trust trustworthiness and information sharing in supply chains bridging china and the united states whether and how trust and trustworthiness differ between a collectivist society e g china and an individualistic one e g the united states generates much ongoing scientific debate and bears significant practical values for managing cross country transactions we experimentally investigate how supply chain members countries of origin china versus the united states affect trust trustworthiness and strategic information sharing behavior in a cross country supply chain we consider a two tier supply chain in which the upstream supplier solicits demand forecast information from the retailer to plan production but the retailer has an incentive to manipulate her forecast to ensure abundant supply the levels of trust and trustworthiness in the supply chain and supplier s capability to determine the optimal production quantity affect the efficacy of forecast sharing and the resulting profits we develop an experimental design to disentangle these three aspects and to allow for real time interactions b

social capital informal governance and post ipo firm performance a study of chinese entrepreneurial firms social capital can serve as informal governance in weak investor protection regimes using hand collected data on entrepreneurs political connections and firm ownership we construct several original measures of social capital and examine their effect on the performance of entrepreneurial firms in china after their initial public offerings political connections or a high percentage of external investors tend to enhance firm performance but intragroup related party transactions commonly lead to performance decline these forms of social capital have a strong influence on the performance of chinese firms whereas formal governance variables such as board size or board independence have little effect although social capital may serve as an informal governance mechanism and effectively substitute for formal governance mechanisms in an emerging market this role of social capital raises several ethical concerns notably the development of rent seeking and crony capitalism

the hidden transformation the changing role of the state after the collapse of communism in central and eastern europe this article reviews the state s role in the transition economies of central and eastern europe among the countries poland is perceived as the leader because it was the first economy to emerge from the decline following the transition as well the only eu member state to survive the crisis without a recession this success is often attributed to the high quality of government however we show that this popular perception is false and that state malfunctions on numerous fronts may soon impede polish growth prospects in poland the only bright spot is the quality of the financial supervision which should serve as a role model for other countries we attribute the malfunctions to the eu accession period that resulted in an unchecked growth of the government and contributed to the weakening of political and legal institutions copyright 2011 oxford university press

how not to sell nuclear weapons we consider situations where a sale affects the ensuing interaction between potential buyers these situations are modeled by assuming that an agent who does not acquire the object for sale incurs an identity dependent externality we construct a revenue maximizing auction for the seller we observe that 1 outside options and participation constraints are endogenous 2 the seller extracts surplus also from agents who do not obtain the auctioned object 3 the seller is better off by not selling at all while obtaining some payments if externalities are much larger than valuations

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

political connections and entrepreneurial investment evidence from china s transition economy abstract recent literature in entrepreneurship suggests that market and legal institutions matter for entrepreneurial investment yet prior studies have focused on the role of formal institutions building on new institutional theory and political connections literature this study aims to evaluate the role of political connections in entrepreneurial reinvestment in less developed and transition economies the purpose of this paper is threefold first it aims to demonstrate systematically how political connections affect entrepreneurial reinvestment second it applies this relationship to a subsample group i e small and medium enterprises smes in order to empirically test whether political connections are more beneficial for large firms or smes third it demonstrates that political connections substitute for rather than complement formal market and legal institutions the empirical test uses a nationally representative sample of entrepreneurial firms from china s transition economy

can socioeconomic heritage produce a lost generation with regard to entrepreneurship a considerable amount of literature deals with the influence of institutions on entrepreneurship but for all that little is known about the interplay between institutions and personal determinants of entrepreneurship in this paper the empirical evidence that older people in transition economies have low engagement in entrepreneurial activity is the starting point for analyzing how institutions moderate the relationship between individual characteristics and entrepreneurial choice the results show that the socioeconomic heritage of being exposed to socialism deters entrepreneurship an effect that is more pronounced for high impact entrepreneurship detailed analyses reveal that the effect is driven by devaluation of socialist work experience and the influence of socialism on mindset

race and gender discrimination in bargaining for a new car more than three hundred paired audits at new car dealerships reveal that dealers quoted significantly lower prices to white males than to black or female test buyers using identical scripted bargaining strategies ancillary evidence suggests that the dealerships disparate treatment of women and blacks may be caused by dealers statistical inferences about consumers reservation prices but the data do not strongly support any single theory of discrimination copyright 1995 by american economic association

