is the internet a us invention an economic and technological history of computer networking abstract although the inventions embodied in the internet originated in a diverse set of industrial economies the us was consistently the source of critical innovations and an early adopter of new applications why did other nations including several that made important inventive contributions to the internet not play a larger role in its development particularly in the creation of new business organizations governance institutions and applications we argue that the role of the us national innovation system in the creation of the internet echoes several key themes of us technological development before 1940 the presence of a large domestic market a set of antitrust and regulatory policies that weakened the power of incumbent telecommunications firms and a diverse private public research community that was willing to work with both domestic and foreign inventions were important preconditions for us leadership in computer networking innovation

conflicting tasks and moral hazard theory and experimental evidence abstract we study a multi task principal agent problem in which tasks can be in direct conflict with each other in theory it is difficult to induce a single agent to exert efforts in two conflicting tasks because effort in one task decreases the success probability of the other task we have conducted an experiment in which we find strong support for the relevance of this incentive problem in the presence of conflict subjects choose two efforts significantly less often when both tasks are assigned to a single agent than when there are two agents each in charge of one task

evasive lying in strategic communication abstract information asymmetries in economic transactions are omnipresent and a regular source of fraudulent behavior in a theoretical and an experimental analysis of a sender receiver game we investigate whether sanctions for lying induce more truth telling the novel aspect in our model is that senders may not only choose between truth telling and explicit lying but may also engage in evasive lying by credibly pretending not to know while we find that sanctions promote truth telling when senders cannot engage in evasive lying this is no longer true when evasive lying is possible then explicit lying is largely substituted by evasive lying which completely eliminates the otherwise positive effect of sanctions on the rate of truth telling as outlined in our model the necessary prerequisite for such an erosion effect is that evasive lying is perceived as sufficiently less psychologically costly than direct lying evidence from our experimental data and a survey conducted with additional participants indicate that the shift towards evasion can indeed be attributed to lower psychological costs overall our results clearly demonstrate the limitations of sanctioning lying to counteract the exploitation of informational asymmetries and may explain the empirical evidence from the finance industry that sanctions for financial misconduct eventually appear to be not very effective

public policies to support basic research what can the rest of the world learn from us theory and practice and what they should not learn the information based theoretical model for public support of basic research developed in the usa at the end of the 1950s has held up well in practice in spite of its neglect of training benefits of necessary investment in research infrastructure and of its consequently limited relevance outside the usa at the same time us practice in basic research has often been misinterpreted as being driven by short term usefulness whereas its key features are massive and pluralistic government funding high academic quality and the ability to invest in the long term development of new often multi disciplinary fields challenges for the future include greater and often ill judged pressures from governments for demonstrable usefulness of the basic research it supports the entirely separate development of direct links to application in bio medical and software fields and more complicated links between basic research and application resulting from the changes in the internationalisation of corporate r d effective policies will depend on better understanding of what makes universities responsive to investments in promising new fields of research and teaching how and why basic fields of great practical usefulness emerge and how basic research requirements are conditioned by a country s level and pattern of economic development bibliometric data could make a considerable contribution if it was more widely recognised that they have informational properties similar to the output of basic research and therefore deserve public support this paper was prepared for the celebration of richard nelson s 70th birthday held in nyc from 13 15 october 2000 comments welcome

common marketing agency as a device for facilitating collusion in a variety of markets firms voluntarily and independently delegate control over certain aspects of marketing to common agents in this article we present an explicit model of agency delegation where firms noncooperatively select agents name output prices and choose compensation schemes we exhibit an equilibrium in which all strategic variables not merely the marketing choices delegated to agents but prices as well are selected perfectly cooperatively this cooperative equilibrium is very simple and attractive each firm sets the collusive output price and employs a commission scheme to compensate the agent although each

