collective action and group heterogeneity voluntary provision versus selective incentives several studies have concluded that heterogeneity within a group facilitates the initiation of collective action however a recent analysis found that heterogeneity can either facilitate or impede collective action depending on factors like the strength of the temptation to free ride reconciling these conclusions is difficult because the earlier studies assumed that public goods are provided voluntarily whereas the later analysis assumed that selective incentives like norms or laws can mandate cooperation i examine the link between group heterogeneity and collective action in three regimes voluntary systems in which actors make unrestricted decisions to participate in collective action compliance systems in which actors create and enforce norms that compel others to participate in public goods production and balanced systems in which actors can create and enforce compliance norms or oppose such norms the analysis reveals a complex link among group heterogeneity collective action and the type of regime by fostering the organization of previously atomized groups and weakening the cohesion of highsolidarity groups heterogeneity in contribution costs and valuation of the public good can reduce social power differentials

evaluating welfare reform in the united states this paper reviews the economic literature on welfare reform over the 1990s a brief summary of the policy changes is followed by a discussion of the methodological techniques that analyze the effects of these changes on outcomes the paper then critically reviews the econometric and experimental literature on caseload changes labor force changes poverty and income changes and family formation changes a growing body of evidence suggests that recent policy changes have influenced economic behavior and well being one particular set of new style welfare programs seems to show especially promising results with significantly increased work and earnings and reduced poverty

learning theory and the logic of critical mass the oliver marwell theory of critical mass is a prominent solution to the free rider problem that plagues collective action in large groups i reformulate the theory as a stochastic learning model in which cooperative responses are shaped by the social sanctions and cues generated by the responses of others this relaxes four assumptions in the original formulation that the actors are rational decisions are isolated events outcomes are deterministic and public goods have pure jointness of supply and collective profit computer simulations then show how adaptive actors become trapped in a suboptimal equilibrium and how they escape through attainment of critical mass start up problems arise from accommodation to social costs and not from low returns to early contributors as previously believed simulations also identify a new dilemma of group size and show why solidarity tends to emerge in response to crisis finally normative solidarity appears to be a consequence rather than cause of critical mass but may promote recovery from random deviance

incentive effects of the u s welfare system a review the author would like to acknowledge support for prior work on this topic from the u s department of health and human services and helpful comments from three anonymous referees rebecca blank howard chernick john fitzgerald irwin garfinkel peter gottschalk edward gramlich david greenberg judith gueron james heckman v joseph hotz robert hutchens michael keane frank levy larry mead michael murray robert plotnick anuradha rangarajan philip robins howard rolston jeffrey smith and daniel weinberg all opinions and errors are those of the author alone

optimal competitive balance in a season ticket league there is no question the level of play has decreased now do games become more exciting are teams more evenly matched no question is that good for the game or not i don t know i really don t know i ask that question all the time nfl hall of fame quarterback troy aikman quoted in pedulla 2003 i think that margin of competition that margin of the difference between winning and losing in this league is very small and i think that is great for the fans because every team comes in with an opportunity to win nfl commissioner roger goodell quoted in curran 2008 i introduction in this article we lay out the basic welfare foundation of optimal competitive balance for regular season play in a closed sports league where season tickets dominate sales this setting best describes the national football league nfl economically the most important of the four major north american leagues nals we handle the case of single ticket leagues like baseball in fort and quirk 2010 our chosen focus is on balance during the regular season and details of all our modeling choices are given in the next section the quotes given above help to illuminate the policy issue addressed by the theory is the nfl too balanced as hall of fame quarterback troy aikman s quote suggests or is the level of parity on the field somehow optimal as suggested in commissioner goodell s quote congressional hearings u s senate 2001 have even been convened on the subject in the remaining nals for the policy oriented literature it is implicitly taken that more balance would be an improvement over the result generated by the leagues themselves comprehensive reviews are in fort 2006a fort and quirk 1995 szymanski 2003 this debate among fans reporters and economists lacks anything remotely resembling any competitive balance target for example an optimal level of competitive balance from the perspective of optimality constructs this intuitive belief that enhancing competitive balance would on net enhance general fan welfare may simply be pareto noncomparable advocacy rottenberg 1956 was the first to detail the problems associated with a lack of competitive balance if outcomes on the field court or ice become too predictable as when there are only a few very dominant teams fans of perennially unsuccessful teams may stay away in droves and some teams in the league may actually go under also even the teams that survive will have lower revenues if these disillusioned fans forsake the sport altogether thus leagues have a vested interest in managing the level of competitive balance the point of departure for this article is how the league s profit maximizing choice of competitive balance deviates from one specification of the social welfare maximizing level of balance we address the question of optimal competitive balance comparing decentralized league outcomes to the level of competitive balance that maximizes the sum of consumers and producers surpluses we realize that other possible pareto optimal outcomes might be developed but the surplus maximizing approach does have the virtue of utilizing theoretical tools that are conceptually amenable to relatively straightforward measurement and comparison in actual leagues in particular our main result is that whether the decentralized league result is too much or too little balance relative to the surplus maximizing level is an empirical matter if the marginal impacts of talent rearrangements are larger in smaller revenue markets than in larger revenue markets then welfare is enhanced by rearranging talent to create more balance but if the reverse is true then less balance enhances social welfare the elements required to actually assess this relationship namely available data and careful empirical analysis can settle the issue we also are not blind to the fact that some advocacy of particular mechanisms to enhance balance actually may be thinly veiled attempts to redistribute wealth from players to owners and among owners