functional unpleasantness the evolutionary logic of righteous resentment economics experiments and everyday experience cast doubt on the assumption that people are self interested in divide the dollar ultimatum games participants turn down offers that would make them objectively better off similarly drivers stuck in a traffic jam fume at cars cruising by on the shoulder many stuck drivers would punish the moving ones if they could even at some cost to themselves such strategies appear irrational because they make the punisher worse off than accepting the situation or offer we examine explanations for costly punishment and relax the presumption that punishers themselves prefer cooperation using evolutionary game theory to show how uncooperative punishers can support cooperation

migrations risks and uncertainty a field experiment in china abstract we report data from the first incentivized artefactual field experiment conducted in china to understand whether chinese migrants differ from non migrants in terms of preferences regarding risk and uncertainty in various contexts we find that compared to non migrants migrants are significantly more likely to enter competitions when they expect competitive entries from others however migrants are not different from non migrants in risk and ambiguity preferences where strategic uncertainty is absent our results suggest that migration may be driven more by a stronger belief in one s chance of succeeding in an uncertain competitive environment than by differences risk attitudes related to state uncertainty

winners and losers in russia s economic transition the transition to a market economy has produced a substantial and rapid change in the wage structure in russia household surveys taken before and after the transition indicate that overall wage inequality nearly doubled from 1991 to 1994 and has reached a level higher than that in the united states returns to both measured skills education occupation and unmeasured skills within groups have increased considerably skill premiums across experience groups however have become more compressed and relative wages of older workers have declined in addition female wages have declined relative to male wages across all percentiles of the wage distribution copyright 1998 by american economic association

staunching emigration from east germany age and the determinants of migration following the unification of germany in 1990 eastern wages and unemployment both rose rapidly i demonstrate that rising wages reduced eastern emigration greatly while rising unemployment had little effect this reflects the behavior of the young who are very sensitive to source region wages and relatively insensitive to source unemployment i show that most of the effect of source unemployment comes from the contemporaneous effect on those laid off who are more likely to be older i find that compared to stayers young emigrants are much more skilled older emigrants are slightly more skilled and commuters are not more skilled as measured by education and pre move wages my conclusions are based on a comparison of results from aggregate inter state migration data and individual data from the eastern sample of the german socio economic panel for 1990 2000 jel j61 p23

selection into auctions for risky and ambiguous prospects we study experimentally the selection into first price sealed bid auctions for a risky or an ambiguous prospect most subjects chose to submit a bid for the risky prospect leading to thinner markets for the ambiguous prospect transaction prices for both prospects were equal although subjects expected the ambiguous markets to be smaller evidence of a positive correlation between risk and ambiguity aversion suggests that the ambiguous markets were populated by relatively risk tolerant bidders a control experiment with selection in a simple choice task shows that subjects correctly anticipate the effects of selection on market size and risk attitudes jel c91 d44 d81

regional institutional development political connections and entrepreneurial performance in china s transition economy while previous research emphasizes the role of political connections in facilitating entrepreneurial performance during china s early reform period 1978 1999 this study argues that regional institutions were increasingly conducive to entrepreneurial activities and thus also played a key role in china s entrepreneurial success during that period the purpose of this study is twofold first it aims to demonstrate how regional institutional development facilitated entrepreneurial performance in china second it aims to understand how formal institutional development among chinese regions affected the role of political connections using a two level hierarchical dataset on chinese private enterprises this study finds that not only legal protection of property rights but also the development of market systems mattered for entrepreneurial performance in addition it shows that political connections played a diminishing role during regional institutional development in china

group formation and cooperation in social dilemmas a survey and meta analytic evidence abstract we survey the growing literature on group formation in the context of three types of social dilemma games public goods games common pool resources and the prisoner s dilemma the 62 surveyed papers study the effect of different sorting mechanisms endogenous endogenous with the option to play the game and exogenous on cooperation rates our survey shows that cooperators are highly sensitive to the presence of free riders independently of the sorting mechanism we complement the survey with a meta analysis showing no difference in terms of cooperation between studies implementing an endogenous and exogenous sorting what is more we find that it is no more likely for a cooperator to be matched with like minded partners in endogenously formed groups than in exogenously formed groups these observations are related as we show in the survey the success of a sorting method in matching like minded individuals and the levels of cooperation are closely interlinked

