Formation of a Communication Network Under Perfect Foresight

We study the formation of a communication network under perfect foresight. We show the existence of a non-monotonic relationship between the cost of link formation and the total number of links created in stable networks. This result enhances a dilemma between stable and efficient networks.     

Matching Communities and Hierarchies within the Firm

This article, which draws on recent literature on organizational communities, raises the question of the coherence of the firm through the analysis of the dialectic interaction between hierarchies and Knowledge-Intensive Communities (KnICs) within the firm. Focusing on the cognitive dimension of the firm, we analyze the matching between hierarchies and KnICs and draw conclusions as to the coherence of the firm. Using two key elements (the frequency of interactions and the intensity of communication between communities), we draw a typology allowing a better understanding of the processes of coordination and knowledge creation within the firm. This revised version was published online in July 2006 with corrections to the Cover Date.     

On the inefficiency of propensity score matching

Propensity score matching is now widely used in empirical applications for estimating treatment effects. Propensity score matching (PSM) is preferred to matching on X because of the lower dimension of the estimation problem. In this note, however, it is shown that PSM is inefficient compared to matching on X. Hence, matching on X should be considered as a serious alternative.     

Experimental comparison of functional and multivariate spectral-based supervised classification methods in hyperspectral image

The aim of this article is to assess and compare several statistical methods for hyperspectral image supervised classification only using the spectral dimension. Since hyperspectral profiles may be viewed either as a random vector or a random curve, we propose to confront various multivariate discriminating procedures with functional alternatives. Eight methods representing three important statistical communities (mixture models, machine learning and functional data analysis) have been applied on three hyperspectral datasets following three protocols studying the influence of size and composition of the learning sample, with or without noised labels. Besides this comparative study, this work proposes a functional extension of multinomial logit model as well as a fast computing adaptation of the nonparametric functional discrimination. As a by-product, this work provides a useful comprehensive bibliography and also supplemental material especially oriented towards practitioners.     

A general concept of procedural fairness for one-stage implementation

A requirement of procedural fairness is introduced and imposed on game forms. According to this axiom, everybody should be able, by varying unilaterally one`s strategy while keeping the others' strategies fixed, to produce the same set of outcomes. This axiom is called « Equality of Attainable Sets ». A necessary and sufficient condition for Nash implementability with Equality of Attainable Sets is provided under a mild domain restriction. This condition is shown to be equivalent to Nash implementability in structured models where each agent is homo oeconomicus.I thank C. d'Aspremont, S. Barbera, K. Binmore, J. Roemer, L. Gevers and an anonymous referee for their comments. The usual disclaimer applies.     

Reports of Wins and Risk Taking: An Investigation of the Mediating Effect of the Illusion of Control

Two experiments examined the relationships between the knowledge that another person has won in a gamble, the illusion of control and risk taking. Participants played a computer-simulated French roulette game individually. Before playing, some participants learnt that another person won a large amount of money. Results from a first experiment (n = 24) validated a causal model where the knowledge of another person’s win increased the illusion of control, measured with betting times, expectancy and self-reports on scales, which in turn encourages risk taking. In the second experiment (n = 36), some participants were told the previous player acknowledged the win to be fortuitous. The suppression of the belief that the previous winner had himself exerted control over the outcome resulted in lower rates of risk-taking behaviors. This suggests that it was not the knowledge of another person’s win in itself that increased risk taking, but rather, the belief that the other person had some control over the gamble’s outcome. Theoretical implications for the study of social mechanisms involved in gambling behavior are discussed.     

Sequential Parimutuel Betting in the Laboratory

This paper investigates parimutuel betting in the laboratory. Our experimental design relies on a simple sequential betting game where equilibrium strategies are characterized according to objective probabilities, the number of bettors, and publicly observable odds. The empirically well-documented phenomenon referred to as the favorite-longshot bias is observed in two of our three treatments. We offer a theoretical explanation of the subjects' behavior which relies on rank-dependent expected utility and pessimistic expectations about future bets.     

Building interpersonal trust within organizations: a relational signalling perspective

This article develops the foundations for a theory of interpersonal trust-building based on relational signalling theory (RST). RST is based on the assumptions that rationality is bounded through framing, that preferences are partially determined by altruism (through a distinction between foreground and background goals), and that an individual’s action is influenced by the normative context in which he or she operates. The focus is on interpersonal trust in work relations within organizations. Interpersonal trust-building is construed as an interactive process in which both individuals learn about each other’s trustworthiness in different situations. Four conditions for the building of interpersonal trust within organizations are (1) the suspension of all opportunistic behaviour, or the removal of distrust; (2) exchange of positive relational signals; (3) avoiding negative relational signals, i.e., dealing with trouble; and (4) the stimulation of frame resonance, or the introduction of trust-enhancing organizational policies. The proposed theory can explain important characteristics of trust in organizational contexts, such as the interactive nature of trust, the learning required to build trust, the role of psychological mechanisms (such as attributions and perceptions) in decisions to trust, the limits to trust, asymmetries between trust and distrust and the context-dependency of trust.

Remittances and inequality: a dynamic migration model

We develop a model to study the effects of migration and remittances on inequality in the origin communities. While wealth inequality is shown to be monotonically reduced along the time-span, the short- and the long-run impacts on income inequality may be of opposite signs, suggesting that the dynamic relationship between migration/remittances and inequality may well be characterized by an inverse U-shaped pattern. This is consistent with the findings of the empirical literature, yet offers a different interpretation from the usually assumed migration network effects. With no need to endogenize migration costs through the role of migration networks, we generate the same results via intergenerational wealth accumulation.     

Energy use, population and growth, 1800�C1970

In this paper, the role of energy use is incorporated into unified growth theory. The paper presents some interesting evidence about the evolution of energy in the transition from stagnation to growth, and it subsequently develops a growth model where the observed increase in conversion efficiency in the coal energy sector is explicitly modelled and calibrated to existing data over the period 1800–1970. The quantitative analysis sheds light on the impact of energy use on the transition from stagnation to growth.