Baddeley, M 2017, 'Keynes’ psychology and behavioural macroeconomics: Theory and policy', The Economic and Labour Relations Review, vol. 28, no. 2, pp. 177-196.
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AbstractUntil recently, modern macroeconomic models have remained solidly grounded on assumptions of rational expectations, efficient markets and representative agents, with policy prescriptions focused on the power of markets, and complex and esoteric financial intermediation instruments justified as solutions to problems of asymmetric information and risk. In modern microeconomics, behavioural economic analysis has flourished, focusing on individual responses and interactions. By contrast, in macroeconomics, humans are assumed to behave as if they are mathematical machines, making decisions in a mechanical, objective way. From this perspective, it is difficult to properly capture the instabilities that characterise modern macroeconomies and financial systems. While some progress has been made in recognising the bounds to rationality, the complexity of the macroeconomy can be captured fully only by embedding psychological and sociological forces more fully into macroeconomic models. Keynes was a pioneer in analysing the impacts of socio-psychological influences on macroeconomic phenomena. This article explores some of Keynes’ fundamental ideas about socio-psychological macroeconomic influences, including insights from A Treatise on Probability (1921) onwards, and links these insights both with modern behavioural economic theory and current macroeconomic policy debates.
Cousley, A, Siminski, P & Ville, S 2017, 'The Causal Effects of World War II Military Service', Journal of Economic History, vol. 77, no. 3, pp. 838-865.
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The effects of military service have been studied for decades, but surprisingly few studies have estimated the effects of World War II (WW2) service, where the focus has been on the impact of this 'total war' on the broader civilian population. Over 90% of Australian males born in the early 1920s served in the military during WW2. Almost none of those born in the late 1920s served. Treating such cohort differences as exogenous, we conduct one of the first econometric studies of WW2 service. We consider major life outcomes including employment, marital status and home ownership, all measured in 1966, while the economy was strong and male employment was very high. We find a significant negative effect on employment, half of which is accompanied by pensioner status. We find positive effects on home ownership and on separation/divorce. A feature of our analysis is a novel visual depiction of the variation which identifies the estimates, drawing on the Frisch-Waugh theorem.
Craig, AC, Garbarino, E, Heger, SA & Slonim, R 2017, 'Waiting To Give: Stated and Revealed Preferences', Management Science, vol. 63, no. 11, pp. 3672-3690.
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We estimate and compare the effect of increased time costs on consumer satisfaction and behavior. We are able to move beyond the existing literature, which focuses on satisfaction and intention, and estimate the effect of waiting time on return behavior. Further, we do so in a prosocial context and our measure of cost is the length of time a blood donor spends waiting. We find that relying on satisfaction data masks important time cost sensitivities; namely, it is not how the donor feels about the wait time that matters for return behavior, but rather the actual duration of the wait. Consistent with theory we develop, our results indicate that waiting has a significant longer-term social cost: we estimate that a 38% increase (equivalent to one standard deviation) in the average wait would result in a 10% decrease in donations per year. This paper was accepted by Uri Gneezy, behavioral economics.
Delavande, A & Rohwedder, S 2017, 'Changes in spending and labor supply in response to a Social Security benefit cut: Evidence from stated choice data', The Journal of the Economics of Ageing, vol. 10, pp. 34-50.
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© 2017 Elsevier B.V. We investigate how individuals in the U.S. expect to adjust their labor force participation and savings if Social Security benefits were cut by 30 percent. Respondents were asked directly what they would do under this scenario. Using the resulting stated choice data we find that respondents would on average reduce spending by 18.2 percent before retirement and 20.4 percent after retirement. About 34.1% of respondents state they would definitely work longer and they would postpone claiming Social Security by 1.1 years. We investigate how working longer and claiming Social Security later would compensate partially for the loss in benefits among the individuals who are currently working, under the assumption that individuals retire and claim at the same time. Individuals would increase their Social Security benefits from the post-reform level due to additional earnings entering the benefit calculation and a smaller early claiming penalty (or higher delayed claiming credit). As a result, the Social Security benefit people would receive would drop on average by 21 rather than 30 percent. Still, the net financial loss, even after accounting for additional earnings, is sizeable for individuals in the lowest wealth tertile.
