Economic Inquiry (Econ Inq)

Publications in this journal

• Source

  Available from: smu.edu.sg

  Article: WHY DID UNIVERSITIES PRECEDE PRIMARY SCHOOLS? A POLITICAL ECONOMY MODEL OF EDUCATIONAL CHANGE

  FALI HUANG
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  ABSTRACT: Universities were first established in Europe around the twelfth century, although primary schools did not appear until the nineteenth. This paper accounts for this phenomenon using a political economy model of educational change on who are educated (the elite or the masses) and what is taught (general or specific/vocational education). A key assumption is that general education is more effective than specific education in enhancing one's skills in a broad range of tasks, including political rent-seeking. Its findings suggest that specific education for the masses is compatible with the elite rule, whereas mass general education is not, which refines the conventional association between education and democracy. (JEL O10, O40, P16, N10)
  Economic Inquiry 03/2012; 50(2):418 - 434.
• Source

  Available from: ucr.edu

  Article: WELL‐INFORMED INTERMEDIARIES IN STRATEGIC COMMUNICATION

  WEI LI
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  ABSTRACT: A privately informed sender may influence the decision maker through an intermediary who is better informed than him. I assume that the objective sender and intermediary pass on their best information, while the biased ones prefer a particular action but also have reputational concerns. I show that the biased intermediary selectively incorporates the sender's information to push his agenda, and his truth-telling incentives always decrease in those of the biased sender. Hence, measures making it more costly for the sender to lie worsen the biased intermediary's distortion, and may make the decision maker strictly worse off. (JEL C70, D82, M31)
  Economic Inquiry 03/2012; 50(2):380 - 398.
• Article: OPTIMISTIC BEHAVIOR WHEN A DECISION BIAS IS COSTLY: AN EXPERIMENTAL TEST

  ASTRI MUREN
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  ABSTRACT: The existence of optimism when biased decisions are costly is investigated experimentally. Subjects make an informed guess about an exogenously determined event: the outside temperature a couple of days later. Payments in the control group depend only on how close the guess was to the realized temperature, while payments in the treatment group also depend positively on realized temperature. The data show the treatment group subjects to guess higher temperatures, that is, higher payments, compared with the control group. Results thus indicate that there is optimism also when a decision bias is costly. (JEL C91, D81, D84)
  Economic Inquiry 03/2012; 50(2):463 - 469.
• Article: hrefhttp://dx.doi.org/10.1111/j.1465-7295.2010.00365.xSatisficing and prior-free optimality in price competition

  Werner Gueth, Vittoria M Levati, Matteo Ploner
  Economic Inquiry 01/2012; 50(2):470-483.
• Article: PEER EVALUATIONS AND TEAM PERFORMANCE: WHEN FRIENDS DO WORSE THAN STRANGERS

  BRICE CORGNET
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  ABSTRACT: We use peer assessments as a tool to allocate joint profits in a real-effort team experiment. We find that using this incentive mechanism reduces team performance. More specifically, we show that teams composed of acquaintances rather than strangers actually underperform in a context of peer evaluations. We conjecture that peer evaluations undermine the inherently high level of intrinsic motivation that characterizes teams composed of friends and possibly exacerbate negative reciprocity among partners. Finally, we analyze the determinants of peer assessments and stress the crucial importance of equality concerns. (JEL C92, M12, M54)
  Economic Inquiry 12/2011; 50(1):171 - 181.
• Article: GENDER AND THE INFLUENCE OF PEER ALCOHOL CONSUMPTION ON ADOLESCENT SEXUAL ACTIVITY

  GLEN R. WADDELL
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  ABSTRACT: I consider the alcohol consumption of opposite-gender peers as explanatory to adolescent sexual intercourse and demonstrate that female sexual activity is higher where there is higher alcohol consumption among male peers. This relationship is robust to school fixed effects, cannot be explained by broader cohort effects or general antisocial behaviors in male peer groups, and is distinctly different from any influence of the alcohol consumption of female peers which is shown to have no influence on female sexual activity. There is no evidence that male sexual activity responds to female peer alcohol consumption. (JEL J13, I12)
  Economic Inquiry 12/2011; 50(1):248 - 263.
• Source

  Available from: utk.edu

  Article: CHEATING IN CONTESTS

  SCOTT M. GILPATRIC
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  ABSTRACT: Wherever competition is used to motivate a desirable activity or productive effort it may also motivate undesirable and therefore prohibited behavior—that is, cheating—that the organizer of the contest attempts to police. For example, when workers compete for promotion, bonuses, or other rewards, they may misrepresent their output (i.e., commit fraud) or increase their output by unacceptable means (e.g., violate regulations). We show how the extent of cheating is determined by the payoffs at stake in the contest, the random component of output, probability of cheating being detected, number of contestants, and the penalty associated with being found to have cheated. We find that while greater enforcement reduces cheating, it may also reduce productive effort. We also identify how two particular aspects of enforcement, the awarding of default victories and use of correlated rather than independent audits, affect cheating behavior. (JEL J33, K42)
  Economic Inquiry 09/2011; 49(4):1042 - 1053.
• Source

  Available from: SSRN

  Article: PATENT POOL FORMATION AND SCOPE OF PATENTS

  CORINNE LANGINIER
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  ABSTRACT: Basic innovations are often fundamental to the development of applications that may be developed by other innovators. In this setting, we investigate whether patent pools can rectify the lack of incentives for a developer to invest in applications. Following Green and Scotchmer, we wonder whether broad basic patents are necessary to provide enough incentives for basic innovators. We show that patent pools are more likely to be formed with patents of very different breadths, or patents of similarly wide breadths. Furthermore, although patent pools rectify the lack of developer incentives, they may reduce the incentive for doing basic research. (JEL K11, L4, O31)
  Economic Inquiry 09/2011; 49(4):1070 - 1082.
• Article: DOES SOCIAL CAPITAL PROMOTE SAFETY ON THE ROADS?

