CONTRACT DESIGN AND SELF‐CONTROL WITH ASYMMETRIC INFORMATION

We study optimal contracting by a monopolistic seller of investment goods to a time‐inconsistent consumer and, in doing so, introduce asymmetric information to the model of DellaVigna and Malmendier (2004) . We find (1) the below‐marginal‐cost‐pricing rule may fail for a low‐value consumer; (2) the firm's profit is no longer unaffected by the consumer's short‐run impatience, as the latter is sophisticated. We find that there is an important threshold value of short‐run patience. When the consumer's short‐term patience is below this level, then, as the patience increases, the firm suffers. When the consumer's short‐run patience is above this threshold, then, as it increases, the firm benefits. Finally, we show that unlike monopoly, perfect competition with asymmetric information achieves the first‐best outcome. (JEL D03, D82, D91)     

MONEY AND PRODUCT QUALITY UNDER ASYMMETRIC INFORMATION

This article examines the effects of money on product quality, as well as the price pattern of heterogeneous quality goods, in a search‐theoretical monetary model with divisible money and divisible commodities. We establish the existence and uniqueness/multiplicity of monetary equilibrium in several different cases. The steady‐state equilibrium of our model displays several properties that are absent or distinct from those of previous studies. In particular, we find that under egalitarian bargaining, the Friedman rule cannot achieve socially efficient allocation due to asymmetric information. We find that the price of informed high‐quality goods is higher than the price of uninformed quality goods. We also find that an increase in inflation can improve product quality. (JEL E40)     

PRIZE SCARCITY AND OVERDISSIPATION IN ALL‐PAY AUCTIONS

We compare bidding behavior in complete information all‐pay auction experiments that vary in the prizes and number of players. We confirm the observation from prior single‐prize experiments that there is overbidding relative to equilibrium predictions. Our primary results are that increasing the number of prizes and players proportionally does not reduce overbidding but increasing the number of prizes with a fixed number of players eliminates overbidding. We conclude that the overbidding phenomenon is related to the scarcity of the prize. We provide new theoretical results on the multi‐prize logit equilibrium, and our experimental results are qualitatively consistent with logit equilibrium predictions. (JEL D72, D91, C91, D44)     

PRICING ANOMALIES IN THE MARKET FOR DIAMONDS: EVIDENCE OF CONFORMIST BEHAVIOR

Some goods are consumed not just for their intrinsic utility but also for the impression their consumption has on others. We analyze the market for such a commodity—diamonds. We collect data on price and other attributes from the inventories of three large online retailers of diamonds. We find that people are willing to pay premiums upward of 18% for a diamond that is one‐half carat rather than slightly less than a half carat and between 5% and 10% for a one‐carat rather than a slightly less than one‐carat stone. Since a major portion of larger gem‐quality diamonds are used for engagement rings, such an outcome is consistent with Bernheim's model of conformism, where individuals try to conform to a single standard of behavior that is often established at a focal point. In this case, prospective grooms signal their desirability as a mate by the size of the diamond engagement ring they give their fiancées. (JEL A1, D4)     

RANK‐ORDER COMPETITION IN THE VOLUNTARY PROVISION OF IMPURE PUBLIC GOODS

Publicly provided goods often create differential payoffs due to timely or spatial distances of group members. We design and test a provision mechanism which utilizes rank competition to mitigate free‐riding in impure public goods. In our Rank‐Order Voluntary Contribution Mechanism (Rank‐Order‐VCM) group members compete via observable contributions for a larger share of the public good; high contributors receive preferential access (a larger share), while low contributors receive restricted access (a lower share). In a laboratory experiment, Rank‐Order‐VCM elicits median contributions equal to the full endowment throughout the finitely played games with constant groups. In the control treatment, with randomly assigned ranks, the contributions are significantly lower and decline over time. We thus provide evidence of rank competition, in situations where discriminatory access to public goods is possible, being efficiency enhancing. (JEL C91, H41)     

