international technology transfer and the technology gap abstract we build a quality ladders product cycle model that explores how the quality of technology transferred through foreign direct investment fdi is linked to innovation and imitation when the absorptive capacity of ldcs is limited successful imitation of low quality levels makes fdi involving high quality levels possible through reduction of the technology gap a subsidy to imitation or a tax on low quality fdi production encourages imitation relative to innovation thus releasing the constraint faced by foreign firms seeking to produce in the south these forces that stimulate high quality fdi raise southern welfare through lower prices faster innovation and higher wages

technology adoption government policy and tariffication abstract we integrate trade policy into an open economy model of technology adoption to investigate the impact of alternate trade barriers on the equilibrium diffusion of a cost saving technology it is shown that even when ad valorem tariffs have a neutral impact on technology adoption non tariff barriers such as quotas can be used to affect the speed of technology diffusion in both the home and foreign countries in addition we demonstrate how in an open economy setting tariffication i e the conversion of quotas to ad valorem tariffs can lead to faster technology adoption world wide

individual risk attitudes measurement determinants and behavioral consequences this paper studies risk attitudes using a large representative survey and a complementary experiment conducted with a representative subject pool in subjects homes using a question asking people about their willingness to take risks in general we find that gender age height and parental background have an economically significant impact on willingness to take risks the experiment confirms the behavioral validity of this measure using paid lottery choices turning to other questions about risk attitudes in specific contexts we find similar results on the determinants of risk attitudes and also shed light on the deeper question of stability of risk attitudes across contexts we conduct a horse race of the ability of different measures to explain risky behaviors such as holdings stocks occupational choice and smoking the question about risk taking in general generates the best all round predictor of risky behavior

risk preferences around the world we present results from a large scale international survey on risk preferences conducted in 53 countries in all countries we find on average an attitude of risk aversion in gains and of risk seeking in losses the degree of risk aversion shows significant cross country differences moreover risk attitudes in our sample depend not only on economic conditions but also on cultural factors as measured by the hofstede dimensions individualism and uncertainty avoidance the data may also serve as an interesting starting point for further research on cultural differences in behavioral economics data as supplemental material are available at http dx doi org 10 1287 mnsc 2013 1869 this paper was accepted by peter wakker decision analysis

tariff and quota equivalence in the presence of asymmetric information abstract this paper investigates the equivalence of optimal import tariffs and quotas in a cournot duopoly model when firms have more information about demand than the domestic government i consider a screening model in which the government offers the domestic firm different contracts from which to choose i show that the availability and cost of obtaining correct information from the firm depends upon the choice of trade policy instrument asymmetric information thus destroys the equivalence of tariffs and quotas which prevails under complete information and has a profound impact on how government firms and consumers rank different trade policy instruments

incentives for foreign direct investment under imitation we study the symmetric mixed strategy equilibrium of a dynamic model where at each instant two exporting firms choose their probability of foreign direct investment f1di the first firm s fdi generates cost lowering spillovers for the second and leads to local imitation thereby intensifying competition while an increase in imitation risk usually makes fdi less likely there exist parameter values for which the converse holds the key point is that by delaying the second firm s switch to fdi an increase in imitation risk can increase the value of being first to invest thereby increasing the equilibrium probability of fidi jel classification f23 f12 l13 incitation a l investissement direct a etranger quand il y a imitation les auteurs etudient 1 equilibre de strategies mixtes symetriques dans un modele dynamique ou a chaque instant deux firmes exportatrices choisissent leur probabilite d investissement direct a 6tranger l investissement direct a 1 etranger de la premiere firme engendre des effets de retomb6e qui reduisent le couits pour la seconde et engendre un effet d imitation au niveau local ce qui a pour effet d augmenter le degre de concurrence alors que l accroissement du risque d imitation reduit la probabilite d investissement direct a l etranger il existe des valeurs des parametres pour lesquels c est l inverse qui se produit le point central est que en faisant en sorte de reporter le recours a l investissement direct a l etranger par la seconde firme un accroissement du risque d imitation peut accroitre l avantage d avoir et6 le premier a investir a l etranger et donc accroitre la probabilite d equilibre d un investissement direct a 1 tranger

