the gender gap fertility and growth changes in fertility have long been recognized as important correlates of economic growth with the relationship between the level of fertility and the level of income per capita being one of the strongest observable correlations in cross country data this paper examines the linkages between fertility and growth theory the structure of the model is presented in sections on production couples decision making system dynamics and steady state equilibria the first component of the model is that increases in capital per worker raise womens relative wages since capital is more complementary to womens labor input than to mens the second component is that increasing womens relative wages reduces fertility by raising the cost of children more than household income finally lower fertility raises the level of capital per worker a positive feedback loop generates demographic transition a rapid decline in fertility accompanied by accelerated output growth

is there a tragedy of a common central bank a dynamic analysis a great deal of uncertainty exists about the degree to which a european central bank ecb can be exploited as common property by undisciplined governments in a dynamic game between symmetric national governments and a single monetary authority open loop strategies in the national setting coincide with strategies in the international setting compared to the open loop outcome feed back strategies slow down debt stabilization moreover debt adjustment is quicker with a common ecb than with individual central banks while inflation as well as fiscal deficits are lower these results conflict sharply with the notion of the ecb as common property

wage elasticities in working and volunteering the role of reference points in a laboratory study we experimentally test how effort responds to wages randomly assigned to accrue to individuals or to a charity in the presence of expectations based reference points or targets when individuals earn money for themselves higher wages lead to higher effort with relatively muted targeting behavior when individuals earn money for a charity higher wages instead lead to lower effort with substantial targeting behavior a reference dependent theoretical framework suggests an explanation for this differential impact when individuals place less value on earnings such as when accruing earnings for a charity instead of themselves more targeting behavior and a more sluggish response to incentives should result results from an additional experiment add support to this explanation when individuals select into earning money for a charity and thus likely place a higher value on those earnings targeting behavior is muted and no longer generates a negative effort response to higher wages data and the online appe

altruism or diminishing marginal utility abstract we challenge a commonly used assumption in the literature on social preferences and show that this assumption leads to significantly biased estimates of the social preference parameter using monte carlo simulations we demonstrate that the literature s common restrictions on the curvature of the decision makers utility function can dramatically bias the altruism parameter we show that this is particularly problematic when comparing altruism between groups with well documented differences in risk aversion or diminishing marginal utility i e men versus women giving motivated by pure versus warm glow motives and wealthy versus poor we conclude by proposing two approaches to address this bias

are you risk averse over other people s money decisions with uncertain outcomes are often made by one party in settings where another party bears the consequences whenever an individual is delegated to make decisions that affect others such as in the typical corporate structure does the individual make decisions that reflect the risk preferences of the party bearing the consequences we examine this question in two simple settings lottery choices and sealed bid auctions using controlled laboratory experiments we find that when an individual makes a decision for an anonymous stranger there is a tendency to exhibit less risk aversion this reduction in risk aversion is relative to his or her own preferences and it is also relative to his or her belief about the preferences of others this result has significant implications for the design of contracts between principals and agents

disease and development the effect of life expectancy on economic growth we exploit the major international health improvements from the 1940s to estimate the effect of life expectancy on economic performance we construct predicted mortality using preintervention mortality rates from various diseases and dates of global interventions predicted mortality has a large impact on changes in life expectancy starting in 1940 but no effect before 1940 using predicted mortality as an instrument we find that a 1 percent increase in life expectancy leads to a 1 7 2 percent increase in population life expectancy has a much smaller effect on total gdp however consequently there is no evidence that the large increase in life expectancy raised income per capita

corruption as a self fulfilling prophecy evidence from a survey experiment in costa rica an influential body of scholarship argues that corruption behaves as a selffulfilling prophecy the idea of this work is that levels of corruption emerge endogenously as a result of a society wide coordination game in which ther individual returns to corrupt behavior are a function of how disposed towards corruption the other members of society are perceived as being an empirical implication of this logic is that if one were to exogenously perturb beliefs about societal levels of corruption upward willingness to engage in corruption should increase as a consequence the current paper evaluates this claim by utilizing an information experiment embedded in a large scale household survey conducted in the gran area metropolitana gam of costa rica from october 2013 to april 2014 n 4200 changes in beliefs about corruption were induced via the random assignment of an informational display depicting the increasing percentage of costa ricans who have experienced or directly observed an act of corruption from 2006 to 2011 the paper finds that on average assignment to this display relative to the control condition increased the probability that a respondent would be willing to pay a bribe to a police officer by approximately 0 04 to 0 08 thereby providing supporting evidence for the self fulfilling prophecy hypothesis

the back scratching game we develop a new experiment to study the emergence of welfare reducing bilateral alliances within larger groups and the effectiveness of institutional interventions to curtail back scratching in each of the 25 rounds of our experiments a player the allocator nominates one of three others in a group as a co worker the receiver which determines the group production that period to be the productivity of the receiver which varies by round but also gives the receiver a bonus and makes them the allocator in the next round alliances then form if two individuals keep choosing each other even when their productivities are lower than that of others causing efficiency losses we study whether particular interventions reduce the rate of alliance formation random allocator rotation policies were found to be ineffective whether implemented prior to or following a baseline treatment low bonuses did significantly reduce the advent of alliances there hence seems to be some hope in preventing back scratching via reducing the gain that can be made by alliances

exposing corrupt politicians the effects of brazil s publicly released audits on electoral outcomes author s finan frederico ferraz claudio abstract this paper examines the extent to which access to information enhances political accountability based upon the results of brazil s recent anti corruption program that randomly audits municipal expenditures of federally transferred funds it estimates the effect of the disclosure of local government corruption practices upon the re election success of incumbent mayors in municipal elections comparing municipalities which were randomly audited before the elections with those audited after the analysis shows that the disclosure of audit results had a significant impact on the re election rates of mayors found to be corrupt for a one standard deviation increase in reported corruption the audit policy reduced the incumbent s likelihood of re election by 25 percent this effect is more pronounced in municipalities where radio stations are present and higher levels of corruption are identified these findings highlight the value of information and the role of the media in reducing informational asymmetries in the political process thus enabling voters to not only hold corrupt politicians accountable but also to reward non corrupt politicians