building trust evidence from vietnamese entrepreneurs abstract in the context of underdeveloped market institutions entrepreneurs in a transition economy are forced to rely on trust based partnerships in the absence of effective market institutions and sufficient elapsed time these entrepreneurial firms find a great need to actively and intentionally develop trust with their partners the current literature however has virtually overlooked the possibility of trust being intentionally developed in interfirm relationships this study develops a model that links trust development strategies trust and interfirm collaboration and reports an empirical test of that model in vietnam the results support the general thesis that trust can be intentionally developed to facilitate interfirm relationships

selection effects in auctions for monopoly rights we demonstrate that auctioning market licenses may result in higher market prices than assigning them via more random allocation mechanisms when future market profit is uncertain winning an auction is like winning a lottery ticket if firms differ in risk attitudes auctions select the least risk averse firm which in turn set a higher price or a higher quantity in case quantity is the decision variable in the marketplace than an average firm

planning for self employment at the beginning of a market economy evidence from individual data of east german workers we investigate the plans of individual workers concerning future self employment in the former german democratic republic shortly before the economic monetary and social union in june july 1990 our data base is the socio economic panel east we find that the desire to become an entrepreneur is basically determined by individual and household characteristics including income and asset indicators and not as much by the current job situation of the individual the work experience attained in the socialist economy seems to be irrelevant for the decision to become self employed in a market economy furthermore we find evidence of barriers to entry which may come from capital market constraints and institutional restrictions we also present an estimation of the determinants of the probability of being self employed in summer 1990 due to institutional restrictions we find only a few individual characteristics to be important

good bye lenin or not the effect of communism on people s preferences preferences for redistribution as well as the generosities of welfare states differ significantly across countries in this paper we test whether there exists a feedback process of the economic regime on individual preferences we exploit the experiment of german separation and reunification to establish exogeneity of the economic system from 1945 to 1990 east germans lived under a communist regime with heavy state intervention and extensive redistribution we find that after german reunification east germans are more in favor of redistribution and state intervention than west germans even after controlling for economic incentives this effect is especially strong for older cohorts who lived under communism for a longer time period we further find that east germans preferences converge towards those of west germans we calculate that it will take one to two generations for preferences to converge completely

conspicuous consumption and political regimes evidence from east and west germany abstract this paper investigates the influence of political regimes on the relative importance of conspicuous consumption we use the division of germany into the communist gdr and the democratic frg and its reunification in 1990 as a natural experiment relying on household data that are representative for germany our empirical results strongly indicate that conspicuous consumption is relatively more important in east germany significantly although we find some convergence a considerable gap in conspicuous consumption expenditures remains even 18 years after the german reunification

the contingent value of social resources entrepreneurs use of debt financing sources in western china this study shows that entrepreneurs use of debt financing sources is conditioned by the resources embedded in their social networks more business or political contacts increase entrepreneurs probability of using formal financial sources and more urban ties increases their probability of using informal sources however the effects of business and bureaucratic ties are contingent on community level institutional trust and on firms age business ties have greater positive impact on the probability of using formal financial sources for older firms and for those in regions with a higher level of institutional trust while the impact of bureaucratic ties on these firms is weaker

individual preferences for political redistribution what drives people s support of governmental reduction of income inequality we employ data from a large international survey in order to evaluate the explanatory power of three competing forces referred to as the homo oeconomicus effect the public values effect and the social rivalry effect the empirical analysis reveals that at the aggregate level all three effects play a significant role in shaping individual preferences for political redistribution attitudes of citizens in formerly socialist countries turn out to differ from those of western citizens in a systematic way 2002 elsevier science b v all rights reserved

what is challenging renewable energy entrepreneurs in developing countries this paper cumulates the findings from a review of the challenges faced by renewable energy entrepreneurs in developing countries to date research that could facilitate the success of renewable energy entrepreneurs in the world s developing regions has been fragmented across two main bodies of literature management specifically entrepreneurship and renewable energy by conducting a qualitative review of the extant literature i propose that the findings from both bodies of research may be distilled to six 6 key challenges inadequate access to institutional finance the price of renewable energy technologies rets the lack of skilled labour underdeveloped physical infrastructure and logistics power dominance of incumbents inadequate government or policy support through this research i not only advance a unified conceptualisation of the challenges faced by renewable energy entrepreneurs in developing countries but also highlight a number of the revealed opportunities for future research