  MATTHEW G. NAGLER
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  ABSTRACT: I present evidence that social capital reduces traffic accidents and related death and injury, using data from a 10-year panel of 48 U.S. states. The econometric challenge is to distinguish the causal effects of social capital from bias resulting from its correlation with unobservable characteristics by state that influence road risks. I accomplish this by employing snow depth as an instrument, and by restricting attention to summertime accidents. My results show that social capital has a statistically significant and sizable negative effect on crashes, traffic fatalities, serious traffic injuries, and pedestrian fatalities that holds up across a range of specifications. (JEL R41, I18, Z13)
  Economic Inquiry 09/2011;
• Article: 2010 Editor's Report

  R. Preston McAfee
  Economic Inquiry 09/2011; 49(4):1118 - 1122.
• Source

  Available from: ua.edu

  Article: THE REAL EXCHANGE RATE AND REAL INTEREST DIFFERENTIALS: THE ROLE OF THE TREND‐CYCLE DECOMPOSITION

  Tatsuma Wada
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  ABSTRACT: We propose an alternative model and method to reconcile the puzzling feature in the relation-ship between the real exchange rate and real interest rate differentials. Our simple two-country model with pre-set prices, along with firms' misperception about the future exchange rate, im-plies that the real exchange rate follows an ARIMA(0,1,p) process. This allows us to compute the exact Beveridge-Nelson decomposition, which is a model-consistent decomposition. In accor-dance with our model, unit roots in the real exchange rates are found; and statistical inference is partially found to be affirmative regarding the link between the real exchange rate detrended by the Beveridge-Nelson decomposition and corresponding real interest differentials.
  Economic Inquiry 07/2011;
• Source

  Available from: ufl.edu

  Article: WHY DON'T ELIGIBLE FIRMS CLAIM HIRING SUBSIDIES? THE ROLE OF JOB DURATION

  SARAH HAMERSMA
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  ABSTRACT: Only a small fraction of firms that hire disadvantaged workers claim the federal subsidies for which they qualify, namely, the Work Opportunity Tax Credit (WOTC) and Welfare-to-Work Tax Credit (WtW). Subsidy benefits depend partially on job duration, with higher subsidy rates above certain job-duration thresholds. I estimate the relationship between a firm's WOTC/WtW participation and its eligible workers' job durations. Using unique Wisconsin administrative data, I find that workers' subsidy rates (determined by hours worked) have the expected relationship to participation: Firms with a larger fraction of workers exceeding the programs' job-duration thresholds are more likely to claim the WOTC/WtW. I also find no evidence that firms systematically modify the job duration of their workers to maximize subsidy payments. (JEL J3)
  Economic Inquiry 06/2011; 49(3):916 - 934.
• Source

  Available from: uvic.ca

  Article: SELF‐EMPLOYMENT, EFFICIENCY WAGE, AND PUBLIC POLICIES

  Alok Kumar
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  ABSTRACT: Empirical evidence suggests that unemployed workers are much more likely to become self-employed than wage employed workers. Also higher unemploy-ment benefits significantly reduce the rate of self-employment. This paper develops a model of self-employment which incorporates transitions between unemployment and self-employment. It integrates two strands of theoretical literature – models of occupational choice and the efficiency wage models. In this model, a higher unemployment benefit reduces the self-employment rate and the transition rate of unemployed workers to self-employment, which is consistent with empirical evidence. Acknowledgement: I thank the editor and two anonymous referees for their detailed and very helpful comments.
  Economic Inquiry 04/2011;
• Article: Contest Design: An Experimental Investigation

  Roman Sheremeta
  Economic Inquiry 01/2011; 49:573-590.
• Source

  Available from: haifa.ac.il

  Article: WHY CANNOT POOR COUNTRIES UTILIZE EXISTING KNOWLEDGE? EXPANSION OF FIRMS AND HUMAN CAPITAL ACCUMULATION BY TRAINING

  GILAD D. AHARONOVITZ
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  ABSTRACT: Current growth literature does not explain the inability of poor countries to utilize existing knowledge. This study presents a stylized development model based on firms' expansion through on-the-job training. Since trained workers can supervise and train more workers, a development process in which output and productivity increase up to a full utilization of existing technology is generated. Unlike schooling-based models, which require an assumption regarding a smaller local stock of knowledge, this study relies on the size of the industrial sector and the limited supply of training opportunities, therefore highlights barriers to development, even when technology and capital are available. (JEL O1, O4, J2)
  Economic Inquiry 12/2010; 49(1):108 - 121.
• Source

  Available from: yolasite.com

  Article: WHAT WAS THE MARKET VALUE OF DAIMLER DURING THE GERMAN HYPERINFLATION?

  LYNDON MOORE
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  ABSTRACT: The claim of Bresciani-Turroni that Daimler's equity capital reached the equivalent of only 327 of their cars during the German hyperinflation has spread widely through the hyperinflation literature. There are two critical errors in Bresciani-Turroni's calculation, and the minimum market value of Daimler in November 1922 was far lower, at around 94 cars. (JEL E31, G12)
  Economic Inquiry 12/2010; 49(1):172 - 173.