taxation and international migration of superstars evidence from the european football market we analyze the effects of top tax rates on international migration of football players in 14 european countries since 1985 both country case studies and multinomial regressions show evidence of strong mobility responses to tax rates with an elasticity of the number of foreign domestic players to the net of tax rate around one around 0 15 we also find evidence of sorting effects low taxes attract highability players who displace low ability players and displacement effects low taxes on foreigners displace domestic players those results can be rationalized in a simple model of migration and taxation with rigid labor demand jel f22 h24 h31 j44 j61 l83

boundedly rational versus optimization based models of strategic thinking and learning in games harstad and selten s article in this forum performs a valuable service by highlighting the dominance of optimization based models over boundedly rational models in modern microeconomics and questioning whether optimization based models are a better way forward than boundedly rational models this article complements rabin s response to harstad and selten focusing on modeling strategic behavior i consider harstad and selten s examples and proposed boundedly rational models in the light of modern behavioral economics and behavioral game theory commenting on the challenges that remain and the most promising ways forward

perspectives on mechanism design in economic theory economics began with xenophon s oeconomicus c 360 bce in which socrates interviews a model citizen who has two primary concerns he goes out to his farm in the country to monitor and motivate his workers there then he goes back to the city where his participation in various political institutions is essential for maintaining his rights to own this farm such concerns about agents incentives and political institutions are also central in economic theory today but they were not always two centuries ago economics developed as an analytical social science by focusing on produc tion and allocation of material goods developing methodologies of national income accounting and price theory questions about resource allocation seemed particularly amenable to math ematical analysis because flows of goods and money are measurable and should satisfy flowbalance equations and no arbitrage conditions from this perspective the classical economic problem was that people s ability to satisfy their desires is constrained by limited resources the classical economic result was that unrestricted free trade can achieve allocative efficiency in the sense that reallocating the available resources cannot improve everyone s welfare a shift of focus from allocation of resources back to analysis of incentives began from the time of augustin cournot 1838 when economic theorists began to analyze optimal decisions of rational individuals as a tool for understanding supply and demand in price theory see jurg

the enduring power of coase abstractby many measures ronald coase has been among the most influential economists of the past 60 years why is this so we suggest that coase s work has enduring appeal to and insight for social scientists in part because it addresses the biggest and most important social problems how do we solve governance and coordination problems when limited information common resource issues and public good issues produce conflicts among several people at once any scholar who works on issues of corporate or common pool governance pollution allocation of seats on legislative committees regulation of systemic risk in financial markets provision of military forces patent thickets creation of optimal communications networks regulation of decreasing cost industries or compensation of corporate officers can see his or her work stemming from several of coase s original insights just as john nash s work reshaped economic theory almost every field of economics and political science is shaped by coasean insights

jon elster s securities against misrule juries assemblies elections a review essay the standard economic approach to designing institutions for collective decision making recognizes individuals strategically rational motivations for misrepresentation and asks how best given an objective function to design a set of incentives and constraints to internalize or negate such motivations securities against misrule offers in the author s phrase an essay in persuasion to the effect that such an approach is fundamentally misguided instead elster argues for a behavioral approach centered on designing institutions for good decision making rather than good outcomes by individuals whose actions are chronically subject to emotional self interested and prejudicial distortions jel d02 d71 d72 d82

the new institutional economics and the theory of the firm abstract concepts of importance in the literature of the new institutional economics such as transaction costs and bounded rationality have been used to extend the standard neoclassical model of the firm but the hybrid models created have failed to provide adequate explanations of enterprise behavior an alternative neoinstitutional model of the firm is developed in the paper that differs from the pure neoclassical model and hybrid models in respect to both the nature of the solution it yields and the process by which it reaches a solution the neoinstitutional firm cannot be expected to achieve either the hypothetical allocative efficiency promised by the frictionless neoclassical model or the relatively efficient constrained pareto optimal solutions predicted by the largely frictionless hybrid models the orthodox marginal rules of neoclassicism can only be used to solve lower level problems that appear within the firm

on trust as a commodity and on the grammar of trust abstract i look at trust in the light of two constructions taken from economic science general competitive analysis and the theory of games i draw on baier s anti contractarian perspective as well as on one informed by wittgenstein s writings the former focuses on relations between inherently unequal and asymmetrical individuals while the latter draws on and revolves around the imperative in the philosophical investigations let the use teach you the meaning p 212 also p 220 i try to spell out how the choice of language has epistemological implications for an analysis of trust for the trustworthiness of the scientific constructions i use for analyzing trust and thereby more generally for defining ourselves and our form of life