is lack of funds the main obstacle to growth ebrd s experience with small and medium sized businesses in central and eastern europe abstract small and medium sized enterprises smes potentially constitute the most dynamic firms in an emerging economy they are the ones most likely to move into areas of comparative advantage and high value added though they often face economic institutional and legal obstacles obstacles include limited access to working capital and long term credit legal and regulatory restrictions inadequate infrastructure high transaction costs and limited managerial and technical expertise despite the presence of multiple and often interrelated constraints however the widespread belief on which policies to support smes are based is that the lack of finance constitutes the main obstacle to the growth of smes enterprise survey work is the tool generally used to deepen our understanding of constraints affecting smes formation and growth the european bank for reconstruction and development ebrd is no exception in this respect during its early years it drew substantially on a set of enterprise surveys conducted by the world bank between 1991 and 1993 in hungary the czech and slovak federal republic csfr poland and russia investigating the obstacles faced by smes as the volume and geographical spread of its operations increased the ebrd felt the need to design and run its own surveys effectively addressing specific issues encountered in the context of its increasing lending and investment activity in central and eastern europe cee the findings of this analysis confirmed the belief that credit constraints constitute one of the main obstacles to growth of smes and encouraged the ebrd to tailor its financing instruments to the stage of transition of the country in question and the ability of the local financial system to assume key responsibilities this paper analyzes the way in which the ebrd strives to correct this capital market failure in the region in which it operates the fundamental principles on which ebrd policy is based are a preference for reaching the smes via local financial intermediaries a commercial approach to the provision of finance and finally a focus on development of the local financial system as a whole it is still too early to draw conclusions on ebrd activity in the field of smes financing based on other types of indicators than data on volume of signed commitments a large part of the loans is still in the grace period therefore investments are in an early phase and operation performance evaluation reports on this type of operations are still too few aggregate data on volume of ebrd financing through financial intermediaries paint an encouraging picture a 250 increase in the volume of such operations between 1994 and 1997 a nine fold increase in the number of subprojects between 1995 and 1997 and an ever widening geographical spread of activities and decreasing size of subprojects indicate that the experience of the ebrd in financing through financial intermediaries is on the whole positive financing provided to intermediaries is not necessarily always intended nor guaranteed to reach smes it is however guaranteed to create the appropriate financing channels which are necessary to ease the smes liquidity constraint this paper discusses the shortcomings of the financial system in the cee countries it outlines the ebrd policy to support smes and the various instruments employed so far and presents selected case studies to throw light on how good project design can help overcome difficult environments and lower the perception of risk connected to indigenous smes a summary of the findings of the survey work conducted by the ebrd in the region is also presented

long lasting effects of socialist education abstract political regimes influence the content of education and criteria used to select and evaluate students we study the impact of a socialist education on the likelihood of obtaining a college degree and on several labor market outcomes by exploiting the reorganization of the school system in east germany after reunification our identification strategy uses cutoff birth dates for school enrollment that lead to variation in the length of exposure to the socialist education system within the same birth cohort an additional year of socialist education decreases the probability of obtaining a college degree and affects longer term labor market outcomes for men

entrepreneurship and the intergenerational transmission of values there is mounting empirical evidence that there is intergenerational transmission of parental preferences for entrepreneurship however much of the work on this topic is not explicit about the role of values in this transmission process furthermore nearly all studies neglect potential heterogeneity of values among entrepreneurial parents this paper contributes to the literature by making use of a natural experiment that allows 1 identifying a group of entrepreneurial parents who have a distinct priority of challenging existing conditions mastery and 2 detecting whether this value orientation is transmitted comparing german entrepreneurs two decades after reunification reveals that the children of self employed parents who encountered a great deal of resistance in the socialist german democratic republic due to their self employment are much more likely to give mastery as the reason for running their own venture compared to entrepreneurs whose parents did not have to overcome this sort of challenge

wage effects of the move toward free markets in east germany this analysis of data from the german socio economic panel soep for the years 1989 91 illuminates important changes in the structure of wages that were occurring in the former east germany during its transition toward a capitalist economy and changes that are probably occurring in other countries in eastern europe as well under the new capitalist wage regime workers realized significant returns to schooling gained under socialism but no significant returns to work experience because work experience is the largest element in the human capital of older workers their wages fell under the new system and the results suggest that their wages will continue to fall relative to those of younger workers generous transfer payments from western germany may prevent an absolute decline in living standards of these workers older workers in other eastern countries however will have no such social assistance and their living standards will probably fall