government procurement and international trade abstract we model the bidding for a government contract in which there is imperfect competition each bidder is better informed about his own costs than either his rival bidders or the government and the distribution of the domestic firms costs differs from the distribution of foreign firms costs because of comparative advantage effects we find that the government minimizes its expected procurement cost by operating a price preference policy not necessarily purchasing from the lowest bidder

on the social dimension of time and risk preferences an experimental study when explaining risk taking intertemporal allocation and distributing behavior economists rely on risk time and other regarding preferences but offer no guidance on how these three crucial aspects are interrelated we report on an experiment exploring such interrelation for this sake we compare evaluations of several prospects each of which allocates certain or risky and immediate or delayed payoffs to the actor and to another participant we find that individuals are selforiented as to social allocation of risk and delay and other regarding with respect to expected payoffs jel c91 d63 d81 there is ample empirical evidence that people do not behave rationally when rationality implies maximization of one s own material rewards to gain flexibility economists have taken into account nonlinear evaluation of material rewards e g in the familiar form of utility of money functions as well as social utilities including other regarding concerns like altruism as in andreoni and miller 2002 inequality aversion as in fehr and schmidt 1999 and bolton and ockenfels 2000 or quasi maximin preferences as in charness and rabin 2002 undeniably this provides a rich toolbox for neoclassical repair which allows aligning rational choice predictions with empirical data on decision behavior nonetheless this toolbox may be

strategic ignorance and the robustness of social preferences participants in dictator games frequently avoid learning whether their choice to maximize their own earnings will help or hurt the recipient and then choose selfishly exploiting the moral wiggle room provided by their ignorance however this is found in an environment in which the dictator must actively learn the true payoffs so inaction means ignorance does this effect persist when one must actively choose either to be ignorant or to be informed or when one must actively choose to remain ignorant in fact whereas 45 of dictators remain ignorant when one must click to become informed this drops to 25 when one must click in either case and to 3 when one must click to remain ignorant although the exploitation of moral wiggle room is not merely an artifact it is much like social behavior itself subject to environmental and psychological factors that may reinforce or undermine its impact data as supplemental material are available at http dx doi org 10 1287 mnsc 2014 1989 this paper was accepted by uri gneezy behavioral economics

bribery behavioral drivers of distorted decisions we experimentally investigate behavioral drivers of bribery focusing on the role of self interest reciprocity and moral costs associated with distorting judgment in our laboratory experiment two participants compete for a prize a referee picks the winner participants can bribe the referee when the referee can keep only the winner s bribe bribes distort her judgment when the referee keeps the bribes regardless of the winner bribes no longer influence her decision an experiment in an indian market confirms these results these findings imply that our participants are influenced by bribes out of self interest and not because of a desire to reciprocate further evidence shows that self interest guides decisions to a greater extent when referees have scope for avoiding the moral costs associated with distorting judgment as a result limiting referees ability to form self serving evaluations can significantly reduce the effectiveness of bribes less

decentralized management of common property resources experiments with a centuries old institution for centuries villages in the alps employed a special system for managing their common properties individual users could inspect other users at their own cost and impose a predetermined sanction a fine when a free rider was discovered the fine was paid to the user who found a violator experiments with the institutions demonstrate that this mechanism considerably improves efficiency of resource use the classical model of identical selfish agents does not capture the data as well as a model with heterogeneous and linear other regarding preferences altruism and especially potentially dysfunctional behavior such as spite and mistake play important positive roles

no excuses for good behavior volunteering and the social environment abstract we study the effect of the social environment on the quantity and quality of voluntary labor contributions by extending benabou and tirole s 2006 image signaling framework we derive theoretical predictions on time volunteered given 1 the availability of excuses to stop volunteering and 2 the presence of an authority figure we test these predictions in an experiment where laboratory subjects are directly involved in a local nonprofit operation we find that in the absence of excuses to stop volunteering subjects volunteer longer without working less productively this increase is partially driven by subjects reluctance to be the first to stop volunteering the presence of an authority figure has little impact but the presence of peers has a positive and significant impact

are children normal abstract we examine becker s 1960 contention that children are normal for the cross section of non hispanic white married couples in the united states we show that when we restrict comparisons to similarly educated women living in similarly expensive locations completed fertility is positively correlated with the husband s income the empirical evidence is consistent with children being normal in an effort to show causal effects we analyze the localized impact on fertility of the mid 1970s increase in world energy prices an exogenous shock that substantially increased men s incomes in the appalachian coal mining region empirical evidence for that population indicates that fertility increases with men s income

ex ante commitments to give if you win exceed donations after a win abstract should fundraisers ask a banker to donate if he earns a bonus or wait and ask after the bonus is known standard eu theory predicts that these approaches are equivalent loss aversion and signaling models predict a larger commitment before the bonus is known theories of affect predict the reverse in five experiments incorporating lab and field elements n 1363 we solicited charitable donations from small lottery winnings varying the conditionality of donations between participants pooling across experiments participants are 23 more likely to commit to donate from the winning income and commit 25 more when asked before the lottery s outcome is determined relative to those asked to donate after they learn they have won these differences are strongly statistically significant this represents the first evidence on how pro social behavior extends to conditional commitments over uncertain income with implications for charitable fundraising giving pledges and experimental methodology

cyclicality mortality and the value of time the case of coffee price fluctuations and child survival in colombia recent studies demonstrate procyclical mortality in wealthy countries but there are reasons to expect a countercyclical relationship in developing nations we investigate how child survival in colombia responds to fluctuations in world arabica coffee prices and document starkly procyclical child deaths in studying this result s behavioral underpinnings we highlight that 1 the leading determinants of child health are inexpensive but require considerable time and 2 as the value of time declines with falling coffee prices so does the relative price of health we find a variety of direct evidence consistent with the primacy of time in child health production

public debt stabilization the relevance of policymakers time horizons policymakers are stuck in time political short termism policy myopia policy short sightedness and similar words have been coined to emphasize the present centric policy thinking politics tends to produce short time horizons and as a result policymakers often fail to use present opportunities to mitigate future harms focusing on fiscal and monetary strategic interactions given different separate decision makers our paper aims to explore the effects of policymakers time horizons on debt stabilization to formalize our ideas we use the novel concept of nonlinear model predictive control feedback nash equilibrium nfne and find that present centric policy thinking and decision horizons matters under several dimensions