reading cournot reading nash the creation and stabilisation of the nash equilibrium the concept of the cournot nash equilibrium is central to noncooperative game theory and the latter s use in macroeconomic theory this paper considers the creation of this theoretical construct examining the separate contributions of both cournot and nash and showing how the two were ultimately joined together in the eyes of contemporary economic theorists rather than simply showing how cournot served as a precursor to nash the author challenges the traditional approach and emphasizes the shifts in interpretation of their respective contributions in so doing he addresses some pertinent questions about the manner in which economic theorists view the evolution of their own discipline copyright 1994 by royal economic society

equilibrium in strategic interaction the contributions of john c harsanyi john f nash and reinhard selten during the past 15 years or so a game theoretic revolution of economics has taken place microeconomic theory has been rewritten in the language of a game theory see kreps 1 990b i publications in industrial organization differ substantially from work published in this area two decades ago in macroeconomics issues of time consistency credibility and reputation have been analyzed by means of game theoretic tools trade theory has been cast in game theoretic terms in financial economics problems of market micro structure are analyzed by means of non cooperative games fundamental concepts and techniques developed by this year s nobel laureates have enabled this revolution to take place as kreps writes

tax harmonization and tax competition in the european union lessons from switzerland abstract this paper presents empirical evidence on individual income tax competition in switzerland tax competition has some influence on the spread of people with high income over the cantons and it is partly capitalised in dwelling rents however it neither leads to a collapse of public good supply nor makes redistribution by the fiscal authorities impossible thus if tax competition works well in switzerland there is no reason why it should have disastrous effects in a future european union

nash equilibrium and the history of economic theory john nash s formulation of noncooperative game theory was one of the great breakthroughs in the history of social science nash s work in this area is reviewed in its historical context to better understand how the fundamental ideas of noncooperative game theory were developed and how they changed the course of economic theory

costly search and recruiting a labor market model with costly search and recruiting is constructed it incorporates many features found in other models and provides new insights into the effects of externalities and transaction costs the model possesses a continuum of equilibria some of which may be pareto ranked with different rates of unemployment despite the multiplicity of equilibria comparative statics results are obtained copyright 1987 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

the elasticity of taxable income with respect to marginal tax rates a critical review this paper critically surveys the large and growing literature estimating the elasticity of taxable income with respect to marginal tax rates using tax return data first we provide a theoretical framework showing under what assumptions this elasticity can be used as a sufficient statistic for efficiency and optimal tax analysis we discuss what other parameters should be estimated when the elasticity is not a sufficient statistic second we discuss conceptually the key issues that arise in the empirical estimation of the elasticity of taxable income using the example of the 1993 top individual income tax rate increase in the united states to illustrate those issues third we provide a critical discussion of selected empirical analyses of the elasticity of taxable income in light of the theoretical and empirical framework we laid out finally we discuss avenues for future research jel h24 h31 j22

welfare reform in european countries a microsimulation analysis this article compares the effects of increasing traditional welfare to introducing in work benefits in the 15 pre enlargement countries of the european union we use a labour supply model encompassing responses to taxes and transfers along both the intensive and extensive margins and the euromod microsimulation model to estimate current marginal and participation tax rates we quantify the equity efficiency trade off for a range of elasticity parameters in most countries because of large existing welfare programmes with high phase out rates increasing traditional welfare is undesirable unless the redistributive tastes of the government are extreme in contrast the in work benefit reform is desirable in a very wide set of cases

john nash the master of economic modeling during the past two decades non cooperative game theory has become a central topic in economic theory many scholars have contributed to this revolution none more than john nash following the publication of von neumann and morgenstern s book it was nash s papers in the early fifties which pointed the way for future research in game theory the notion of nash equilibrium is indispensable nash s formulation of the bargaining problem and the nash bargaining solution constitute the cornerstone of modern bargaining theory his insights into the non cooperative foundations of cooperative game theory initiated an area of research known as the nash program nash s analysis of the demand game in which he uses a perturbation of a game to select an equilibrium inspired the construction of several refinements of the notion of nash equilibrium a scholar s influence does not necessarily qualify him for a nobel prize one may argue that such awards are a social institution established to serve social goals it is legitimate to ask what message the swedish academy sends to the scientific community and the rest of the world in some cases prizes are designed to encourage individuals to invest their resources in endeavors that are important to society nash s achievements depend more on his genius than on characteristics which can be encouraged by utilitarian incentives sometimes prizes are expressions of social indebtedness towards members of society who have devoted their life towards advancing a social goal nash s active career was intensive but very short and i have not heard that he deliberately sacrificed attractive alternatives in favor of advancing economic knowledge prizes are also intended to promote the recipient s field of research by now game theory is well recognized any graduate student in economics is familiar with the foundations of non cooperative game theory and i doubt that there is any further need to expand the influence of game theory

