THE LAW OF DEMAND, POSITIVE SLOPING MARGINAL REVENUE, AND MULTIPLE PROFIT EQUILIBRIA

This paper demonstrates that the conditions for a positively sloping marginal revenue curve are much less stringent than is generally recognized. Simple transformations of any well-behaved convex demand function can easily result in a demand for which marginal revenue is positively sloping. For this reason, positively sloping marginal revenue functions must be considered whenever convex demand functions are analyzed. The existence of positively sloping marginal revenue makes multiple profit equilibria for the firm a very real possibility.     

NON-AGGRESSIVE BIDDING BEHAVIOR AND THE "WINNER'S CURSE"

Previous authors have noted a curious result that arises within the context of sealed-bid auctions: in certain situations it is in the bidder's interest to respond non-aggressively to increased competition. We consider a decision-theoretic formulation of the bidder's problem, and derive necessary conditions for the choice of a non-aggressive bidding strategy. The resulting conditions relate closely to a phenomenon that has been described rather loosely by bidding practitioners as the "winner's curse.' In the course of this paper we develop a specific definition of the winner's curse, and demonstrate how it affects the firm's competitive behavior.     

DOES RAIDING EXPLAIN THE NEGATIVE RETURNS TO FACULTY SENIORITY?

We track faculty for 30 yr at five PhD‐granting departments of economics. Two‐thirds of faculty who take alternative employment move downward; less than one‐quarter moves upward. We find a substantial penalty for seniority, even after richly controlling for faculty productivity, and the penalty is little changed when we allow wages and returns to seniority to differ by mobility status. Faculty who end up moving to better or comparable positions were penalized as severely for seniority while they were in our sample as faculty who stay. These results are incompatible with the raiding hypothesis. Faculty from top 10 programs are also punished for seniority but to a lesser degree than other faculty, which could reflect reduced monopsony power against such faculty if they are more marketable. All results persist when we control for prospective publications and allow lower returns for older publications. Match‐quality bias has dissipated in the post‐internet period, which may be the consequence of greater availability of information. (JEL J62, J44, J42)     

THE IMPACT OF TAX POLICY ON INVESTMENT BEHAVIOR IN THE CHEMICAL INDUSTRY, 1951-65

The purpose of this study was to estimate the impact of changes in Federal tax policy on investment behavior in the chemicals and allied products industry and to examine the possibility of a differential impact of changes in tax policy on investment behavior in manufacturing industries. The impact of changes in tax policy on investment behavior in the chemical and allied products industry was estimated and compared with the impact of tax policy on investment behavior in total manufacturing found in earlier studies. The model used to estimate the impact of changes in tax policy on investment behavior in the chemicals and allied products industry was the neo-classical model of capital accumulation as formulated initially by Dale Jorgenson. The conclusions reached were that changes in tax policy have had a measurable impact on investment behavior in the chemical and allied products industry which was greater as a percentage of gross investment than that found on total manufacturing in earlier studies.     

ON THE NATURE OF RECIPROCAL MOTIVES

Data from 692 subjects in 11 experimental treatments provide a systematic exploration of the existence and nature of reciprocal behavior in two-person games. The experimental design discriminates between motivations of reciprocity and (nonreciprocal) other-regarding preferences. The existence of positive reciprocity is found to be dependent on the level of social distance but not the level of monetary payoff. The larger context in which a decision is made is found to have a significant effect on negative reciprocity. These findings on payoff levels, social distance, decision context, and reciprocity have implications for both theoretical modeling and experimental design. (JEL C70 , C91 , D63 , D64 )     

Conjugacy as a Distinctive Feature of the Dirichlet Process

Abstract.  Recently the class of normalized random measures with independent increments, which contains the Dirichlet process as a particular case, has been introduced. Here a new technique for deriving moments of these random probability measures is proposed. It is shown that, a priori , most of the appealing properties featured by the Dirichlet process are preserved. When passing to posterior computations, we obtain a characterization of the Dirichlet process as the only conjugate member of the whole class of normalized random measures with independent increments.