letting the briber go free an experiment on mitigating harassment bribes this paper examines the effectiveness of using asymmetric liability to combat harassment bribes basu 2011 advocates legal immunity for bribe givers while retaining culpability for bribe takers results from our experiment indicate that while this policy has the potential to significantly reduce corrupt practices weak economic incentives for the bribe giver or retaliation by bribe takers can mitigate the positive disciplining effect of such an implementation as a result asymmetric liability on its own may face challenges in the field

the determinants of mortality mortality rates have fallen dramatically over time starting in a few countries in the 18th century and continuing to fall today in just the past century life expectancy has increased by over 30 years at the same time mortality rates remain much higher in poor countries with a difference in life expectancy between rich and poor countries of also about 30 years this difference persists despite the remarkable progress in health improvement in the last half century at least until the hiv aids pandemic in both the time series and the cross section data there is a strong correlation between income per capita and mortality rates a correlation that also exists within countries where richer better educated people live longer we review the determinants of these patterns over history over countries and across groups within countries while there is no consensus about the causal mechanisms we tentatively identify the application of scientific advance and technical progress some of which is induced by income and facilitated by education as the ultimate determinant of health such an explanation allows a consistent interpretation of the historical cross country and within country evidence we downplay direct causal mechanisms running from income to health

do natural resources fuel authoritarianism a reappraisal of the resource curse a large body of scholarship finds a negative relationship between natural resources and democracy extant cross country regressions however assume random effects and are run on panel datasets with relatively short time dimensions because natural resource reliance is not an exogenous variable this is not an effective strategy for uncovering causal relationships numerous sources of bias may be driving the results the most serious of which is omitted variable bias induced by unobserved country specific and time invariant heterogeneity to address these problems we develop unique historical datasets employ time series centric techniques and operationalize explicitly specified counterfactuals we test to see if there is a long run relationship between resource reliance and regime type within countries over time both on a country by country basis and across several different panels we find that increases in resource reliance are not associated with authoritarianism in fact in many specifications we generate results that suggest a resource blessing

coordination economies advertising and search behavior in retail markets we introduce a model of the retail firm in which consumers and active firms benefit collectively from coordination of sales at fewer firms using this model we show that ostensibly uninformative advertising plays a key role in bringing about coordination economies by directing consumer search toward firms that offer the best deals optimal consumer search takes the form of a simple rule of thumb that uses observed advertising information to guide search both industry concentration and social surplus are higher in the presence of advertising relative to a no advertising benchmark jel d83 l15 many observed advertisements seem to be at odds with rational behavior in a variety of ads mostly on tv and radio multiproduct sellers provide little hard information choosing instead to impart only vague slogans that are suggestive of good deals examples are plentiful a hardware store

oil price shocks income and democracy he effect of natural resource wealth and income on political institutions is a central issue at the intersection of economics and political sciences we contribute to this research by examining the effect of international oil price fluctuations on democratic institutions over the 1960 2007 period we also exploit the very persistent response of aggregate income to oil prices to study the effect of persistent oil price driven income shocks on democracy our results indicate that countries with greater net oil exports over gdp see improvements in democratic institutions following upturns in international oil prices for example positive oil price shocks lead to improvements in the polity democracy score as well as the subscores for executive constraints executive recruitment and political competition and a higher probability of a democratic transition we estimate that an oil price driven 1 percentage point increase in per capita gdp growth increases the polity democracy score by around 0 2 percentage points on impact and by around 2 percentage points in the long run the effect on the probability of a democratic transition is around 0 4 percentage points our work relates to the literature on the link between political institutions and natural resource wealth and income an influential early contribution is lipset 1959 who documents that high income countries tend to be more democratic he argues that this positive correlation arises because higher per capita income is a symptom of the modernization of society and that modernization also increases citizens demand for political participation the positive association between income and democracy has also been emphasized by huntington 1991 who holds that higher per capita income was one of the key factors behind the

a dynamic model of corruption deterrence abstract this paper presents a model of corruption deterrence with a simple overlapping generations structure built into it a crucial assumption is that when corruption becomes more prevalent in the economy it is harder to audit a corrupt official effectively it is shown that this assumption may give rise to several stationary equilibrium levels of corruption this possibility has been exploited to explain why sometimes a government may temporarily resort to an extremely severe deterrence policy and why the same deterrence scheme may imply quite different levels of corruption a case study is provided to give empirical support to the model

competitive procurement with corruption we study competitive procurement administered by a corrupt agent who is willing to manipulate his evaluation of contract proposals in exchange for bribes with complete information and no corruption the efficient firm will win the contract for sure if the agent is corrupt and has large manipulation power however bribery makes it costly for the efficient firm to secure a sure win so in equilibrium the efficient firm loses the contract with positive probability the optimal scoring rule for the buyer deemphasizes quality relative to price and does not fully handicap and may even favor the efficient firm

monetary and fiscal policies interaction in monetary unions in this paper the literature on the interaction between monetary and fiscal policies in a monetary union is surveyed by adopting the concept of symbiosis as a starting point the paper highlights the importance of uncertainty policy makers preferences and targets then the role of commitment to policy rules and coordination is addressed the analysis also focuses on the importance of the data considered for the generation of the policy mix as a final step the paper discusses the main results in the literature on public debt management in a monetary union all the reported theoretical results are then adopted to retrieve policy and institutional implications for the european monetary union

propensities to engage in and punish corrupt behavior experimental evidence from australia india indonesia and singapore abstract this paper examines cultural differences in individual decision making in a corruption game we define culture as an individual s accumulated experience shaped by the social institutional and economic aspects of the environment in which the individual lives based on experiments run in australia melbourne india delhi indonesia jakarta and singapore we find that there is a greater variation in the propensities to punish corrupt behavior than in the propensities to engage in corrupt behavior across cultures consistent with the existing corruption indices the subjects in india exhibit a higher tolerance of corruption than the subjects in australia however the subjects in singapore have a higher tolerance and the subjects in indonesia have much lower tolerance of corruption than expected we conjecture that this is due to the nature of the recent institutional changes in these two countries we also vary our experimental design to examine the impact of the perceived cost of bribery and find that the results are culture specific

