Bargaining for power and information : an experimental and theoretical analysis of the interaction between institutions, externalities and adverse selection

Bargaining is the building block of many economic interactions, ranging from bilateral to multilateral encounters and from situations in which the actors are individuals to negotiations between firms or countries. In all these settings, economists have been intrigued for a long time by the fact that some projects, trades or agreements are not realized even though they are mutually beneficial. On the one hand, this has been explained by incomplete information. A firm may not be willing to offer a wage that is acceptable to a qualified worker, because it knows that there are also unqualified workers and cannot distinguish between the two types. This phenomenon is known as adverse selection. On the other hand, it has been argued that even with complete information, the presence of externalities may impede efficient outcomes. To see this, consider the example of climate change. If a subset of countries agrees to curb emissions, non-participant regions benefit from the signatories’ efforts without incurring costs. These free riding opportunities give rise to incentives to strategically improve ones bargaining power that work against the formation of a global agreement. This thesis is concerned with extending our understanding of both factors, adverse selection and externalities. The findings are based on empirical evidence from original laboratory experiments as well as game theoretic modeling. On a very general note, it is demonstrated that the institutions through which agents interact matter to a large extent. Insights are provided about which institutions we should expect to perform better than others, at least in terms of aggregate welfare. Chapters 1 and 2 focus on the problem of adverse selection. Effective operation of markets and other institutions often depends on good information transmission properties. In terms of the example introduced above, a firm is only willing to offer high wages if it receives enough positive signals about the worker’s quality during the application and wage bargaining process. In Chapter 1, it will be shown that repeated interaction coupled with time costs facilitates information transmission. By making the wage bargaining process costly for the worker, the firm is able to obtain more accurate information about the worker’s type. The cost could be pure time cost from delaying agreement or cost of effort arising from a multi-step interviewing process. In Chapter 2, I abstract from time cost and show that communication can play a similar role. The simple fact that a worker states to be of high quality may be informative. In Chapter 3, the focus is on a different source of inefficiency. Agents strive for bargaining power and thus may be motivated by incentives that are at odds with the socially efficient outcome. I have already mentioned the example of climate change. Other examples are coalitions within committees that are formed to secure voting power to block outcomes or groups that commit to different technological standards although a single standard would be optimal (e.g. the format war between HD and BlueRay). It will be shown that such inefficiencies are directly linked to the presence of externalities and a certain degree of irreversibility in actions. I now discuss the three articles in more detail. In Chapter 1, Olivier Bochet and I study a simple bilateral bargaining institution that eliminates trade failures arising from incomplete information. In this setting, a buyer makes offers to a seller in order to acquire a good. Whenever an offer is rejected by the seller, the buyer may submit a further offer. Bargaining is costly, because both parties suffer a (small) time cost after any rejection. The difficulties arise, because the good can be of low or high quality and the quality of the good is only known to the seller. Indeed, without the possibility to make repeated offers, it is too risky for the buyer to offer prices that allow for trade of high quality goods. When allowing for repeated offers, however, at equilibrium both types of goods trade with probability one. We provide an experimental test of these predictions. Buyers gather information about sellers using specific price offers and rates of trade are high, much as the model’s qualitative predictions. We also observe a persistent over-delay before trade occurs, and this mitigates efficiency substantially. Possible channels for over-delay are identified in the form of two behavioral assumptions missing from the standard model, loss aversion (buyers) and haggling (sellers), which reconcile the data with the theoretical predictions. Chapter 2 also studies adverse selection, but interaction between buyers and sellers now takes place within a market rather than isolated pairs. Remarkably, in a market it suffices to let agents communicate in a very simple manner to mitigate trade failures. The key insight is that better informed agents (sellers) are willing to truthfully reveal their private information, because by doing so they are able to reduce search frictions and attract more buyers. Behavior observed in the experimental sessions closely follows the theoretical predictions. As a consequence, costless and non-binding communication (cheap talk) significantly raises rates of trade and welfare. Previous experiments have documented that cheap talk alleviates inefficiencies due to asymmetric information. These findings are explained by pro-social preferences and lie aversion. I use appropriate control treatments to show that such consideration play only a minor role in our market. Instead, the experiment highlights the ability to organize markets as a new channel through which communication can facilitate trade in the presence of private information. In Chapter 3, I theoretically explore coalition formation via multilateral bargaining under complete information. The environment studied is extremely rich in the sense that the model allows for all kinds of externalities. This is achieved by using so-called partition functions, which pin down a coalitional worth for each possible coalition in each possible coalition structure. It is found that although binding agreements can be written, efficiency is not guaranteed, because the negotiation process is inherently non-cooperative. The prospects of cooperation are shown to crucially depend on i) the degree to which players can renegotiate and gradually build up agreements and ii) the absence of a certain type of externalities that can loosely be described as incentives to free ride. Moreover, the willingness to concede bargaining power is identified as a novel reason for gradualism. Another key contribution of the study is that it identifies a strong connection between the Core, one of the most important concepts in cooperative game theory, and the set of environments for which efficiency is attained even without renegotiation.

