has discrimination lessened over time a test using baseball s all star vote i introduction the objective of this analysis is to examine changes in racial discrimination over time the labor market literature indicates that black white wage differentials have declined substantially in the last 45 years and most of that decline came before 1980 1 however the degree to which this was due to altered attitudes among whites increased productivity among blacks or corrective legislation is debated 2 most studies are not able to effectively test the hypothesis of changes in attitudes as attitudes are very difficult to observe some activities may be very indicative of attitudes though take voting for baseball s annual all star game each all star vote is cast anonymously the voter gets neither praise nor censure the cost of voting is low ballots are freely supplied at ballparks and filling them out takes but a minute or two to a large degree the reward is in the voting itself the voter is able to express his her opinion on an issue of interest there are no rules to be followed a fan can vote for a player because of his ability reputation performance team age appearance color or anything else the all star vote is as close to a pure expression of preference as is likely to be found if fans prefer white players to black all else equal black players should receive fewer votes than equivalent whites if those preferences change the vote differential should change in tandem this is the test that this article applies in an examination of all star voting from 1970 to 1996 baseball has long been a useful source of discrimination studies it has a clear and unambiguous history of discrimination in which owners players and fans have all been implicated 3 there are two particular advantages in looking to baseball for evidence of changes in discriminatory attitudes baseball has not been as directly influenced by the equal opportunity and affirmative action laws that are argued to have helped close the black white wage gap and baseball productivity can be controlled for in a relatively precise fashion while changes in the wage gap may have a variety of causes changes in an all star vote gap more plausibly reflect changes in attitudes therefore if we find the variance in all star votes unexplained by other factors and correlated with race has shrunk over time we will take it as support for the hypothesis that discriminatory attitudes have weakened the article will proceed as follows section ii discusses the all star vote and the underlying model section iii presents the analysis section iv concludes ii the all star game baseball s all star game has been played every year and twice per year for a short period since 1933 with the exception of the war year of 1945 it is held in the middle of the season and pits the best players from each of major league baseball s mlb two leagues the national and the american against each other various methods of selecting all star teams have gone in and out of vogue the game was first established through the efforts of arch ward sports editor of the chicago tribune as a special part of the 1933 chicago world s fair ballots were printed in the tribune and in several other major newspapers and fans voted for their favorite stars fan voting was dropped two years later in favor of selection by baseball s managers only to be re instituted in 1947 and abandoned a second time after ballot stuffing by cincinnati reds fans led to the election of seven reds to the starting line up in 1957 from 1958 to 1969 the starting all star line ups were chosen by a vote of the players themselves in 1970 baseball commissioner bowie kuhn re established the fan vote amid much ballyhoo the new system was a popular success and has remained in place ever since this study analyzes and compares fan votes over 26 years it begins with 1970 the year that the fan vote was re established ends with 1996 and fills in the middle with the votes of 1971 1973 1975 1977 1979 1980 1985 and 1990

variations in trading volume return volatility and trading costs evidence on recent price formation models patterns in stock market trading volume trading costs and return volatility are examined using new york stock exchange data from 1988 intraday test results indicate that for actively traded firms trading volume adverse selection costs and return volatility are higher in the first half hour of the day this evidence is inconsistent with the admati and pfleiderer 1988 model which predicts that trading costs are low when volume and return volatility are high interday test results show that for actively traded firms trading volume is low and adverse selection costs are high on monday which is consistent with the predictions of the foster and viswanathan 1990 model academics investors and regulators alike are now intensively focused upon understanding the volatility of asset returns and its relation to trading volume this interest was undoubtedly piqued by the market break of october 1987 a time during which volatility and trading volume reached unprecedented levels but even beforehand researchers observed regular differences in the return process for various hours of the day and days of the week research concerning temporal patterns in stock market volatility and volume falls in two groups studies that document observed patterns and studies that develop models to predict patterns among the studies in the first group are oldfield and rogalski 1980 french and roll 1986 stoll and whaley 1990 harris 1986 and wood mcinish and ord 1985 who report evidence on seasonalities in daily and weekly return variances among the regularities that have been documented using interday data is that volatility is higher when the market is open than when it is closed oldfield and rogalski 1980 french and roll 1986 and stoll and whaley 1990 for example point out significant differences in return volatility between trading