long term determinants of the demographic transition 1870 2000 abstract this paper analyzes the long term economic determinants of the demographic transition using a large panel of countries since 1870 a simple theoretical framework accounts for the possibly nonmonotonic variations of fertility in the course of economic development as predicted by unified growth theory i find that primary schooling rather than income or health related variables is the most robust determinant of the fertility transition as regards the health transition both education and income are significant determinants of mortality rates but education alone accounts for the bulk of their time variation over the twentieth century thus education can be viewed as the main long term determinant of the demographic transition

a free press is bad news for corruption abstract this paper tests the proposition that a free press may be a powerful control on corruption we find evidence of a significant relationship between more press freedom and less corruption in a large cross section of countries this result is robust to specification and sample and the relationship is not sensitive to the choice of a particular measure of corruption or of press freedom furthermore we present evidence which suggests that the direction of causation runs from higher press freedom to lower corruption

the genesis and spread of economic corruption a microtheoretic interpretation abstract this paper argues that the ability to engage in corruption arises from the possession of quasi monopoly power or authority by one of the parties to corruption this authority is passed on routinely through delegation of functions in state and publicly owned enterprises or acquired by explicit or implicit contract with another party or by solemn promise to act in good faith corruption tends to spread by enlisting the support of more individuals within and across activities this support is needed to overcome risks to solve problems of indivisibility and to reap benefits of network externalities

i paid a bribe an experiment on information sharing and extortionary corruption abstract theoretical and empirical research on corruption has flourished in the last three decades however identifying successful anti corruption policies remains a challenge in this paper we ask whether bottom up institutions that rely on voluntary and anonymous reports of bribe demands such as the i paid a bribe website first launched in india in 2010 could act as effective anti corruption tools and if this is the case whether and how their effectiveness could be improved we overcome measurement and identification problems by addressing our research questions in the laboratory our results show that the presence of a reporting platform like the i paid a bribe website may be insufficient to systematically lower bribery a more effective platform is one where posts disclose specific information about the size of the bribes and the location of their requestors i e a platform that could serve as a search engine for the least corrupt officials especially if posting is restricted to service recipients our results also show that while citizens rarely post false information lying by officials when allowed to post on the platform is widespread

is generosity involuntary abstract we estimate the distribution of exit reservation prices in a dictator game the mean exit reservation price equals 82 of the dictator game endowment and only 36 of subjects have exit reservation prices consistent with selfish or social preferences

effects of the price of charitable giving evidence from an online crowdfunding platform abstract a long literature has examined the effects of the price of giving that is the amount an individual must give for one dollar to accrue to the charitable activity itself on donative behavior we use data from donorschoose org an online platform linking teachers with prospective donors that are uniquely suited to addressing this question due to exogenous variation in overhead costs an increased price of giving results in a lower likelihood of a project being funded we also calculate the price elasticity of giving finding estimates between 0 8 and 2 finally we examine the effect of competition on giving and find that increased competition reduces the likelihood of a project being funded these results provide insight into the workings of the market for charitable gifts

fundraising through online social networks a field experiment on peer to peer solicitation abstract two main reasons why people donate to charity are that they have been asked and asked by someone they care about one would therefore expect that charitable organizations could benefit from peer to peer fundraising if they were able to persuade donors to do so for them however little is known on the costs and benefits of asking donors to fundraise we investigate this by implementing a field experiment embedded in an online giving organization s web page in our experiment donors who have completed an online transaction were randomly asked to share having donated by posting on their facebook fb wall or by sending a private message to a friend on fb to further explore the impact of incentives on the willingness to fundraise donors were also assigned to one of three treatments in which the organization added either 0 1 or 5 in the donor s name in exchange for sharing the information we have several findings 1 donors respond to incentives larger add on donations increase the willingness to post having made a donation 2 nuisance costs may be important willingness to post is over two times higher among those already logged into fb 3 the type of ask matters willingness to post via one s wall or via a private message is different 4 there are benefits to incentivizing peer to peer fundraising in increased new donations

correlation neglect in belief formation many information structures generate correlated rather than mutually independent signals the news media being a prime example this article provides experimental evidence that many people neglect the resulting double counting problem in the updating process in consequence beliefs are too sensitive to the ubiquitous telling and re telling of stories and exhibit excessive swings we identify substantial and systematic heterogeneity in the presence of the bias and investigate the underlying mechanisms the evidence points to the paramount importance of complexity in combination with people s problems in identifying and thinking through the correlation even though most participants in principle have the computational skills that are necessary to develop rational beliefs many approach the problem in a wrong way when the environment is moderately complex thus experimentally nudging people s focus towards the correlation and the underlying independent signals has large effects on beliefs

if the worst comes to the worst dictator giving when recipient s endowments are risky abstract donors may often not be sure whether a recipient really needs their help does this uncertainty deter generosity we experimentally investigate a situation in which donors do not know the financial endowment of the recipient for certain but still have some information on the distribution the endowments are drawn from in the experiment we find that uncertainty does not deter generosity in fact if we filter out selfish dictators under most specifications of uncertainty dictators give more compared with the donation dictators make to a recipient they know to have the expected value of the endowment with certainty they are particularly concerned about the possibility of a recipient leaving the lab with no payoff from the game

estimating the permanent income elasticity of government expenditures evidence on wagner s law based on oil price shocks this paper provides instrumental variable estimates of the permanent income elasticity of government expenditures it uses annual variation in the international oil price weighted with countries average oil net export gdp shares as a plausibly exogenous source of within country variation in countries permanent income the short run estimates of the permanent income elasticity are robust across alternative specifications and are below one the estimated elasticity coefficients range between 0 3 and 0 6 and have standard errors of 0 1 and 0 4 respectively point estimates of long run elasticities are somewhat larger but still smaller than unity the investment component of government spending is found to be more elastic than the consumption component whereas elasticity differences between rich and poor countries are insignificant

types and patterns an experimental east west german comparison of cooperation and solidarity abstract in a study of public good and solidarity experiments conducted in eastern and western germany we found in both games that eastern subjects behave in a significantly more selfish manner than do western subjects besides that we found that many qualitative results of both data sets are similar since our experiments were conducted in two parts of one nation we present an unusually well controlled cross cultural study by avoiding difficulties that usually arise in multinational settings we conclude that cooperation and solidarity behavior seem to depend strongly on different culture specific norms resulting from opposing economic and social histories in the two parts of germany