THE QUANTITATIVE IMPORTANCE OF OPENNESS IN DEVELOPMENT

This paper deals with a classic development question: how can the process of economic development—transition from stagnation in a traditional technology to industrialization and prosperity with a modern technology—be accelerated? Lewis (1954) and Rostow (1956) argue that the pace of industrialization is limited by the rate of capital formation which in turn is limited by the savings rate of workers close to subsistence. We argue that access to capital goods in the world market can be quantitatively important in speeding up the transition. We develop a parsimonious open‐economy model where traditional and modern technologies coexist (a dual economy in the sense of Lewis 1954). We show that a decline in the world price of capital goods in an open economy increases the rate of capital formation and speeds up the pace of industrialization relative to a closed economy that lacks access to cheaper capital goods. In the long run, the investment rate in the open economy is twice as high as in the closed economy and the per capita income is 23% higher. (JEL O11, F43, O14)     

THE RISE OF SERVICES,DEINDUSTRIALIZATION, AND THE LENGTH OF ECONOMIC RECOVERY

Economic recovery is longer in service‐providing economies than in goods‐producing economies. Services cannot be produced and inventoried ahead of demand; goods can. We are the first to document this macroeconomic repercussion of the sectoral shift away from the secondary sector toward the tertiary sector, that is, of deindustrialization and the rise of services. We distinguish between nontradable services and all other sectors, using U.S. state‐level employment data for post‐1960 recessions. Concerns over the endogeneity of services are addressed in two ways: by using 3‐year pre‐recession averages of sector shares, and separately by invoking instrumental variables. Our results are robust to alternative specifications. The increase in service production and deindustrialization in the United States over the last half‐century lengthens the trough‐to‐peak employment recovery from recessions by about 40%. (JEL E24, E32, L80, N12)     

HIERARCHICAL TRADE

Commodity trading is typically organized hierarchically: Large‐scale trade takes place at the global price system while individuals trade at local price systems within their countries. Agencies or trading houses establish the link between these different market places. In this paper, we devise a framework to study this type of hierarchical trade. We identify the free trade and the autarky equilibrium as polar cases. We show that no other two‐stage market equilibria exist if the commodity space is two‐dimensional. An example demonstrates that other, so‐called intermediate equilibria exist for three‐dimensional commodity spaces. We then provide an explicit construction of special classes of intermediate equilibria. Moreover, we study the consequences when some countries control the agency that organizes trade at the global level and we analyze the role of international goods arbitrage. Finally, we show that profit‐maximizing agencies may not promote free trade outcomes. (JEL D43, D50, F10)     

ENTRY AND EXIT,PRODUCT VARIETY,AND THE BUSINESS CYCLE

We study the stochastic behavior of a dynamic general equilibrium model with monopolistic competition. Each seller sells his product in the consumption goods as well as the investment goods market and has market power in both. Consumers derive utility from a constant elasticity of substitution (CES) aggregate of all the consumption goods and augment their capital stock by a CES aggregate of all the investment goods. We analyze the equilibrium of this economy allowing for an endogenous determination of the number of firms and therefore of products. The principal effect we wish to highlight is the endogenous propagation and magnification of technology and preference disturbances through product space variations. (JEL E32, D43, L16)     

HISTORY DEPENDENCE AND THE FORMATION OF SOCIAL PREFERENCES: AN EXPERIMENTAL STUDY

We study the minimal contributing set (MCS) game, a three‐person sequential step‐level public goods game. The behavior of critical third players changes with experience in this game even though they face no strategic or payoff uncertainty. We explore why these changes occur by manipulating subjects' experience in the first half of the experiment. The treatments give subjects very different initial experiences, but all treatments move subjects' choices toward experienced subjects' play in the control sessions. Long‐run play is indistinguishable across treatments. Our results are more consistent with the “discovered preferences” hypothesis ( Plott 1996 ) than either the “constructed preference” or “reference point” hypotheses. (JEL H41, C72, C92)     