Delavande, A, Lee, J & Menon, S 2017, 'Eliciting Survival Expectations of the Elderly in Low-Income Countries: Evidence From India', Demography, vol. 54, no. 2, pp. 673-699.
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Abstract We examine several methodological considerations when eliciting probabilistic expectations in a developing country context using the Longitudinal Ageing Study in India (LASI). We conclude that although, on average, individuals are able to understand the concept of probability, responses are sensitive to framing effects and to own versus hypothetical-person effects. We find that overall, people are pessimistic about their survival probabilities compared with state-specific life tables and that socioeconomic status does influence beliefs about own survival expectations as found in previous literature in other countries. Higher levels of education and income have a positive association with survival expectations, and these associations persist even when conditioning on self-reported health. The results remain robust to several alternative specifications. We then compare the survival measures with objective measures of health. We find that activities of daily life, height, and low hemoglobin levels covary with subjective expectations in expected directions.
Despotakis, S, Hafalir, I, Ravi, R & Sayedi, A 2017, 'Expertise in Online Markets', Management Science, vol. 63, no. 11, pp. 3895-3910.
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We examine the effect of the presence of expert buyers on other buyers, the platform, and the sellers in online markets. We model buyer expertise as the ability to accurately predict the quality, or condition, of an item, modeled as its common value. We show that nonexperts may bid more aggressively, even above their expected valuation, to compensate for their lack of information. As a consequence, we obtain two interesting implications. First, auctions with a “hard close” may generate higher revenue than those with a “soft close.” Second, contrary to the linkage principle, an auction platform may obtain a higher revenue by hiding the item’s common-value information from the buyers. We also consider markets where both auctions and posted prices are available and show that the presence of experts allows the sellers of high-quality items to signal their quality by choosing to sell via auctions. This paper was accepted by J. Miguel Villas-Boas, marketing.
Di Guilmi, C 2017, 'The Agent‐Based Approach to Post Keynesian Macro‐Modeling', Journal of Economic Surveys, vol. 31, pp. 1183-1203.
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© 2017 John Wiley & Sons Ltd. The paper presents a survey of Post Keynesian (PK) agent-based (AB) models and AB models with PK features. It is argued that AB modeling is fully consistent with the PK approach and that the cross-fertilization can benefit both areas of research. The survey focuses on how the various models have faced the issues implied by adopting a bottom–up approach in a traditionally aggregative structure and highlights the additional insights coming from this modeling strategy. Particular attention is devoted to stock-flow consistent AB models for theivvr potential in defining a new benchmark for this type of research.
Goeree, JK & Zhang, J 2017, 'One man, one bid', Games and Economic Behavior, vol. 101, pp. 151-171.
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© 2016 Elsevier Inc. We compare two mechanisms to implement a simple binary choice, e.g. adopt one of two proposals. We show that when neither alternative is ex ante preferred, simple majority voting cannot implement the first best outcome. We introduce a simple bidding mechanism where votes can be bought at a quadratic cost and voters receive rebates equal to the average of others' payments. This mechanism is budget-balanced, individually rational, and fully efficient in the limit. Moreover, the mechanism redistributes from those that gain from the outcome to those that lose and everyone is better off under bidding compared to voting. We test the two mechanisms in the lab using an environment with “moderate” and “extremist” voters. The observed efficiency losses under voting are close to theoretical predictions and significantly larger than under bidding. Because of redistribution, the efficiency gain from bidding benefits mostly the moderate voters.
Goldbaum, D 2017, 'Divergent Behavior in Markets with Idiosyncratic Private Information', Review of Behavioral Economics, vol. 4, no. 2, pp. 181-213.
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A state of perpetually evolving divergent trading strategies is the natural consequence of a market with idiosyncratic private information. In the face of intrinsic uncertainty about other traders’ strategies, participants resort to learning and adaptation to identify and exploit profitable trading opportunities. Model-consistent use of market-based information generally improves price performance but can inadvertently produce episodes of sudden mispricing. The paper examines the impact of trader’s use of information and bounded rationality on price efficiency.