you owe me in many cultures and industries gifts are given in order to influence the recipient often at the expense of a third party examples include business gifts of firms and lobbyists in a series of experiments we show that even without incentive or informational effects small gifts strongly influence the recipient s behavior in favor of the gift giver in particular when a third party bears the cost subjects are well aware that the gift is given to influence their behavior but reciprocate nevertheless withholding the gift triggers a strong negative response these findings are inconsistent with the most prominent models of social preferences we propose an extension of existing theories to capture the observed behavior by endogenizing the reference group to whom social preferences are applied we also show that disclosure and size limits are not effective in reducing the effect of gifts consistent with our model financial incentives ameliorate the effect of the gift but backfire when available but not provided

a policy oriented theory of corruption perspectives from political science and economics are drawn on to suggest an integrated theory of governmental corruption the theory is oriented toward policy choices and corruption is viewed as a product of individual and structural variables that interact to produce both positive and negative consequences individual level considerations such as greed and the likelihood of detection and prosecution suggest one set of policies for reducing corruption bureaucratic constraints citizen participation and the congruence of legal structures and social demands offer a competing set of concerns that must be dealt with in analyzing corrupt practices we show that corruption as a process influences the optimal level of social welfare alternative conceptions are examined and a model is developed to evaluate policy choices related to corruption from the perspective of welfare optimization applied to the analysis of corruption the model integrates general equilibrium theory deterrence theory and structural conditions finally policy implications are considered

the effect of inequality in stakes on sharing behavior evidence from an experimental study abstract this study aims to test an aspect of inequality aversion in sharing behavior we designed a dictator game to examine whether the sharing behavior of a dictator could be affected by the amounts allocated to other dictators we find that dictators tended to transfer less money to recipients if they knew that other dictators received much more than they did however dictators did not share more money if they were given a relatively larger grant than others this suggests that self serving fairness norms influence individuals sharing behavior

excusing selfishness in charitable giving the role of risk decisions involving charitable giving often occur under the shadow of risk a common finding is that potential donors give less when there is greater risk that their donation will have less impact while this behaviour could be fully rationalized by standard economic models this article shows that an additional mechanism is relevant the use of risk as an excuse not to give in a laboratory study participants evaluate risky payoffs for themselves and risky payoffs for a charity when their decisions do not involve tradeoffs between money for themselves and the charity they respond very similarly to self risk and charity risk by contrast when their decisions force tradeoffs between money for themselves and the charity participants act more averse to charity risk and less averse to self risk these altered responses to risk bias participants towards choosing payoffs for themselves more often consistent with excuse driven responses to risk additional results support the existence of excuse driven types

social image concerns and prosocial behavior field evidence from a nonlinear incentive scheme abstract using longitudinal data on the entire population of blood donors in an italian town we examine how donors respond to a nonlinear award scheme that rewards them with symbolic prizes medals when they reach certain donation quotas our results indicate that donors significantly increase the frequency of their donations immediately before reaching the thresholds for which the rewards are given but only if the prizes are publicly announced in the local newspaper and awarded in a public ceremony the results are robust to several specifications sample definitions and controls for observable and unobservable heterogeneity our findings indicate that social image concerns are a primary motivator of prosocial behavior and that symbolic prizes are most effective as motivators when they are awarded publicly we discuss the implications of our findings for policies aimed at incentivizing prosocial behavior

income and health spending evidence from oil price shocks health expenditures as a share of gdp in the united states have more than tripled over the past half century a common conjecture is that this is a consequence of rising income we investigate this hypothesis by instrumenting for local area income with time series variation in oil prices interacted with local oil reserves this strategy enables us to capture both partial equilibrium and local general equilibrium effects of income on health expenditures our central income elasticity estimate is 0 7 with 1 1 as the upper end of the 95 confidence interval which suggests that rising income is unlikely to be a major driver of the rising health expenditure share of gdp 2013 the president and fellows of harvard college and the massachusetts institute of technology

obtaining a driver s license in india an experimental approach to studying corruption we conduct two experiments to understand the process of obtaining a driver s license in india in the first experiment we randomly assign license candidates to one of three groups bonus offered a financial reward if they could obtain their license fast lesson offered free driving lessons upfront and control the control group alone illustrates bureaucratic failures 71 of the license getters in that group avoided the mandated driving test and 62 failed a surprise driving test the system responds to private needs there are more license getters in the bonus group but at a social cost there are more license getters who cannot drive in the bonus group the system however also appears to respond to social considerations as there are more license getters in the lesson group large extra legal payments are made by license getters those in the control group pay 2 5 times the official fee more of these extra legal payments take place in the bonus group surprisingly these extra legal payments are not direct bribes to bureaucrats but instead payments to agents in the second experiment we perform an audit study to better understand the role of agents the audit shows that agents can provide licenses to individuals even if they cannot drive but the audit also shows that agents cannot as easily circumvent all other rules we argue that our findings are most consistent with agents being the channel for corruption in this system we also report some suggestive evidence that bureaucrats create red tape possibly to induce more license candidates to use agents

deciding for others reduces loss aversion we study risk taking on behalf of others both when choices involve losses and when they do not a large scale incentivized experiment with subjects randomly drawn from the danish population is conducted we find that deciding for others reduces loss aversion when choosing between risky prospects for which losses are ruled out by design subjects make the same choices for themselves as for others in contrast when losses are possible we find that the two types of choices differ in particular we find that subjects who make choices for themselves take less risk than those who decide for others when losses loom this finding is consistent with an interpretation of loss aversion as a bias in decision making driven by emotions and that these emotions are reduced when making decisions for others

economic growth size of the agricultural sector and urbanization in africa this paper uses variations in international commodity prices and rainfall to construct instrumental variables estimates of the within country effect that changes in the size of the agricultural sector and gdp per capita growth have on the urbanization rate for a panel of 41 african countries during the period 1960 2007 the paper s three main findings are that i decreases in the share of agricultural value added lead to a significant increase in the urbanization rate ii conditional on changes in the share of agricultural value added gdp per capita growth does not significantly affect the urbanization rate iii increases in the urbanization rate had a significant negative average effect on gdp per capita growth