economic performance through time prize lecture to the memory of alfred nobel december 9 1993 this abstract was borrowed from another version of this item

bidding for the future signaling in auctions with an aftermarket abstract this paper considers auctions where bidders compete for an advantage in future strategic interactions when bidders wish to exaggerate their private information equilibrium bidding functions are biased upwards as bidders attempt to signal via the winning bid signaling is most prominent in second price auctions where equilibrium bids are above value in english and first price auctions signaling is less extreme since the winner incurs the cost of her signaling choice the opportunity to signal lowers bidders payoffs and raises revenue when bidders understate their private information separating equilibria need not exist and the auction may not be efficient

strategic pricing consumer search and the number of firms discover prices there are three distinct price dispersed equilibria characterized by low moderate and high search intensity the effects of an increase in the number of firms on search behaviour expected prices price dispersion and welfare are sensitive i to the equilibrium consumers search intensity and ii to the status quo number of firms for instance when consumers search with low intensity an increase in the number of firms reduces search does not affect expected price leads to greater price dispersion and reduces welfare in contrast when consumers search with high intensity increased competition results in more search and lower prices when the number of competitors in the market is low to begin with but in less search and higher prices when the number of competitors is large duopoly yields identical expected price and price dispersion but higher welfare than an infinite number of firms a question that has received much attention in economic theory is how the number of competitors and market outcomes are related despite the existence of work showing the contrary see e g satterthwaite 1979 rosenthal 1980 the prediction that emerges from a market where firms interact in a cournot fashion has come to dominate economic thought namely that an increase in the number of competitors leads to larger aggregate production lower market price and improved market performance measured in terms of some social welfare criterion ruffin 1971 this paper challenges the generality of this belief by presenting an oligopoly model with consumer search where the equilibrium expected price may be constant increasing or nonmonotonic in the number of firms we present an economy with two types of consumers consumers who search for prices at no cost fully informed and consumers who must pay a fixed search cost for each price quotation they observe less informed 1 all buyers have the same willingness to pay for the good and buy either a single unit or nothing at all on the supply side of the market there are n firms producing a homogeneous good at constant marginal cost we analyse a one shot simultaneous move game firms set prices and consumers decide how many prices to search for at the same moment in time our model is essentially an oligopolistic version of burdett and judd 1983 where some consumers search costlessly in this model consumers search using a fixed sample size search strategy i e they choose the number of prices to observe before receiving any offer nonsequential search is appealing when consumers find it more advantageous to gather price information quickly morgan and manning 1985 this occurs when the search outcome is observed with delay and delay is costly for instance an mba graduate looking for a job 1 the presence in the model of consumers who search costlessly captures the fact that some people have a

auctioning the digital dividend a model for spectrum auctions abstract we model a spectrum auction where firms purchase units to participate in a constrained multi product downstream market we use dynamic programming techniques to numerically solve for the optimal bidding strategy in a clock auction firms value constraining competitor market power so incumbents often bid aggressively to shut out entrants we find that high cost firms may hold up the market so the auction may be inefficient and generate zero revenue an auction may be optimal for a regulator maximising total surplus a regulator maximising auction revenue sets reserve prices high enough to restrict spectra sold effectively behaving as a monopolist

export promotion via industrial enclaves the philippines bataan export processing zone the economic merits of export processing zones as a form of export promotion are studied in this article by focusing upon a large long established zone in the philippines it is shown that although the absence of trade duties and other regulations led the zone to generate significant benefits for the philippines through employment and foreign exchange earnings this was outweighed by the heavy public infrastructure investment necessitated by the choice of location moreover although firms occupying the zone are predominantly foreign over 90 per cent of their investment was financed by government guaranteed borrowings at controlled interest rates from within the philippines

promoting entrepreneurship in eastern europe the past decade has seen a revival of entrepreneurship in the modern industrial economies characterized by a wave of enterprise restructuring and of new developments in business and technology in this paper we argue that market transitions of the post socialist economies of eastern europe cannot be successful without similar entrepreneurial restructuring to address the massive structural distortions that still plague the post reform economies the governments of the region must promote entrepreneurship through policies that 1 make use of all possible sources of entrepreneurship including in particular the former state and social sectors and 2 establish a macroeconomic environment and property rights framework conducive to entrepreneurship a successful promotion strategy will need to operate on several fronts by 1 redirecting entrepreneurial activities into legal productive activities 2 increasing the supply and effectiveness of entrepreneurs 3 developing markets for complementary inputs and 4 increasing the demand for entrepreneurship an unsuccessful approach we argue will be one that regards the pre reform small private sector as the only source of entrepreneurship and as the only arena for its productive use

