are any growth theories robust this article investigates the strength of empirical evidence for various growth theories when there is model uncertainty with respect to the correct growth model using model averaging methods we find little evidence that so called fundamental growth theories play an important role in explaining aggregate growth in contrast we find strong evidence for macroeconomic policy effects and a role for unexplained regional heterogeneity as well as some evidence of parameter heterogeneity in the aggregate production function we conclude that the ability of cross country growth regressions to adjudicate the relative importance of alternative growth theories is limited despite the vast amount of empirical research generated by new growth theories there is remarkably little consensus on which mechanisms are most salient in explaining cross country differences this article is designed to provide some evidence on this question by examining the robustness of empirical support for different growth the ories as determinants of both aggregate growth and its underlying components total factor productivity tfp growth and physical and human capital accumulation one reason for the lack of empirical consensus on growth determinants is that the main statistical tool in empirical studies cross country growth regressions provides very different answers depending on how the regression is specified which for this context typically amounts to the choice of control variables individual papers typically employ regressions that include modest subsets of the body of regressors that have been pro posed in the literature as a whole others employ a kitchen sink approach to evaluate the relative evidentiary support of competing growth theories in such an exercise a large number of variables are included in a regression and those variables that prove to be significant are then declared to be the important determinants of growth while the others are dismissed as unimportant rodrik et al 2002 sachs 2003

how competitiveness may cause a gender wage gap experimental evidence abstract we show that choices in competitive behavior may entail a gender wage gap in our experiments employees first choose a remuneration scheme competitive tournament vs piece rate and then conduct a real effort task employers know the pie size the employee has generated the remuneration scheme chosen and the employee s gender employers then decide how the pie will be split as in a dictator game whereas employers do not discriminate by gender when tournaments are chosen they take substantially and significantly more from female employees who choose piece rate remuneration a discriminatory wage gap occurs which cannot be attributed to employees performance

more is better but fair is fair tipping in dictator and ultimatum games abstract this paper examines allocators willingness to reward and punish their paired recipients recipients only compete in a skill testing contest the outcome of which determines the size of the surplus in the dictator game allocators reward skillful recipients but punish unskillful ones only modestly the punishment effect is mitigated by the belief held by some allocators that effort is the appropriate measure of deservingness the ultimatum game extension reveals offerers ability to adapt to the strategic environment offers to skillful recipients in the ultimatum game however are shown to be motivated by a taste for fairness and not strategic considerations journal of economic literature classification numbers c70 c91 d63

distributional concerns equity or efficiency oriented abstract this paper provides experimental evidence that in binary choice dictator games the majority of participants are efficiency rather than equity oriented even if their own payoff is reduced by the respective choice therefore altruistic and as a consequence reciprocal motives need to be modelled explicitly if we aim to predict behavior in experiments correctly

warrant valuation and exercise strategy abstract this paper demonstrates that warrant valuation and exercise strategy differ fundamentally from call option valuation simultaneous exercise of warrants is shown to be suboptimal and a monopolist owning all warrants can achieve a higher value unless warrants are perfectly divisible no satisfactory equilibrium exists for the valuation and exercise of widely held warrants the problems encountered appear to be quite general and stem from necessary assumptions about future corporate dividend policy and capital structure such assumptions are necessary for any model of corporate security valuation

warrant exercise and bond conversion in competitive markets abstract we develop a theory of warrants held by competitive warrantholders not constrained to exercise their warrants as one block the theory also applies to convertible bonds held by competitive bondholders not constrained to convert their bonds as one block we prove that the warrant bond price in each of the competitive equilibria is less than or equal to the price in an economy with the block constraint and for at least one competitive equilibrium the warrant bond price equals the warrant bond price in the block constrained economy we illustrate the paths of competitive warrant exercise and bond conversion and conclude that under realistic assumptions they can be long

strategic investment under uncertainty a synthesis abstract investment is a central theme in economics finance and operational research traditionally the focus of analysis has been either on assessing the value of flexibility investment under uncertainty or on describing commitment effects in competitive settings industrial organization research contributions addressing the intersection of investment under uncertainty and industrial organization have become numerous in recent years in this paper we provide an overview aimed at categorizing and relating these research streams we highlight managerial insights concerning the nature of competitive advantage first versus second mover advantage the manner in which information is revealed firm heterogeneity capital increment size and the number of competing firms

a pseudo bayesian model in financial decision making with implications to market volatility under and overreaction abstract this paper develops a model of weight assignments using a pseudo bayesian approach that reflects investors behavioral biases in this parsimonious model of investor sentiment weights induced by investors conservative and representative heuristics are assigned to observations of the earning shocks of stock prices such weight assignments enable us to provide a quantitative link between some market anomalies and investors behavioral biases the seriousness of an anomaly can be quantitatively assessed by investigating into its dependency on weights new results other than the short run underreaction and long run overreaction can be derived and new hypotheses can be formed