does willful ignorance deflect punishment an experimental study abstract this paper studies whether people can avoid punishment by remaining willfully ignorant about possible negative consequences of their actions for others we employ a laboratory experiment using modified dictator games in which a dictator can remain willfully ignorant about the payoff consequences of his decision for a receiver a third party can punish the dictator after observing the dictator s decision and the resulting payoffs on the one hand willfully ignorant dictators are punished less if their actions lead to unfair outcomes than dictators who reveal the consequences before implementing the same outcome on the other hand willfully ignorant dictators are punished more than revealing dictators if their actions lead to fair outcomes we conclude that willful ignorance can circumvent blame when unfair outcomes result but that the act of remaining willfully ignorant is itself punished regardless of the outcome models of procedural fairness combining ex ante and ex post fairness qualitatively predict the observed punishment pattern

cooperative monetary and fiscal policies in the euro area this article discusses the interaction of fiscal and monetary policy in the euro area though many observers suggest a fiscal union as the next step of euro area constitutional reform a federal fiscal union does not appear politically feasible in the short run we suggest moving forward with cooperative monetary and fiscal institutions and policies that allow for decentralized fiscal decisions while taking federal stabilization policies into account this approach will increase the probability of survival of the euro area compared with the current fiscal arrangements using a dynamic macro model counterfactual simulation paths of our cooperative solution are contrasted with time series data for the euro area

a theory of misgovernance this paper tries to explain why government bureaucracies are often associated with red tape corruption and lack of incentives the paper identifies two specific ingredients that together can provide an explanation the fact that governments often act precisely in situations where markets fail and the presence of agency problems within the government we show that these problems are exacerbated at low levels of development and in bureaucracies dealing with poor people we also argue that we need to posit the existence of a welfare oriented constituency within the government in order to explain red tape and corruption

how corruption may corrupt abstract the incidence of corruption appears to vary strongly across societies even for comparable activities the model highlights how the profitability of bureaucratic corruption may be related to its frequency and points toward a few mechanisms that can be used in explaining the stylized facts of varying incidence of corruption there might be multiple self fulfilling equilibria levels of corruption even when both supply and demand of corrupt acts are considered

income and population growth do populations grow as countries become richer in this study we estimate the effects on population growth of shocks to national income that are plausibly exogenous and unlikely to be driven by technological change for a panel of over 139 countries spanning the period 1960 2007 we interact changes in international oil prices with countries average net export shares of oil in gdp controlling for country and time fixed effects we find that this measure of oil price induced income growth is positively associated with population growth the iv estimates indicate that a 1 percentage point increase in gdp per capita growth over a 10 year period increases countries population growth by around 0 1 percentage points furthermore we find that this population effect results from both a positive effect on fertility and a negative effect on infant and child mortality

population technology and growth from malthusian stagnation to the demographic transition and beyond this paper develops a unied growth model that captures the historical evolution of population technology and output it encompasses theendogenous transitionbetween three regimes that have characterized economic development the economy evolves from amalthusianregime wheretechnologicalprogressis slow andpopulationgrowthprevents anysustainedriseinincomepercapita intoapost malthusianregime wheretechnological progress rises and population growth absorbs only part of output growth ultimately a demographic transition reverses the positive relationship between income and population growth andtheeconomyentersamoderngrowthregimewithreducedpopulationgrowth

fiscal policy coordination and emu a dynamic game approach abstract this paper examines the case for fiscal policy coordination in a european economic and monetary union emu a two bloc model with two market structures is examined emu producing a single homogeneous good in both blocs emu1 and a two good emu emu2 where each bloc produces a single home good the european central bank sets monetary policy so as to achieve credibly low inflation rates we find that for emu2 as relative prices can change countries have an incentive to improve their terms of trade leading to an inefficient noncooperative outcome which can be avoided by cooperation

auction design and favoritism abstract the theory of auctions has ignored the fact that often auction designers not the principal design auctions in a multi attribute auction the auction designer may bias his subjective evaluation of quality or distort the relative weights of the various attributes to favor a specific bidder an ancient concern in the procurement of weapons in the auctioning of government contracts and in the purchase of electricity by regulated power companies the paper analyzes the steps to be taken to reduce the possibility of favoritism it is first shown that in the absence of favoritism quality differentials among firms are more likely to be ignored if the auction designer has imperfect information about the firm s costs second if the auction designer may collude with only one bidder the other bidders should be chosen if they are at least as efficient as the former bidder and no hard information about quality differentials is released by the auction designer that would justify fair discrimination in favor of the former bidder last if the auction designer can collude with any bidder the optimal auction tends to a symmetric auction in which quality differentials are ignored the possibility of favoritism reduces the auction designer s discretion and makes the selection process focus on non manipulable monetary dimensions of bids

under the weather health schooling and economic consequences of early life rainfall life in rural areas of developing countries is prone to many kinds of risk such as illness or mortality of household members crop or other income loss due to natural phenomena weather insect infestations or fire for example and civil conflict in addition to their contemporaneous effects the effects of certain types of shocks may still be felt many years or even decades later from a public policy standpoint it is particularly important to identify shocks that have large long run effects moreover the mechanics underlying the persistence of shocks may be of con siderable interest for example a health shock may have a long run effect simply because the health shock itself persists over time alternately the health shock may not directly affect long run outcomes but it could affect some other outcome such as educational attainment that helps determine long run well being in this paper we focus on shocks that occur at the very beginning of life we ask how sensi tive long run individual well being is to environmental conditions around the time of birth in particular we examine the effect of weather shocks around the time of birth on the adult health education and socioeconomic outcomes of indonesian women and men born between 1953 and 1974 in addition we attempt to shed light on the intervening pathways connecting early life rainfall to adult outcomes illuminating the roles of health and educational attainment in deter mining adult socioeconomic status this investigation has considerable data requirements it necessitates information on weather shocks experienced by individuals several decades earlier as well as detailed current informa tion on adult outcomes we use information in the indonesian family life surveys ifls on an individual s year and location of birth and link each individual in that survey to locality specific rainfall data for their birth year for individuals born in rural areas on whom we focus rainfall variation across space and time should generate corresponding variation in agricultural output and thus household income to deal with measurement error in the rainfall data we run instrumental variables regressions where variables for rainfall measured at slightly more distant rainfall stations serve as instruments for rainfall in the individual s birthplace and birth year we examine the impact of early life rainfall on a range of adult outcomes observed in 2000 we find that higher early life rainfall leads to improved health schooling and socioeconomic status for women women with 20 percent higher rainfall relative to normal local rainfall in their year and location of birth are 3 8 percentage points less likely to self report poor or very poor health they attain 0 57 centimeters greater height attain 0 22 more completed grades of