foreign direct investment and spillovers gradualism may be better the standard argument says that in the presence of positive spillovers foreign direct investment should be promoted and subsidized in contrast this paper claims that the very existence of spillovers may require temporarily restricting fdi our argument is based on two features of spillovers they are limited by the economy s absorptive capacity and they take time to materialize by letting in capital more gradually initial investment has the time to create spillovers and upgrade the economy s absorptive capacity before further investment occurs the economy converges to a steady state with a superior technology and a greater capital stock l argument conventionnel suggere que l investissement direct de l etranger ide devrait etre promu et subventionne si des effets de retombee positifs existent a contrario ce memoire suggere que l existence meme de ces retombees peut necessiter qu on restreigne temporairement les ide cette argumentation se fonde sur deux caracteristiques des retombees ces retombees sont limitees par la capacite de l economie receptrice a les absorber et elles prennent du temps a se materialiser en laissant entrer ce capital graduellement l investissement initial a le temps de creer des retombees et d ameliorer la capacite d absorption de l economie nationale avant que d autres investissements se produisent l economie nationale converge alors vers un regime permanent dote d une technologie superieure et d un stock de capital plus important

corporate governance and innovation a survey abstract the traditional economics of innovation inspired by schumpeter and more recent advances on his work seem unable to explain why firms with similar external conditions may show greatly different performance in innovation contrastingly the literature on corporate governance provides some useful insights for understanding corporate innovation activity to the extent that such literature examines the economic effects of different modes of coordination between firm members the process through which individuals integrate their human and physical resources within the firm is central to the dynamics of corporate innovation this paper provides the first survey of the literature on this issue we start by discussing how various theoretical approaches to the analysis of the firm deal with technological innovation we then describe three main channels corporate ownership corporate finance and labour through which a system of corporate governance shapes a firm s innovation activity finally we examine the relationship between country level institutional settings national patterns of corporate governance and the aggregate innovation activity of corporations we conclude by suggesting that future research should focus more deeply on the interrelation between the various dimensions of corporate governance and on their joint effect on firm innovation

on the determinants of household debt maturity choice this article jointly analyses a behavioural and a cultural concept to explain household debt portfolio choice the behavioural approach explores the role of time preferences on household debt maturity in a theoretical model and a numerical analysis we derive a positive relationship between the long term discount factor and the optimal maturity of household loans the cultural approach examines whether national culture is a reasonable predictor for household debt maturity we show that culture is an important factor for households borrowing decisions and has even more predictive power than time preferences countries with higher scores on the hofstede dimension of long term orientation tend to have shorter household debt maturity time preferences incur a primarily mediating role because the effect of national culture on the borrowing decision is reduced as the long term discount factor increases

complementarities in organizational design and the diffusion of information technologies an empirical analysis we use a specially designed survey on french firms located in haute savoie to provide empirical evidence suggesting that information and communication technologies adoption is not only influenced by the traditional factors of technology diffusion but also by complementarity effects between strategies organization and information technologies the data collected permitted several advances firstly we could study authentic ict while the recent literature has mainly focused on computer capital stocks or automation tools secondly we constructed measures of the determinants put forward by the models of technology diffusion thirdly we studied three kinds of practices organizational and strategic practices technological choices

trade policy and product variety when is a ver superior to a tariff using the romer romer p 1994 new goods old theory and the welfare costs of trade restrictions j dev econ 43 5 38 model of trade policy and product variety this note shows that a voluntary export restraint ver may be superior to an equivalent tariff that results in the same volume of total imports the explanation for this counterintuitive result is that the ver has less effect on the profitability of foreign firms than the tariff and hence the reduction in product variety with the ver is less than with the tariff if the greater product variety with the ver is sufficiently large to compensate for the loss of tariff revenue then the ver is superior to the equivalent tariff

welfare ranking ad valorem and specific tariffs under monopolistic competition actual trade and tariff policy prefers ad valorem tariffs to specific tariffs yet in this paper we show that in a setting of monopolistic competition realizing a given restriction on imports via a specific tariff would generate more consumer utility than obtaining the same restriction via an ad valorem tariff jel classification f12 un classement en terme de bien etre des droits de douane ad valorem et specifiques quand on est en regime de concurrence monopolistique les politiques commerciales en vigueur pref rent les droits de douane ad valorem aux droits de douane specifiques or ce memoire montre que dans un contexte de concurrence monopolistique reduire les importations par le truchement d un droit de douane specifique genere plus d utilite pour le consommateur que les memes restrictions obtenues par le truchement d un droit de douane ad valorem

