Ex Ante versus Ex Post Optimal Promotion Rules: The Case of Internal Promotion

A firm deciding on its promotion practices will be concerned both with the efficient assignment of workers to tasks and with rewarding prior performance. This can result in a time-inconsistency problem because the promotion rule that is optimal at the time of the promotion decision may differ from the rule that is optimal before performance is determined. In this article I explore the role of time inconsistency in determining promotion practices. In particular, I show that the common practice of favoring internal candidates for promotion can be understood as a response by firms to the problem of time inconsistency.     

International Tax Competition: A Case for International Cooperation in Globalization

The liberalization of international financial flows and foreign direct investment has induced countries to use diverse measures to attract inflow of foreign capital and foreign direct investment, which is expected to have a positive effect on the growth of GDP and thus a positive effect on social welfare. Tax exemption, reduction of tax rate, tax holiday, or diverse subsidies are some of the most important measures used. In this paper we study international tax cooperation, i.e., countries change and especially reduce tax rate for corporate income or for asset revenues to attract inflow of foreign direct investment. Both theoretical and empirical studies have shown the sensibility of foreign direct investment decision with respect to tax rate differences between home countries and host countries. In general, more inflow of foreign direct investment can be expected if the tax rate of the home country is lower than that of foreign countries. This is the main reason for international tax cooperation. In this paper we propose a simple model to prove the sub-optimal Nash non cooperative solution in a two-country tax-competition game. The model shows that international tax cooperation can improve welfare of the participating countries. How to reach a cooperative solution for an international tax competition game (ITCG) is therefore an important issue for further discussions and studies. International institutions can play a crucial role to reach international tax cooperation or international tax harmonization.     

Almost Consistent Estimation of Panel Probit Models with “Small” Fixed Effects

We propose four different GMM estimators that allow almost consistent estimation of the structural parameters of panel probit models with fixed effects for the case of small Tand large N. The moments used are derived for each period from a first order approximation of the mean of the dependent variable conditional on explanatory variables and on the fixed effect. The estimators differ w.r.t. the choice of instruments and whether they use trimming to reduce the bias or not. In a Monte Carlo study, we compare these estimators with pooled probit and conditional logit estimators for different data generating processes. The results show that the proposed estimators outperform these competitors in several situations.     

The role of ethics in interdisciplinary technology assessment

Technology Assessment (TA) is a problem oriented endeavour dealing with political, societal, ecological, etc. problems. Only in rare cases is one individual scientific discipline sufficient to assess these problems. Usually the perspectives of different scientific disciplines have to be combined in order to develop interdisciplinary based recommendations to act. In this paper a quality controlled interdisciplinary discussion process is described which encourages an expert group to generate argumentation chains cross-cutting the disciplinary boundaries. The role of ethical reflection in this procedure depends on the problem situation. Whenever a technical application is on the agenda which cannot be allocated to a so-called “business-as-usual” case, one would ask for ethical reflection. This contribution argues that this ethical reflection has to take place together with the interdisciplinary discussion due to two reasons. Firstly, the technical, economical, legal and social aspects are deeply cross-correlated with the ethical reflection. And secondly, participating in such interdisciplinary discussions enables an ethical reflection which keeps in touch with the real world. Two case studies dealing with robotics applications in health care are mentioned as examples for problem settings, in which interdisciplinary TA succeed in developing discipline-crossing argumentation chains.     

Reconsidering the Evolution of Nonlinguistic Communication: The Case of Laughter

Nonlinguistic communication is typically proposed to convey representational messages, implying that particular signals are associated with specific signaler emotions, intentions, or external referents. However, common signals produced by both nonhuman primates and humans may not exhibit such specificity, with human laughter for example showing significant diversity in both acoustic form and production context. We therefore outline an alternative to the representational approach, arguing that laughter and other nonlinguistic vocalizations are used to influence the affective states of listeners, thereby also affecting their behavior. In the case of laughter, we propose a primary function of accentuating or inducing positive affect in the perceiver in order to promote a more favorable stance toward the laugher. Two simple strategies are identified, namely producing laughter with acoustic features that have an immediate impact on listener arousal, and pairing these sounds with positive affect in the listener to create learned affective responses. Both depend on factors like the listener's current emotional state and past interactions with the vocalizer, with laughers predicted to adjust their sounds accordingly. This approach is used to explain findings from two experimental studies that examined the use of laughter in same-sex and different-sex dyads composed of either friends or strangers, and may be applicable to other forms of nonlinguistic communication.     

A “brer rabbit” case for reverse mandated benefits

Reverse mandated benefits is a government-mandated policy that requires employees to provide their employers with benefits that workers would not provide otherwise. Of course, only those benefits would be mandated that are worth more to employers than they cost, as determined by political authorities. My case for such a policy argues that it is at least as sensible as policies mandating that employers provide benefits to their employees that would not be provided otherwise.     

Ecocultural Attributes: Evaluating Ecological Degradation in Terms of Ecological Goods and Services Versus Subsistence and Tribal Values

It is becoming increasingly clear that scientists, managers, lawyers, public policymakers, and the public must decide how to value what is provided by, and is a consequence of, natural resources. While “Western” scientists have clear definitions for the goods and services that ecosystems provide, we contend that these categories do not encompass the full totality of the values provided by natural resources. Partly the confusion results from a limited view of natural resources derived from the need to monetize the value of ecosystems and their component parts. Partly it derives from the “Western” way of separating natural resources from cultural resources or values, and partly it derives from the false dichotomy of assuming that ecosystems are natural, and anything constructed by man is not natural. In this article, we explore the previous assumptions, and suggest that because cultural resources often derive from, and indeed require, intact and unspoiled natural ecosystems or settings, that these values are rightly part of natural resources. The distinction is not trivial because of the current emphasis on cleaning up chemically and radiologically contaminated sites, on restoration of damaged ecosystems, on natural resource damage assessments, and on long‐term stewardship goals. All of these processes depend upon defining natural resources appropriately. Several laws, regulations, and protocols depend upon natural resource trustees to protect natural resources on trust lands, which could lead to the circular definition that natural resources are those resources that the trustees feel they are responsible for. Where subsistence or tribal peoples are involved, the definition of natural resources should be broadened to include those ecocultural attributes that are dependent upon, and have incorporated, natural resources. For example, a traditional hunting and fishing ground is less valued by subsistence peoples if it is despoiled by contamination or physical ecosystem degradation; an Indian sacred ground is tarnished if the surrounding natural environment is degraded; a traditional homeland is less valued if the land itself is contaminated. Our argument is that intact natural resources are essential elements of many cultural resources, and this aspect requires and demands adequate consideration (and may therefore require compensation).     

Joint tests of non-nested models and general error specifications

This paper is concerned with joint tests of non-nested models and simultaneous departures from homoskedasticity, serial independence and normality of the disturbance terms. Locally equivalent alternative models are used to construct joint tests since they provide a convenient way to incorporate more than one type of departure from the classical conditions. The joint tests represent a simple asymptotic solution to the “pre-testing” problem in the context of non-nested linear regression models. Our simulation results indicate that the proposed tests have good finite sample properties.