a note on switching costs and technology choice it is a commonplace claim that the ibm pc owes its success not to technical superiority but to the belief that it would be successful this note presents a simple model where switching costs between brands say because of incompatible software can lead to an inferior technology being adopted switching costs arise when buyers find it costly to switch to a competitor once they have bought from one manufacturer even if ex ante their products were identical 1 if consumers care about which firms survive perhaps because they need to buy spare parts then their belief that particular firms will succeed may ensure that these firms do indeed succeed since possibly more efficient rivals may be unable o overcome consumers reluctance to buy one may therefore find inferior technologies being adopted this model can be seen as an example of the analysis of katz and shapiro 1986 in which expectations can also lead to poorer products winning out in their model this is because of network externalities that is to say consumers value a product more highly the more other consumers buy it here there are no direct network externalities but the presence of switching costs and increasing returns together generates an indirect externality since the more consumers who buy a product the more likely it is to survive and the more attractive it is to other consumers

information aggregation rationality and the condorcet jury theorem the condorcet jury theorem states that majorities are more likely than any single individual to select the better of two alternatives when there exists uncertainty about which of the two alternatives is in fact preferred most extant proofs of this theorem implicitly make the behavioral assumption that individuals vote sincerely in the collective decision making a seemingly innocuous assumption given that individuals are taken to possess a common preference for selecting the better alternative however in the model analyzed here we find that sincere behavior by all individuals is not rational even when individuals have such a common preference in particular sincere voting does not constitute a nash equilibrium a satisfactory rational choice foundation for the claim that majorities invariably do better than individuals therefore has yet to be derived

fairness and incentives in a multi task principal agent model this paper reports on a two task principal agent experiment in which only one task is contractible the principal can either offer a piece rate contract or a voluntary bonus to the agent bonus contracts strongly outperform piece rate contracts many principals reward high effort on both tasks with substantial bonuses agents anticipate this and provide high effort on both tasks in contrast almost all agents with a piece rate contract focus on the first task and disregard the second principals understand this and predominantly offer bonus contracts this behavior contradicts the self interest theory but is consistent with theories of fairness

revisiting the trade off between risk and incentives the shocking effect of random shocks despite its central role in the theory of incentives empirical evidence of a trade off between risk and incentives remains scarce we reexamine this trade off in a workplace lab environment and find that in line with theory principals increase fixed pay while lowering performance pay when the relationship between effort and output is noisier unexpectedly agents produce substantially more in the noisy environment than in the baseline despite weaker incentives in addition principals earnings are significantly higher in the noisy environment we show that these findings can be accounted for when agents maximize a non cara utility function or when they exhibit loss aversion data and the online appendix are available at https doi org 10 1287 mnsc 2017 2914 this paper was accepted by uri gneezy behavioral economics

voluntary voting costs and benefits we compare voluntary and compulsory voting in a condorcet type model in which voters have identical preferences but dierential information with voluntary voting all equilibria involve sincere voting and positive participation thus in contrast to situations with compulsory voting there is no con ict be tween strategic and sincere behavior when voting is costless voluntary voting is welfare superior to compulsory voting even when voting is costly participa tion rates are such that in the limit the correct candidate is elected that is information fully aggregates

theories of behavior in principal agent relationships with hidden action abstract in a laboratory experiment we investigate behavior in a principal agent situation with moral hazard we evaluate the predictive success of two theories one is the standard agency theory which assumes that the agent will accept any contract offer that satisfies his participation constraint typically requiring zero expected utility the other is the fair offer theory suggested by keser and willinger 2000 principals principles when agents actions are hidden international journal of industrial organization 18 1 163 185 which requires that the principal provide full insurance against losses to the agent and leave him a share of at most 50 of the generated surplus the treatment variable of our experiment is the cost of effort as effort costs increase expected net surplus of a contract decreases we observe that fair offer theory generally predicts observed contract offers better than standard agency theory however the predictive success of the fair offer theory decreases while the one of standard agency theory increases with decreasing expected net surplus

network externality an uncommon tragedy economists have defined network externality and have examined putative inframarginal market failures associated with it this paper distinguishes between network effects and network externalities where the latter are market failures the authors argue that while network effects are important network externalities are theoretically fragile and empirically undocumented some network externalities are merely pecuniary network ownership or transactions among network participants can internalize some network effects the type of market failure that has been associated with these externalities is a transition problem that has little to do with externality