are they efficient in the middle using propensity score estimation for modeling middlemen in indian corporate corruption corrupt regulatory environment encourages firms to deploy middlemen for speedy and assured acquisition of different services from regulatory agencies using a world bank dataset of 2210 indian manufacturing firms this article examines how firms with middlemen deal with corrupt governmental agencies for its operational efficiency our results demonstrate that deployment of middlemen by the firms is often accompanied by a substantial increase in operational delay relatively trigger more consumption of senior management s time on regulatory disentanglement enhance the likelihood tendency to pay bribe and likely to face more court cases as a means of restitution of legal rights as firm specific attributes may contaminate our preliminary results we utilized the propensity score framework to examine relationships among variables of interests our study contributes to the inconspicuous part of the corruption literature by attempting to present a comprehensive but indirect assessment of the functions of middlemen that predominantly remained unattended except some scattered descriptive case based anecdotal presentations

social background cooperative behavior and norm enforcement studies have shown that there are differences in cooperative behavior across countries furthermore differences in the use and the reaction on the introduction of a norm enforcement mechanism have been documented in cross cultural studies recently we present data which prove that stark differences in both dimensions can exist even within the same town for this end a unique data set was created based on public goods experiments conducted in cape town south africa most of the differences in behavior can however be explained by variables accounting for social capital and social environment such as trust or household violence

initial human and financial capital as predictors of new venture performance abstract this research seeks to predict the performance of new ventures based on factors that can be observed at the time of start up indicators of initial human and financial capital are considered to determine how they bear upon the probability of three possible performance outcomes 1 failure 2 marginal survival or 3 high growth four categories of initial human and financial capital are examined general human capital represented here by the entrepreneur s education gender and race may reflect the extent to which the entrepreneur has had the opportunity to develop relevant skills and contacts management know how embodied in the entrepreneur or available through advisors or partners reflects management specific skills and knowledge without regard to the kind of business industry specific know how reflects specific experience in similar businesses financial capital is one of the most visible resources it can create a buffer against random shocks and allow the pursuit of more capital intensive strategies which are better protected from imitation the study utilizes a longitudinal study of 1053 new ventures representative of all industry sectors and geographical regions the research departs from most previous studies in considering different measures of performance marginal survival and growth and in considering explicitly whether the factors contributing to marginal survival differ from those contributing to high growth it was found that measures of general human capital influenced both survival and growth except for gender with women owned ventures being less likely to grow but just as likely to survive management know how variables had more limited impact having parents who had owned a business contributed to marginal survival but not to growth number of partners contributed to growth but not to survival management level prior employment in non profit organizations or not having been in the labor force and the use of professional advisors did not have significant effects industry specific know how contributed to both survival and growth amount of initial financial capital also contributed to both the usefulness of the model is enhanced by the fact that the resource variables considered are relatively easy to assess and all can be considered at the time of start up although some of the human capital variables cannot easily be changed the benefits or risks associated with each can be assessed in some cases potential problems can be identified so that plans can be modified to improve prospects overall it appears that using a model based upon the initial human and financial capital of the venture it is possible to predict the performance of new ventures with some degree of confidence

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

entrepreneurial intentions in the third age the impact of perceived age norms this article investigates the impact of perceived age norms on the formation of entrepreneurial intentions in the third age age norms refer to those social norms that determine whether establishing and running a business are considered appropriate behavior for a mature individual an empirical analysis of finnish individuals finds that norms perceived as permissive of enterprising activity in the third age exert a significant positive influence on entrepreneurial intentions in this segment even when controlling for the general level of entrepreneurship in the municipalities this influence is partially mediated by whether the individual has a positive attitude toward entrepreneurship by how the individual perceives their own ability to start and run a business by the extent of support from their family and friends they perceive and by the importance of that support to them thus if policy aims to increase enterprising activity in the third age segment the portfolio of instruments should include measures that address people s general awareness of third age entrepreneurship as a viable positive and attractive late career option

