communication networks in markets abstract this paper proposes and tests experimentally a dynamic model of bargaining to analyze decentralized markets where buyers and sellers obtain information about past deals through their social network there is a unique equilibrium in which every individual obtains the same outcome independent of their network position and this outcome depends on the peripheral least connected individuals in the network the main testable predictions are that networks with high density and or low variability in the number of connections across individuals allow their members to obtain a better deal these predictions are tested in a lab experiment through 4 treatments that vary the network that subjects are assigned to the results of the experiment lend support to the theoretical predictions subjects converge to an outcome that is independent of their network position and they fare better if they are assigned to a network that is dense and or has low variability in number of connections across members

the impact of unemployment insurance on job search evidence from google search data job search is a key choice variable in theories of labor markets but is difficult to measure directly we develop a job search activity index based on google search data the google job search index gjsi we validate the gjsi with both survey and web based measures of job search unlike those measures the gjsi is high frequency geographically precise and available in real time we demonstrate the gjsi s utility by using it to study the effects of unemployment insurance policy changes between 2008 and 2014 we find no evidence of an economically meaningful effect of these changes on aggregate search

job search and hyperbolic discounting structural estimation and policy evaluation this paper estimates the structural parameters of a job search model with hyperbolic discounting and endogenous search effort it estimates quantitatively the degree of hyperbolic discounting and assesses its implications for the impact of various policy interventions aimed at reducing unemployment the model is estimated using data on unemployment spells and accepted wages from the national longitudinal survey of youth nlsy the likelihood function explicitly incorporates all the restrictions implied by the optimal dynamic programming solution to the model both observed and unobserved heterogeneity are accounted for the results point to a substantial degree of hyperbolic discounting especially for low and medium wage workers the structural estimates are also used to evaluate alternative policy interventions for the unemployed estimates based on a model with exponential discounting may lead to biased inference on the economic impact of policies jel c6 c73 d90 j64 j68

testing for imperfect competition at the fulton fish market in this article i report the results of a study of the prices paid by individual buyers at the fulton fish market in new york city in principle this is a highly competitive market in which there should be no predictable price differences across customers who are equally costly to service the results indicate that different buyers pay different prices for fish of identical quality for example asian buyers pay 7 less for whiting than do white buyers a result which is inconsistent with the model of perfect competition

exploring price and non price decision making in the uk package tour industry insights from small scale travel agents and tour operators abstract the emerging literature on the uk package tour industry has drawn upon diverse academic disciplines each carrying different methodological presuppositions underplayed is the intrinsic context within which tourism providers operate this paper presents the results of a questionnaire research investigation to generate practitioners insights into the competitive behaviour of the industry in the uk such insights are central in an understanding of the perceptions and processes at work oligopoly behaviour appears to be present amongst both large company groupings and small enterprises the exploratory analysis suggests the need to re emphasise the behavioural nature of oligopoly further the tourism industry shares this characteristic with manufacturing previously assumed to be widely different

decision making by specialist luxury travel agents abstract we report an ethnographic study of specialist travel agents in luxury wildlife tourism agents consider 30 factors in 5 groups related to client destination attraction operator and agent they consider the groups in sequence rapidly and intuitively they are driven by a powerful regard for the high expectations of wealthy clients and a sense of responsibility to the clients but they assume authority over the decision they rely on personal experience with each particular place and tourism product and sell only what they know one of their skills is to project themselves into the client s perspective so as to imagine a trip in great detail this process contrasts strongly with the explicit deterministic approach used by retail travel agents in high volume lower priced subsectors where earnings are driven by commission and incentive structures for high end agents establishing long term relationships of mutual trust with individual clients and tour operators is paramount

trading in networks theory and experiments intermediation is a prominent feature of economic production and exchange two features of intermediation are salient coordination among traders between the source and the destination and competition between alternative combinations of intermediaries we develop a simple model to study these forces and we test the theoretical predictions in experiments our theoretical analysis yields a complete characterization of pricing equilibrium in networks there exist both ecient and inecient equilibria suggesting a key role of coordination among intermediaries strategic interaction leads to either buyer and seller retaining all surplus or intermediaries extracting all surplus we develop conditions on network structure under which these di erent extremal outcomes arise respectively laboratory experiments show that eciency prevails in almost all cases so traders are successful in coordination subjects coordinate on extreme surplus division finally experiments highlight the role of network structure in determining pricing and the