why do black basketball players work more for less money abstract we explore kahn and sherer s finding that national basketball association players salaries are lower for black than white players in general we do not find evidence that this salary differential is due to the racial preferences of fans specifically we observe that black players actually play more than comparable white players we offer a theory of price discrimination based on relative supplies and supply elasticities in lieu of the racial discrimination argument as an explanation for the black white wage differential

what went wrong the erosion of relative earnings and employment among young black men in the 1980s this paper shows a widening in black white earnings and employment gaps among young men from the mid 1970s through the 1980s earnings gaps increased most among college graduates and in the midwest while gaps in employment population rates grew most among dropouts we attribute the differential widening to shifts in demand for subgroups due to shifting industry and regional employment the falling real minimum wage and deunionization the growing supply of black to white workers that was marked among college graduates and to increased crime among dropouts the different factors affecting subgroups highlight the economic diversity of black americans

customer racial discrimination in major league baseball most studies of racial discrimination concentrate on identifying the existence rather than the source of discrimination in contrast this paper tests directly for racial discrimination by major league baseball customers by examining the market for baseball cards in tobit regressions the market prices of cards consistently reflect player performance records and other demand variables when interactive race productivity variables are included in the models a significant and complex pattern of fan discrimination against black pitchers and black hitters is found discrimination against latin players is not found

racial discrimination and professional basketball salaries in the 1990s racial differences in professional basketball player salaries are examined to determine whether the 20 premium paid to whites in the mid 1980s has persisted into the 1990s ols and tobit regressions indicate no difference between white and black salaries controlling for player and team characteristics for the 1994 95 season however censored quantile regressions show substantial racial differences at certain points in the salary distribution whites earn less than blacks at the lower end of the distribution although the difference is not statistically significant and varies with minutes played in contrast whites receive a significant premium 18 at the upper end of the salary distribution these findings are consistent with a form of consumer discrimination in which sports fans prefer to see white star players all else equal

labor market effects of september 11th on arab and muslim residents of the united states we investigated whether the september 11 2001 terrorists attacks had any effect on employment earnings and residential mobility of first and second generation arab and muslim men in the united states we find that september 11th did not significantly affect employment and hours of work of arab and muslim men but was associated with a 9 11 percent decline in their real wage and weekly earnings with some evidence that this decline was temporary the adverse earnings effects were strongly linked to hate crime incidence estimates also suggest that the terrorists attacks reduced intrastate migration of arab and muslim men

white collar crime writ small a case study of bagels donuts and the honor system for more than a decade an mit trained economist has meticulously recorded the results of nearly 75 000 deliveries of bagels and donuts to corporate offices these bagels and donuts are left in workplaces in the morning along with a list of prices and a lockbox office workers purchase the products on the honor system later that day the uneaten goods and the lock box are collected and the relevant data for each office are recorded in a spreadsheet these data provide a unique opportunity for understanding the extent to which individuals behave honestly in this setting and the factors that influence the level of honesty an analysis of the discrepancy between the prices of the goods consumed and the actual payments deposited in the lock box yields a number of insights first the base payment rate is quite high on average payments represent almost 90 percent of the posted price in a model of pure self interest one would expect very low payment rates because there would seem to be many opportunities for individuals to take the products with almost no chance of their nonpayment being detected moderating the tendency to take the products without paying is the fact that low payment rates will increase the probability the delivery company stops serving the company paying for one s bagels and donuts viewed in this light is a public good for other office workers thus one might expect a strong negative relationship between office size and payment rates which is not present in the data rather the data appear more consistent with a model in which there are internal nonpecuniary costs associated with stealing the bagels and donuts i e people overwhelmingly pay for the products because it would be wrong not to do so the observed payment rates are systematically related to a variety of observable factors for instance payment rates fall in response to increases in the posted price this is consistent with the increase in financial costs pushing some marginal consumers to be willing to sustain the moral cost associated with not stealing the goods or paying less than full price payment rates are higher when many of the bagels and donuts go uneaten suggesting that the marginal consumer pays a lower share of the posted price than the inframarginal consumer purchasers of donuts appear to be more likely to pay less than the full price there is a sharp and persistent increase in the payment rate following the september 11 terrorist attacks