can neoclassical economics underpin the reform of centrally planned economies te here s a curious symmetry between the arguments propounded over the last century in advocacy of socialism and the present popular discussion of the reform of centrally planned economies in those old discussions the vision of socialism was utopian which was contrasted with the dickensian realities of capitalism now the disasters of central planning are contrasted with the benefits flowing from perfectly functioning markets in the conventional wisdom of reform the vision of markets is utopian and that of central planning concentrates on the awful reality what is largely missing in the conventional wisdom is a satisfactory attempt to come to grips with the central question that should be answered in formulating reform plans how does one explain the differences in performance of market capitalist and centrally planned economies of course capitalism has outperformed central planning the developed west is therefore an obvious source of ideas for reforms but the institutions of capitalism come in many varieties and cannot be put in place instantaneously there are many alternative reform paths depending upon the importance attributed to each of these institutions thus there remains the problem of tracing the source of the superiority of capitalist economies to specific characteristics this point was made clear to me on hearing a vietnamese official justify single party rule by noting the economic success of taiwan and singapore reformers need a filter that interprets the experience of capitalist and socialist systems this is exactly where economic theory plays a vital role

the attitudinal legacy of communist labor relations this study of workers attitudes compares data from international social survey programme issp surveys for former communist countries in europe with issp data for western countries over the perio

auctions as coordination devices this paper develops an economic argument relating auctions to high market prices at the core of the argument is the claim that market competition and bidding in an auction should be analyzed as part of one game where the pricing strategies in the market subgame depend on the bidding strategies during the auction i show that when there are two licenses for sale the only equilibrium in the overall game that is consistent with the logic of forward induction is the one where firms bid an amount almost equal to the profits of the cooperative market outcome and follow a cooperative pricing strategy in the market game resulting in high prices with three or more licenses the auction format co determines whether or not the forward induction argument works

signaling future actions and the potential for sacrifice we consider extensions of games where some players have the option of signaling future actions by incurring costs the main result is that in a class of games if one player can incur costs then forwards induction selects her most preferred outcome surprisingly the player does not have to incur any costs to achieve this the option alone suffices however when all players can incur costs one player s attempt to signal a future action is vulnerable to a counter signal by the opponent this vulnerability to counter signaling distinguishes signaling future actions from signaling types

how not to run auctions the european 3g telecom auctions abstract there were enormous differences in the revenues from the european third generation 3g or umts mobile phone license auctions from 20 euros per capita in switzerland to 650 euros per capita in the uk though the values of the licenses sold were similar poor auction designs in some countries facilitated collusion between firms and failed to attract entrants the sequencing of the auctions was also crucial we discuss the auctions in the uk netherlands germany italy austria switzerland belgium greece and denmark

self centered and other regarding behavior in the solidarity game this paper revisits the experiment on the solidarity game by selten and ockenfels selten r ockenfels a 1998 an experimental solidarity game journal of economic behavior and organization 34 517 539 we replicate the basic design and extend it to test the robustness of the fixed total sacrifice effect and the applied strategy method our results only partially confirm the validity of the fixed total sacrifice effect in a treatment with constant group endowment rather than constant winner endowment the predominance of fixed total sacrifice behavior is replaced by fixed relative gift behavior we do not find correlations between actual gift behavior and measures of empathy driven pro social behavior used in social science

what price coordination the efficiency enhancing effect of auctioning the right to play a model is proposed to explain the results of recent experiments in which subjects repeatedly played a coordination game with the right to play auctioned each period in a larger group subjects bid the market clearing price to a level recoverable only in the efficient equilibrium and then converged to that equilibrium although subjects playing the game without auctions converged to inefficient equilibria the efficiency enhancing effect of auctions is reminiscent of forward induction but is not explained by equilibrium refinements the model explains it by showing how strategic uncertainty interacts with history dependent learning dynamics to determine equilibrium selection copyright 1998 by american economic association

personality characteristics of self employed an empirical study this paper is concerned with the personality characteristics of self employed most existing studies on personality characteristics of entrepreneurs concentrate on factors like age educational profile and motivations to become self employed there is a lack of significant empirical findings to claim that entrepreneurs are psychologically different from the general population based on a large sample of 14 846 individuals we compare self employed with the general population and with wage and salary earners we empirically show that entrepreneurs differ from the general population and wage and salary earners in a number of characteristics entrepreneurs are more individually oriented than the rest of the population individual responsibility and effort are distinguishing characteristics when asked about important qualities that children can be encouraged to learn at home entrepreneurs answer that it is important to teach children an ethic of working hard except for the latter characteristic the same holds if we compare self employed with wage and salary earners