a perpetual race to stay ahead this paper presents a model of dynamic competition between two firms that repeatedly engage in an innovative activity the state of competition measured by the difference between the number of innovations introduced by the firms evolves stochastically according to their effort level the structure of markov perfect equilibria is identified it is generally not true that competition is fiercest when firms are closest rather firms invest under two distinct circumstances while sufficiently ahead to outstrip their rival and secure a durable leadership while behind to regain leadership and prevent the situation from worsening to the point where their rival outstrips them industry such a market structure cannot be adequately modelled by a repeated game since history obviously affects market opportunities more precisely previous outcomes determine the range of available actions and pay offs economists have thus resorted to the study of races to gain insights into the strategic issues raised by such competition with the notable exceptions of aoki 1991 harris 1991 and budd harris and vickers 1993 most of the literature has analysed formal races displaying exogenous finishing lines or deadlines as well as final prizes and rewards and the corresponding results rely on backward induction however such assumptions do not seem to capture accurately the essential features of many markets often the rivalry only ends if at all when one of the competitors withdraws so that the deadline should be endogenized moreover benefits and losses are continuously collected additionally the emerging empirical literature on races stresses the inadequacy of standard models and the need to model r d as a race with multiple prizes in the words of cockburn and henderson 1994 our finding that the modern game theoretic literature is of only limited usefulness as an empirical guide points to the need to model r d as a race with multiple prizes the model analysed in this paper is an attempt to offer an adequate framework for this type of dynamic competition the stochastic evolution of the state of competition between two firms depends on their respective effort levels the state of competition is measured by the

the uncertainty effect when a risky prospect is valued less than its worst possible outcome expected utility theory prospect theory and most other models of risky choice are based on the fundamental premise that individuals choose among risky prospects by balancing the value of the possible consequences these models therefore require that the value of a risky prospect lie between the value of that prospect s highest and lowest outcome although this requirement seems essential for any theory of risky decision making we document a violation of this condition in which individuals value a risky prospect less than its worst possible realization this demonstration which we term the uncertainty effect draws from more than 1000 experimental participants and includes hypothetical and real pricing and choice tasks as well as field experiments in real markets with financial incentives our results suggest that there are choice situations in which decision makers discount lotteries for uncertainty in a manner that cannot be accommodated by standard models of risky choice from the time of bernoulli on it has been common to argue that a individuals tend to display aversion to the taking of risks and b that risk aversion in turn is an explanation for many observed phenomena in the economic world arrow 1971 p 90

the long term impact of international migration on economic decision making evidence from a migration lottery and lab in the field experiments this paper studies how migration from a poor to a rich country affects key economic beliefs preference parameters and transnational household decision making efficiency the setting is the migration of tongans to new zealand through a migration lottery program in a 10 year follow up survey of individuals applying for this program the study elicited risk and time preferences and pro market beliefs it also linked migrants and potential migrants to a partner household consisting of family members who would stay behind if the migrants moved survey participants played lab in the field games designed to measure the degree of intra family trust and the efficiency of intra family decision making migration provides a large and permanent positive shock to income a large change in economic institutions and a reduction in interactions with partner household members despite these changes the study finds no significant impacts of migration on risk and time preferences pro market beliefs or the decision making efficiency of transnational households this stability in the face of such a large and life changing event lends credence to economic models of migration that treat these determinants of decision making as time invariant and contrasts with recent evidence on preference changes after negative shocks

foreign ownership and technology adoption evidence from indian firms abstract firms in developing countries rely on foreign technology purchases to improve their technology we use a theoretical framework developed by katz and shapiro to examine the ongoing technology adoption behavior of foreign owned and domestic firms using firm level data on indian firms from 1989 to 1993 we test this theoretical model we find that foreign ownership firm size and market structure are among the variables that impact a firm s probability of adopting new technology we also find that the 1991 liberalization of technology transfer policies in india appears to have had a larger impact on foreign owned firms than domestic firms

the boundaries of multinational enterprises and the theory of international trade this paper begins with a review of empirical evidence on multinational firms conceptual underpinnings of a theory are developed relying in particular on the notion of knowledge capital as a mobile joint input into geographically separated production facilities this idea is embedded in a simple two country general equilibrium model that supports multinational production in equilibrium under conditions consistent with the empirical evidence the final section examines internalization and shows why certain properties of knowledge capital also imply a preference for transferring technologies internally within the firm rather than through arm s length markets