job security and long term investment an experimental analysis we investigate an experimental labor market setting in which we introduce the novel aspect that workers have the chance of investing money in a long term project in order to increase their income we find a strong relationship between what happens inside the labor market worker s performance and what happens outside the labor market long term investment contrary to the theoretical predictions with selfish preferences we find that the mere presence of long term projects acts as an effort enforcement device this effect seems to be driven by an increase in long term employment relationships in the other direction long term labor relationships seem to provide a safer environment for undertaking successful long term projects this article also considers three different types of experimental labor contracts we find that performance based dismissal barriers whereby firms are required to retain workers if they have satisfied the effort level required by firms lead to more long term employment relationships and higher overall productivity as theory predicts the presence of renewable dismissal barriers makes it likely that workers will provide the desired effort level firms appear to correctly anticipate this leading to greater social efficiency

voting behavior discrimination and the national baseball hall of fame we investigate whether black latin and white major league baseball players receive the same consideration by the baseball writers association of america in voting for membership into the national baseball hall of fame the first stage of heckman s two step procedure indicates that the probability a black player will ever receive at least one vote is significantly lower than that for his white counterpart the second stage suggests that race or ethnicity sometimes matter in determining the number of votes a candidate receives for hall of fame membership jel j7 d72

promises in contract design in this paper we propose a new channel of contract design to boost efficiency if deviating from one s own words induces a self imposed moral burden the optimal contracting procedure with regard to cheap talk shall assign the responsibility for installing the nonbinding promise in the contract to whoever has the residual right to break such promise in the spirit of grossman and hart 1986 and hart and moore 1990 to study whether a worker s own promise of effort level governs his real choice of effort in a gift exchange game we implement four treatments in our experiments by varying two factors 1 who the firm or the worker takes the position of the proposer to propose the contract and 2 whether the proposed contract includes a nonbinding specification of the worker s effort level our key finding is that when it is the worker who proposes the contract and the contract includes the worker s promised effort level both the worker s actual effort choice and the aggregate profits are significantly higher than in each of the

compensation and performance an experimental study this paper investigates how compensation structure affects performance in a simple but effort consuming task in this experimental study the subjects were asked to multiply two digit numbers for 40 min and were paid using either a linear with different pay for performance sensitivities or a convex option based compensation mechanism we found that per unit wage has a non linear positive effect on performance whereas increasing per unit compensation from 0 to 0 02 or from 0 05 to 0 15 has virtually no effect on performance an increase from 0 02 to 0 05 results in higher productivity we also found that option based compensation results in better performance

trading networks and liquidity provision abstract we study the profitability of traders in two fully electronic and highly liquid markets the dow and standard poor s 500 e mini futures markets using unique information that identify counterparties to a transaction we show and seek to explain the fact that the network pattern of trades captures the relations between behavior in the market and returns our approach includes a simple representation of how much a shock is amplified by the network and how widely it is transmitted this representation provides a possible shorthand for understanding the consequences of a fat finger trade a withdrawing of liquidity or other market shock

experimentation in financial markets in this paper we use a unique data set on the italian interdealer bond market to empirically estimate the process of strategic experimentation the results show how the information generated in the process of interdealer trading affects the incentive to experiment upon receipt of an order dealers deliberately engage in trade with other dealers either to exploit the information contained in the order they receive or if they are uncertain about its quality to assess it by actively experimenting with other dealers we therefore identify hiding and experimenting as main types of dealer strategies