family welfare cultures strong intergenerational correlations in various types of welfare use have fuelled a long standing debate over whether welfare receipt in one generation causes welfare participation in the next generation some claim a causal relationship in welfare receipt across generations has created a culture in which welfare use reinforces itself through the family others argue the determinants of poverty or poor health are correlated across generations so that children s welfare participation is associated with but not caused by parental welfare receipt however there is little empirical evidence to sort out these claims in this paper we investigate the existence and importance of family welfare cultures in the context of norway s disability insurance di system to overcome the challenge of correlated unobservables across generations we take advantage of random assignment of judges to di applicants whose cases are initially denied some appeal judges are systematically more lenient which leads to random variation in the probability a parent will be allowed di using this exogenous variation we find strong evidence that welfare receipt in one generation causes welfare participation in the next generation when a parent is allowed di their adult child s participation over the next five years increases by 6 percentage points this effect grows over time rising to 12 percentage points after ten years while these findings are specific to our setting they serve to highlight that welfare reforms can have long lasting effects on program participation since any original effect on the current generation could be reinforced by changing the participation behavior of their children as well the detailed nature of our data allows us to compare the intergenerational transmission with spillover effects in other networks and to explore mechanisms our findings point to a special link between parents and their children with little impact due to close neighbors di participation we find suggestive evidence that what may change as a result of a parent being allowed di is their children s beliefs about the efficacy of trying to get on to the di program or their attitudes about di participation and its stigma

competitive balance measures in sports leagues the effects of variation in season length appropriate measurement of competitive balance is a cornerstone of the economic analysis of professional sports leagues we examine the distributional properties of the ratio of standard deviations rsd of points percentages the most widely used measure of competitive balance in the sports economics literature in comparison with other standarddeviation based measures simulation methods are used to evaluate the effects of changes in season length on the distributions of competitive balance measures for different distributions of the strengths of teams in a league the popular rsd measure performs as expected only in cases of perfect balance if there is imbalance in team strengths its distribution is very sensitive to changes in season length this has important implications for comparisons of competitive balance for different sports leagues with different numbers of teams and or games played jel l83 d63 c63

loss aversion and labor supply in many occupations workers labor supply choices are constrained by institutional rules regulating labor time and effort provision this renders explicit tests of the neoclassical theory of labor supply difficult here we present evidence from studies examining labor supply responses in neoclassical environments in which workers are free to choose when and how much to work despite the favorable environment the results cast doubt on the neoclassical model they are however consistent with a model of reference dependent preferences exhibiting loss aversion and diminishing sensitivity jel j22 b49

backward looking social control rational choice theorists stress the need for social control to overcome the free rider problem in collective action critics counter that mechanisms for monitoring and enforcement are themselves public goods that presume collective action rather than explain it in response heckathorn 1989 proposed an analytic solution based on hypocritical cooperation in which rational actors calculate the optimal allocation of resources between compliance with collective obligations and their enforcement i relax these forward looking behavioral assumptions and show how social control might evolve among backward looking pragmatists computers simulations test the ability of various sanctioning regimes to generate cooperation as well as resist stampedes that risk overcooperation and needless sacrifice external moral sanctions produce too little cooperation while internalized sanctions produce too much

how income transfer programs affect work savings and the income distribution a critical review for helpful comments on earlier drafts we thank without implicating moses abramovitz yves balcer john bishop alan blinder richard burkhauser michael darby irwin garfinkel alan gustman daniel hamermesh martin holmer george jakubson robert lampman paul menchik robert moffitt michael murray joseph quinn timothy smeeding eugene smolensky barbara wolfe and two anonymous referees

