a firm and a small union unemployment and vacancies co exist because of search considerations there is a unique natural unemployment rate which ensures that every firm union s bargained wage is stationary shocks that are eventually absorbed by wages cause deviations of unemployment from its natural rate because the firm union initial response to a shock is to change vacancies and possibly wages which cause changes in unemployment flows via the search process

games of perfect information predatory pricing and the chain store paradox the thesis of this paper is that finite noncooperative games possessing both complete and perfect information ought to be treated like one player decision problems that is players ought to assign at every move subjective probabilities to every subsequent choice in the game and ought to make decisions via backward induction this view is in contrast with the gametheoretic approach of nash equilibrium after expanding on this view for games in the abstract in sections 2 and 3 attention is turned in section 4 to an example due to reinhard selten called the chain store paradox which possesses the flavor of a situation involving a predatory pricing monopolist it is argued that for the chain store game the decision analytic approach leads under certain assumptions to more realistic outcomes than the standard nash equilibrium approach

an introduction to applicable game theory this paper offers an introduction to game theory for applied economists i try to give simple definitions and intuitive examples of the basic kinds of games and their solution concepts there are four kinds of games static or dynamic and complete or incomplete information complete information means there is no private information the corresponding solution concepts are nash equilibrium in static games of complete information backwards induction or subgame perfect nash equilibrium in dynamic games of complete information bayesian nash equilibrium in static games with incomplete information and perfect bayesian or sequential equilibrium in dynamic games with incomplete information the main theme of the paper is that these solution concepts are closely linked as we consider progressively richer games we progressively strengthen the solution concept to rule out implausible equilibria in the richer games that would survive if we applied solution concepts available for simpler games in each case the stronger solution concept differs from the weaker concept only for the richer games not for the simpler games

signalling and adaptive learning in an entry limit pricing game in an experimental investigation of milgrom and roberts 1992 model play consistently converges to a unique equilibrium providing evidence of sophisticated strategic behavior that the theory predicts play starts with monopolists at their myopic maxima followed by an attempt to pool and then if no pooling equilibrium exists separation suggesting myopia rather than a forward looking process when both pure strategy equilibria and separating equilibria exist equilibrium selection is a function of the past history of play an adaptive learning model characterizes the major features of the data and provides predictions of intermediate term behavior that is otherwise lacking in the theory

social ties and partner identification in sino hong kong international joint ventures partner identification is an important and under studied precursor to selection and eventual performance of international joint ventures ijvs the mechanics of the identification process were investigated in depth across a sample of eighteen sino hong kong ijvs using the case study research method the cross case findings of this exploratory investigation support the idea that social networks provide a valuable resource for reducing ijv partner search costs specifically the findings reveal that while weakly linked bridge ties are valuable in identifying potential partners searches based on strong ties tend to be shorter and provide a more robust basis for inter partner cooperation

selfcon rming equilibrium and model uncertainty we propose to bring together two conceptually complementary ideas 1 selfcon rming equilibrium sce at rest points of learning dynamics in a game played recurrently agents best respond to con rmed beliefs i e beliefs consistent with the evidence they accumulated and 2 ambiguity aversion agents other things being equal prefer to bet on events with known rather than unknown probabilities and more generally distinguish objective from subjective uncertainty a behavioral trait captured by their ambiguity attitudes using as a workhorse the smooth ambiguity model of klibano marinacci and mukerji 2005 we provide a de nition of smooth sce which generalizes the traditional concept of fudenberg and levine 1993a b here called bayesian sce and admits waldean maxmin sce as a limit case we show that the set of equilibria expands as ambiguity aversion increases the intuition is simple by playing the same strategy in

does psychic distance moderate the market size entry sequence relationship an analysis of 924 foreign market entries made by a sample of chinese exporters reveals that psychic distance moderates the relationship between foreign market size and entry sequence in doing so this study challenges the extant hypothesis that the establishment of foreign operations conforms to a simple pattern of increasing psychic distance to markets the findings also reveal that psychic distance is asymmetrical in nature and that assessments made by sellers and their buyers are inherently inequivalent

social ties and foreign market entry the social dynamics which precede international exchange are considered in light of data collected on 133 foreign market entries from a sample of highly internationalized manufacturing firms consistent with research done in the social network field the findings support the hypothesis that knowledge of foreign market opportunities is commonly acquired via existing inter personal links rather than collected systematically via market research this study thus contributes towards an understanding of those antecedent conditions that lead to the formation of export exchange relationships