the isolation paradox and the discount rate for benefit cost analysis one argument used to justify a rate of discount for benefit cost analysis below the market rate is based on a divergence of private and collective behavior known as the isolation paradox in this paper we reexamine this argument using a three period general equilibrium model incorporating the intergenerational structure of benevolence assumed by earlier writers we show that in this model the appropriate rate of discount is the market rate regardless of the existence of the isolation paradox in the absence of other market distortions no shadow pricing of capital inputs is necessary in the calculation of net present value

the distinctiveness of entrepreneurship in transition economies this paper is concerned with the distinctiveness of entrepreneurship and small business development in countries that are at different stages of transformation to market based economies following a discussion of the potential relevance of selected conceptualisations of entrepreneurship to transition conditions the authors present original empirical data referring to the characteristics of entrepreneurs and their businesses from countries at different stages of market reform distinctive features of entrepreneurial behaviour identified reflect the unstable and hostile nature of the external environment and the scarcity of key resources particularly capital in an unstable and weakly structured environment informal networks often play a key role in helping entrepreneurs to mobilise resources win orders and cope with the constraints imposed by highly bureaucratic structures and often unfriendly officials moreover the social context inherited from the former socialist period appears to affect both the attitudes and behaviour of entrepreneurs and the attitudes of society at large towards entrepreneurship

sub optimal saving and the shadow price of labor the public good argument abstract one argument for the incorporation of a premium on saving into calculations of the shadow price of labor has been the claim that aggregate inter generational savings are a public good and the individual savings decisions lead to sub optimal provision of savings this paper shows that even if this claim was true the incorporation of a premium on savings into benefit cost analysis calculations would be inappropriate the shadow price of labor relative to project output shoud still be set at the relative effects on aggregate income of hiring a worker on the one hand and producing output on the other

asset markets as an equilibrium selection mechanism coordination failure game form auctions and tacit communication abstract in this paper we explore the possibility that asset markets provide a means of tacit communication which may allow subjects to coordinate on the payoff dominant equilibrium in an underlying coordination game we find that the existence of a market price for the right to play does communicate information about the equilibrium selection problem specifically behavior never converged to the efficient outcome when subjects were endowed with the right to participate but always converged to the efficient outcome when subjects purchased the right to participate journal of economic literature classification numbers c720 g120

fixed costs matter even when the costs are sunk how firms set prices is key to understanding markets standard economics dictates that the fixed costs of a firm should not affect its prices nonetheless it is common practice for firms to raise their prices after a fixed costs increase we show that firms are correct in doing so if two ubiquitous conditions apply i future profits increase in current sales and ii firms are liquidity constrained

does auctioning of entry licences induce collusion an experimental study we use experiments to examine whether the auctioning of entry rights affects the behaviour of market entrants standard economic arguments suggest that the licence fee paid at the auction will not affect pricing since it constitutes a sunk cost this argument is not uncontested though and this paper puts it to an experimental test our results indicate that an auction of entry licences has a significant positive effect on average prices in oligopoly but not in monopoly these results are consistent with the conjecture that entry fees induce players to take more risk in pursuit of higher expected profits in oligopoly entry fees increase the probability that the market entrants coordinate on a collusive price path in monopoly taking more risk does not make sense since average prices are already close to the profit maximizing price

license auctions when winning bids are financed through debt we study an auction where two licenses to operate on a new market are sold and winning bidders finance their bids on the debt market higher bids imply higher debts which affects product market competition when debt induces firms to compete more aggressively retail prices are lower than in a model without debt as are auction revenues when debt induces firms to compete less aggressively retail prices are higher than in a model without debt and the effect on auction revenues is ambiguous net firm profits are always higher than in a model without debt due to endogenous credit rationing

pareto optimal redistribution and private charity abstract when private charity exists and is motivated by utility interdependence a non pareto optimal outcome the free rider problem typically arises nevertheless incremental fiscal redistribution cannot achieve a paretian welfare improvement so long as private charity continues at positive levels donors respond to incremental fiscal redistribution by reducing their voluntary contributions by exactly a dollar for every dollar transferred in this way no net transfer is achieved unless incremental fiscal redistribution is pursued to the point where private contributions have been driven to zero alternatively a net transfer may be achieved by fiscal measures which affect donors marginal incentives to donate