Discursive Practices Of Organizational Identity Negotiations

How do organizations discursively negotiate organizational identity? In a longitudinal interpretive case study, we investigate the discursive practices of identity negotiations in a non-profit organization. Drawing on semi-structured interviews, documents and participant observations, and in applying a discourse analytical framework, we first identify three distinct discourses that provide the discursive resources for three different identity propositions. Then and in order to understand how these discursive resources are activated and utilized, we reconstruct four distinct discursive practices of organizational identity negotiations: (1) external comparison and differentiation (2) denial of trade-offs and harmonization (3) historization, and (4) moralization. We discuss how this structure relates to other similarly pluralistic organizational contexts.

The Honey Bee Pathosphere of Mongolia: European Viruses in Central Asia

Parasites and pathogens are apparent key factors for the detrimental health of managed European honey bee subspecies, Apis mellifera. Apicultural trade is arguably the main factor for the almost global distribution of most honey bee diseases, thereby increasing chances for multiple infestations/infections of regions, apiaries, colonies and even individual bees. This imposes difficulties to evaluate the effects of pathogens in isolation, thereby creating demand to survey remote areas. Here, we conducted the first comprehensive survey for 14 honey bee pathogens in Mongolia (N = 3 regions, N = 9 locations, N = 151 colonies), where honey bee colonies depend on humans to overwinter. In Mongolia, honey bees, Apis spp., are not native and colonies of European A. mellifera subspecies have been introduced ~60 years ago. Despite the high detection power and large sample size across Mongolian regions with beekeeping, the mite Acarapis woodi, the bacteria Melissococcus plutonius and Paenibacillus larvae, the microsporidian Nosema apis, Acute bee paralysis virus, Kashmir bee virus, Israeli acute paralysis virus and Lake Sinai virus strain 2 were not detected, suggesting that they are either very rare or absent. The mite Varroa destructor, Nosema ceranae and four viruses (Sacbrood virus, Black queen cell virus, Deformed wing virus (DWV) and Chronic bee paralysis virus) were found with different prevalence. Despite the positive correlation between the prevalence of V. destructor mites and DWV, some areas had only mites, but not DWV, which is most likely due to the exceptional isolation of apiaries (up to 600 km). Phylogenetic analyses of the detected viruses reveal their clustering and European origin, thereby supporting the role of trade for pathogen spread and the isolation of Mongolia from South-Asian countries. In conclusion, this survey reveals the distinctive honey bee pathosphere of Mongolia, which offers opportunities for exciting future research.

For Sale: Trade Policy in Majoritarian Systems

We provide a theory of trade policy determination that incorporates the protectionist bias inherent in majoritarian systems, suggested by Grossman and Helpman (2005). The prediction that emerges is that in majoritarian systems, the majority party favors industries located disproportionately in majority districts. We test this prediction using U.S. tariff data from 1993, and House campaign contribution data from two electoral cycles. We find evidence of a protectionist bias due to majoritarian system politics that is comparable in magnitude to the payoff from being an organized industry.

Do Labor Market Imperfections Increase Trade Protection? A Theoretical Investigation

Labor market imperfections are commonly believed to be a major reason for imposing trade impediments. In this paper, I introduce labor market rigidities that are prevalent in continental European countries into the well-known protection for sale model proposed by Grossman and Helpman (1994). I show that contrary to commonly held views, imperfections in the labor market do not necessarily increase equilibrium trade protection. A testable equilibrium trade protection equation is also derived. The findings in this paper are hence particularly relevant for empirical tests of trade policy determinants in economies with more regulated labor markets.

1906 Polk's Medical Register and Directory of North America (Texas Portion Only)

List of Physicians and Surgeons arranged by location, giving post office address with population and location, the School practiced, date and college of graduation, all the existing and extinct medical colleges in North America, with locations, officers, number of professors, lecturers, demonstrators, etc., the various medical societies, penal, reformatory and charitable state institutions, hospitals, sanitariums, dispensaries, asylums and other medical institutions, boards of health, boards of medical examiners, health officers at principal points, the laws of registration and other laws relating to the profession, medical journals with names of editors, frequency of publication and subscription rates, medical libraries, a therapeutic classification of American health resorts, mineral springs, official list of officers of the medical departments of the U.S. Army, Navy and Marine Hospital Service, the U.S. Indian Service, roster of examining surgeons of the U.S. Pension Department, a descriptive sketch of each state, territory and province, embodying such matters as location, boundary, extent in miles and acres, latitude and longitude, statistics relating to climate, temperature, rate of mortality, etc. Full particulars of all national and inter-state associations and societies relating to medicine and surgery, and an INDEX TO THE PHYSICIANS OF THE UNITED STATES. Arranged alphabetically, with the number of the page and column in which the name appears.