uncertainty aversion in game theory experimental evidence abstract this paper studies using a laboratory experiment the effects of uncertainty aversion the union of risk aversion and ambiguity aversion on behavior in a normal form game we isolate and identify two components of uncertainty aversion in games the effect of an agent s own uncertainty preferences and effect of the agent s beliefs regarding their opponent s uncertainty preferences uncertainty preferences are correlated with behavior in games induced beliefs about the risk preferences of an opponent have a larger effect on strategic behavior than induced beliefs about an opponent s ambiguity preferences although both components have a significant effect on behavior the results support the hypothesis that strategic uncertainty is an important determinant of strategic behavior and that the response to strategic uncertainty is modulated by subject uncertainty attitudes

on the internationalization process of firms a critical analysis even though international marketing has been challenged because of theoretical and methodological shortcomings very few researchers have actually attempted to analyze the weaknesses based on principles of theory evaluation in this article the author examines two types of models addressing the individual firm s internationalization process a theory evaluation is performed based on the explanation and the falsification criteria in order to improve the internationalization models some measures are proposed

nash equilibrium under knightian uncertainty breaking down backward induction abstract we define nash equilibrium for two person normal form games in the presence of knightian uncertainty using the formalization of schmeidler and gilboa we show that nash equilibrium exists for any degree of uncertainty aversion that maxmin behaviour can occur even when it is not rationalizable in the usual sense and that backward induction breaks down in the twice repeated prisoners dilemma we relate these results to the literature on cooperation in the finitely repeated prisoners dilemma and the literature on epistemological conditions underlying nash equilibrium the knowledge notion implicit in this model of equilibrium does not display logical omniscience journal of economic literature classification numbers c72 d81

choice under uncertainty with the best and worst in mind neo additive capacities the concept of a non extreme outcome additive capacity neo additive capacity is introduced neo additive capacities model optimistic and pessimistic attitudes towards uncertainty as observed in many experimental studies moreover neo additive capacities can be applied easily in economic problems as we demonstrate by examples this paper provides an axiomatisation of choquet expected utility with neo capacities in a framework of purely subjective uncertainty

optimism and pessimism in games this paper considers the impact of ambiguity in strategic situations it extends the earlier literature by allowing for optimistic responses to ambiguity ambiguity is modelled by ceu preferences we propose a new solution concept for players who may express ambiguitypreference then we study comparative statics of changes in ambiguity attitude in games with strategic complements this gives a precise statement of the impact of ambiguity on economic behaviour

understanding the domain of cross national buyer seller interactions cross national face to face selling has thus far received very little scholarly treatment in marketing literature with few notable exceptions most existing research in this area has been fragmentary and opportunistic these problems are largely because of the lack of a broad generalizable framework within which to conceptualize and execute research studies in offering such a conceptual framework this article looks at buyer seller interactions from a communication perspective

the network dynamics of international new ventures this study uses multi site case research to advance a set of propositions regarding the network dynamics of early stage international new ventures the investigative approach builds on arguments that network theory and analysis are fundamental to international entrepreneurship in the spirit of cross disciplinary research perspectives from the entrepreneurship literature are embraced to help inform our understanding of international new venture networks

correlated nash equilibrium abstract we modify the epistemic conditions for nash equilibrium only to accommodate gilboa and schmeidler s i gilboa d schmeidler maxmin expected utility with nonunique prior j math econ 18 1989 141 153 maxmin expected utility preferences and identify the equilibrium concept in n player strategic games that characterizes the modified epistemic conditions the epistemic characterization supports the equilibrium concept as a minimal generalization of nash equilibrium in the sense that it deviates from nash equilibrium only in terms of players attitude towards ambiguity consequently comparing it with nash equilibrium constitutes a ceteris paribus study of the effects of ambiguity on how a game is played for example with ambiguity beliefs about action choices are in general correlated

a definition of uncertainty aversion a definition of uncertainty or ambiguity aversion is proposed it is argued that the definition is well suited to modelling within the savage as opposed to anscombe and aumann domain of acts the defined property of uncertainty aversion has intuitive empirical content behaves well in specific models of preference multiple priors and choquet expected utility and is tractable tractability is established through use of a novel notion of differentiability for utility functions called eventwise differentiability

sequential two player games with ambiguity if players beliefs are strictly non additive the dempster shafer updating rule can be used to define beliefs off the equilibrium path we define an equilibrium concept in sequential two person games where players update their beliefs with the dempster shafer updating rule we show that in the limit as uncertainty tends to zero our equilibrium approximates bayesian nash equilibrium by imposing context dependent constraints on beliefs under uncertainty

