GIFT EXCHANGE AND WORKERS' FAIRNESS CONCERNS: WHEN EQUALITY IS UNFAIR5

We study how different payment modes influence the effectiveness of gift exchange as a contract enforcement device. In particular, we analyze how horizontal fairness concerns affect performance and efficiency in an environment characterized by contractual incompleteness. In our experiment, one principal is matched with two agents. The principal pays equal wages in one treatment and can set individual wages in the other. We find that the use of equal wages elicits substantially lower efforts. This is not caused by monetary incentives per se because under both wage schemes it is profit‐maximizing for agents to exert high efforts. The treatment difference instead seems to be driven by the fact that the norm of equity is violated far more frequently in the equal wage treatment. After having suffered from violations of the equity principle, agents withdraw effort. These findings hold even after controlling for the role of intentions, as we show in a third treatment. Our results suggest that adherence to the norm of equity is a necessary prerequisite for successful establishment of gift‐exchange relations. (JEL: J33, D63, M52, C92, J41)     

Stable local computation with conditional Gaussian distributions

This article describes a propagation scheme for Bayesian networks with conditional Gaussian distributions that does not have the numerical weaknesses of the scheme derived in Lauritzen (Journal of the American Statistical Association 87: 1098–1108, 1992).The propagation architecture is that of Lauritzen and Spiegelhalter (Journal of the Royal Statistical Society, Series B 50: 157– 224, 1988).In addition to the means and variances provided by the previous algorithm, the new propagation scheme yields full local marginal distributions. The new scheme also handles linear deterministic relationships between continuous variables in the network specification.The computations involved in the new propagation scheme are simpler than those in the previous scheme and the method has been implemented in the most recent version of the HUGIN software.     

Whose voice is heard in online deliberation?: A study of participation and representation in political debates on the internet

One of the core elements of the vision of 'electronic democracy' is the hope that the Internet permits free and equal access to political debates. However, experiences with online discourse challenge this view. The digital divide being one obstacle to participation, even more interesting is the fact that online communication is constrained in ways similar to the offline world. This paper attempts to reassess the question of whether the Internet makes political debate more open to voices that are normally not heard in the political field. Based on empirical evidence from a large-scale online deliberation, it analyses who participates in political debates on the Internet and whose views are represented. The results challenge both the optimistic and the sceptical view on electronic democracy. A theoretical model is developed that is able to explain the results. It extends current research by including the cultural practices of technology use and the specific effects of large-scale communication in the analysis. Though preliminary this model can help to inform the designers of online deliberations to make the most of their democratic potential.     

A Branch and Cut solver for the maximum stable set problem

This paper deals with the cutting-plane approach to the maximum stable set problem. We provide theoretical results regarding the facet-defining property of inequalities obtained by a known project-and-lift-style separation method called edge-projection, and its variants. An implementation of a Branch and Cut algorithm is described, which uses edge-projection and two other separation tools which have been discussed for other problems: local cuts (pioneered by Applegate, Bixby, Chvátal and Cook) and mod-k cuts. We compare the performance of this approach to another one by Rossi and Smiriglio (Oper. Res. Lett. 28:63–74, 2001) and discuss the value of the tools we have tested.     

Comparison as Incentive: Newsvendor Decisions in a Social Context

Explicit formal mechanisms dominate the discussion about incentives in Operations Management, yet many other mechanisms exist. Social comparison between peers may provide strong implicit incentives for individuals. Social comparison arises naturally in all social settings and may thus be unintended; however, many companies deliberately use it to motivate employees. In this study, we model a social context in which purchasers evaluate their performance relative to their peers; a feeling of inferiority results in a negative contribution to utility, whereas a feeling of superiority results in a positive contribution. We find that social comparison induces characteristic deviations from the newsvendor optimum ordering decision: if fear of inferiority outweighs anticipation of superiority, then purchasers herd together; the converse scenario incites actors to polarize away from each other. In both cases, actors will deviate from ordering the newsvendor optimum in order to satisfy social goals. Demand correlation and profit margins moderate the extent of the deviation.     

Allais for all: Revisiting the paradox in a large representative sample

We administer the Allais paradox questions to both a representative sample of the Dutch population and to student subjects. Three treatments are implemented: one with the original high hypothetical payoffs, one with low hypothetical payoffs and a third with low real payoffs. Our key findings are: (i) violations in the non-lab sample are systematic and a large bulk of violations is likely to stem from non-familiarity with large payoffs, (ii) we can identify groups of the general population that have much higher than average violation rates; this concerns mainly the lowly educated and unemployed, and (iii) the relative treatment differences in the population at large are accurately predicted by the lab sample, but violation rates in all lab treatments are about 15 percentage points lower than in the corresponding non-lab treatments.     

On micro-foundations of dynamic capabilities: A multi-level perspective based on CEO personality and knowledge-based capital

In recent years, researchers have asked why some firms are better than others at developing dynamic capabilities. The existing literature assesses micro-foundations separately, either on the managerial or on the organizational level. This study aims to provide a more holistic picture on the antecedents of dynamic capabilities by integrating managerial and organizational micro-foundations. Specifically, we posit that the personality of Chief Executive Officers (CEOs), manifested through their core self-evaluation (CSE), represents an individual-level micro-foundation which influences three types of a firm's knowledge-based capital—human, social, and organizational capital. We also argue that these three, in turn, are organization-level micro-foundations that ultimately enable the development of a firm's dynamic capabilities. We test our multi-level framework using data from 307 German CEOs, and confirm that CEO CSE is positively related with all three forms of knowledge-based capital. We further find that human capital and organizational capital mediate the relationship between a CEO's CSE and a firm's dynamic capabilities. Our research contributes by extending a central framework of the micro-foundations project (the bathtub model) that integrates the upper echelons perspective into a multi-level analysis. We empirically validate this model and advance the understanding of how firm leaders indirectly influence firm dynamic capabilities by shaping individual learning conditions.     

Food fights: irritating for social change among Auckland's alternative food initiatives

ABSTRACT

This article explores alternative food initiatives (AFI) and their performances of benign transgression. Through collaborative activist-and-academic-storytelling we tease apart the divergent practices of AFIs to question what mediates these performances in the grey area between conventional and alternative practice. Grounded examples of AFIs performing alternative economy and related acts of ‘irritant’ civil disobedience show how subverting normative practices of power and authority can catalyse social reproduction of difference, and tangibly alter the conventional food system.     

Risk and time preferences of entrepreneurs: evidence from a Danish field experiment

To understand how small business entrepreneurs respond to government policy one has to know their risk and time preferences. Are they risk averse, or have high discount rates, such that they are hard to motivate? We have conducted a set of field experiments in Denmark that will allow a direct characterization of small business entrepreneurs in terms of these traits. We build on experimental tasks that are well established in the literature. The results do not suggest that small business entrepreneurs are more or less risk averse than the general population under the assumption of Expected Utility Theory. However, we generally find an S-shaped probability weighting function for both small business entrepreneurs and non-entrepreneurs, with entrepreneurs being more optimistic about the chance of occurrence for the best outcome in lotteries with real monetary outcomes. The results also point to a significant difference in individual discount rates between entrepreneurs and non-entrepreneurs: entrepreneurs are willing to wait longer for certain rewards than the general population.