rough and lonely road to prosperity a reexamination of the sources of growth in africa using bayesian model averaging this paper takes a fresh look at africa s growth experience by using the bayesian model averaging bma methodology bma enables us to consider a large number of potential explanatory variables and sort out which of these variable can effectively explain africa s growth experience posterior coefficient estimates reveal that key engines of growth in africa are substantially different from those in the rest of the world more precisely it is shown that mining primary exports and initial primary education exerted differential effect on african growth these results are examined in relation to the existing literature copyright 2008 john wiley sons ltd

interactions between investment timing and management effort under asymmetric information costs and benefits of privatized firms abstract in this paper we examine the interactions between investment timing and management effort in the presence of asymmetric information between the owner and the manager where the manager has an informational advantage we find that investment timing is later under asymmetric information than under full information implying a decrease in the value of equity option however in order to minimize any distortion under underinvestment management effort is greater under asymmetric information than under full information we show that there are trade offs in the efficiencies of investment timing and management effort under asymmetric information these results fit well with the findings of past empirical studies concerning the costs and benefits of privatized firms

the impact of voluntary disclosure on a firm s investment policy in this paper we provide a model which describes how voluntary disclosure impacts on the timing of a firm s investment decisions a manager chooses a time to invest in a project and a time to disclose the investment return in order to maximise his monetary payoff we assume that this payoff is linked to the level of the firm s stock price prior to investing the profitability of the project and the market reaction to the disclosure of the investment return are uncertain but the manager receives signals at random points in time which assist in resolving some of this uncertainty we find that a manager whose objective can only be achieved through voluntarily disclosing the return is motivated to invest at a time that would be sub optimal for an identical manager with a profit maximising objective

incentives and service quality in the restaurant industry the tipping service puzzle tipping is a significant economic activity tips in the us food industry alone amount to about 42 billion annually that was claimed to improve service quality and increase economic efficiency because it gives incentives to provide excellent service and therefore allows to avoid costly monitoring of workers the article suggests that this common wisdom might be wrong a simple model shows formally that tips can improve service only if they are sensitive enough to service quality empirical evidence suggests that tips are hardly affected by service quality nevertheless rankings of service quality by customers are very high the co existence of these two findings is denoted the tipping service puzzle and several possible explanations for it are offered

evaluation of firm s loss due to incomplete information in real investment decision abstract we investigate the effect of incomplete information in a model where a start up with a unique idea and technology pioneers a new market but will eventually be expelled from the market by a large firm s subsequent entry we evaluate the start up s loss due to incomplete information about the large firm s behavior we clarify conditions under which the start up needs more information about the large firm the proposed method of evaluating the loss due to incomplete information could also be applied to other real options models involving incomplete information

strategic entry in a triopoly market of firms with asymmetric cost structures abstract this paper examines the strategic investment timing decision in a triopoly market comprising firms with asymmetric cost structures we present three novel results first in the case where there are relatively small cost asymmetries between firms and a relatively small first mover advantage the firm with the lowest cost structure is not always the first investor in other cases the firm with the lowest cost structure is the first investor second an increase in volatility increases the possibility that a firm without the lowest cost structure is the first investor finally even in the three asymmetric firm model we show that the first investor threshold is larger in a triopoly than in a duopoly although it is smaller in a duopoly than in a monopoly

option exercise games an application to the equilibrium investment strategies of firms under the standard real options approach to investment under uncertainty agents formulate optimal exercise strategies in isolation and ignore competitive interactions however in many real world asset markets exercise strategies cannot be determined separately but must be formed as part of a strategic equilibrium this article provides a tractable approach for deriving equilibrium investment strategies in a continuous time cournot nash framework the impact of competition on exercise strategies is dramatic for example while standard real options models emphasize that a valuable option to wait leads firms to invest only at large positive net present values the impact of competition drastically erodes the value of the option to wait and leads to investment at very near the zero net present value threshold copyright 2002 oxford university press

likelihood based estimation of dynamic panels with predetermined regressors this article discusses the likelihood based estimation of panel data models with individual specific effects and both lagged dependent variable regressors and additional predetermined explanatory variables the resulting new estimator labeled as subsystem limited information maximum likelihood ssliml is asymptotically equivalent to standard panel generalized method of moment as n for fixed t but tends to present smaller biases in finite samples as illustrated in simulation experiments simulation results also indicate that the estimator is preferred to other alternatives available in the literature in terms of finite sample performance finally to provide an empirical illustration i revisit the evidence on the relationship between income and democracy in a panel of countries using the proposed estimator