Johar, M, Maruyama, S & Truong, J 2017, 'The contribution of Western fast food to fast-growing body mass in China', Applied Economics, vol. 49, no. 8, pp. 797-811.
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© 2016 Informa UK Limited, trading as Taylor & Francis Group. The westernization of Asian countries has led to the rapid expansion of Western-style fast-food restaurants, which are believed to be fueling an unprecedented rise in body mass in these countries. This study tests this belief using longitudinal data from China. Exploiting the opening of a Western-style fast-food restaurant in a particular community, we conduct a transition analysis to make a more convincing causal interpretation than the standard cross-sectional or fixed-effects approach. Considering several measures of fatness, we find no robust evidence of Western fast food having a substantial effect overall, but there is some indication of effect heterogeneity.
Lee, W, Greenwood, PE, Heckman, N & Wefelmeyer, W 2017, 'Pre-averaged kernel estimators for the drift function of a diffusion process in the presence of microstructure noise', Statistical Inference for Stochastic Processes, vol. 20, no. 2, pp. 237-252.
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Lemus, J & Temnyalov, E 2017, 'Patent privateering, litigation, and R&D incentives', The RAND Journal of Economics, vol. 48, no. 4, pp. 1004-1026.
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AbstractWe model “patent privateering”—whereby producing firms sell patents to Patent Assertion Entities (PAEs), which then license them under the threat of litigation—in a bargaining game. PAEs can negotiate higher licensing fees than producing firms because they cannot be countersued for infringement. Privateering produces two countervailing effects: it increases the offensive value of patents, whereas it decreases their defensive value and lowers the aggregate surplus of producing firms. Embedding the bargaining game into a Research and Development (R&D) contest for multiple complementary technologies, we find that privateering may increase R&D investments, even as it induces more litigation threats and reduces industry profits.
Maruyama, S & Johar, M 2017, 'Do Siblings Free-Ride in 'being There' for Parents?', Quantitative Economics, vol. 8, no. 1, pp. 277-316.
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There is a potential free-rider problem when several siblings consider future provision ofcare for their elderly parents. Siblings can commit to not providing long-term support byliving far away. If location decisions are made by birth order, older siblings may enjoy a Örstmoveradvantage. We study siblingsílocation decisions relative to their parents by estimating asequential participation game for US data. We Önd: (1) limited strategic behavior: in two-childfamilies, more than 92% of children have a dominant strategy; and (2) a non-negligible publicgood problem: in families with multiple children, 18.3% more parents would have had at leastone child living nearby had location decisions been made cooperatively
Mendolia, S & Siminski, P 2017, 'Is education the mechanism through which family background affects economic outcomes? A generalised approach to mediation analysis', Economics of Education Review, vol. 59, pp. 1-12.
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© 2017 Elsevier Ltd We seek to quantify the role of education as a mechanism through which family background affects economic outcomes. To this end, we generalise mediation analysis to allow for multidimensional treatments. This improves the validity of mediation analysis for our application, in which family background is exogenous and multidimensional. Our approach allows the mediating role of education to vary across background characteristics, whilst also estimating its overall mediating effect. We estimate that educational attainment explains 21%–37% of the family background effect on hourly earnings in Australia, and only 13%–19% of the effect on wealth. We argue that these estimates are likely upward-biased. Therefore the link between family background and economic outcomes operates mostly through other mechanisms.
Moreno, D & Wooders, J 2017, 'Reserve prices in auctions with entry when the seller is risk-averse', Economics Letters, vol. 154, pp. 6-9.
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© 2017 Elsevier B.V. We show that risk aversion raises the public reserve price rP above the seller's cost c, but lowers the secret reserve price rS below the revenue maximizing reserve price r0. Further, rP
Suzuki, T 2017, 'Directives, expressives, and motivation', Theoretical Economics, vol. 12, no. 1, pp. 175-210.