using baseball card prices to measure star quality and monopsony i introduction measuring productivity presents problems in many areas of economics this is especially true in sports economics where appropriate indicators of individual productivity apart from team productivity have been the subject of much debate and where the issue of fairness in compensation has become especially contentious in recent years due to the extremely high salaries being paid to participants baseball has been studied more widely than any other sport largely because of the vast amount of data that has been assembled for it and its fairly well defined indicators hits home runs earned run averages eras and so on however even in this sport controversies over productivity and compensation continue problems were severe enough in 1994 to have resulted in a 232 day general strike and the first ever cancellation of the world series events that are estimated to have cost major league baseball mlb and the economy close to 1 billion 1 this research will utilize baseball card prices a relatively neglected source of market evaluation of players reflecting their value to the ultimate consumer to measure the important but intangible characteristic of star quality or charisma possessed by some players star quality which exists over and above productivity as indicated in official game statistics is generally acknowledged to bring fans to the stadiums and impact team revenues in a significant way this research will determine a numerical measure of star quality as the residual in a model of baseball card prices based on traditional performance variables we shall use this in the computation of a total productivity figure for a sample of baseball players for the period leading up to the strike of 1994 from this we will derive a measure of the players marginal revenue product mrp and examine the issue of monopsonistic exploitation by comparing this expanded mrp to the players salaries ii monopsonistic exploitation the institutional arrangements and operating policies of mlb have acted to restrict mobility in that labor market and have led to numerous charges of monopsonistic exploitation over the years historically players were drafted into a team and reserved to employment by that team alone unless they were traded to another team at the discretion of management however several lawsuits and labor grievances in the 1970s resulted in the introduction of free agency which limits a team s control over a player to six years the mlb players association argues that even this shortened restrictive period together with the collusive operating policies permitted under baseball s special exemption from antitrust laws gives rise to monopsonistic exploitation this implies that many players receive less than their mrp to their team this sentiment was an element in the players rejection of management s position in the 1994 contract negotiations which led to the strike that canceled part of two seasons previous research on measuring productivity roger noll 1974 was one of the first researchers to study baseball productivity and one of the few to address the issue of star quality noll attempted to capture the star quality effect by entering the number of star players on a team as an explanatory variable in his attendance regression other researchers have advanced the technique for determining productivity from performance statistics but have not addressed the star quality factor directly the productivity study of scully 1974 focused on a player s slugging percentage total number of bases divided by total at bats as the statistic with the greatest influence on a team s winning percentage and hence on team revenues using 1968 69 data scully found that a one point increase in a team s slugging percentage increased total team revenue by over 9 500 medoff 1976 focused on runs scored as the major indicator of player performance as it contributed to team revenues in 1972 74

liquidity provision and stock return predictability this paper examines the trading behavior of two groups of liquidity providers specialists and competing market makers using a six year panel of nyse data trades of each group are negatively correlated with contemporaneous price changes to test for return predictability we sort stocks into quintiles based on each group s past trades and then form long short portfolios stocks most heavily bought have significantly higher returns than stocks most heavily sold over the two weeks following a sort cross sectional analysis shows smaller more volatile less actively traded and less liquid stocks more often appear in the extreme quintiles time series analysis shows the long short portfolio returns are positively correlated with a market wide measure of liquidity a double sort using past trades of specialists and competing market makers produces a long short portfolio that earns 88 basis points per week act as complements finally we identify a chain of liquidity provision designated market makers nyse specialists initially trade against order flows and prices changes specialists later mean revert their inventories by trading with competing market makers who appear to spread trades over a number of days alternatively specialists may trade with competing market makers who arrive to market with delay

bad news an experimental study on the informational effects of rewards both psychologists and economists have argued that rewards often have hidden costs one possible reason is that the principal may have incentives to oer higher rewards when she knows the task to be di cult our experiment tests if high rewards embody such bad news and if this is perceived by their recipients our design allows us to decompose the overall eect of rewards on eort into a direct incentive and an informational eect the results show that most participants correctly interpret high rewards as bad news in accordance with theory the negative informational eect co exists with the direct positive eect

customer racial discrimination in the market for memorabilia the case of baseball because consumer discrimination can reduce productivity it is often impossible to tell whether differential productivity is the effect of discrimination or of differential ability detailed data for the sports labor market make it possible to separate consumer discrimination from ability we use a unique approach to determine whether the entertainment value of baseball players is related to their race we examine whether race directly affects the value of a player in the market for baseball cards in contrast to studies that use salaries there is no room for owner or coworker discrimination our evidence supports the hypothesis of consumer discrimination