real options and preemption under incomplete information abstract this paper introduces incomplete information and preemption into an equilibrium model of firms facing real investment decisions the optimal investment strategy may lie anywhere between the zero npv trigger level and the optimal strategy of a monopolist depending on the distribution of competitors costs and the implied fear of preemption our model implies that the equity returns of firms which hold real options and are subject to preemption will contain jumps and positive skewness

house money effects on trust and reciprocity in a typical laboratory investment game experiment participants endowments are provided by the experimenter thus the worst case for the investor is that she loses all of her found money by contrast in naturally occurring environments investment decisions can often lead to a loss of one s own money this paper investigates whether trust found in one shot anonymous laboratory interaction is robust to own money environments our results show that consistent with previous investment game results most investors send a positive amount and most trustees return at least the transfer amount regardless of whether the investors purchase or are gifted their endowment however investments are on average lower when participants use their own money and the fraction of maximum investments the most risky investment decision is only half as large under own money as it is under gifted endowments our results explain why one should exercise caution in placing trust in any government s ability to spend other people s money prudently

how democracy affects growth abstract this paper introduces a new methodology to examine the empirical relationship between democracy and economic growth democratic institutions are assumed to affect growth through a series of channels we specify and estimate a full system of equations determining growth and the channel variables results suggest that democracy fosters growth by improving the accumulation of human capital and less robustly by lowering income inequality on the other hand democracy hinders growth by reducing the rate of physical capital accumulation and less robustly by raising the ratio of government consumption to gdp once all of these indirect effects are accounted for the overall effect of democracy on economic growth is moderately negative our results indicate that democratic institutions are responsive to the demands of the poor by expanding access to education and lowering income inequality but do so at the expense of physical capital accumulation

losers and winners in economic growth this paper examines the growth rates in 116 economies from 1965 to 1985 it finds that the lowest quintile had an average growth rate of real gross domestic product gdp per capita of 1 3 percent whereas the highest quintile averaged 4 8 percent the authors isolate five influences that discriminate reasonably well between slow and fast growers a conditional convergence effect whereby a country grows faster if it begins with lower real gdp per capita in relation to its initial level of human capital in the forms of educational attainment and health a positive effect on growth from a high ratio of investment to gdp although this effect is weaker than that reported in some previous studies a negative effect from excessively large government a negative effect from government induced distortions of markets and a negative effect from political instability overall the fitted growth rates for eighty five economies for 1965 85 had a correlation of 0 8 with the actual values the authors also find that female educational attainment has a pronounced negative effect on fertility whereas female and male attainment are each positively related to life expectancy and negatively related to infant mortality

selection in a field experiment with voluntary participation summary the external validity of experiments in economics can be ensured only if participants reflect the relevant market population we study data from a promotional campaign of nh hoteles to study sample selection problems in a gift exchange field experiment the promotion allowed guests to pay any non negative amount for a stay in one of 36 hotels in belgium and the netherlands we distinguish between involuntary participants who booked prior to the announcement of the promotional campaign and voluntary participants who booked after the campaign was announced the involuntary participants pay on average substantially more this different behavior cannot be explained by differences in satisfaction or observed compositional differences between both groups during the promotion we varied the posted price of a room that was communicated to the guests only the involuntary participants respond to this exogenous variation in the posted price we argue that the promotional campaign mainly attracted individuals with relatively few prosocial reputational concerns because they benefit most from a name your own price scheme copyright 2010 john wiley sons ltd

the cycle of earnings inequality evidence from spanish social security data we use detailed information on labor earnings and employment from social security records to document the evolution of male daily earnings inequality in spain from 1988 to 2010 we find that inequality was strongly countercyclical it increased around the 1993 recession experienced a substantial decrease during the 1997 2007 expansion and then a sharp increase during the recent recession this evolution went in parallel with the cyclicality of employment in the lower middle part of the wage distribution our findings highlight the importance of the housing boom and bust in this evolution suggesting that demand shocks in the construction sector had large effects on aggregate labor market outcomes

model averaging in economics an overview standard practice in empirical research is based on two steps first researchers select a model from the space of all possible models second they proceed as if the selected model had generated the data therefore uncertainty in the model selection step is typically ignored alternatively model averaging accounts for this model uncertainty in this paper i review the literature on model averaging with special emphasis on its applications to economics finally as an empirical illustration i consider model averaging to examine the deterrent effect of capital punishment across states in the usa

how much do distortions affect growth abstract this paper presents a simple endogenous growth model with two types of capital which can display sizeable long run growth effects of distortionary policies the model applies to many different types of distortions of relative prices common in developing countries such as differential taxes and tariffs black market exchange rates and price controls the model shows that a subsidy to one type of capital financed by a tax on another capital good lowers growth a measure of the variance of relative prices of investment goods across sectors has a negative and statistically significant effect on growth

