DOES RELATIVE THINKING EXIST IN REAL‐WORLD SITUATIONS? A FIELD EXPERIMENT WITH BAGELS AND CREAM CHEESE

Many experiments show that consumers consider relative price differences even when only absolute price differences are relevant from an economic perspective, a phenomenon that was denoted “relative thinking.” These experiments, however, were conducted using hypothetical questions. To test whether the relative thinking bias also exists in real‐world situations, a field experiment where subjects could purchase either a bagel or a bagel with cream cheese was conducted. The monetary addition for the cream cheese was kept constant ($0.20) in both treatments, but the bagel's price varied ($0.05 in one treatment and $0.30 in the other). Relative thinking then implies that more people should add the cream cheese when the bagel's price is higher, because the relative price increase for the cream cheese is then smaller. However, the results did not document any relative thinking—more people (in percentage of those who purchase) added the cream cheese when the bagel's price was lower (the difference between the treatments, however, was not statistically significant). A replication of the experiment as a hypothetical‐scenario experiment did document relative thinking, suggesting that introduction of financial incentives might alleviate relative thinking. (JEL C93, D01, D10, L00, M31)     

WHY DOES CHILD LABOR PERSIST WITH DECLINING POVERTY?

We develop a dynamic overlapping generations model to highlight the role of income inequality in explaining the persistence of child labor under declining poverty. Differential investment in two forms of human capital—schooling and health—in the presence of inequality gives rise to a nonconvergent income distribution in the steady state characterized by multiple steady states of relative income with varying levels of education, health, and child labor. The child labor trap thus generated is shown to preserve itself despite rising per capita income. Policy recommendations include public provision of education targeted toward reducing schooling costs for the poor or raising the efficacy of public health infrastructure. (JEL I1, J2, O1, O2)     

A Self-portrait

I was fond of literature from childhood. But I wasstudying hard to become a doctor and never thought ofliving off writing. I began my writing career from the May FourthMovement in 1919. At first, as a member of the FemaleStudents Federation, I wrote some articles for publication.At that time the turbulent Chinese youth's patrioticmovement and the new cultural movement brought me outof the home and campus. I began to witness the pressing     

TO DETER OR TO MODERATE? ALLIANCE FORMATION IN CONTESTS WITH INCOMPLETE INFORMATION

We consider two players' choice about the formation of an alliance ahead of conflict in a framework with incomplete information about the strength of the potential ally. When deciding on alliance formation, players anticipate the self‐selection of other players and the informational value of own and other players' choices. In the absence of these signaling effects, strong players have an incentive to stand alone, which leads to a separating equilibrium. This separating equilibrium can be destabilized by deception incentives if beliefs are updated on the basis of endogenous alliance formation choices. Weak players may find it attractive to appear strong in order to deter competitors from positive effort choices. Strong players may find it attractive to appear weak in order to give their competitors a false sense of security and then beat them with little effort. Moreover, appearing weak allows players to free‐ride when alliances are formed. (JEL D72, D74)     

DOES A GOOD CENTRAL BANKER MAKE A DIFFERENCE?

The personalities of central bankers moved center stage during the recent financial crisis. Indeed, several central bankers even became “superstars.” In this article, we investigate whether superstar central bankers have an impact on economic performance. We employ school grades given to central bankers by the financial press, defining as superstars those central bankers receiving the top grade. First, we explain the grades in a probit estimation with measures of economic performance, institutional features, and personal characteristics. Second, we employ a matching approach to account for the endogeneity of grading with respect to economic performance. Using entropy balancing, we identify credible counterfactuals for top‐graded central bankers, that is, nonsuperstar central bankers who face similar situations. Comparing the economic performance of both groups, we find that superstars do indeed matter: a top‐graded central banker faces a significantly more favorable output‐inflation tradeoff than his peers. This effect is driven by outstanding central bankers in both advanced and emerging economies and is especially prevalent in the precrisis subsample. (JEL E52, E58)     

A Love Hotline

ONE day last October, I interviewed a woman in Quancheng, Jinan, who had struggled with death for more than twenty years. Despite her physical frailties, however, this woman had started a hotline to provide psychological counseling for others. Currently, she helps nearly 40 people every day.     