condemning corruption while condoning inefficiency an experimental investigation into voting behavior this article reports results from an economic experiment that investigates the extent to which voters punish corruption and waste in elections while both are responsible for reductions in voters welfare they are not necessarily perceived as equally immoral the empirical literature in political agency has not yet dealt with these two dimensions of voters choice calculus our results suggest that morality and norms are indeed crucial for a superior voting equilibrium in systems with heterogeneous politicians while corruption always is punished self interest alone in the absence of norms leads to the acceptance and perpetuation of waste and social losses

a theory of collective reputations with applications to the persistence of corruption and to firm quality the paper is a first attempt at modelling the idea of group reputation as an aggregate of individual reputations a member s current incentives are affected by his past behaviour and because his track record is observed only with noise by the group s past behaviour as well the paper thus studies the joint dynamics of individual and collective reputations and derives the existence of stereotypes from history dependence rather than from a multiplicity of equilibria or from the existence of a common trait as is usually done in the literature it shows that new members of an organization may suffer from an original sin of their elders long after the latter are gone and it derives necessary and sufficient conditions under which group reputations can be rebuilt last the paper applies the theory to analyse when a large firm can maintain a reputation for quality 1 collective reputations collective reputations play an important role in economics and the social sciences countries ethnic racial or religious groups are known to be hard working honest corrupt hospitable or belligerent some firms enjoy substantial rents from their reputations for producing high quality products some departments are reported to treat their faculty or students fairly the paper is a first attempt at modelling the idea of group reputation as an aggregate of individual reputations a member s current incentives are affected by her past behaviour and because her track record is observed only with noise by the group s past behaviour as well the paper studies the joint dynamics of individual and collective reputations in a model in which current generations are progressively replaced by new ones and derives the existence of stereotypes from history dependence rather than from a multiplicity of equilibria or from the existence of a common trait as is usually done in the literature see section 2 for a detailed comparison with the literature it shows that new members of an organization may suffer from an original sin of their elders long after the latter are gone and it derives necessary and sufficient conditions under which group reputations can be rebuilt last the paper applies the theory to analyse when a large firm can maintain a reputation for quality let us spell out the building blocks of our theory in more detail a a group s reputation is only as good as that of its members each member is characterized by individual traits such as talent diligence or honesty past individual behaviour conveys information about these traits and generates individual reputations

global population growth technology and malthusian constraints a quantitative growth theoretic perspective we structurally estimate a two sector schumpeterian growth model with endogenous population and finite land reserves to study the long run evolution of global population technological progress and the demand for food the estimated model closely replicates trajectories for world population gdp sectoral productivity growth and crop land area from 1960 to 2010 projections from 2010 onwards show a slowdown of technological progress and because it is a key determinant of fertility costs significant population growth by 2100 global population reaches 12 4 billion and agricultural production doubles but the land constraint does not bind because of capital investment and technological progress

design competition through multidimensional auctions this article studies design competition in government procurement by developing a model of two dimensional auctions wherefirms bid on both price and quality and bids are evaluated by a scoring rule designed by a buyer three auction schemes first score second score and second preferred offer are introduced and related to actual practices if the buyer can commit to a scoring rule in his best interest the resulting optimal scoring rule underrewards quality relative to the buyer s utility function and implements the optimal outcome for the buyer underfirst and second score auctions absent the commitment power the onlyfeasible scoring rule is the buyer s utility function under which 1 all three schemes yield the same expected utility to the buyer and 2 first and second score auctions induce the first best level of quality which turns out to be excessive from the buyer s point of view

is more competition always better an experimental study of extortionary corruption using a laboratory experiment we assess whether increasing competition among public officials reduces extortionary corruption we find that increasing the number of providers has no effect on bribe demands when citizens search costs are high but it increases corruption when search costs are low the effect is absent in a parallel setting framed as a standard market which we attribute to citizens using a nonsequential search strategy as opposed to sequential search in the corruption setting we conclude that efforts to reduce search costs such as infrastructure investments are preferable to anti corruption policies aimed at increasing the number of providers jel d73 d49 c91

betrayal aversion evidence from brazil china oman switzerland turkey and the united states comment in a series of binary choice problems we investigate how a chooser s risk taking changes when others share in their personal risk either equally or unequally we find that when the safe option yields inequality the risky option is taken significantly more often on the other hand the inequality resulting from the risky choice does not affect risk taking we also find that choosers tend to be less risk averse in a one person context compared to when the risk also affects the payoff of another c72 d81 z13

an economic model of the meat paradox abstract many individuals have empathetic feelings towards animals but frequently consume meat we investigate this meat paradox using insights from the literature on motivated reasoning in moral dilemmata we develop a model where individuals form self serving beliefs about the suffering of animals caused by meat consumption in order to alleviate the guilt associated with their dietary choices the model predicts that the price of meat has a causal effect on individuals beliefs high prices foster realism by lowering the returns to self deception which magnifies the price elasticity of meat consumption the model also predicts a positive relationship between individuals taste for meat and their propensity to engage in self deception a causal effect of aggregate consumption on individual beliefs and the coexistence of equilibria of collective realism and collective denial

wealthier is healthier we estimate the effect of income on health using cross country timeseries data on health infant and child mortality and life expectancy and income per capita we use instrumental variables estimates using exogenous determinants of income growth to identify the pure income effect on health isolated from reverse causation or incidental association the long run income elasticity of infant and child mortality in developing countries lies between 0 2 and 0 4 using these estimates we calculate that over a half a million child deaths in the developing world in 1990 alone can be attributed to the poor economic performance in the 1980s

ambiguity and excuse driven behavior in charitable giving a donation may have ambiguous costs or ambiguous benefits in a laboratory experiment we show that individuals use this ambiguity strategically as a moral wiggle room to behave less generously without feeling guilty such excuse driven behavior is more pronounced when the costs of a donation rather than its benefits are ambiguous however the importance of excuse driven behavior is comparable under ambiguity and under risk individuals exploit any type of uncertainty as an excuse not to give regardless of the nature of this uncertainty

