INEFFICIENCY AS A STRATEGIC DEVICE IN GROUP CONTESTS AGAINST DOMINANT OPPONENTS

Contests between groups are prone to intra‐group externalities (free‐riding). Yet, costless incentive schemes that entirely avoid free‐riding within a group might be undesirable, both individually and socially. In contests between two groups, a relatively weak (i.e., small or unproductive) group will optimally not implement them because they compound differences in strength between groups. If the groups are of relatively similar strengths, they are both worse off when they rein in their intra‐group externalities compared to a situation where they do not. If groups' strengths differ sufficiently, the relatively strong group benefits at the expense of the relatively weak one. (JEL Z13, D72, N40, D74)     

GROWTH AND CONVERGENCE WHEN TECHNOLOGY AND HUMAN CAPITAL ARE COMPLEMENTS

This article presents a model of endogenous growth, in which a firm's technology and a country's human capital stock are complementary in the production of output. Production technologies are created by costly research and development (R&D) and are owned by firms that can freely choose where in the world to produce. Both production and R&D have a positive effect on a country's human capital stock. While all countries typically grow at the same rate in the long run, they differ in their levels of human capital, per capita output, and the quality of the technologies that are used in production. A country's relative position in terms of productivity is history dependent. Countries that start out with a lower human capital stock or industrialize later end up with a lower per capita GDP in long‐term equilibrium. (JEL O4, O33, O47)     

RISING R&D INTENSITY AND ECONOMIC GROWTH

Over the past decades, private R&D spending in the United States and other developed countries has been growing faster than gross domestic product. At the same time, the growth rates of per-capita and aggregate output have been rather stable, possibly declining slightly. This article proposes a growth model that can account for the observed phenomenon by explicitly describing competition among technological leaders and followers in individual markets in a way that is consistent with existing studies on firms' motivation to invest in R&D. The model shows the possibility that the unsustainable trend of rising R&D intensity persists for a very long time. (JEL O3, O4, L1)     

GREENING THE SERVICE PROFIT CHAIN: THE IMPACT OF ENVIRONMENTAL MANAGEMENT PRACTICES

This paper explores the relationship between environmental practices and performance in services and the impact of such practices on the external portion of the service profit chain. Using structural equation modeling, it tests the hypotheses developed with data from the European hospitality industry. The findings suggest that environmental practices are positively related to performance through the mediating effect of enhanced customer satisfaction and loyalty. The paper's contributions include: the conceptual development of the relationship between environmental practices and performance in services, the incorporation of environmental practices within the service profit chain, and the testing of their impact on customer satisfaction.     

A SIMPLE PRINCIPAL-AGENT EXPERIMENT FOR THE CLASSROOM

In this note we describe a simple, flexible and instructive moral hazard experiment. It can be used in a variety of classes, including principles classes, to illustrate the basic incentive conflicts in principal-agent interactions, the importance of information, and the power of reputational enforcement.     

AN EXPERIMENTAL STUDY ON THE RELEVANCE AND SCOPE OF NATIONALITY AS A COORDINATION DEVICE

In a period marked by extensive cross‐national interactions, nationality may present an important focal point that individuals coordinate on. This study uses an experimental approach to study whether nationality serves as a coordination device. We let subjects from Japan, Korea, and China play coordination games in which we vary information about their partner. The results show that nationality serves as a coordination device if common nationality is the only piece of information available to the subjects. The strength of this device is nationality‐dependent and diminishes when participants are provided with additional information about their partner. We also find that subjects are likely to coordinate on the Pareto‐dominant equilibrium at about the same rate if the partner has a different nationality than if nationality is unknown. (JEL C91, C92, Z1, Z13)     

GENDER DIFFERENCES IN EXPERIMENTAL WAGE NEGOTIATIONS

We examine behavioral gender differences and gender pairing effects in a laboratory experiment with face‐to‐face alternating‐offers wage bargaining. Our results suggest that gender differences in bargaining behavior are role‐dependent. We find that women obtain worse bargaining outcomes than men when they take on the role of employees, but not when they act as employers. Differences in bargaining outcomes can be explained by the bargaining parties' initial offers and counteroffers. We do not find evidence for behavioral differences between men and women in the process of alternating offers after first offers and counteroffers are made.(JEL J16, C78, C91)     

LEADING WITH(OUT) SACRIFICE? A PUBLIC‐GOODS EXPERIMENT WITH A PRIVILEGED PLAYER

We analyze two team settings in which one member in a team has stronger incentives to contribute than the others. If contributions constitute a sacrifice for the strong player, the other team members are more inclined to cooperate than if contributions are strictly dominant for the strong player. (JEL C91, C92, H40, H41)