protection and the product line monopoly and product quality the product line decision of a monopolist is analyzed and used to study the effect of specific and ad valorem taxes on the entire product line while specific taxes or quotas raise average quality ad valorem taxes may not the welfare consequences of such policies when the monopolist is a home one and when he she is a foreign one are discussed with a home monopolist both specific and ad valorem subsidies are welfare improving while with a foreign monopolist their welfare properties depend on the distribution of consumers copyright 1990 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

heterogeneity in risky choice behaviour in a broad population we analyse risk preferences using an experiment with real incentives in a representative sample of 1 422 dutch respondents our econometric model incorporates four structural parameters that vary with observed and unobserved characteristics utility curvature loss aversion preferences towards the timing of uncertainty resolution and the propensity to choose randomly rather than on the basis of preferences we find that all four parameters contribute to explaining choice behaviour the structural parameters are significantly associated with socio economic variables but it is essential to incorporate unobserved heterogeneity in each of them to match the rich variety of choice patterns in the data

process innovation activity in a mixed oligopoly the role of cooperatives this article develops a sequential game theoretic model of heterogeneous producers to examine the market and welfare effects of cooperative involvement in process innovation activity in the agricultural sector the analysis examines an open membership input supplying cooperative co op that maximizes member welfare and finances its innovation activity through retained earnings analytical results show that the presence of the co op can increase the arrival rate of innovations while reducing the price of agricultural inputs cooperative involvement in innovation activity can thus be welfare enhancing and socially desirable with its effectiveness being determined by the degree of producer heterogeneity and the size of innovation costs

the behavioral life cycle hypothesis self control mental accounting and framing are incorporated in a behavioral enrichment of the life cycle theory of saving called the behavioral life cycle blc hypothesis the key assumption of the blc theory is that households treat components of their wealth as nonfungible even in the absence of credit rationing specifically wealth is assumed to be divided into three mental accounts current income current assets and future income the temptation to spend is assumed to be greatest for current income and least for future income considerable empirical support for the blc theory is presented primarily drawn from published econometric studies

on vertical relations and the timing of technology adoption we study the timing of new technology adoption in markets with input outsourcing and thus with vertical relations we find that technology adoption can take place earlier when firms engage in input outsourcing than when they produce the input in house hence the presence of vertical relations can accelerate the adoption of a new technology we also find that particular features of a vertically related market such as the distribution of bargaining power and the contract type through which trading is conducted can crucially affect the speed of technology adoption

eating your own lunch protection through preemption recent discussions of management practices among successful high technology companies suggest that one key strategy for success is to eat your own lunch before someone else does the implication is that in intensely competitive or hypercompetitive markets firms with a leading position should aggressively cannibalize their own current advantages with next generation advantages before competitors step in to steal the market given the pace of technological and other types of change such strategy often requires creating next generation advantages while the current advantages are still profitable that is trading current profits for future market leadership we capture the tradeoff between a market leader s willingness to reap profits with its current set of advantages and its desire to maintain market leadership by investing in the next generation using a competitive model that determines the equilibrium launch time of a next generation advantage we find that in absence of lower launch costs for an

portfolio choices and asset prices the comparative statics of ambiguity aversion we investigate the comparative statics of more ambiguity aversion as defined by klibanoff marinacci and mukerji 2005 in the context of the static two asset portfolio problem it is not true in general that more ambiguity aversion reduces the demand for the uncertain asset we exhibit some sufficient conditions to guarantee that ceteris paribus an increase in ambiguity aversion reduces the demand for the ambiguous asset and raises the equity premium for example this is the case when the set of plausible distributions of returns can be ranked according to the monotone likelihood ratio order we also show how ambiguity aversion distorts the price kernel in the alternative portfolio problem with complete markets for contingent claims