rationalizability learning and equilibrium in games with strategic complementarities we study a rich class of noncooperative games that includes models of oligopoly competition macroeconomic coordination failures arms races bank runs technology adoption and diffusion r d competition pretrial bargaining coordination in teams and many others for all these games the sets of pure strategy nash equilibria correlated equilibria and rationalizable strategies have identical bounds also for a class of models of dynamic adaptive choice behavior that encompasses both best response dynamics and bayesian learning the players choices lie eventually within the same bounds these bounds are shown to vary monotonically with certain exogenous parameters we study the class of noncooperative supermodular games introduced by topkis 1979 and further analyzed by vives 1985 1989 who also pointed out the importance of these games in industrial economics supermodular games are games in which each player s strategy set is partially ordered the marginal returns to increasing one s strategy rise with increases in the competitors strategies so that the game exhibits strategic complementarity 2 and if a player s strategies are multidimensional marginal returns to any one com ponent of the player s strategy rise with increases in the other components this class turns out to encompass many of the most important economic applications of noncooperative game theory in macroeconomics diamond s 1982 search model and bryant s 1983 1984 rational expectations models can be represented as supermodular games in each of these models more activity by some members of the economy raises the returns to increased levels of activity by others in oligopoly theory some models of bertrand oligopoly with differentiated products qualify as supermodu lar games in these games when a firm s competitors raise their prices the marginal profitability of the firm s own price increase rises a similar structure is present in games of new technology adoption such as those of dybvig and spatt 1983 farrell and saloner 1986 and katz and shapiro 1986 when more users hook into a communication system or more manufacturers adopt an interface standard the marginal return to others of doing the same often rises similarly in some specifications of the bank runs model introduced by diamond and dybvig 1983 when more depositors withdraw their funds from a bank it is more worthwhile for other depositors to do the same in the warrant exercise

ambiguity made precise a comparative foundation the theory of subjective expected utility has been recently extended to allow ambiguity to matter for choice we propose a notion of absolute ambiguity aversion by building on a notion of comparative ambiguity aversion we characterize it for a preference model which encompasses some of the most popular models in the literature we next build on these ideas to provide a definition of unambiguous act and event and show the characterization of the latter as an illustration we consider the classical ellsberg 3 color urn problem and find that the notions developed in the paper provide intuitive answers journal of economic literature classification number d81

the influence of the management team s international experience on the internationalization behaviors of smes why are some small and medium sized enterprises smes more successful in selling outside their domestic markets than are other smes in the same industry although the traditional explanation is that firms can gain valuable knowledge and resources as they become older and larger small and young firms are not necessarily disadvantaged if they develop other mechanisms to acquire the requisite knowledge and resources we examine the role of the management team s international experience as such a mechanism for the internationalization of canadian software product firms we show that internationally experienced management teams have a greater propensity to develop foreign strategic partners and to delay less in obtaining foreign sales after start up and that these behaviors are associated with a higher degree of internationalization

theory and misbehavior of first price auctions recent experimental evidence appears to reject simple nash equilibrium models of bidding behavior in first price auctions the author presents a methodological critique of this evidence existing tests have concentrated on deviations of subjects from predictions in the message space of the action bid deviations the author suggests that it is more natural to evaluate subject behavior in expected payoff space he concludes that the evidence against the simple models is not significant enough to warrant their rejection copyright 1989 by american economic association

irrationality and ambiguity in extensive games abstract based on a model where deviations from equilibrium play are assumed to identify irrational players who are characterized by ambiguous set valued strategies this paper introduces an equilibrium notion for extensive games with ambiguity averse players that yields a precise interpretation for the counterfactual reasoning usually associated with backward induction the resulting equilibria are always nash equilibria but may not satisfy the conditions required for various refinements of nash equilibrium including those for subgame perfection existence of such equilibria is proved for all two player games and for n player games with perfect information

the uppsala internationalization process model revisited from liability of foreignness to liability of outsidership the uppsala internationalization process model is revisited in the light of changes in business practices and theoretical advances that have been made since 1977 now the business environment is viewed as a web of relationships a network rather than as a neoclassical market with many independent suppliers and customers outsidership in relation to the relevant network more than psychic distance is the root of uncertainty the change mechanisms in the revised model are essentially the same as those in the original version although we add trust building and knowledge creation the latter to recognize the fact that new knowledge is developed in relationships