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When an agent's motivation is sensitive to how his supervisor thinks about the agent's competence, the supervisor has to take into account both informational and expressive contents of her message to the agent. This paper shows that the supervisor can credibly express her trust in the agent's ability only by being unclear about what to do. Suggesting what to do, i.e., 'directives,' could reveal the supervisor's 'distrust' and reduce the agent's equilibrium effort level even though it provides useful information about the decision environment. There is also an equilibrium in which directives are neutral in expressive content. However, it is shown that neologism proofness favors equilibria in which directives are double-edged swords.
Tomoeda, K 2017, 'First-price auction implements efficient investments', Economics Letters, vol. 159, pp. 198-200.
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This note shows that the first-price auction fully implements efficient investments when agents make not only ex ante but also ex post investments. The essential assumptions of our model are that (i) each agent can invest before and after participating in the auction under the same cost function and (ii) the cost functions are common knowledge among agents. In any equilibrium of our model, the most efficient agent always wins and makes the efficient level of investment.
Van Essen, M & Wooders, J 2017, 'Dissolving a Partnership Securely', Economic Theory, vol. 69, no. 2, pp. 415-434.
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© 2019, Springer-Verlag GmbH Germany, part of Springer Nature. We characterize security strategies and payoffs for three mechanisms for dissolving partnerships: the Texas Shoot-Out, the K+ 1 auction, and the compensation auction. A security strategy maximizes a participant’s minimum payoff, and represents a natural starting point for analysis when a participant is either uncertain of the environment or uncertain of whether his rivals will play equilibrium. For the compensation auction, a dynamic dissolution mechanism, we introduce the notion of a perfect security strategy. Such a strategy maximizes a participant’s minimum payoff along every path of play. We show that while a player has many security strategies in the compensation auction, he has a unique perfect security strategy.
Vasconcelos, L 2017, 'A signaling-based theory of contractual commitment to relationships', European Economic Review, vol. 93, pp. 123-138.
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© 2017 Elsevier B.V. In this paper I present signaling as an explanation for how and why parties commit to relationships when they initially contract about the terms of those relationships. Two forms of contractual commitment to a relationship are considered: a promise to trade in the future (contracted quantity); and a promise not to trade with anyone else (contracted exclusivity). A party is said to commit more to a relationship if it commits initially to trade a higher quantity and/or to a higher level of exclusivity. I characterize equilibrium contracts and therefore commitment. Both the ability to signal information through an exclusivity commitment and whether the informed party commits more to the relationship when the relationship is more likely to succeed depend on the source of the asymmetry of information.
Xiao, J, Zhou, X & Hu, W 2017, 'WELFARE ANALYSIS OF THE VEHICLE QUOTA SYSTEM IN CHINA', International Economic Review, vol. 58, no. 2, pp. 617-650.
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This article presents a welfare analysis of the vehicle quota system of Shanghai, China. The empirical findings suggest that the quota system leads to both welfare loss as a result of reduction in vehicle transactions and welfare gain because of less externality of auto consumption. The net effect depends on the shadow price of the marginal externality, the assumption of vehicle lifetime, and market conditions such as consumers' intrinsic preference for vehicles. Compared to a progressive tax system, the quota system is less effective in vehicle control but more efficient in improving social welfare.
Fiorini, M 1970, 'When Situational Crime Prevention Measures Result in the Displacement of Crime', Asian and Australasian Society of Labour Economics, Canberra.
Patterson, E, Agarwal, R, Bajada, C & Green, R 1970, 'The Role of Digital Standards in Managing Australian Public Service Innovation'.