who chooses annuities an experimental investigation of the role of gender framing and defaults research suggests that women are more risk averse and less financially literate than men as evidenced by their choice of less risky asset investments we contribute to the literature by focusing on the role of gender in an increasingly important financial decision facing individuals at retirement the choice between purchasing an annuity in this case a fixed immediate lifetime annuity or investing their savings on their own by using a controlled experiment we eliminate the role of adverse selection and unfair annu ity pricing and are able to focus specifically on gender we also explore the role of defaults and framing and whether women react differently to these features we find that women are more likely to choose the annuity and this is only partly explained by differences in risk aversion and financial literacy furthermore biases in a five minute presentation of information signifi cantly affect choices in ways that differ across men and women

precautionary saving credit constraints and irreversible investment theory and evidence from serniarid india this article investigates the extent to which poor households are discouraged from making a non divisible but profitable investment using data on irrigation wells in india we estimate the parameters of a structural model of irreversible investment results show that poor farmers fail to undertake a profitable investment that they could in principle self finance because the nondivisibility of the investment puts it out of their reach irreversibility constitutes an additional disincentive to invest simulations show that the availability of credit can dramatically increase investment in irrigation and that interest rate subsidization has little impact

multinational plant location as a game of timing we study the problem of when firms should switch from exporting to producing at an onshore plant which will cater to a local market the model incorporates factors such as rivalry differences between costs of domestic and offshore production differences in consumer preferences for offshore and domestically produced goods and the capital costs associated with switching to domestic production we find equilibrium timing patterns where there is a leader and a follower diffusion equilibria to be most typical furthermore we find that a firm with lower switching costs has a competitive advantage in the determination of which firm will lead it is found in the duopoly model that market growth and production and transportation unit costs have a relatively greater impact on the timing of the switch than do changes in demand elasticities or changes in the fixed costs of switching with more firms and increased competition however the effect of changes in fixed costs become relatively greater

eliciting von neumann morgenstern utilities when probabilities are distorted or unknown this paper proposes a new method the gamble tradeoff method for eliciting utilities in decision under risk or uncertainty the elicitation of utilities to be used in the expected utility criterion turns out to be possible even if probabilities are ambiguous or unknown a disadvantage of the tradeoff method is that a few more questions usually must be asked to clients also the lotteries that are needed are somewhat more complex than in the certainty equivalent method or in the probability equivalent method the major advantage of the tradeoff method is its robustness against probability distortions and misconceptions which constitute a major cause of violations of expected utility and generate inconsistencies in utility elicitation thus the tradeoff method retains full validity under prospect theory rank dependent utility and the combination of the two i e cumulative prospect theory the tradeoff method is tested for monetary outcomes and for outcomes describing life duration we find higher risk aversion for life duration but the tradeoff method elicits similar curvature of utility apparently the higher risk aversion for life duration is due to more pronounced deviations from expected utility

choice under uncertainty evidence from ethiopia india and uganda we review experimental evidence collected from risky choice experiments using poor subjects in ethiopia india and uganda using these data we estimate that just over 50 of our sample behaves in accordance with expected utility theory and that the rest subjectively weight probability according to prospect theory our results show that inferences about risk aversion are robust to whichever model we adopt when we estimate each model separately however when we allow both models to explain portions of the data simultaneously we infer risk aversion for subjects behaving according to expected utility theory and risk seeking behaviour for subjects behaving according to prospect theory

time to change what to sow risk preferences and technology adoption decisions of cotton farmers in china this paper examines the role of individual risk attitudes in the decision to adopt a new form of agricultural biotechnology in china i conducted a survey and a field experiment to elicit the risk preferences of chinese farmers who faced the decision of whether to adopt genetically modified bt cotton a decade ago in my analysis i expand the measurement of risk preferences beyond expected utility theory to incorporate prospect theory i find that farmers who are more risk averse or more loss averse adopt bt cotton later farmers who overweight small probabilities adopt bt cotton earlier

tariffs versus quotas with endogenous quality this paper analyzes the effects and desirability of tariffs quotas and quality controls when the quality of the imported good is endogenous and the foreign producer is a monopolist a crucial determinant of the direction of these effects is shown to be the valuation of increments in quality by the marginal consumer relative to that of all consumers on average a way of comparing infinitesimal equivalent policies is developed and used to compare import equivalent policies

developments in non expected utility theory the hunt for a descriptive theory of choice under risk this article reviews recent developments in the economic theory of individual decision making under risk since the 1950s it has been known that individual choices violate the standard model of expected utility in predictable ways considerable research effort has now been devoted to the project of developing a superior descriptive model following an overview of non expected utility theories which distinguishes between conventional and non conventional approaches the paper seeks to assess these alternative models in terms of empirical success using laboratory and field data and theoretical usefulness the closing sections reflect on some new directions emerging in this literature