opening and closing the market evidence from the london stock exchange we investigate the performance of call markets at the open and close using a unique natural experiment provided by the london stock exchange where traders can choose between a call and an off exchange dealership system although the call market dominates dealers in terms of price discovery it suffers from a high failure rate to open and close trading especially when trading conditions are difficult the call s trading costs increase with asymmetric information slow trading order flow imbalances and uncertainty traders resort to use of call auctions is negatively correlated with firm size implying that the call may not be the optimal method for opening and closing trading of medium and small sized stocks

endogenous reputation formation under the shadow of the future recent research has shown that making people s decisions known to others may enhance cooperation in infinitely repeated prisoner s dilemma games with random matching this paper experimentally studies whether people can cooperate with each other by endogenously showing their identities and building cooperative reputations when there is an option to hide the identities our experiment shows that a non negligible fraction of subjects choose to conceal their identities and accordingly subjects fail to cooperate with each other in communities if hiding is cost free however almost all subjects disclose their identities and successfully achieve cooperation if a cost is charged for the act of hiding this finding has a broad methodological implication for the study of reputation mechanisms when infinitely repeated games are used in an experiment as people s behavior may be determined by their ability to hide identities

automation versus intermediation evidence from treasuries going off the run this paper examines the choice of trading venue by dealers in u s treasury securities to determine when services provided by human intermediaries are difficult to replicate in fully automated trading systems when treasury securities go off the run their trading volume drops by more than 90 this decline in trading volume allows us to test whether intermediaries knowledge of the market and its participants can uncover hidden liquidity and facilitate better matching of customer orders in less active markets consistent with this hypothesis the market share of electronic intermediaries falls from 81 to 12 when securities go off the run electronic trading systems have been steadily increasing their share of securities trading in almost all financial markets as the amount of automation in financial markets increases it is natural to ask what services human intermediaries provide that are difficult or impossible to replicate in a fully automated trading system existing theory suggests that human intermediaries play at least two important functions first an intermediary s knowledge of the market and its participants may uncover hidden liquidity that facilitates quicker and more efficient matching of customer orders grossman 1992 the value of this matching function is greater when trading volume is low and matches are difficult to find second when information asymmetry is high the repeated interaction between an intermediary and its customers allows the intermediary to protect itself against informed trades and offer better prices to its customers seppi 1990 these two factors explain for example why electronic communications networks ecns have a greater market share for the largest and most actively traded nasdaq stocks while nasdaq market makers have a larger share in smaller less liquid stocks characterized by greater information asymmetry barclay hendershott and mccormick 2003 and why nyse specialists have higher participation rates in smaller less liquid stocks madhavan and sofianos 1998

centralised order books versus hybrid order books a paired comparison of trading costs on nsc euronext paris and sets london stock exchange this article compares the cost of trading large capitalisation equities on the hybrid order driven segment of the london stock exchange and the centralised electronic order book of euronext using samples of stocks matched according to economic sector free float capitalisation and trading volume our study shows that transaction costs are lower on the centralised order book than on the hybrid order book the presence of dealers outside the electronic order book favours the frequency of large trades but is associated with higher execution costs for all other trades and higher adverse selection and inventory costs inside the order book

gift exchange in a multi worker firm one of the main findings of a large body of gift exchange experiments is that in an incomplete contracts environment workers on average do not shirk and usually provide more than the minimum enforceable effort level in general 40 to 60 percent of the workers reward higher wages with higher effort these results are observed for simple one employer one worker relationships in this paper we investigate whether they generalize to the more realistic situation in which the employer employs several workers we compare a bilateral gift exchange game with a treatment in which each employer has four workers we find that effort levels in the latter treatment are only marginally lower gift exchange thus appears to be robust to increases in the size of the workforce and intention based reciprocity rather than social preferences seems to be the main driving force behind gift exchange

death effect on collectible prices it has been widely observed that the price of art or celebrity memorabilia rises around the time of the artist or figure s death previous authors attribute this death effect primarily to expectations on the part of collectors concerning the future supply of collectibles relating to the public figure as in the case of a durable goods monopolist the observations of the sports memorabilia market suggest that the increase in prices is instead due to a nostalgia effect as a result of the media attention that surrounds the death of a prominent public figure