corruption and development a review of issues in this paper we start with a discussion of some of the different denotations of the problem of corruption we then consider the ways in which the damaging consequences of corruption operate in a developing economy while not ignoring its possible redeeming features in some cases we pursue the question of why corruption is perceptibly so different in different societies and also persistent finally we examine the feasible policy issues that arise in this context

difference form contests and the robustness of all pay auctions abstract in much of the existing literature on rent seeking games the outcome of the contest is either infinitely sensitive or relatively insensitive to contestants efforts the current paper presents a family of contest games that permit characterization of equilibrium for all levels of sensitivity of the outcome to contestants efforts specifically the outcome of the contest depends on the difference between efforts which encompass the lottery and the all pay auction as polar cases the equilibrium converges to that of the all pay auction as the probability of winning the prize grows infinitely sensitive to one s effort and the main qualitative features of equilibrium persist over a large parameter region journal of economic literature classification numbers d44 d72

on the merit of equal pay performance manipulation and incentive setting abstract work performance is often difficult to assess thus leaving room for manipulation of commonly used metrics we created a laboratory workplace in which we can precisely assess both work performance along with manipulation activities using two independent experiments we show that whenever pay for performance is used manipulation is pervasive leading to both a waste of organizational resources and a weakening of incentives by contrast paying organizational members equally effectively deters manipulation attempts leading to higher organizational production

a controlled field experiment on corruption abstract this paper reports on a controlled field experiment on corruption designed to address two important issues the experimenter s scrutiny and the unobservability of corruption in the experiment a grader is offered a bribe along with a demand for a better grade we find that graders respond more favorably to bigger bribes while the effect of higher wages is ambiguous it lowers the bribe s acceptance but it fosters reciprocation monitoring and punishment can deter corruption but we cannot reject that it may also crowd out intrinsic motivations for honesty when intensified finally our results suggest several micro determinants of corruption including age ability religiosity but not gender

money debt and deficits in a dynamic game this paper analyzes a dynamic linear quadratic game between the fiscal and monetary authorities the equilibrium outcome of the game determines the time path of money creation fiscal deficits and public debt the game is solved for different equilibrium concepts the equilibria are then compared and interpreted with reference to alternative institutional arrangements the main results are i coordination increases the speed of adjustment towards the steady state and takes the steady state value of public debt closer to the desired target ii precommitments take the non cooperative equilibrium closer to the coordinated outcome iii increasing the weight that each policymaker assigns to his own private objectives slows down the adjustment process places more burden on the opponent but has ambiguous effects on the steady state value of public debt

directed giving evidence from an inter household transfer experiment abstract we investigate the determinants of giving in a lab in the field experiment with large stakes study participants in urban mozambique play dictator games where their counterpart is the closest person to them outside their household when given the option dictators do a large fraction of giving in kind in the form of goods rather than cash in addition they share more in total when they have the option of giving in kind compared to giving that can only be in cash qualitative post experiment responses suggest that this effect is driven by a desire to control how recipients use gifted resources standard economic determinants such as the rate of return to giving and the size of the endowment also affect giving but the effects of even large changes in these determinants are significantly smaller than the effect of the in kind option our results support theories of giving where the utility of givers depends on the composition not just the level of gift recipient expenditures and givers thus seek control over transferred resources

corruption and culture an experimental analysis article i nfo article history why do some people choose corruption over honesty and others not do the social norms and values prevailing in the societies in which they grew up affect their decisions in 2005 we conducted a bribery experiment and found that among undergraduates we could predict who would act corruptly with reference to the level of corruption in their home country among graduate students we could not in 2007 we replicated our result and also found that time spent in the uk was associated with a decline in the propensity to bribe although this does not explain our inability to predict graduate behaviour we conclude that while corruption may in part be a cultural phenomenon individuals should not be prejudged with reference to their country of origin

accounting for the effect of health on economic growth i use microeconomic estimates of the effect of health on individual outcomes to construct macroeconomic estimates of the proximate effect of health on gdp per capita i employ a variety of methods to construct estimates of the return to health which i combine with cross country and historical data on height adult survival rates and age at menarche using my preferred estimate eliminating health differences among countries would reduce the variance of log gdp per worker by 9 9 percent and reduce the ratio of gdp per worker at the 90th percentile to gdp per worker at the loth percentile from 20 5 to 17 9 while this effect is economically significant it is also substantially smaller than estimates of the effect of health on economic growth that are derived from cross country regressions

income and democracy existing studies establish a strong cross country correlation between income and democracy but do not control for factors that simultaneously affect both variables we show that controlling for such factors by including country fixed effects removes the statistical association between income per capita and vari ous measures of democracy we present instrumental variables estimates that also show no causal effect of income on democracy the cross country corre lation between income and democracy reflects a positive correlation between changes in income and democracy over the past 500 years this pattern is con sistent with the idea that societies embarked on divergent political economic development paths at certain critical junctures jel d7 e 1

deception the role of uncertain consequences abstract we study how decisions to lie extend to risky environments we provide experimental evidence from a sender receiver game where there is uncertainty over the amount by which a sender s lie reduces its receiver s payoff which is known only to potential liar even though all reduction amounts are equiprobable ex post beliefs elicited from senders suggest that unlike truth tellers most liars underestimate the extent of the actual reduction in the receiver s payoff and appear to exploit this self serving bias resulting in substantially more lying relative to a baseline treatment without the uncertainty subsequent treatments confirm the bias by either providing additional evidence or by removing possible confounds an intervention treatment nudging senders toward correcting the bias reduces lying

debt stabilization games in the presence of risk premia as a result of the recent financial crisis and the ensuing economic recession fiscal deficits have soared in many oecd countries as a consequence government debt has been on the rise again after a period of stable or declining government debt in this paper we analyze debt stabilization in a country that features endogenous risk premia imposed by financial markets that evaluate the probability of debt default by governments endogenous risk premia arise by assuming e g simple linear relations between risk premia and the level of debt as a result the real interest rate on government debt can be written as a constant measuring the risk free real interest rate corrected for real output growth plus an endogenous risk premium that depends on the debt level we bring such an endogenous risk premium into tabellini 1986 model and analyze the impact of it this gives rise to a non linear differential game we solve this game for both a cooperative setting and a non cooperative setting the non cooperative game is solved under an open loop information structure we present a bifurcation analysis w r t the risk premium parameter