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Digital services are a disruptive innovation helping the Australian government deliver public services to a greater number of citizens faster and more efficiently than ever before (United Nations, 2016). Over the last 20 years, the Australian federal government has been able to achieve nearly full availability of digital government services through public sector innovation. A recent commitment to such innovation occurred with the May 2015 release of a Digital Service Standard (DSS). Two years has passed since Australia introduced its DSS and this research reviews the role of this standard in fostering public service innovation. To perform this analysis, this research evaluates the alignment between the DSS and the commonly adopted approaches for managing organisational innovation of Innovation Process Management (Cooper, 1990) and Innovation Portfolio Management (Tuff & Nadji, 2012) in the public sector context. The analysis draws on publicly available data on 19 Digital Service Standard assessments from July 2015 to June 2017 and case studies of three assessments including: Digital Marketplace, MyGov and BloodNet. This evaluation found that the DSS exemplifies innovation process and innovation portfolio management in its use of gates, assessment criteria and reach across eight different agencies. The analysis also identified design limitations in the DSS as a whole of government innovation management approach due to its limited uptake in the majority of large government agencies and lack of specific standards to encourage different types of innovation. The paper proposes a framework to realign the DSS to better practices of innovation process and portfolio management, including tailoring the standard for new and existing services across a greater proportion of government agencies, and adjusting the DSS to encourage both incremental and disruptive innovations.
Rathore, A, Agarwal, R, Bajada, C & Paul, S 1970, 'Japan’s technology management legacy impacting its IoT leadership', Production and Operations Management Society (POMS) 2017 International Conference, MGSm Sydney.
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Abstract: The objective of this study is to identify the factors in traditional Japanese corporate management style which are impacting Japan’s leadership in IoT on global platform. To-date, Japan has 18% of worldwide share of IoT patents assigned. Fujitsu is the only Japanese company at 8th place in world’s top ten patents assignee ranking. Top places are filled by US, Chinese, Korean and European companies (Trappey, A. 2016). Japan envisioned the concept of an “Intelligent Object Network” TRON (The Real-time Operating system Nucleus), an open real-time operating system kernel - similar to IoT - as one of the Tokyo University’s objectives as far as back in 1987 (Sakamura J, 2015). However, Japan simply let Germany initiate ‘Industry 4.0’ policy and standards while allowing the United States to lead the IIC (Industrial Internet Consortium) despite years of experience and lead in embedded systems and high level proficiency in ubiquitous computing. Exploratory research revealed that management-related factors such as catch-up and mass production roll out policies were the largest inhibitors to setting international software standards whereas local focus related policies were considered major hindrances for Japanese gadgets to succeed worldwide. Local focus of gadgets and unwillingness of management into development of open source IoT software were found to be interlinked that Japan is not leading Industry 4.0. Institutional arrange¬ments of Japan’s catch-up system in most key industries are the primary cause of Japan’s software firms’ competitive weak¬ness. The very arrangements that help explain Japan’s success in steel, machine tools, semiconductors, and computer hardware are found to be the source of its weakness in computer software (Anchordoguy, M 1999). Insularity is a long-standing problem in Japan, often referred to as the 'Galapagos Syndrome.' Products are highly evolved but don't survive well beyond the water's edge (Pesek, W 2013). Many Japanes...
Agarwal, R, Green, R, Bajada, C & Brown, P 2017, 'Major study paints picture of who's managing our businesses', UTS.
Buckley, N, Mestelman, S, Muller, RA, Schott, S & Zhang, J 2017, 'Do the Number of Appropriators from the Commons Matter in Controlled Laboratory Environments?'.
Di Guilmi, C & Carvalho, L 2017, 'The dynamics of leverage in a demand-driven model with heterogeneous firms'.
Girsberger, EM 2017, 'Migration, Education and Work Opportunities', IZA Discussion Paper No. 11028 (September 2017).
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I study individual location, education and work decisions in a dynamic life-cycle model in a developing country. I estimate the model exploiting panel data on migrants and stayers in Burkina Faso, and cross-sectional data on permanent emigrants. Individuals self-select into migration and locations based on education. Migration to urban centres increases with education, while migrants at the extremes of the education distribution tend to move abroad. Local unemployment rates, skilled work opportunities and returns to education result in differential expected income gains across locations and hereby explain the complex migration pattern observed. Large income gains from migration are partially offset by direct and indirect migration costs, as well as by higher investment in education (for rural migrants). Migration prospects to urban centres drive education choices of rural individuals. Hence, migration policies can be used to stimulate educational attainment in rural regions.
Green, R, Agarwal, R & Bajada, C 2017, 'Study identifies Sydney’s innovation hotspots', UTS News room.