the effect of production technology on trust and reciprocity in principal agent relationships with team production we introduce differently sized teams rather than a single worker and three production technologies to an otherwise standard gift exchange environment to study experimentally whether and to what extent trust and reciprocity is affected moving to a team of workers introduces new motivations such as free riding and coordination burden that are likely to intensify with team size and the technology used by the firm we find that the positive relationship between wages and effort although affected still holds workers reduce their efforts when coordination for efficiency is more difficult using a particular production technology results also suggest that for any given technology firms react to their relevant outcome profitability and not just to workers efforts

how individual preferences are aggregated in groups an experimental study abstract this paper experimentally investigates how individual preferences through unrestricted deliberation are aggregated into a group decision in two contexts reciprocating gifts and choosing between lotteries in both contexts we find that median group members have a significant impact on the group decision but the median is not the only influential group member non median members closer to the median tend to have more influence than other members by investigating the same individual s influence in different groups we find evidence for relative position in the group having a direct effect on influence these results are consistent with predictions from spatial models of dynamic bargaining for members with intermediate levels of patience we also find that group deliberation involves bargaining and compromise as well as persuasion preferences tend to shift towards the choice of the individual s previous group especially for those with extreme individual preferences

corporate philanthropy and productivity evidence from an online real effort experiment contributing to a social cause can be an important driver for workers in the public and nonprofit sectors as well as in firms that engage in corporate philanthropy or other corporate social responsibility policies this paper compares the effectiveness of a social incentive that takes the form of a donation received by a charity of the subject s choice to a financial incentive we find that social incentives lead to a 13 rise in productivity regardless of their form lump sum or related to performance or strength the response is strong for subjects with low initial productivity 30 whereas high productivity subjects do not respond when subjects can choose the mix of incentives half sacrifice some of their private compensation to increase social compensation with women more likely to do so than men furthermore offering subjects some discretion in choosing their own payment schemes leads to a substantial improvement in performance comparing social incentives to equally costly increases in private compensation for low productivity subjects reveals that the former are less effective in increasing productivity but the difference is small and not statistically significant data as supplemental material are available at http dx doi org 10 1287 mnsc 2014 1985 this paper was accepted by uri gneezy behavioral economics

does risk sharing motivate interdealer trading we use unique data from the london stock exchange to test whether interdealer trade facilitates inventory risk sharing among dealers we develop a methodology that focuses on periods of extreme inventories inventory cycles we further distinguish between inventory cycles that are unanticipated and those that are anticipated because of worked orders the pattern of interdealer trade during inventory cycles matches theoretical predictions for the direction of trade and the inventories of trade counterparts we also show that london dealers receive higher trading revenues for taking larger positions

racial discrimination in professional basketball evidence from nielsen ratings using data on nielsen ratings for locally televised nba basketball games we find strong evidence that viewership increases when there is greater participation by white players this finding controls for a wide variety of other factors that could systematically affect nielsen ratings and signifies the presence of customer discrimination in the market for nba players we also find that higher nielsen ratings allow nba teams to realize greater advertising revenues meaning that the marginal revenue product of white players exceeds that of comparable black players this factor explains much of the race based salary gap that exists in professional basketball

intention based reciprocity and the hidden costs of control abstract empirical research suggests that despite strengthening conventional incentives to put in effort exerting control might reduce worker performance the present paper shows that intention based reciprocity can explain such hidden costs of control if individuals differ in their propensity for reciprocity and preferences are private information not being controlled might then be considered to be kind because not everybody reciprocates not being controlled with high effort this argument contrasts existing theoretical wisdom on the hidden costs of control that is almost exclusively based on signaling

