infonet-economy

Given that the range of rewarding and punishing outcomes of actions is large but neural coding capacity is limited, efficient processing of outcomes by the brain is necessary. One mechanism to increase efficiency is to rescale neural output to the range of outcomes expected in the current context, and process only experienced deviations from this expectation. However, this mechanism...

Der Wettlauf der Eitelkeiten kann zu einer höheren kollektiven Wirtschaftsleistung führen. Er kann die Menschen aber auch unglücklich machen und zu fahrlässigem Konsum verleiten.

We study the bilateral trade problem put forward by Myerson and Satterthwaite (1983) under the assumption that agents are loss-averse, using the model developed by Kőszegi and Rabin (2006, 2007). We show that the endowment effect increases the sellers information rent, and that the attachment effect reduces the buyer’s information rent. Further, depending on the distribution of types...

China’s emergence as a great economic power has induced an epochal shift in patterns of world trade. Simultaneously, it has challenged much of the received empirical wisdom about how labor markets adjust to trade shocks. Alongside the heralded consumer benefits of expanded trade are substantial adjustment costs and distributional consequences. These impacts are most visible in the...

Ein Gespräch mit Josef Falkinger über Ungleichheit, Teilhabe und Gerechtigkeit, die gesellschaftliche Bedeutung eines gemeinsamen Fortschrittsprojekts und ökonomische Macht.

The willingness to punish norm violation is an important component of many legal and social institutions, and much prior research demonstrates an apparent willingness to incur costs to punish individuals who act unfairly. But, will people rely on “excuses” to get out of having to act on costly punishment intentions, as they do with other costly pro-social acts? And how may the answer...

Relative performance evaluation (RPE) is, at least on paper, enjoying widespread popularity in determining the level of executive compensation. Yet existing empirical evidence of RPE is decidedly mixed. Two principal explanations are held responsible for this discord. A constructional challenge arises from intricacies of identifying the correct peers. And on a simpler note, corporate...

Work and trade relationships are often governed by relational contracts, in which incentives for cooperative action today stem from the prospective future benefits of the relationship. In this paper, we study how reductions in clarity about the financial consequences of actions, induced by incomplete information about the costs of providing quality, affect relational contracts in...

This paper studies optimal dynamic tax policy under the threat of political reform. A policy will be reformed ex post if a large enough coalition of citizens supports reform; thus, sustainable policies are those that will continue to attract enough political support in the future. We find that optimal marginal capital taxes are either progressive or U-shaped, so that savings are...