A Permanent Memory

My mind is filled with unbearable sorrow when I recall my dearest mother. The calender on the desk where mother worked still shows November 29 1995, the day my mother went out and was killed in a traffic accident. I leave the calender at this date because a very important part in my life stopped still on this day also. Mother was the only daughter in her family. My grandmother lived with my parents after my grandfather passed away. I was born during the War of     

A De'ang Wedding

Every wedding is different, but somehow they are all the same. That is what I felt when I attended the wedding of Yang Yubu, a De'ang young woman who is an acquaintance of mine. Chudonggua Village is located at the eastern part of Santai Township. It is about 30 kilometers away from tile seat of Mangshi. When I learned that Yubu was going to get married, I jumped onto a shuttle bus that would take me past the foot of the mountain where the village sits. Halfway along the journey, I disembarked and started     

A Lady's Tailette

THE young lady in the photo is attending to her toilette. About 130 years ago, ladies like her sat unhurriedly before their dressing table every day to have themselves elaborately made up. It was their necessary daily work. At that time, old China was on the verge of turbulence and change. After its failure in the Opium War in 1840, the Qing Dynasty (1644-1911) was in decline. Moreover, the invasion of the great worldpowers and the introduction of capitalism was shaking the foundations of the feudal empire. Though the ladies in the photo still dressed in tidy lace-edged garments and wore their hair in smooth buns, we can     

A Physics Teacher

~~A Physics Teacher@尚雅萍     

A Love Story

LI Zhijun, a platoon leader, was injuredand became blind when he led hismen to remove an unfired gun in1981. Wang Ping was his then fiancee. LiZhijun was in a dilemma-if he told her hehad lost his sight, he was afraid that it woulddevastate her; if not, how long could heconceal the truth? After several days of mentaltorture, he decided to tell her the truth and toask her to leave him.     

A Decade-Long Partnership

THE Children's Choir of the China Central Philharmonic Society was founded in 1983 by Yang Hongnian, a leading conductor and a professor at China's Central Conservatory of Music. The 160 members of the Choir are from various mid-     

A Private Controversy

DISCUSSIONS on privacyflamed at the 1998 book fair.Absolute Privacy waspublished at the beginning of the year,immediately followed by SinglePrivacy and Very Private. And thereare others: Inside Marriage andBeyond, Observations of Lovers, andmore. Most are written by journalists,     

EFFECTS OF PARENTAL LEAVE AND WORK HOURS ON FATHERS’ INVOLVEMENT WITH THEIR BABIES

Using data from the first wave of the Millennium Cohort Study, covering a large birth cohort of children in the UK at age 8 to 12 months, this paper examines the effects of leave-taking and work hours on fathers’ involvement in four specific types of activities: being the main caregiver; changing diapers; feeding the baby; and getting up during the night. We also investigate the effects of policies on fathers’ leave-taking and work hours. We find that taking leave and working shorter hours are related to fathers being more involved with the baby, and that policies affect both these aspects of fathers’ employment behaviour. Thus, we conclude that policies that provide parental leave or shorter work hours could increase fathers’ involvement with their young children.     

A Wine-Water Container

This exquisite bronze object is a combination wine container and water container. It was excavated from the tomb of Zeng Houyi, a prince of the State of Zeng. The upper part is a wine container, measuring 30. 1 cm tall and the lower part is a water or ice container, measuring 58 cm in diameter. The two parts resemble a     

A Hainan Singer

HAINAN, the youngest province inChina since being added to the list of areasgranted economic favors by thegovernment, holds a secret it adores. CaoShijuan is famed as "the province's lark"and when the area celebrated its tenthanniversary, she held in its honor the firstever solo concert the province had everseen. Originally from Hunan, Cao wasenrolled into a local Xiangju opera troupe     

A Scholarly Director

TDWN Head Zhao: "How tired and good-for-nothing I am! To help ordinary people become richer, I got the money by a deal using my own son against my conscience. But now they think I'm a town traitor. High leaders demand that I build a big free market,     

A Brave Man,His Wife and A Noble Animal

APAIR of dedicated and hardworking law students when they met, Duan Qinghao and Zeng Jing went on to become a happy, model family but that idyll was destroyed when Duan Qinghao gave his life while protecting the majestic pantholops hodgsoni at the young age of 36. Leaving a young son and a promising career behind, his dedicated wife Zeng Jing had always shown great understanding of her husband's diligence in protecting the endangered species. In July, 1999, a conference on the Prevention and Control of International Environmental Crime was held in Geneva by the United Nations Environment Programme, International Criminal     

Creating A New Career

SOBBING, the workers from the Fengfeng canvas Producing Factory in Hebei Province could not hold back their tears upon hearing the factory's bankruptcy declared by the manager. It was November of 1992. The factory was then running at a loss due to the changing market economy. Stop production completely: we all knew what this meant.