Enacting everyday feminist collaborations: Reflexive becoming,proactive improvisation and co‐learning partnerships

We trace back our own multi‐year teaching and writing collaboration in academia to theorize feminist collaboration. Drawing from feminist theories and our autoethnographic reflections, we surface three metaphorical processes that constitute feminist collaboration. We consider feminist collaboration as: (i) reflexive becoming, that is, feminist collaborators constantly make sense of what counts as feminist as the group and context evolve; (ii) proactive improvisation, that is, feminist collaborators collectively strive for everyday transformations within situated constraints; and (iii) co‐learning partnerships, that is, feminist collaborators relate to one another in ways that uphold commitments to reflexivity, equity and care. Enacting these processes are fraught with tensions that intertwine with one another to constrain and enable feminist collaboration. We conclude the article by calling for continued theorization and engagement with feminist collaboration.     

Is Self‐Compassion Selfish? The Development of Self‐Compassion,Empathy, and Prosocial Behavior in Adolescence

Both self‐compassion and empathy have been theorized to promote prosociality in youth, but there is little longitudinal data examining this possibility. We assessed self‐compassion, empathy, and peer‐rated prosociality yearly, in a cohort of 2,078 youth across 17 schools (M age at T1 = 14.65 years; 49.2% female), as they progressed from Grade 9–12. We utilized multi‐level modeling to predict prosocial behavior, nested within students, classes, and schools. We found that self‐compassion and empathy uniquely predicted peer‐rated prosocial behavior. However, only empathy predicted increases in prosocial behavior across time. While self‐compassion is not selfish, it does not appear to facilitate the development of kindness toward adolescent peers. Self‐compassion may help to buffer against possible negative effects of empathic distress.     

Making connections between global production networks for used goods and the realm of production: a case study on e‐waste governance

Recent scholarship on waste within economic geography and global production network (GPN) studies has identified several unique characteristics of networks for used goods vis‐à‐vis ‘traditional’ GPN studies focused on production, exchange and consumption. However, in un‐bracketing GPNs to include analysis of post‐consumption activity, identifying how the distinct moments of production, exchange, consumption and disposal/recycling are related becomes a crucial task. Towards this end, I present a case study on the governance of e‐waste networks that draws upon discussions of performativity and Hudson's cultural political economy approach to GPNs. In my analysis, I demonstrate how multiple factors, such as ideological differences over how to handle e‐waste, the non‐standardized nature of used goods, as well as production factors such as design choices and planned obsolescence, all shape and disrupt efforts to standardize and coordinate resource recovery and hazard mitigation in the post‐consumption phase of electronic goods. Such analysis moves past the novelty of GPNs for used goods toward a more integrated understanding of GPNs as a whole.     

HEALTH CARE INFLATION AND ITS IMPLICATIONS FOR MONETARY POLICY

Motivated by recent findings on the cyclical movement of both health and health spending, we construct a general equilibrium model that distinguishes health care demand from the demand for other goods. Using this model, we are able to generate inflation dynamics and cyclicality of health that match the US data. When the model is subjected to an expansionary monetary policy shock, it yields different output and inflation responses compared with a two‐sector model with homogeneous demand. We show that the trade‐off between leisure and health spending plays an important role in model dynamics. The model further predicts different degrees of inflation stabilization across sectors when a shift in the monetary policy occurs. (JEL E52, E31, E32, I10)     

PROVIDING GLOBAL PUBLIC GOODS: ELECTORAL DELEGATION AND COOPERATION

This study experimentally examines the effect of electoral delegation on providing global public goods shared by several groups. Each group elects one delegate who can freely decide on each group member's contribution to the global public goods. Our results show that people mostly vote for delegates who assign equal contributions for every group member. However, in contrast to standard theoretical predictions for our delegation mechanism, unequal contributions across groups drive cooperation down over time, and it decreases efficiency by almost 50% compared to the selfish benchmark. This pattern is not driven by delegates trying to exploit their fellow group members, as indicated by theory. It is driven by conditional cooperation of delegates across groups. Since one of the potential sources of the resulting inefficiency is the polycentric nature of global public goods provision together with other‐regarding preferences, we use the term P‐inefficiency to describe our finding. (JEL C92, D72, H41)     

DOES WAL‐MART SELL INFERIOR GOODS?