oligopoly games and the cournot bertrand model a survey traditional oligopoly models hold that firms compete in the same strategic variable output cournot or price bertrand alternatively a hybrid model allows some firms to compete in output and other firms to compete in price also known as the cournot bertrand model when the choice of strategic variable is endogenous the established dominant strategy is output competition a growing body of work demonstrates however that the cournot bertrand outcome can be a subgame perfect nash equilibrium in the presence of market asymmetries observations of real world markets consistent with cournot bertrand behavior bolster justification for the model and have stimulated an impressive and evolving literature on advances and applications we lay out the roots of the cournot bertrand model and explore a number of model developments we categorize 12 primary models in the literature based on alternative assumptions in particular some authors consider when the timing of play as well as the choice of strategic variable are endogenous altogether this research identifies when cournot bertrand behavior can emerge in a dynamic setting and under alternative market conditions we also review the cournot bertrand model applications in the fields of international economics industrial organization labor and public economics we expect the literature to continue to expand in the future

google it up a google trends based uncertainty index for the united states and australia we develop uncertainty indices for the united states and australia based on freely accessible real time google trends data our google trends uncertainty gtu indices are found to be positively correlated to a variety of alternative proxies for uncertainty available for these two countries var investigations document an economically and statistically significant contribution to unemployment dynamics by gtu shocks in the united states in contrast the contribution of gtu shocks to unemployment dynamics in australia is found to be much milder and substantially lower than that of monetary policy shocks

migration and optimal income taxes abstract the issue addressed in this paper is the optimal taxation of incomes earned in the home economy and of incomes earned abroad when people can migrate as a preliminary the optimal taxation of home incomes when there is migration and no taxation of foreign incomes is discussed then in a more general setting we deal with optimal taxation of different kinds of labour when another kind of labour is not taxable and show how this bears on the taxation of foreign incomes the last sections of the paper analyse a simple model in which people choose between taxable labour at home taxable labour abroad and untaxable labour a condition is found implying that the optimal tax on foreign income is higher than on the home income of a person of equal utility

learning from schelling s strategy of conflict thomas schelling s strategy of confl ict is a masterpiece that should be recognized as one of the most important and infl uential books in social theory this paper reviews some of the important ideas in strategy of confl ict and considers some of the broader impact that this book has had on game theory economics and social theory by his emphasis on the critical importance of information and commitment in strate gic dynamics schelling played a vital role in stimulating the development of non cooperative game theory more broadly schelling s analysis of games with multiple equilibria has redefi ned the scope of economics and its place in the social sciences jel d74 f51 h56

new directions for modelling strategic behavior game theoretic models of communication coordination and cooperation in economic relationships author s crawford vp abstract in this paper i discuss the state of progress in applications of game theory in economics and try to identify possible future developments that are likely to yield further progress to keep the topic manageable i focus on a canonical economic problem that is inherently game theoretic that of fostering efficient coordination and cooperation in relationships with particular attention to the role of communication i begin with an overview of noncooperative game theory s principal model of behavior nash equilibrium i next discuss the alternative thinking and learning rationales for how real world actors might reach equilibrium decisions i then review how nash equilibrium has been used to model coordination communication and cooperation in relationships and discuss possible developments

jeux sans frontieres tax competition and tax coordination when countries differ in size closer international integration is putting increasing pressure on existing national tax structures this paper uses a simple two country model to address a range of consequent policy concerns focusing particularly on the role of country size differences in size exacerbate the inefficiency from noncooperative behavior harming both countries the smaller country loses from harmonization to any tax rate between those set in the noncooperative equilibrium but both countries gain from the imposition of a minimum tax anywhere in that range the fully optimal response to freer cross border trade however may be to do nothing jel h20 h77

migration and wage effects of taxing top earners evidence from the foreigners tax scheme in denmark this paper analyzes the eects of income taxation on the international migration and earnings of top earners using a danish preferential foreigner tax scheme and populationwide danish administrative data this scheme introduced in 1991 allows new immigrants with high earnings to be taxed at a preferential at rate for a duration of three years we obtain two main results first the scheme has doubled the number of highly paid foreigners in denmark relative to slightly less paid and therefore ineligible foreigners this translates into a very large elasticity of migration with respect to 1 minus the average tax rate on foreigners between 1 5 and 2 second we nd compelling evidence of a negative eect of the scheme induced reduction in the average tax rate on pre tax earnings of foreign migrants at the individual level this nding can be rationalized by a matching frictions

john nash and the analysis of strategic behavior abstract this essay describes one economist s view of how four extraordinary papers by john nash two on non cooperative game theory proceedings of the national academy of sciences usa 36 1950b 48 49 annals of mathematics 54 1951 286 295 and two on the theory of bargaining econometrica 18 1950a 155 162 econometrica 21 1953 128 140 influenced the development of game theory as a tool for analyzing strategic behavior