Retribution in a cheap-talk experiment

We use a two-person 3-stage game to investigate whether people choose to punish or reward another player by sacrificing money to increase or decrease the other person’s payoff. One player sends a message indicating an intended play, which is either favorable or unfavorable to the other player in the game. After the message, the sender and the receiver play a simultaneous 2x2 game. A deceptive message may be made, in an effort to induce the receiver to make a play favorable to the sender. Our focus is on whether receivers’ rates of monetary sacrifice depend on the process and the perceived sender’s intention, as is suggested by the literature on deception and procedural satisfaction. Models such as Rabin (1993), Sen (1997), and Charness and Rabin (1999) also permit rates of sacrifice to be sensitive to the sender’s perceived intention, while outcome-based models such as Fehr and Schmidt (1999) and Bolton and Ockenfels (1997) predict otherwise. We find that deception substantially increases the punishment rate as a response to an action that is unfavorable to the receiver. We also find that a small but significant percentage of subjects choose to reward a favorable action choice made by the sender.

Parametric and semiparametric estimation of sample selection models: an empirical application to the female labour force in Portugal

This comment corrects the errors in the estimation process that appear in Martins (2001). The first error is in the parametric probit estimation, as the previously presented results do not maximize the log-likelihood function. In the global maximum more variables become significant. As for the semiparametric estimation method, the kernel function used in Martins (2001) can take on both positive and negative values, which implies that the participation probability estimates may be outside the interval [0,1]. We have solved the problem by applying local smoothing in the kernel estimation, as suggested by Klein and Spady (1993).

Are one factor logarithmic volatility models useful to fit the features of financial data? An application to microsoft data.

This paper provides empirical evidence that continuous time models with one factor of volatility, in some conditions, are able to fit the main characteristics of financial data. It also reports the importance of the feedback factor in capturing the strong volatility clustering of data, caused by a possible change in the pattern of volatility in the last part of the sample. We use the Efficient Method of Moments (EMM) by Gallant and Tauchen (1996) to estimate logarithmic models with one and two stochastic volatility factors (with and without feedback) and to select among them.

When does universal peace prevail? Secession and group formation in rent seeking contests and policy conflicts

This paper analyzes secession and group formation in a general model of contest inspired by Esteban and Ray (1999). This model encompasses as special cases rent seeking contests and policy conflicts, where agents lobby over the choice of a policy in a one-dimensional policy space. We show that in both models the grand coalition is the efficient coalition structure and agents are always better off in the grand coalition than in a symmetric coalition structure. Individual agents (in the rent seeking contest) and extremists (in the policy conflict) only have an incentive to secede when they anticipate that their secession will not be followed by additional secessions. Incentives to secede are lower when agents cooperate inside groups. The grand coalition emerges as the unique subgame perfect equilibrium outcome of a sequential game of coalition formation in rent seeking contests.

Voting by committees with exit

We study the problem of a society choosing a subset of new members from a finite set of candidates (as in Barberà, Sonnenschein, and Zhou, 1991). However, we explicitly consider the possibility that initial members of the society (founders) may want to leave it if they do not like the resulting new society. We show that, if founders have separable (or additive) preferences, the unique strategy-proof and stable social choice function satisfying voters' sovereignty (on the set of candidates) is the one where candidates are chosen unanimously and no founder leaves the society.

The role of central bank operating procedures in an economy with productive government spending

The choice of either the rate of monetary growth or the nominal interest rate as the instrument controlled by monetary authorities has both positive and normative implications for economic performance. We reexamine some of the issues related to the choice of the monetary policy instrument in a dynamic general equilibrium model exhibiting endogenous growth in which a fraction of productive government spending is financed by means of issuing currency. When we evaluate the performance of the two monetary instruments attending to the fluctuations of endogenous variables, we find that the inflation rate is less volatile under nominal interest rate targeting. Concerning the fluctuations of consumption and of the growth rate, both monetary policy instruments lead to statistically equivalent volatilities. Finally, we show that none of these two targeting procedures displays unambiguously higher welfare levels.

Voting by committees under constraints

We consider social choice problems where a society must choose a subset from a set of objects. Specifically, we characterize the families of strategy-proof voting procedures when not all possible subsets of objects are feasible, and voters' preferences are separable or additively representable.