attitudes towards large income risk in welfare states an international comparison using survey data and the instrument developed by barsky et al we estimate the distribution of attitudes towards income risk in a country where many employment and health related risks are generously covered by a tax financed social insurance system norway in 2006 under a constant relative risk aversion assumption the sample average for the coefficient of relative risk aversion is 3 8 with standard deviation 2 3 this number is then contrasted to that for five other oecd countries where risk attitudes have been measured using the same instrument and also prior to the financial crisis chile france italy the netherlands and the usa when we relate this distribution for stated relative risk aversion to that for generosity of social insurance and the risks related to employment and health expenditure a picture emerges suggesting that more extensive welfare states induce higher risk tolerance for foreground risks a relationship that is in line with the theory on risk vulnerability

strategic fdi and industrial ownership structure we argue that different industrial ownership structures generate different incentives for firms to engage in fdi a comparison is made between partially cooperative structures such as the japanese kieretsu and korean chaebol systems and competitive structures such as u s firms it is found that ownership structure has significant implications for the probability of initial fdi whether or not a cooperative structure is also coordinated turns out to be crucial in predicting fdi behaviour this has further implications for the optimal fdi incentives of potential host countries and for how empirical studies might be designed jel classification f10 f21 f23 strategie d investissements directs a l etranger et structure de propriete de l industrie les auteurs suggerent que des structures differentes de propriete dans l industrie engendrent des incitations diverses pour les entreprises a investir directement a l etranger on fait des comparaisons entre des structures partiellement cooperatives comme celles des kieretsus au japon et des chaebol en coree et des structures concurrentielles comme celles qui existent aux etats unis il appert que la structure de propriete a un impact significatif sur la probabilite de faire initialement un investissement direct a l etranger le fait que la structure de cooperation engendre aussi une coordination s avere d une importance centrale pour predire le comportement d investissement direct a l etranger voila qui a des implications pour le design des incitations a investir par les pays hotes potentiels et pour le design des etudes empiriques de ces phenomenes

the dynamics of bertrand price competition with cost reducing investments the authors would like to acknowledge the funding received from the danish council for independent research and innovation fund denmark fedor iskhakov gratefully acknowledges the support from the australian research council projects ce110001029 and fl110100247 as well as from frisch centre project 1307 financed by the ministry of labor norway

information acquisition and the adoption of new technology the profitability of a new technology is rarely known with certainty at its announcement date consequently prior to making an adoption decision it behooves the firm considering the adoption of this innovation to reduce the level of uncertainty associated with its profitability the firm accomplishes this by sequentially gathering information updating its prior estimate of profitability in a bayesian manner quantifying the uncertainty regarding the innovation permits application of dynamic programming techniques criteria are derived which tell the firm when to stop collecting information and make the adoption decision it will be shown that it is optimal for the firm to continue to collect information until its estimate of profitability crosses one of two thresholds upon crossing the upper threshold the firm adopts the technology whereas the firm rejects the technology if the lower threshold is crossed the model predicts that even the manager who behaves optimally will occasionally adopt unprofitable technologies and reject profitable ones

second mover advantages in the strategic adoption of new technology under uncertainty abstract this paper introduces technological uncertainty into a timing game of new technology adoption it is shown that the timing neither necessarily involves first mover advantages in precommitment equilibria reinganum review of economic studies xlviii 1981 395 405 nor rent equalization due to the threat of preemption fudenberg and tirole review of economic studies lii 1985 383 401 rather there may be second mover advantages because of informational spillovers furthermore the model predicts that the equilibrium payoffs will typically be discontinuous and non monotonic in the probability that the new technology is profitable a welfare analysis reveals several market failures and suggests that policy intervention should adequately depend on the nature of uncertainty and the rate of technological progress