are unemployed black youth income maximizers the exceedingly high rates of unemployment which plague black youth today have generated a great deal of interest and concern among economists and policymakers while recent research has provided some important insights into the nature and causes of the problem many puzzles remain unresolved for instance the evidence seems to indicate that the problem of unemployment for black youth is primarily one of lengthy duration or low probability of gaining employment rather than one of high frequency or high probability of losing employment furthermore the reported reservation wages of black youth remain above the minimum wage despite these lengthy durations of unemployment yet they continue to express desires for work and seek jobs which are comparable to those sought by white youth these findings raise several questions about the economic decisions made by young blacks do lengthy durations of joblessness reflect income or utility maximizing behavior on the part of black youth who accurately perceive their market and nonmarket opportunities for income and who choose their responses accordingly are their perceptions of these market opportunities accurate i e are expectations rational or at least do they adapt after some period of search if so is income being maximized or do other arguments in their utility functions such as leisure receive much weight this paper presents the results of an exercise that sheds some light on these issues in particular i analyze some survey data on job search by inner city black youth using a technique developed recently by lancaster and chesher 4 they use a simple incomemaximizing model of job search to derive formulas for the elasticities of reservation wages and employment probabilities with respect to nonwage income and job offer arrival rates these formulas enable us to compute these elasticities from summary statistics instead of estimating these parameters statistically however the technique is valid only if the stringent assumptions of the simple job search model are correct and if certain survey data can be interpreted in a particular manner the validity of an income maximizing search model for a sample of unemployed black youth is tested below using formulas derived by lancaster and chesher i compute the elasticities and employment probabilities for unemployed blacks that are implied by this model these are then compared to observed employment probabilities and econometrically

bargaining in a network of buyers and sellers abstract we analyze bargaining between buyers and sellers who are connected by an exogenously given network players can make repeated alternating public offers that may be accepted by any of the responders linked to each specific proposer our purpose is to find the conditions of the network which drive the price distribution in equilibrium this paper uses graph theory tools to provide necessary and sufficient conditions regarding the architecture of networks for the subgame perfect equilibrium of the bargaining game to coincide with the walrasian outcome

network structure and strategic investments an experimental analysis abstract this paper experimentally analyzes the effect of network structures on individuals decisions in a game of strategic substitutes the theoretical basis for our experiment is the model of bramoulle and kranton 2007 as predicted we find that individuals are able to coordinate on equilibria but that coordination strongly depends on the network structure despite frequent coordination failures in graphs of size n 4 equilibrium play seems easier on network architectures with high low density and low high centrality if play converges it almost exclusively does so towards the predicted equilibria theoretical results with respect to welfare are also confirmed next to global graph structural properties we also explore the effects of local and individual factors we find that behavior on networks is affected by the number of direct neighbors but not by individuals risk attitudes apparently the global and the local structure of a network does not leave much explanatory room for individual effects that pertain to risk taking

an evolutionary model of bargaining abstract individuals from two populations of bargainers are randomly matched to play the nash demand game they make their demands by choosing best replies based on an incomplete knowledge of the precedents and occasionally they choose randomly there is no common knowledge over the long run typically one division will be observed almost all of the time this stochastically stable division is close to the nash solution when all agents in the same population are alike when the populations are heterogeneous a generalization of the nash solution results if there is some mixing between the two populations the stable division is fifty fifty journal of economic literature classification number c78

the informal recruitment channel and the quality of job worker matches an analysis on italian survey data this article analyzes the consequences of being recruited through the informal channel in the italian labor market using data collected through a new survey implemented by institute for the development of the vocational training of workers isfol we find that while workers entering the labor market via professional ties enjoy a wage bonus and a reduction in entry times those recruited via family and friends referrals save on entry times but receive on average lower wages moreover the use of the family channel reduces the returns to education and is associated with the phenomenon of over education suggesting the existence of some mismatches between workers and jobs characteristics copyright 2011 the author 2010 published by oxford university press on behalf of associazione icc all rights reserved oxford university press

the digital provide information technology market performance and welfare in the south indian fisheries sector when information is limited or costly agents are unable to engage in optimal arbitrage excess price dispersion across markets can arise and goods may not be allocated efficiently in this setting information technologies may improve market performance and increase welfare between 1997 and 2001 mobile phone service was introduced throughout kerala a state in india with a large fishing industry using microlevel survey data we show that the adoption of mobile phones by fishermen and wholesalers was associated with a dramatic reduction in price dispersion the complete elimination of waste and near perfect adherence to the law of one price both consumer and producer welfare increased