the emergence of generalized exchange the existence of generalized exchange characterized by unilateral resource giving has been a puzzle when we assume rational actors because free riding can occur this article first identifies pure generalized exchange in which each actor gives resources to the recipient s of his choice then it proposes the fairness based selective giving strategy an actor adopting this strategy selects a recipient whose behaviors satisfy her criterion of fairness provided perfect information is given the results of evolutionary simulation show that pure generalized exchange can emerge among egoists without collective norms even in societies in which individuals have information only about their immediate neighbors

the baseball players labor market reconsidered the owners wanted as few players as possible to become free agents i wasn t entirely opposed to this i didn t want as many free agent players as to flood the market what would likely produce the optimal mix of supply and demand with no history offree agent movement to study it was impossible to know which requirement would be best my gut feeling and i stress feeling was thatfive years would be better and if the choice lay between four and six years i would choose the latter the owners committee proposed six years i suggested five

using differences in knowledge across neighborhoods to uncover the impacts of the eitc on earnings we develop a new method of estimating the impacts of tax policies that uses areas with little knowledge about the policy s marginal incentives as counterfactuals for behavior in the absence of the policy we apply this method to characterize the impacts of the earned income tax credit eitc on earnings using administrative tax records covering all eitc eligible lers from 19962009 we begin by developing a proxy for local knowledge about the eitc schedule the degree of sharp bunching at the exact income level that maximizes eitc refunds by individuals who report self employment income the degree of self employed sharp bunching varies signi cantly

cooperation in microcredit borrowing groups identity sanctions and reciprocity in the production of collective goods cooperation to produce collective goods is widespread in society and yet so is its failure theorists have identified competing mechanisms for facilitating group cooperation including group identity sanctions and reciprocity here i use empirical data to explore how these mechanisms influence cooperation in the natural laboratory of microcredit borrowing groups microcredit makes loans to high risk borrowers through borrowing groups in which individuals access to credit is dependent on the behavior of other members of the group thereby creating a social dilemma for members and an opportunity to observe cooperation in real world groups by analyzing both collective goods production loans and compliance repayment i find that the competing mechanisms have differential effects group identity sanctions and reciprocity are all associated with more borrowing in the group only reciprocity however limits loan delinquency and is associated with group longevity suggesting both that collective goods p

the economic design of sporting contests what is the optimal number of entrants in a race or the optimal number of teams in a baseball league what is the optimal structure of prizes for a golf tournament or degree of revenue sharing for a football championship how evenly balanced should the competing teams be in the nascar or formula one championships what is the maximum number of entrants per nation to the olympic games that should be permitted what quota of qualifying teams to the soccer world cup should be allocated to the developing nations

using notches to uncover optimization frictions and structural elasticities theory and evidence from pakistan we develop a framework for nonparametrically identifying optimization frictions and structural elasticities using notches discontinuities in the choice sets of agents introduced by tax and transfer policies notches create excess bunching on the low tax side and missing mass on the high tax side of a cutoff and they are often associated with a region of strictly dominated choice that would have zero mass in a frictionless world by combining excess bunching observed response attenuated by frictions with missing mass in the dominated region frictions it is possible to uncover the structural elasticity that would govern behavior in the absence of frictions and arguably capture long run behavior we apply our framework to tax notches in pakistan using rich administrative data while observed bunching is large and sharp optimization frictions are also very large as the majority of taxpayers in dominated ranges are unresponsive to tax incentives the combination of large observed bunching and large frictions implies that the frictionless behavioral response to notches is extremely large but the underlying structural elasticity driving this response is nevertheless modest this highlights the inefficiency of notches by creating extremely strong price distortions they induce large behavioral responses even when structural elasticities are small

fan welfare maximization as a club objective in a professional sports league abstract motivated by aspects of european soccer club governance members clubs supporters trusts a first formal analysis of fan welfare maximization as a club objective in a sports league is provided with comparisons to objectives studied previously profit and win maximization positive comparisons focus on team qualities ticket prices attendances and the impact of capacity crowds empirically observed ticket black markets and inelastic pricing are consistent only with fan welfare maximization normatively social welfare aggregate league surplus is well served by a league of fan welfare maximizers or sometimes win maximizers but not profit maximizers leagues should not normally make profits

rationing queues and black markets several types of rationing and queue mechanisms are compared in a framework of general equilibrium type models under gross substitutability and normality assumptions about consumers walrasian demand during transition from rationing and queues to a market system a group of low income people loses the transition involves larger losses for this group if black markets prevail under rationing or queues while a group of high income consumers gains some other comparative statics results are developed for a queue model with black markets copyright 1993 by the econometric society

