Contracts, Reference Points, and Competition - Behavioral Effects of the Fundamental Transformation

In this paper we study the role of incomplete ex ante contracts for ex post trade. Previous experimental evidence indicates that a contract provides a reference point for entitlements when the terms are negotiated in a competitive market. We show that this finding no longer holds when the terms are determined in a non-competitive way. Our results imply that the presence of a "fundamental transformation" (i.e., the transition from a competitive market to a bilateral relationship) is important for a contract to become a reference point. To the best of our knowledge this behavioral aspect of the fundamental transformation has not been shown before.

A Legislator under Surveillance: The Creation and Implementation of Swiss Banking Legislation 1910-1934

This paper analyses how banking regulation was introduced in Switzerland - one of the world's most prominent financial centres - which remained in place until the beginning of the twenty-first century. It shows that the law adopted on 8 November 1934 is a perfect example of capture of the regulator by the regulated. Essentially a political response in the context of the economic crisis of the 1930s, it largely reflected the interests of banking circles by limiting the intervention of the State as much as possible. The introduction of the new legislation was facilitated by the temporary weakness of Swiss banking circles, as they depended on the State to delay or prevent the collapse of many major credit institutions. They did not manage to derail the law as they had two decades earlier when they scuppered the federal bill on banks drawn up between 1914 and 1916. But this time they were better organized and more united, and intervened all the more effectively in the legislative process itself. The 1934 law is thus distinctive in that it made no structural changes to the architecture of the financial centre but merely codified its practices through flexible legislation meant to reassure the public. The law was aimed less at controlling banking activity than at keeping - thanks to skilfully calibrated political concessions - the State from having to intervene more directly in the internal management of banks or in the fixing of interest rates and the export of capital.

Support for a demographically based selection method at University: The role of competition

Building on the instrumental model of group conflict (IMGC), the present experiment investigates the support for discriminatory and meritocratic method of selections at university in a sample of local and immigrant students. Results showed that local students were supporting in a larger proportion selection method that favors them over immigrants in comparison to method that consists in selecting the best applicants without considering his/her origin. Supporting the assumption of the IMGC, this effect was stronger for locals who perceived immigrants as competing for resources. Immigrant students supported more strongly the meritocratic selection method than the one that discriminated them. However, contrasting with the assumption of the IMGC, this effect was only present in students who perceived immigrants as weakly competing for locals' resources. Results demonstrate that selection methods used at university can be perceived differently depending on students' origin. Further, they suggest that the mechanisms underlying the perception of discriminatory and meritocratic selection methods differ between local and immigrant students. Hence, the present experiment makes a theoretical contribution to the IMGC by delimiting its assumptions to the ingroup facing a competitive situation with a relevant outgroup. Practical implication for universities recruitment policies are discussed.