tenable strategy blocks and settled equilibria when people interact in familiar settings social conventions usually develop so that people tend to disregard alternatives outside the convention for rational players to usually restrict attention to a block of conventional strategies no player should prefer to deviate from the block when others are likely to act conventionally and rationally inside the block we explore two set valued concepts coarsely and finely tenable blocks that formalize this notion for finite normal form games we then identify settled equilibria which are nash equilibria with support in minimal tenable blocks for a generic class of normal form games our coarse and fine concepts are equivalent and yet they differ from standard solution concepts on open sets of games we demonstrate the nature and power of the solutions by way of examples settled equilibria are closely related to persistent equilibria but are strictly more selective on an open set of games with fine tenability we obtain invariance under the insertion of a subgame with a unique totally mixed payoff equivalent equilibrium a property that other related concepts have not satisfied

the diffusion of adsl and costs of switching internet providers in the broadband industry evidence from the french case the innovative broadband internet industry is characterised by inertia phenomena in terms of technology choice as well as selection of internet service providers isps within the set of firms providing internet very often in europe the incumbent operator has the lion s share of end customers and supplies the dominant technology focusing on the french case this paper shows that although inertia on the supply side partly due to the regulation process in itself helps to explain the technology mix reached to date a more complete picture of the inertia can be obtained when we consider the existence of costs faced by customers when switching between isps we calculate these so called switching costs the closing section of this paper derives several implications in terms of policy

technology adoption in the presence of network externalities we analyze technology adoption in industries where network externalities are significant the pattern of adoption depends on whether technologies are sponsored a sponsor is an entity that has property rights to the technology and hence is willing to make investments to promote it key findings include the following 1 compatibility tends to be undersupplied by the market but excessive standardization can occur 2 in the absence of sponsors the technology superior today has a strategic advantage and is likely to dominate the market 3 when one of two rival technologies is sponsored that technology has a strategic advantage and may be adopted even if it is inferior 4 when two competing technologies both are sponsored the technology that will be superior tomorrow has a strategic advantage

technology systems and technology policy in an evolutionary framework the central purpose of this paper is to outline an evolutionary theory of technology policy and to connect it with the emerging literature on national systems of innovation any understanding of technology policy must be based on a clear understanding of the nature of technology and the important differences between science and technology technology can be treated in terms of knowledge skills and artifacts and in each case there are different variety generating mechanisms different selection processes and different institutional structures for policy purposes the degree of connection between these different dimensions of technology is at the core of technology policy c 1995 academic press inc copyright 1995 by oxford university press

some results of experimental duopoly markets with demand inertia subjects played twice a multistage duopoly game with demand inertia their actual behavior is different from the unique subgame perfect equilibrium solution of the game in the second plays of the game subjects tend to behave more cooperatively than in the first plays profits prices and price stability are significantly higher the individual markets in the second plays are classified into strongly cooperative weakly cooperative and aggressive markets each market type shows a particular pattern of behavior average price and price instability of a market can be used as indicators for classification copyright 1993 by blackwell publishing ltd

on committees of experts a committee makes a decision on a project on behalf of the public members of the committee agree on the a priori value of the project and hold additional private information about its consequences they are experts who care about the value of the project and about being considered well informed before voting on the project members can exchange their private information simultaneously we show that reputational concerns make the a priori unconventional decision more attractive and lead committees to show a united front these results hold irrespective of whether information can be manipulated or not also reputational concerns induce members to manipulate information and vote strategically if their preferences differ considerably from those of the member casting the decisive vote our last result is that the optimal voting rule balances the quality of information exchange and the alignment of interests of the decisive voter with those of the public

committee design with endogenous information this paper is concerned with the arrangements for collective decision making in a world where agents must be motivated to acquire information the analysis identifies some basic forces shaping the design of panels of decision makers referees managers jurors etc in situations where decision makers are useful only in so far as they expend some effort to gain information about the alternatives at hand these situations are common one being the refereeing process where an editor requires the opinions of a number of experts who must read the paper acquire information in order to give an opinion as to publication analogously in committees which screen applicants to a programme the committee members must gain information about the applicant s qualifications and likelihood of success in order to evaluate whether to admit him her finally in trial juries it is important that jurors pay attention to the evidence in order to make an informed judgement 1 we focus on environments where information is a public good in the sense that the social benefits of one decision maker acquiring information exceed the private benefits a good mechanism in this environment must not only aggregate information efficiently but also induce the decision makers to acquire information we analyse the design of voting mechanisms our problem is to choose two parameters which determine both the incentive to acquire information and the efficiency with which information is aggregated the first parameter is the size of the decision making unit the number of committee members the second is the plurality required to overturn the status quo the voting rule our main result is this a voting rule that requires a large plurality in the extreme unanimity to upset the status quo can be optimal only if the information available to each committee member is sufficiently accurate when individual information is noisy the drawback