on the diffusion of new technology a game theoretic approach this paper is an attempt at a rigorous albeit not exceedingly general analysis of the diffusion of new technology in particular consider an industry composed of two firms each using the current best practice technology the firms are assumed to be operating at nash equilibrium output levels generating a market price given demand and profit allocations when a cost reducing innovation is announced each firm must determine when if ever to adopt it based in part upon the discounted cost of implementing the new technology and in part upon the behavior of the rival firm if either firm adopts before the other it can expect to make substantial profits at the expense of the other firm on the other hand the discounted sum of purchase price and adjustment costs may decline with the lengthening of the adjustment period as various quasi fixed factors become more easily variable therefore although waiting costs the firm more in terms of foregone profits it may save money on the cost of purchasing the new technology thus the firm must weigh the costs and benefits of delaying adoption as well as take account of its rival s strategic behavior

financial decision making are women really more risk averse 40 males 33 females gain gambling gain domain loss gambling loss domain a contextual frames b abstract gambling frames studies the application of experimental methods provided stronger control of the economic environment in which decisions were made we elicited data which call into question the prevalence of stereotypic risk attitudes in financial decision making first we find that the comparative risk propensity of male and female subjects is strongly dependent on the financial decision setting second and more important we observe no gender differences in risk propensity when subjects face contextual decisions since in practice financial decisions are always contextual our results suggest that the above gender stereotype may not reflect true male and female attitudes toward financial risks i gender specific risk behavior an experimental design our experiment was designed to examine gender specific risk propensity in decisions relevant for investors and managers table 1 gives an overview of the experimental design in the main treatment we implemented risky choices in the form of investment and insurance decisions choice behavior in this treatment henceforth called the context treatment directly measures the risk behavior of male and female subjects in contextual financial decisions we also ran a control treatment in which the same risky choices were presented as abstract gambling decisions this control treatment henceforth called the abstract treatment allows us to validate the risk behavior induced by our experimental procedure in the light of the above mentioned gambling evidence in the context treatment subjects were confronted with risky choices in two different decision contexts subjects first had to complete a series of investment decisions they were then presented with a series of identical choices this time however framed as insur1 wealth effects from income differences outside the laboratory may still affect risk behavior in our experiment they are controlled for in our model 2 experimental instructions are available in german from the authors or in english from our web page www wif ethz ch publikationen htm ance decisions each investment and insurance decision incorporated a choice between a risky lottery and a certain payoff with the series of choices implemented in the two frames we elicited our subjects certainty equivalents for the same four risky lotteries l1 l2 l3 l4 in both contexts we implemented two frames in the context treatment in order to measure the risk propensity of subjects toward both perceived gains and perceived losses in both frames all possible payoffs for each decision were positive in the investment frame these payoffs were also presented as gains while in the insurance frame the same payoffs were presented as losses relative to an initial endowment therefore elicited certainty equivalents in the investment frame measure subjects risk propensities in the gain domain while certainty equivalents in the insurance frame measure risk propensity in the loss domain if in contextual financial decisions female subjects are generally more risk averse than men our results should display ceteris paribus lower female certainty equivalents in both the investment and insurance frames 3 the four lotteries l1 l2 l3 and l4 each had two possible outcomes payoffs in swiss francs 1 sfr a 0 60 and their probabilities were 30 sfr 6 10 sfr 6 30 sfr 2 10 sfr 2 30 sfr 6 10 sfr 6 and 50 sfr 2 20 sfr 2 respectively 4 experimental evidence suggests that individual risk propensity will vary systematically between the gain and loss domain daniel kahneman and amos tversky 1979 383 vol 89 no 2 gender and economic transactions 3y16 my68 mp 383 friday dec 10 08 20 am lp aer my68 figure 1 differences in mean certainty equivalents ce between male and female subjects by frame note certainty equivalents and male female differences are measured in swiss francs in the abstract treatment we confronted a different group of subjects with exactly the same risky decisions as those in the main treatment however as mentioned before all choices in this control treatment were framed as abstract gambling decisions again two frames were implemented in the gaingambling and loss gambling frames we measured the risk attitudes of subjects toward gambles in the gain and loss domain respectively subjects in both treatments were told in advance that one of their choices would determine their experimental earnings further all subjects completed a post experimental questionnaire which yielded information on each subject s disposable income this information is necessary to exclude wealth effects due to income differences outside the laboratory as an explanation of gender specific choice behavior

dynamic competition in technological investments an empirical examination of the lcd panel industry abstract when are technological laggards more likely to try to catch up with leaders we offer empirical evidence on firm level data of plant investments in the tft lcd panel industry where technological competition has been intense and dynamic we find that the followers level of technology has a non monotonic effect on technology improving investments with intermediate followers the most apt to invest in catch ups this result is a puzzle given the existing theory on technology race we also find that followers catch up investments increase with the capacity of the leader that employs the state of the art technology these results are robust to variations in specification and alternative accounts of effects we discuss our findings and contributions in light of the technology race literature