does the public employment service affect search effort and outcomes in this paper we examine the disincentive effects of the public employment service on the search effort of unemployed workers and on their exit rate from unemployment for that purpose we specify a structural search model with fixed and variable costs of search in which unemployed workers select their optimal search intensity given the exogenous arrival rate of job contacts coming from the public employment agency because the theoretical effect of an increase in this exogenous job contact arrival rate on the structural exit rate from unemployment is ambiguous we estimate this model using individual unemployment duration data our results show that the exit rate from unemployment increases with the arrival rate of job contacts obtained by the public employment service especially for low educated and low skilled workers they also show that the search effort is more costly for low educated women and low skilled adult unemployed workers this last result suggests that a public employment agency that matches searchers and employers is beneficial in the sense that it saves searchers in terms of search costs they would otherwise bear

the role of consumers in competition and competition policy abstract this paper develops the idea that consumers behaviour matters significantly from the viewpoint of industry performance this is examined through some theoretical propositions on search and switching behaviour but then at greater length through some case study examples these demonstrate how even in potentially competitive industries reluctance by consumers to search or to switch suppliers can lead to sub competitive outcomes comparisons are made between industries where search and switching is easy and those where it is not the significance of non traditional competition policy remedies such as enforcement of annual contracts in changing the outcome is drawn out

bilateral bargaining in networks abstract each connected pair of nodes in a network can jointly produce one unit of surplus a maximum number of linked nodes is selected in every period to bargain bilaterally over the division of the surplus according to the protocol proposed by rubinstein and wollinsky equilibrium in a market with sequential bargaining econometrica 53 1985 1133 1150 all pairs which reach an agreement obtain the discounted payoffs and are removed from the network this bargaining game has a unique subgame perfect equilibrium that induces the dulmage mendelsohn decomposition partition of the bipartite network of the set of nodes in this network

learning by doing and learning from others human capital and technical change in agriculture household level panel data from a nationally representative sample of rural indian households describing the adoption and profitability of high yielding seed varieties hyvs associated with the green revolution are used to test the implications of a model incorporating learning by doing and learning spillovers the estimates indicate that i imperfect knowledge about the management of the new seeds was a significant barrier to adoption ii this barrier diminished as farmer experience with the new technologies increased iii own experience and neighbors experience with hyvs significantly increased hyv profitability and iv farmers do not fully incorporate the village returns to learning in making adoption decisions

the impact of informal networks on quit behavior sector disaggregation the change in the level effect accounts for only 0 35 0 41 percentage point of the 2 24 percentage point deceleration in labor productivity growth between the 1948 65 and 1973 78 periods the aggregate rate and level effects are not very sensitive to the degree of disaggregation 12versus 60 sector although some large level effects are evident within and across major industrial divisions they often cancel out in the aggregate however the level effect from the shift out of farming is quantitatively large and is close to the aggregate level effect using either 12 sector or 60 sector disaggregation although one can approximate the aggregate level effect by looking only at that for agriculture one should note that other fairly large level effects exist both within and across major industrial divisions other than agriculture

clever agents in young s evolutionary bargaining model in the models of young 1993 econometrica61 57 84 1993 j econ theory59 145 168 boundedly rational individuals are recurrently matched to play a game and they play myopic best replies to the recent history of play it could therefore be an advantage to instead play a myopic best reply to the myopic best reply something boundedly rational players might conceivably also do we investigate this possibility in the context of young s j econ theory59 145 168 bargaining model it turns out that cleverness in this respect indeed does have an advantage in some cases however if all individuals are equally informed about past play in a statistical sense then the nash bargaining solution remains the unique long run outcome when the mutation rate goes to zero journal of economic literature classification numbers c70 c78

strategic communication networks in this paper we consider situations in which individuals want to choose an action close to others actions as well as close to a payoff relevant state of nature with the ideal proximity to the common state varying across the agents before this coordination game with heterogeneous preferences is played a cheap talk communication stage is offered to players who decide to whom they reveal the private information they hold about the state the strategic information transmission taking place in the communication stage is characterized by a strategic communication network we provide a direct link between players preferences and the strategic communication network emerging at equilibrium depending on the strength of the coordination motive and the prior information structure equilibrium strategic communication networks are characterized in a very tractable way and compared in term of efficiency in general a maximal strategic communication network may not exist and communication networks cannot be ordered in the sense of pareto however expected social welfare always increases when the communication network expands strategic information transmission can be improved when group or public communication is allowed and or when information is certifiable