vertical integration in west africa s cotton industry are parastatals a second best solution this article provides a framework to compare market outcomes among vertically integrated monopsonies in the cotton sector of west africa and alternative more competitive market structures based on a principal agent framework in the presence of factor market constraints as well as capital market failure efficiently operated cotton parastatals increase sector welfare and efficiency by providing input credits in equilibrium outcomes with the principal agent model suggest growers receive the reservation income to participate in cotton production while the principal cotton company extracts the surplus above the reservation income competitive markets entail more equitable distribution of benefits than with parastatal vertical integration but credit and factor market constraints can still persist promotion of a competitive market system will not support cotton productivity growth unless stakeholders pursue complementary programs to develop credit markets and research and extension institutions in the presence of current market failures parastatals may be a second best solution

principals principles when agents actions are hidden abstract we examine the behavior of subjects in a simple principal agent game with hidden action while subjects in the role of agents tend to choose the actions which maximize their expected profits subjects in the role of principals offer contracts which differ from the theoretical predictions we identify three principles of contract design 1 the agent s remuneration for the better outcome is at least as high as the remuneration for the worse outcome 2 the agent must not risk making a loss 3 the net profit of the agent should not be higher than the net profit of the principal

an incentive compatible condorcet jury theorem we consider a group of individuals who face a binary collective decision each group member holds some private information and all agree about what decision should be taken in each state of nature however the state is unknown and members can differ in their valuations of the two types of mistakes that might occur and in their prior beliefs about the true state for a slightly randomized majority rule we show that informative voting by all voters is the unique nash equilibrium that this equilibrium is strict and that the condorcet asymptotic efficiency result holds in this setting

sectoral systems of innovation and production the concept sectoral system of innovation and production provides a multidimensional integrated and dynamic view of sectors it is proposed that a sectoral system is a set of products and the set of agents carrying out market and non market interactions for the creation production and sale of those products a sectoral systems has a specific knowledge base technologies inputs and demand agents are individuals and organizations at various levels of aggregation they interact through processes of communication exchange co operation competition and command and these interactions are shaped by institutions a sectoral system undergoes change and transformation through the co evolution of its various elements 2002 elsevier science b v all rights reserved

a quick and easy method for estimating switching costs abstract i develop and test a method for a quick and easy calculation of consumer switching costs among brands in a given industry the theory developed and tested here maps observed brands prices and market shares onto the switching costs which deter a consumer of a specific brand from switching to any other competing brand then i demonstrate how users switching costs can be directly calculated in two different industries a the israeli cellular phone market and b the finnish market for bank deposits this calculation method can be used to calculate switching costs in a wide variety of other industries such as airlines health services computers software telecommunications and more

lock in and the costs of switching mainframe computer vendors what do buyers see this paper closely studies the historical experiences of computer users faced with incompatibility problems one key point throughout the discussion is that operating system compatibilities and application software were the principal source of switching costs the larger point here is that vendor specificity is partially a choice variable for the buyer it influences many facets of an organization as well as management and employee behavior foresighted users anticipate that daily decisions regarding programming practices and equipment maintenance influence the costs of switching during a later vendor decision buyers take a wide variety of actions both simple and complex most of the paper is concerned with documenting and analyzing how buyers change investments collect information manipulate bidding procedures and change managements practices either in anticipation of or in response to incompatibility problems copyright 1997 by oxford university press

continental national and sub national innovation systems complementarity and economic growth the purpose of this paper is to discuss the relevance of innovation systems to economic growth rates over the last two centuries the focus is on complementarity or lack of it between sub systems of society and on models of active learning in catching up economies the paper discusses variations in rates of growth of economic regions and the extent to which variations may be attributed to innovation systems the analysis is applied to britain in the 18th century the united states in the second half of the 19th century and the innovation systems of catching up countries in the 20th century