social welfare in sports leagues with profit maximizing and or win maximizing clubs this article develops a contest model to compare social welfare in homogeneous leagues in which all clubs maximize identical objective functions with mixed leagues in which clubs maximize different objective functions we show that homogeneous leagues in which all clubs are profit maximizers dominate all other leagues mixed leagues in which small market clubs are profit maximizers and large market clubs are win maximizers type i mixed leagues are dominated by all other leagues from a welfare perspective large market clubs win too often in purely win maximizing and type i mixed leagues whereas small market clubs win too many games in purely profit maximizing leagues and in mixed leagues in which large market clubs are profit maximizers and small market clubs are win maximizers type ii mixed leagues these results have important policy implications social welfare will increase if clubs are reorganized from non profit member associations to profit maximizing corpora tions moreover we show that revenue sharing decreases increases social welfare in mixed homogeneous leagues

the backward hustle an experimental investigation of tax code notches and labor supply abstract the phase in and phase out of benefits as part of social safety nets has the potential to distort individuals labor supply decisions classical economic theory predicts a strong incentive to adjust labor supply and bunch at the discontinuities that arise within notched tax systems however such behavior has been difficult to observe in both survey and administrative data in this paper we design a laboratory experiment to explore the impact of notches on subjects bunching behavior within an environment where subjects receive full information about their payment schedules and can freely adjust their labor supply number of tasks completed while we find clear evidence of bunching under our notched payment system many subjects still fail to bunch we explore the role of behavioral factors such as self control overconfidence and loss aversion as potential determinants of bunching behavior our results indicate that within our sample self control and loss aversion have a positive and significant association with subjects decision to bunch while overconfidence has a negative association these estimates are of the expected sign and suggest that behavioral factors may serve as important underlying determinants of an individual s decision to bunch

a behavioral model of turnout the so called paradox of voting is a major anomaly for rational choice theories of elections if voting is costly and citizens are rational then in large electrorates the expected turnout would be small for if many people voted the chance of anyone being pivotal would be too small to make the act worthwhile yet many people do vote even in large national elections to address this puzzle we construct a model of adaptive rationality citizens learn by simple trial and error repeating satisfactory actions and avoiding unsatisfactory ones their aspiration levels which code current payoffs as satisfactory or unsatisfactory are also endogenous themselves adjusting to experience our main result is that agents who adapt in this manner turn out in substantial numbers even in large electorates and even if voting is costly for everyone standard conceptions of rational behavior do not explain why anyone bothers to vote in a mass election turnout is the paradox that ate rational choice theory fiorina 1990 334 we would like to thank stephen ansolabehere sorin antohi glenn ellison dedre gentner sunil kumar david laitin tze lai arthur lupia elijah millgram lincoln moses scott page tom palfrey john patty paul pfleiderer adam simon joel sobel carole uhlaner three anonymous referees and the participants in the political economics seminar at the gsb the stanford caltech workshop the unc american politics research group the ucla conference on cognition emotion and rational choice panels at the annual meetings of the mpsa and the apsa the agent 2000 workshop the seventh annual wallis conference the cmu pitt colloquium series and the center for advanced study in the behavioral sciences seminar series for their helpful comments this paper was written while ting was at the university of north carolina at chapel hill and he thanks unc s department of political science for its support it was revised while bendor was a fellow at the casbs and he is grateful for the center s financial and intellectual support

spatial competition and strategic firm relocation firms compete spatially for customers who have some degree of brand loyalty the number and attractiveness of the alternatives available to these customers dictates the level of competition facing firms in this study data on ticket pricing in four professional sports leagues are used to empirically examine the existence of spatial competition in sports and the impact of space on team relocations results allowing for structural breaks over time while using spatial autoregressive techniques suggest that sports franchises spatially compete when pricing their tickets and that spatial characteristics including the level of spatial competition have influenced the relocation of teams jel d40 l11 r30 l83

collective versus individual sale of television rights in league sports in many countries the collective sale of tv rights by sports leagues has been challenged by the antitrust authorities in several cases however leagues won in court on the ground that sport cannot be considered a standard good in this paper we investigate the conditions under which the sale of tv rights collectively by sports leagues rather than individually by teams is preferred from a social welfare viewpoint we find that collective sale is socially preferable when leagues are small relatively homogeneous in terms of clout and where teams get little performance related revenues

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