Likelihood-based approaches to modeling demand for medical care

We review recent likelihood-based approaches to modeling demand for medical care. A semi-nonparametric model along the lines of Cameron and Johansson's Poisson polynomial model, but using a negative binomial baseline model, is introduced. We apply these models, as well a semiparametric Poisson, hurdle semiparametric Poisson, and finite mixtures of negative binomial models to six measures of health care usage taken from the Medical Expenditure Panel survey. We conclude that most of the models lead to statistically similar results, both in terms of information criteria and conditional and unconditional prediction. This suggests that applied researchers may not need to be overly concerned with the choice of which of these models they use to analyze data on health care demand.

Stable coalition structures with fixed decision scheme

This paper studies the stability of a finite local public goods economy in horizontal differentiation, where a jurisdiction's choice of the public good is given by an exogenous decision scheme. In this paper, we characterize the class of decision schemes that ensure the existence of an equilibrium with free mobility (that we call Tiebout equilibrium) for monotone distribution of players. This class contains all the decision schemes whose choice lies between the Rawlsian decision scheme and the median voter with mid-distance of the two median voters when there are ties. We show that for non-monotone distribution, there is no decision scheme that can ensure the stability of coalitions. In the last part of the paper, we prove the non-emptiness of the core of this coalition formation game

Self-selection consistent functions

This paper studies collective choice rules whose outcomes consist of a collection of simultaneous decisions, each one of which is the only concern of some group of individuals in society. The need for such rules arises in different contexts, including the establishment of jurisdictions, the location of multiple public facilities, or the election of representative committees. We define a notion of allocation consistency requiring that each partial aspect of the global decision taken by society as a whole should be ratified by the group of agents who are directly concerned with this particular aspect. We investigate the possibility of designing envy-free allocation consistent rules, we also explore whether such rules may also respect the Condorcet criterion.

Subjective income expectations, canonical models and income risk

Expectations are central to behaviour. Despite the existence of subjective expectations data, the standard approach is to ignore these, to hypothecate a model of behaviour and to infer expectations from realisations. In the context of income models, we reveal the informational gain obtained from using both a canonical model and subjective expectations data. We propose a test for this informational gain, and illustrate our approach with an application to the problem of measuring income risk.

La transmissió dels models bizantins d’Itàlia a Hispània

Estudi realitzat a partir d’una estada a Roma entre el 7 de gener i el 28 de febrer de 2006. S’ estudia la influència de les produccions bizantines i orientals a la península Ibèrica, a l’època visigoda i més enllà, fins i tot justificant una cronologia dels segles VIII-X dC per a molts dels capitells tradicionalment denominats mossàrabs del nord-oest peninsular. A més, s’enuncia una via per la investigació de les possibles influències llombardes a la península Ibèrica. També es comenten les relacions entre els capitells del nord-est peninsular i els de la Gàl.lia.

Constrained school choice

Recently, several school districts in the US have adopted or consider adopting the Student-Optimal Stable Mechanism or the Top Trading Cycles Mechanism to assign children to public schools. There is clear evidence that for school districts that employ (variants of) the so-called Boston Mechanism the transition would lead to efficiency gains. The first two mechanisms are strategy-proof, but in practice student assignment procedures impede students to submit a preference list that contains all their acceptable schools. Therefore, any desirable property of the mechanisms is likely toget distorted. We study the non trivial preference revelation game where students can only declare up to a fixed number (quota) of schools to be acceptable. We focus on the stability of the Nash equilibrium outcomes. Our main results identify rather stringent necessary and sufficient conditions on the priorities to guaranteestability. This stands in sharp contrast with the Boston Mechanism which yields stable Nash equilibrium outcomes, independently of the quota. Hence, the transition to any of the two mechanisms is likely to come with a higher risk that students seek legal actionas lower priority students may occupy more preferred schools.

Environmental regulation: choice of instruments under imperfect compliance

Compliance is an important issue in environmental regulation. In this paper, we discuss some of the key elements of the problem and analyze a situation where emissions are not random and firms are risk-neutral. We study the firm's decision on emissions and compliance when the environmental regulation is based on standards and the enforcement agency audits the firm with a certain probability. We then compare total emissions when environmental regulation is based on different instruments: standards, taxes, and tradable permits. We show that when compliance is an issue, environmental taxes are superior to the other instruments. We also analyze the (static) efficiency of the solution.

Els models d'organització metropolitana: el cas de Montreal

Estudi realitzat a partir d’una estada a l’Institut National de Recherche Scientifique, de Montreal, entre l’1 de setembre i el 30 de desembre de 2005. S’analitza el model d’organització de l’àrea metropolitana de Montreal (Canadà) després de la reforma realitzada entre 2000 i 2002, així com les causes que van conduïr a adoptar-lo.