1902 Polk's Medical Register and Directory of the United States and Canada (Texas portion only)

List of Physicians and Surgeons arranged by states and provinces, giving post office address with population and location, the School practiced, date and college of graduation, all the existing and extinct medical colleges in the United States and Canada, with locations, officers, number of professors, lecturers, demonstrators, etc., the various medical societies, state prisons, hospitals, sanitariums, dispensaries, asylums and other medical institutions, boards of health, boards of medical examiners, a synopsis of the laws of registration and other laws relating to the profession, medical journals with names of editors, frequency of publication and subscription rates, medical libraries, mineral springs, official list of officers of the medical departments of the U.S. Army, Navy and Marine Hospital Service, roster of examining surgeons of the U.S. Pension Department, a descriptive sketch of each state, territory and province, embodying such matters as location, boundary, extent in miles and acres, latitude and longitude, statistics relating to climate, temperature, rate of mortality, number of deaths from consumption, etc. full particulars of all national associations and societies relating to medicine and surgery, and an INDEX TO THE PHYSICIANS OF THE UNITED STATES. Arranged alphabetically, with the number of the page on which the name appears.

The Role of the Clinical Educator in Evaluating Nursing Competency

INTRODUCTION: Evaluation of nursing competency is critical to assuring patient safety and maintaining high professional standards in the practice of nursing. All nurses must graduate from an approved nursing program and successfully pass the national board exam before receiving initial licensure. State boards of nursing fulfill the role of gatekeeper, seeking to assure the public that nurses provide safe, competent care. In turn, high public awareness and patient advocacy initiatives require close monitoring of nursing competency. [See PDF for complete abstract]

Pliocene-Pleistocene alkenone, nitrogen and opal record of ODP Site 175-1082

In this study we present combined high-resolution records of sea surface temperature (SST), phytoplankton productivity, and nutrient cycling in the Benguela Upwelling System (BUS) for the past 3.5 Ma. The SST record provided evidence that upwelling activity off Namibia mainly intensified ca. 2.4-2.0 Ma ago in response to the cooling of the Southern Ocean and the resultant strengthening of trade winds. As revealed by productivity-related proxies, BUS intensification led to a major transition in regional biological productivity when considering the termination of the Matuyama Diatom Maximum (a diatom high-production event). Major oceanic reorganization in the Benguela was accompanied by nutrient source changes, as indicated by a new nitrogen isotopic (delta15N) record that revealed a stepwise increase at ca. 2.4 and ca. 1.5 Ma ago. The change in source region likely resulted from significant changes in intermediate water formation tied to the reorganization of oceanic conditions in the Southern Ocean, which may have in turn mainly controlled the global ocean N cycle, and therefore the N isotopic composition of nutrients since 3.5 Ma ago.

XRF scanning, pollen and spores of ODP Site 108-659

Pliocene vegetation dynamics and climate variability in West Africa have been investigated through pollen and XRF-scanning records obtained from sediment cores of ODP Site 659 (18°N, 21°W). The comparison between total pollen accumulation rates and Ti/Ca ratios, which is strongly correlated with the dust input at the site, showed elevated aeolian transport of pollen during dusty periods. Comparison of the pollen records of ODP Site 659 and the nearby Site 658 resulted in a robust reconstruction of West African vegetation change since the Late Pliocene. Between 3.6 and 3.0 Ma the savannah in West Africa differed in composition from its modern counterpart and was richer in Asteraceae, in particular of the Tribus Cichorieae. Between 3.24 and 3.20 Ma a stable wet period is inferred from the Fe/K ratios, which could stand for a narrower and better specified mid-Pliocene (mid-Piacenzian) warm time slice. The northward extension of woodland and savannah, albeit fluctuating, was generally greater in the Pliocene. NE trade wind vigour increased intermittently around 2.7 and 2.6 Ma, and more or less permanently since 2.5 Ma, as inferred from increased pollen concentrations of trade wind indicators (Ephedra, Artemisia, Pinus). Our findings link the NE trade wind development with the intensification of the Northern Hemisphere glaciations (iNHG). Prior to the iNHG, little or no systematic relation could be found between sea surface temperatures of the North Atlantic with aridity and dust in West Africa.