I estimate the aggregate income elasticity of Wal‐Mart's and Target's revenues using quarterly data for 1997–2006. I find that Wal‐Mart's revenues increase during bad times, whereas Target's revenues decrease, consistent with Wal‐Mart selling “inferior goods” in the technical sense of the term. An upper bound on the aggregate income elasticity of demand for Wal‐Mart's wares is ?0.5. (JEL L81, D12)     

THE COMPOSITION OF GOVERNMENT EXPENDITURE: ECONOMIC CONDITIONS AND PREFERENCES

This paper examines the question of why the composition of government expenditure differs among democratic countries and to what extent it may be explained by differences in economic conditions or preferences. A simple overlapping generations model, which allows for a range of relevant factors, is constructed to examine the division of expenditure on public goods and a transfer payment under majority voting. The model yields a closed‐form solution for the majority choice of the expenditure ratio. An empirical examination suggests that income inequalities play a minor role while different preferences for public goods reflecting cultural differences across countries may play an important role in accounting for the substantial variations in expenditure patterns. (JEL D72, H41, H53, H11)     

A CLEAR AND PRESENT MINORITY: HETEROGENEITY IN THE SOURCE OF ENDOWMENTS AND THE PROVISION OF PUBLIC GOODS

We conduct public goods experiments in which participant groups are heterogeneous in regards to the source of their endowments. We find that this dimension of heterogeneity significantly reduces contributions to the public good, yielding strong support for the Nash prediction of minimal contributions. These minimal contributions arise in environments in which there exists a clear minority in terms of source of endowments. We discuss these results in light of current research on the influence of heterogeneous populations on public goods provision and redistributive policies. (JEL C9, D63, H4, J15)     

Successful societies: Decision-making and the quality of attentiveness

Combining moral philosophy with sociological theory to build on themes introduced in Hall and Lamont’s Successful Societies (2009), the paper outlines a distinctive perspective. It holds that a necessary condition of successful societies is that decision-makers base their decisions on a high level of attentiveness (concern and comprehension) towards subjectively valued and morally legitimate forms of life. Late modern societies consist of a plurality of forms of life, each providing grounds for what Alasdair MacIntyre has called internal goods—valued and morally valuable practices. The status of such goods is examined, and distinctions are drawn between their manifest and latent, and transposable and situationally specific, characteristics. We integrate this refined idea of internal goods into a developed conception of habitus that is both morally informed and situationally embedded. The sociological approach of strong structuration theory (SST) is employed to demonstrate how this conception of habitus can guide the critique of decision-making that damages internal goods. We identify the most pervasive and invidious forms of damaging decision-making in contemporary societies as those involving excessive forms of instrumental reasoning. We argue that our developed conception of habitus, anchored in the collectively valued practices of specific worlds, can be a powerful focus for resistance. Accounts of scholarship in higher education and of the white working class in America illustrate the specificities of singular, particular, social worlds and illuminate critical challenges raised by the perspective we advocate.     

Political extremism — left, center, and right

This paper formalizes Lipset’s theory of political extremism and applies its axioms and derivations to guide empirical research. A latent structure analysis of measures of the issues from a survey of the 1992 U.S. electorate produced a three-class Left-Center-Right classification of voters. Given that ideological consistency may indicate a propensity toward political extremism, this study finds that this propensity now is strongest in the Right class and not in the Left and Center classes. He taught political sociology and search methodology at the University of Calfornia, Santa Barbara. His publications include theoretical and emjpirical analysis of political and social process and he has edited A Handbook of Social Science Methods.