variety and superstardom in popular music i introduction alfred marshall 1947 and irving fisher 1925 73 both believed that as average incomes increase the increase in the demand for quality goods and services will be greater than for those goods and services regarded as having lower quality in addition marshall pointed out that innovations in technology and mass production such as those taking place at the turn of the century would lower the per unit price of quality goods and ultimately allow the higher quality goods to capture a greater share of the market rosen 1981 1983 has termed this the superstar phenomenon marshall added a specific view that this situation had not occurred in the field of professional singers since at that time there were insufficient innovations for low cost mass production of sound rosen 1981 857 has suggested that subsequent innovations have since made the field of professional singers i e the recording industry a likely candidate for the superstar phenomenon in a recent paper hamlen 1991 provided some initial empirical evidence which indicates that the modern recording industry for popular music i e 1955 1987 fell short of the predicted marshall rosen superstar phenomenon in that study it was shown that while consumers of popular music recognized differences in quality as measured by an external objective measurement and there was an increase in total record earnings by singers with greater measured levels of ability the increase in these earnings was less than proportional to the increase in ability this would indicate that the marshall rosen concept of superstardom did not hold empirically during the period however there was no attempt in that paper to analyze why the superstar phenomenon failed to occur in a profession that has been viewed in the superstar literature as one of the most likely candidates since the knowledge of quality differences in performers is highly dependent on the transmission of information among different consumers some economists have tried to hypothesize a more precise market scenario to explain how performers with greater talent rise to stardom macdonald 1988 offered a model which he believes is relevant for musicians and singers it is based on a dynamic information accumulation process with multiple market levels singers begin in the entry level market where they compete mostly as unknowns here they share the revenues from lower income consumers who also have lower opportunity costs of time and therefore can afford to listen to many singers of relatively poor quality however in this entry level market some singers exhibit relatively high quality and receive above average success these higher quality singers are then given the opportunity to compete successfully in more select markets where the consumers have higher incomes and higher opportunity costs of time in each higher market level consumers are willing to pay a premium to listen to only the higher quality singers i e those filtered out from the lower market levels under reasonable assumptions macdonald s multi market processes can produce the superstar phenomenon described above adler 1985 pointed out a possible flaw in superstar models such as macdonald s the quality filter described above may be an imperfect filter with both type one errors some high quality singers do poorly and type two errors some lower quality singers do well adler believes that factors other than talent also determine the success and failure of singers these factors consist of those attributes which cannot be directly described as a measure of quality while some of these other factors are measurable and comparable e g musical style sex or race many may never be identified or measured e g charisma song delivery good looks etc the presence and importance of all of these other factors both measurable and nonmeasurable make up the demand for variety and tend to alter the simple relationship between quality ability and success

are workers willing to pay to join a better team using data from the major league baseball free agent market this study is the first to show that the productivity expected of the team a worker will join produces a significant negative compensating wage differential the younger workers in the sample drive this result trading 25 of their wages to join teams with an expected productivity one standard deviation higher this investment can be recouped if a reasonable increase in human capital occurs these results are robust to contract length wage simultaneity and indicate that investment in human capital motivates the observed tradeoff suggesting a new pathway through which human capital accumulation can affect wages reliable measures of workers own past productivity and the productivity expected of a worker s future team provide key advantages to identifying these effects jel j31 j24 m54

transaction costs and asset prices a dynamic equilibrium model in this article we study the effects of transaction costs on asset prices we assume an overlapping generations economy with a riskless liquid bond and many risky stocks carrying proportional transaction costs we obtain stock prices and turnover in closed form surprisingly a stock s price may increase in transaction costs and a more frequently traded stock may be less adversely affected by an increase in transaction costs calculations based on the marginal investor overestimate the effects of transaction costs for realistic parameter values transaction costs have very small effects on stock prices but large effects on turnover

anonymity adverse selection and the sorting of interdealer trades this article asks why london security dealers use more than one trading venue to trade with one another we argue that differences in the exclusivity liquidity anonymity and post trade transparency of each system permit a more efficient sorting of interdealer trades than if there were just one system our evidence comes from detailed data on where london dealers chose to place interdealer trades contrary to intuition we show that uninformed interdealer trades as measured by subsequent price impact tend to migrate to third party brokered systems where trade is anonymous by contrast informed interdealer trades tend to migrate to the direct nonanonymous public market additionally we show that this distribution of trades is supported by differences in the price improvement dealers receive in the direct and brokered markets our findings have implications for three strands of the market microstructure literature first they contribute to our understanding of the importance of anonymity and transparency in securities trading most theoretical models of the effects of anonymity and transparency predict that anonymous trading systems will attract more informed trades