bargaining in stationary networks we study an infinite horizon game in which pairs of players con nected in a network are randomly matched to bargain players who reach agreement are replaced by new players at the same positions in the network we show that all equilibria are payoff equivalent the payoffs and the set of agreement links converge as players become patient several new concepts mutually estranged sets partners and shortage ratios provide insights into the relative strengths of the positions in the network we develop a procedure to deter mine the limit equilibrium payoffs for all players characterizations of equitable and nondiscriminatory networks are also obtained jel c78 d85 competitive equilibrium theory assumes large and anonymous markets in which every buyer can trade with every seller underlying these assumptions are standard goods and services that may be traded at low transaction costs by agents who are not in specific relationships with one another however in many markets goods and services are heterogeneous e g cars apartments or need to be tailored to particular needs e g manufacturing inputs technical support furthermore trad ing opportunities may depend on transportation costs social relationships infor mation advertising trust technological compatibility joint business opportunities free trade agreements etc in such cases it is natural to model the market using a network where only pairs of connected agents may engage in exchange new theories are needed to explore the influence of the network structure on market outcomes many questions arise how does an agent s position in the net work determine his bargaining power and the local prices he faces who trades with whom and on what terms when are prices uniform in the network one possible conjecture is that an agent s bargaining power is determined by his relative number of connections in the network however this simple theory is implausible consider the network of four sellers located at the top nodes and nine buyers located at the bottom nodes depicted in figure 1 assume that each seller supplies one unit of a homogeneous indivisible good each buyer demands one unit of the good and all buyers have identical values for the good the buyer located in the middle has the largest number of links in the network as he is connected to each

endogenous job contact networks we use the uk quarterly labour force survey to document the presence of two phenomena first a positive correlation between unemployment rate and the proportion of job seekers who use social networks to nd jobs network use second a non monotone relation between unemployment rate and the proportion of recently employed workers who found their job through friends or relatives network productivity this second relation is positive for low levels of unemployment rate while it becomes negative for high levels of unemployment rate existing models of social networks and labor market generally assume that social networks are exogenous this assumption implies a negative correlation between unemployment rate and network productivity we develop a model where social networks are used to collect job oers but workers decide strategically how much to invest in their network we show that equilibrium job contact networks are dense and more productive in transmitting information when labor market turnover is moderate while they are less productive and segmented into clusters for either high or low turnover the equilibrium response of job contact networks to changes in labor market conditions is sucient to generate

when demand drops and prices rise tourist packages in the balearic islands during the economic crisis abstract the aim of this paper is to analyse the effects of the crisis on the prices of package holidays to the balearic islands sold by a sample of british and german tour operators three alternative price indexes are calculated the results show that tour operators have reacted by using market strategies other than pricing aimed at boosting their revenue even though they do not push up the number of tourists thus protecting the tour operators financial yield

networks in labor markets wage and employment dynamics and inequality we present a model of labor markets that accounts for the social network through which agents hear about jobs we show that both wages and employment are positively associated a strong form of correlation across time and agents we also analyze the decisions of agents regarding staying in the labor market or dropping out if there are costs to staying in the labor market then networks of agents that start with a worse wage status will have higher drop out rates and there will be a persistent differences in wages between groups according to the starting states of their networks

an empirical investigation of the returns to job search the assumption of diminishing returns to job search plays a crucial role in the search model presented recently in this review by john seater this assumption is justified by noting that spatial aspects of the search process cause diminishing returns since travel time required to search firms in a circular area increases faster than the area to be searched besides being an important property of a class of theoretical models returns to search may partly explain the paradox of an approximately forty hour workweek contrasted with a seven hour search week see john barron and wesley mellow p 396 the interaction of diminishing returns to and positive costs of search may result in an optimal allocation of search time of only a few hours per week in this paper i examine whether the assumption of diminishing returns to job search can be supported by the data following seater the returns to search are measured by the number of firms contacted and the focus is on the ability of unemployed individuals to translate search time into employee contracts returns to search are evaluated by noting whether the production process exhibits diminishing returns with respect to the input variable