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

timing of technology adoption and product market competition abstract this paper examines how product market competition affects firms timing of adopting a new technology as well as whether the market provides sufficient adoption incentives it demonstrates that adoption dates differ not only among symmetric firms but also among markets with different market features more specifically technology adoption can occur earlier in a market with cournot competition than in a market with bertrand competition it can also occur earlier in a market in which goods are not too close substitutes therefore this paper shows that competition toughness does not always reinforce adoption incentives when goods are sufficiently differentiated adoption occurs later than is socially optimal

optimal foreign investment dynamics in the presence of technological spillovers abstract in this paper we present a dynamic model of a firm which is deciding whether to outsource parts of its production to a less developed economy where wages and the level of technology are lower outsourcing reduces production costs but is associated with spillovers to foreign potential competitors spillovers over time increase productivity of firms in the foreign country and make them stronger competitors on the common market the paper analyzes the inter temporally optimal behavior of the firm and shows that two outcomes are possible in the long run one outcome is that there is one steady state where the firm invests a positive amount in the foreign country and the other outcome is a continuum of steady states with no investment the paper then derives conditions such that it is optimal for the firm to invest in the foreign country and characterizes different types of optimal dynamic investment patterns in addition using numerical dynamic optimization methods the effect of the speed of technology adoption and of the wage differential on total labor income in the home country is studied taking into account the transition dynamics

dynamic competition and intellectual property rights in a model of product development we study innovation timing and socially optimal intellectual property rights iprs when firms facing market uncertainty invest strategically in product development if demand growth and volatility are high attrition occurs and iprs should ensure the cost of imitation attains a lower bound we identify if demand growth and volatility are low then provided that the private imitation incentive is socially excessive iprs should set the cost of imitation high enough to induce preemption and possibly winner take all preemption moreover the welfare achieved with optimal iprs is then greater with endogenous innovation than if firm roles are predetermined illustrating the importance of fostering dynamic competition in extensions we show how firms benefit from open standards takeovers have ambiguous welfare effects and simple licensing schemes are welfare improving

exploring the consistency of higher order risk preferences this study measures higher order risk preferences and their consistency we explore the role of country differences the variation of stakes and the framing of lotteries we observe a robust dichotomous pattern of choice behavior in china in the usa and in germany the majority of choices are consistent with mixed risk aversion or mixed risk loving behavior we also find this pattern after a tenfold increase in the stakes finally our results reveal that this pattern is strengthened if the lotteries are displayed in compound rather than reduced form in a follow up study we explore potential explanations for this framing effect

do safeguard tariffs and antidumping duties open or close technology gaps abstract this paper examines how the country breadth of tariff protection can affect the technology adoption decisions of both domestic import competing and foreign exporting firms the contribution of the analysis is to show how firm level technology adoption changes under tariffs of different country breadth i show that a country specific tariff like an antidumping duty induces both domestic import competing firms and foreign exporting firms to adopt a new technology earlier than they would under free trade in contrast a broadly applied tariff like a safeguard can accelerate technology adoption by a domestic import competing firm but will slow down technology adoption by foreign exporting firms because safeguard tariffs can delay the foreign firm s adoption of new technology the worldwide welfare costs associated with using them may be larger than is generally believed

loss aversion under prospect theory a parameter free measurement agrowing body of qualitative evidence shows that loss aversion a phenomenon formalized in prospect theory can explain a variety of field and experimental data quantifications of loss aversion are however hindered by the absence of a general preference based method to elicit the utility for gains and losses simultaneously this paper proposes such a method and uses it to measure loss aversion in an experimental study without making any parametric assumptions thus it is the first to obtain a parameter free elicitation of prospect theory s utility function on the whole domain our method also provides an efficient way to elicit utility midpoints which are important in axiomatizations of utility several definitions of loss aversion have been put forward in the literature according to most definitions we find strong evidence of loss aversion at both the aggregate and the individual level the degree of loss aversion varies with the definition used which underlines the need for a commonly accepted definition of loss aversion