the hidden advantage of delegation pareto improvements in a gift exchange game this paper analyzes the effect on performance and earnings of delegating the wage choice to employees our results how that such delegation significantly increases effort levels moreover we observe a pareto improvement as the earnings of both employers and employees increase when employers delegate than when they do not interestingly we also find that the employees performance under delegation is higher than under non delegation even for similar wages while there is strong evidence that behavior reflects strategic considerations this result also holds for one shot interactions a possible non strategic motivation explaining the positive reaction to delegation is a sense of enhanced responsibility

school quality and black white relative earnings a direct assessment the wage differential between black and white men fell from 40 percent in 1960 to 25 percent in 1980 it has been argued that this convergence reflects improvements in the relative quality of black schools to test this hypothesis we assembled data on pupil teacher ratios annual teacher pay and term length for black and white schools in the eighteen segregated states from 1915 to 1966 these data are linked to estimated returns to education for southern born men from different cohorts and states in 1960 1970 and 1980 improvements in the relative quality of black schools explain 20 percent of the narrowing of the black white earnings gap between 1960 and 1980

customer discrimination in professional basketball evidence from the trading card market this paper presents evidence on the existence of customer racial discrimination in professional basketball from recent prices for the trading cards of former players in the national basketball association data were collected on the 258 active roster players in the nba during the 1976 77 season 133 of whom had cards issued that year maximum likelihood estimation of a card price equation is carried out accounting both for the nonrandom selection of the players for whom cards exist and for left censoring of the dependent variable overall the empirical results suggest the absence of customer racial discrimination in the pricing of basketball trading cards however there is some evidence that the effect of career length on trading card prices is lower for whites than for blacks and that the card price premium for players who subsequently coached in the nba is lower for blacks than for whites

reference points and effort provision a key open question for theories of reference dependent preferences is what determines the reference point one candidate is expectations what people expect could affect how they feel about what actually occurs in a real effort experiment we manipulate the rational expectations of subjects and check whether this manipulation influences their effort provision we find that effort provision is significantly different between treatments in the way predicted by models of expectation based reference dependent preferences if expectations are high subjects work longer and earn more money than if expectations are low

informed speculation with imperfect competition competitive rational expectations models have the unsatisfactory property dubbed the schizophrenia problem by hellwig that each trader takes the equilibrium price as given despite the fact that he influences that price an examination of information aggregation in a non competitive rational expectations model using a nash equilibrium in demand functions shows that the schizophrenia problem is avoided by having each trader take into account the effect his demand has on the equilibrium price given a distribution of private information across traders prices reveal less information than in the competition equilibrium and prices no longer become fully informative in the limit as noise trading vanishes or as traders become risk neutral with small traders the model may become one of monopolistic competition not perfect competition in contrast to the competitive model a reasonable model of endogenous acquisition of costly private information is obtained even when traders are risk neutral

the role of responsibility in strategic risk taking we explore play between groups where one member of each 2 person group dictates the play of that group and is therefore responsible for the payoff of the other group member we compare this to play when the game is the same but each person is playing only for herself consistent with the principle of responsibility alleviation described by charness charness g 2000 responsibility and effort in an experimental labor market journal of economic behavior and organization 42 375 384 we find that a sense of responsibility for the welfare of others has an effect while the issue of responsibility does not appear to influence the decisions of 2 3 of the population almost 90 percent of the remaining 1 3 of the population plays a less risky strategy when choosing for a group than when playing only for herself

the cross sectional determinants of inventory control and the subtle effects of adrs abstract this paper addresses the effects of international cross listings on the domestic market by investigating the properties of market maker inventories on the london stock exchange we find that the unit root hypothesis can only be rejected for a fraction of dealer inventories and that mean reversion is generally slow inter stock variations in mean reversion can be explained by liquidity and risk related variables as well as the availability of adrs on other exchanges we find that adrs do have an appreciable and significant impact on dealer behaviour and trading costs the findings have implications for our understanding of the subtleties of linkages between markets