Chemical composition of dredged rocks from the Hess Deep, Eastern Equatorial Pacific

A joint analysis of data on the anomalous magnetic field, seismicity, and structures of the Hess deep basalts have allowed to specify propagation of the spreading zone and to correct position of the neovolcanic zone. A precise petrogeochemical analysis of various types of basalts composing the uneven-aged oceanic crust of the basin showed that magmatics of the neovolcanic zone are related to the primitive type in contrast to rift boards of differential basalts. A model of the deep structure of the Galapagos rift in the area of the western Hess Deep has been suggested.

Pollen analyses of sediment core GeoB9508-5

Millennial-scale dry events in the Northern Hemisphere monsoon regions during the last Glacial period are commonly attributed to southward shifts of the Intertropical Convergence Zone (ITCZ) associated with an intensification of the northeasterly (NE) trade wind system during intervals of reduced Atlantic meridional overturning circulation (AMOC). Through the use of high-resolution last deglaciation pollen records from the continental slope off Senegal, our data show that one of the longest and most extreme droughts in the western Sahel history, which occurred during the North Atlantic Heinrich Stadial 1 (HS1), displayed a succession of three major phases. These phases progressed from an interval of maximum pollen representation of Saharan elements between ~19 and 17.4 kyr BP indicating the onset of aridity and intensified NE trade winds, followed by a millennial interlude of reduced input of Saharan pollen and increased input of Sahelian pollen, to a final phase between ~16.2 and 15 kyr BP that was characterized by a second maximum of Saharan pollen abundances. This change in the pollen assemblage indicates a mid-HS1 interlude of NE trade wind relaxation, occurring between two distinct trade wind maxima, along with an intensified mid-tropospheric African Easterly Jet (AEJ) indicating a substantial change in West African atmospheric processes. The pollen data thus suggest that although the NE trades have weakened, the Sahel drought remained severe during this time interval. Therefore, a simple strengthening of trade winds and a southward shift of the West African monsoon trough alone cannot fully explain millennial-scale Sahel droughts during periods of AMOC weakening. Instead, we suggest that an intensification of the AEJ is needed to explain the persistence of the drought during HS1. Simulations with the Community Climate System Model indicate that an intensified AEJ during periods of reduced AMOC affected the North African climate by enhancing moisture divergence over the West African realm, thereby extending the Sahel drought for about 4000 years.

To fuse or not to fuse? Assessing the case for convergent disciplines on goods and services trade

Think piece by Pierre Sauvé for the E15 Initiative on Strengthening the Global Trade System In his latest essay for the ICTSD-World Economic Forum E15 initiative on Strengthening the Global Trade and Investment System for Sustainable Development, WTI Director of External Programmes and Academic Partnerships and faculty member Pierre Sauvé explores the case for fusing the law of goods with that of services in a world of global value chains. The paper does so by directing attention to the questions of whether the current architectures of multilateral and preferential trade governance are compatible with a world of trade in tasks; whether the existing rules offer globally active firms a coherent structure for doing business in a predictable environment; whether it is feasible to redesign the structure and content of existing trade rules to align them to the reality of production fragmentation; and what steps can be envisaged to better align policy and realities in the marketplace if the prospects for restructuring appear unfavourable. The paper argues that fusing trade disciplines for goods and services is neither needed nor feasible and may actually deflect attention from a number of worthwhile policy initiatives where more realistic (if never easily secured) prospects of generic rule-making may well exist.

The Role of Distance in Determining International Transport Costs: Evidence from Philippine Import Data

This paper presents an empirical investigation of the appropriateness of distance as a determinant of international transport costs by using Philippine import data. This study addresses three specific questions. First, does distance really matter in the determination of transport costs? Second, if distance is a significant factor, what is the magnitude of its impact? Third, does the impact of distance on transport costs vary by commodity? Results indicate that while distance is important in determining transport costs, using distance alone as the proxy of international transport costs is insufficient, and such use underestimates the impact of distance on international transport costs. Results also indicate that the impact of distance varies across commodity groups, but it is difficult to precisely determine the direction and the magnitude of this impact.

Trade Credits under Imperfect Enforcement: A Theory with a Test on Chinese Experience

It is widely recognized that trade credit is an important financial mechanism, particularly in developing economies and transition economies where institutions are weak. This paper documents theoretical analysis and empirical accounts on what facilitates an effective supply of trade credit based on original surveys conducted in P.R. of China. Our theory predicts that trade volume and trade credit are increasing function of cash held by the buyer and enforcement technology of the seller. Furthermore, if the state sector’s enforcement technology is high, it has positive external effect to expand the volumes of trade credit and trades in the whole economy. From the data, we found that government made active commitment in enforcement of trade credit contract and the government owned firms are main supplier and receivers of trade credit, which suggest that enforcement by government and state sector were effective against presumptions in the previous literatures.