growth empirics in panel data under model uncertainty and weak exogeneity this paper considers panel growth regressions in the presence of model uncertainty and reverse causality concerns for this purpose my econometric framework combines bayesian model averaging with a suitable likelihood function for dynamic panel models with weakly exogenous regressors and xed eects an application of this econometric methodology to a panel of countries over the 1960 2000 period highlights the diculties in identifying the sources of economic growth by means of cross country regressions in particular none of the nine candidate regressors considered can be labeled as a robust determinant of economic growth moreover the estimated rate of conditional convergence is indistinguishable from zero

some doubts about measuring self interest using dictator experiments the costs of anonymity abstract traditionally economists have assumed self interest governs economic choices recently some social scientists and economists especially those working in game theoretic and experimental areas have begun to treat self interest as a testable hypothesis one important vehicle for evaluating self interest has been a class of experiments called dictator experiments we believe that these experiments may have a flaw in their design which leads researchers to overstate systematically the role of self interest in individuals motivations double blind experiments designed to create conditions of privacy and anonymity may engender doubts in subjects regarding the existence of pairings and the disposition of any money they share moreover subjects may view the experiment as a game we test these conjectures using both traditional and modified dictator experiments

is god in the details a reexamination of the role of religion in economic growth summary barro and mccleary 2003 religion and economic growth across countries american journal of sociology 68 760 781 is a key research contribution in the new literature exploring the macroeconomic effects of religious beliefs this paper represents an effort to evaluate the strength of their claims we evaluate their results in terms of replicability and robustness overall their analysis generally meets the standard of statistical replicability though not perfectly on the other hand we do not find that their results are robust to changes in their baseline statistical specification when model averaging methods are employed to integrate information across alternative statistical specifications little evidence survives that religious variables help to predict cross country income differences copyright 2011 john wiley sons ltd

do people tip strategically to improve future service theory and evidence a central question about tipping is whether people tip strategically to improve future service or only because tipping is a social norm i present a theoretical model that incorporates psychological utility associated with tipping because it is a social norm and allows tipping to be motivated also by future service considerations the model predicts that if future service is a reason for tipping the sensitivity of tips to service quality should be higher for repeating customers than for non repeating ones surveys of 597 restaurant customers are analysed and suggest that future service is not a reason for tipping une question centrale a propos des pourboires est la suivante est ce que les gens donnent des pourboires strategiquement pour ameliorer la qualite du service ou est ce que le pourboire est simplement une norme sociale l auteur presente un modele theorique qui incorpore a la fois l utilite psychologique associee au pourboire parce que c est une norme sociale et prend en compte que le pourboire peut etre motive aussi par des l intention d ameliorer la qualite future du service le modele predit que si la qualite future du service est la raison pour donner des pourboires la sensibilite des pourboires a la qualite du service devrait etre plus grande pour les clients reguliers que pour les clients occasionnels des enquetes aupres de 597 clients de restaurants suggerent que la qualite future du service n est pas la raison pour laquelle on donne des pourboires

preemption and rent equalization in the adoption of new technology we study the adoption of a new technology to illustrate the effects of preemption in games of timing we show that the threat of preemption equalizes rents in a duopoly but that this result does not extend to the general oligopoly game if the gain to preemption is sufficiently small then the optimal symmetric outcome which involves late adoption is an equilibrium this contrasts with reinganum s result that in precommitment equilibria there must be diffusion we develop a new and richer formalism for modeling games of timing which permits a continuoustime representation of the limit of discrete time mixed strategy equilibria

strategic investment in technological innovations abstract the aim of this paper is to determine the optimal timing of technology investment of a single firm in a duopoly framework as time passes different technologies are invented which after sometime become available for the firm to adopt the question here is not only when a firm should invest but also which technology should be adopted for different scenarios the optimal technology investment decision is determined outcomes range from pre emption equilibria to equilibria with second mover advantages

unequal opportunities and distributive justice abstract we provide experimental evidence on how unequal access to performance enhancing education affects demand for redistribution people earn money in a real effort experiment and can then decide how to distribute it among themselves and another subjects we compare situations in which randomly chosen people get access to performance enhancing education with situations in which either only luck or only performance determines outcome we find that unequal opportunities evoke a preference for redistribution that is comparable to the situation when luck alone determines the allocation however people with unequal access to education are more likely to disagree about the appropriate distribution

role dependent social preferences bargaining results emerge from the interplay of strategic options and social preferences for every bargaining game however the advantage of a player having certain preferences in terms of negotiated equilibrium revenues might differ we explore the hypothesis that preferences change according to the players strength combination simple 1 1 bargaining experiments from the literature are discussed and 2 2 as well as 2 3 assignment market experiments with possible renegotiations are investigated the assumption that players adopt preferences for two to five roles defined by strength combinations of the two bargainers explains the experimental results better than individually constant preferences