The Spread of free-riding behavior in a social network

We study a model where agents, located in a social network, decide whether to exert effort or not in experimenting with a new technology (or acquiring a new skill, innovating, etc.). We assume that agents have strong incentives to free ride on their neighbors' effort decisions. In the static version of the model efforts are chosen simultaneously. In equilibrium, agents exerting effort are never connected with each other and all other agents are connected with at least one agent exerting effort. We propose a mean-field dynamics in which agents choose in each period the best response to the last period's decisions of their neighbors. We characterize the equilibrium of such a dynamics and show how the pattern of free riders in the network depends on properties of the connectivity distribution.

Riding the South Sea bubble

This paper presents a case study of a well-informed investor in the South Sea bubble. We argue that Hoare's Bank, a fledgling West End London banker, knew that a bubble was in progress and nonetheless invested in the stock; it was profitable to "ride the bubble." Using a unique dataset on daily trades, we show that this sophisticated investor was not constrained by institutional factors such as restrictions on short sales or agency problems. Instead, this study demonstrates that predictable investor sentiment can prevent attacks on a bubble; rational investors may only attack when some coordinating event promotes joint action.

Red Riding Hood: Caperucita Roja, de Perrault a Catherine Hardwicke

El cuento de Caperucita Roja1 ha sobrevivido a través de los años gracias a su rico simbolismo por las imágenes de gran alcance que contiene. La joven niña con la capa roja que se encuentra con un lobo disfrazado de abuela es algo que golpea profundamente al receptor. El tema se ha estudiado desde numerosos puntos de vista; destaca el psicoanalista Bruno Bettelheim,2 que señala la caperuza que lleva la protagonista como símbolo de su entrada en la pubertad, asociando el color rojo con el ciclo menstrual. No todos los críticos están de acuerdo con este aspecto, aunque bastantes autores relacionan el cuento con el despertar de la sexualidad,la adolescencia y todo lo que conlleva. Perrault tampoco descuida tener en cuenta su advertencia de los riesgos en la etapa, sobre todo para las niñas románticas, en la moraleja final del relato.

Optimal technology policy: subsidies versus monitoring

We analyze the optimal technology policy to solve a free-riding problem between the members of a RJV. We assume that when intervening the Government suffers an additional adverse selection problem because it is not able to distinguish the value of the potential innovation. Although subsidies and monitoring may be equivalent policy tools to solve firms' free-riding problem, they imply different social losses if the Government is not able to perfectly distinguish the value of the potential innovation. The supremacy of monitoring tools over subsidies is proved to depend on which type of information the Government is able to obtain about firms' R&D performance.

Information-sharing implications of horizontal mergers

We analyze the effects of uncertainty and private information on horizontal mergers. Firms face uncertain demands or costs and receive private signals. They may decide to merge sharing their private information. If the uncertainty parameters are independent and the signals are perfect, uncertainty generates an informational advantage only to the merging firms, increasing merger incentives and decreasing free-riding effects. Thus, mergers become more profitable and stable. These results generalize to the case of correlated parameters if the correlation is not very severe, and for perfect correlation if the firms receive noisy signals. From the normative point of view, mergers are socially less harmful compared to deterministic markets and may even be welfare enhancing. If the signals are, instead, publicly observed, uncertainty does not necessarily give more incentives to merge, and mergers are not always less socially harmful.

Inequality and a repeated joint project

Agents voluntarily contribute to an infinitely repeated joint project. We investigate the conditions for cooperation to be a renegotiation-proof and coalition-proof equilibrium before examining the influence of output share inequality on the sustainability of cooperation. When shares are not equally distributed, cooperation requires agents to be more patient than under perfect equality. Beyond a certain degree of share inequality, full efficiency cannot be reached without redistribution. This model also explains the coexistence of one cooperating and one free-riding coalition. In this case, increasing inequality can have a positive or negative impact on the aggregate level of effort.

The determinants of pricing in pharmaceuticals: Are U.S. prices really higher than those of Canada?

This paper studies price determination in pharmaceutical markets using data for 25 countries, six years and a comprehensive list of products from the MIDAS IMS database. We show that market power and the quality of the product has a significantly positive impact of prices. The nationality of the producer appears to have a small and often insignificant impact on prices, which suggests that countries which regulates prices have relatively little power to do it in a way that advances narrow national interest. We produce a theoretical explanation for this phenomenon based on the fact that low negotiated prices in a country would have a knock-on effect in other markets, and is thus strongly resisted by producers.Another key finding is that the U.S. has prices that are not significantly higher than those of countries with similar income levels. This, together with the former observation on the effect of the nationality of producers casts doubt on the ability of countries to pursue "free-riding" regulation.

Experimental evaluation of anonymous protocols under the JXTA middleware

JXTA is a peer-to-peer (P2P) middleware whichhas undergone successive iterations through its 10 years of history, slowly incorporating a security baseline that may cater to different applications and services. However, in order to appeal to a broader set of secure scenarios, it would be interesting to take into consideration more advanced capabilities, such as anonymity.There are several proposals on anonymous protocols that can be applied in the context of a P2P network, but it is necessary to be able to choose the right one given each application¿s needs. In this paper, we provide an experimental evaluation of two relevant protocols, each one belonging to a different category of approaches to anonymity: unimessage and split message. Webase our analysis on two scenarios, with stable and non-stable peers, and three metrics: round trip-time (RTT), node processing time and reliability.