prices prices and prices a study in the airline sector abstract this article creates and empirically analyzes a dynamic pricing framework the model includes the main theories on prices in the literature and dynamically analyzes how companies change their pricing policies according to different circumstances through the use of regressions the article shows the relative long and short term impact on pricing equations strategic versus operational matters and on production conditions versus demand perspectives in the setting of operational prices in addition it highlights how the proportions of these pricing perspectives change in the airline sector according to the effect of the environment on the configuration of the strategy determined by monthly and hourly seasonality and also according to the nature of this competitive strategy determined by the characteristics of the company and the destination airport the results confirm our framework and show how firms combine the different perspectives in their pricing strategies

identification of endogenous social effects the reflection problem this paper examines the reflection problem that arises when a researcher observing the distribution of behaviour in a population tries to infer whether the average behaviour in some group influences the behaviour of the individuals that comprise the group it is found that inference is not possible unless the researcher has prior information specifying the compisition of reference groups if this information is available the prospects for inference depend critically on the population relationship between the variables defining reference groups and those directly affecting outcomes inference is difficult to implossible if these variables are functionally dependent or are statistically independent the prospects are better if the variables defining reference groups and those directly affecting outcomes are moderately related in the population

the joint determination of household membership and market work the case of young men except in special cases market work and household membership are jointly chosen a nash bargaining model of family behavior is used to specify stochastic structural relationships two indirect utility functions and a market and a reservation wage function that jointly determine work consumption and household membership the maximum likelihood estimates of the implied trinomial probit model differ sharply from those obtained when either market work or household membership is taken as exogenous this application to white male youths from the national longitudinal surveys shows the insurance function of families parents insure their sons against poor market opportunities

search method use by unemployed youth this article presents a search model which shows that search method choices should be related to their costs and expected productivities as well as to nonwage income and wage offer distributions the empirical evidence then shows that the most frequently used search methods i e friends and relatives and direct applications without referral are also the most productive in generating offers and acceptances the number of methods used is affected by factors that presumably reflect opportunities as well as income sources and needs specific methods are chosen in a manner that generates positive average effects on outcomes for those using them

personal networks and nonagricultural employment the case of a farming village in the philippines abstract this article based on an intensive village survey in the philippines analyzes the effects of personal networks on rural villagers access to nonagricultural occupations and the terms of employment given to them a key finding is that personal networks are selectively used to reduce transaction costs and their impacts on employment conditions vary by size and by location of enterprises we find that when villagers are employed in unskilled work at small enterprises those who use family relative networks receive wage premiums however if we limit our sample to small enterprises located near our study village the family relative network premiums become insignificant presumably because of the overriding influence of the community wide network within a narrow local community contrary to the case of small enterprises unskilled workers wages at large enterprises are not much affected by personal networks but are largely determined by years of schooling and work experience the recent developmen

on the formation of interaction networks in social coordination games there are many situations where two interacting individuals can benefit from coordinating their actions we examine the endogenous choice of partners in such social coordination games and the implications for resulting play we model the interaction pattern as a network where individuals periodically have the discretion to add or sever links to other players with such endogenous interaction patterns we see multiple stochastically stable states of play including some that involve play of equilibria in the coordination game that are neither efficient nor risk dominant thus the endogenous network structure not only has implications for the interaction pattern that emerges but it also has a significant impact on the play in the coordination game relative to what would arise if the same interaction network were exogenous

does incarceration length affect labor market outcomes abstractthis paper studies how longer incarceration spells affect offenders labor market outcomes by using a reform that increased incarceration lengths by approximately 1 month i use detailed register data for offenders who predominantly serve incarceration spells of 1 2 months i analyze the sample for several years prior to and after incarceration and show that the reform led to an exogenous increase in incarceration lengths i find that the longer incarceration spells result in lower unemployment rates and higher earnings possibly because marginal increases in short incarceration spells improve conditions and incentives for rehabilitation while the costs of jail related to these outcomes are unaffected i show that the estimates are robust to different econometric specifications and further provide evidence that my results are not driven by changes in macroeconomic conditions

the role of spatial and skill mismatches explaining long term unemployment in paris in the paris region one can observe simultaneously the coexistence of a large and dynamic job pool with long lasting periods of unemployment this paradox reveals the importance of skill and spati