This paper tests the effect of a matching mechanism on donations in a controlled fieldnexperiment. We match the donations of students at the University of Zurich who, each semester, have to decide whether they wish to contribute to two Social Funds. Our results support thenhypothesis that a matching mechanism increases contributions to a public good. However, the effect depends on the extent to which the contributions are matched. Whereas a 25 percentnincrease of a donation does not increase the willingness to contribute, a 50 percent increase does have an effect. In addition, people need to be socially inclined to react to the matching mechanism. The field experiment provides some evidence suggesting that the matching mechanism crowds-out the intrinsic motivation of giving.
This paper examines the effects of deficits spending on the Nazi recovery. Although deficits were substantial and full employment was reached within four years, their fiscal impulse was too small to account for the speed of recovery. VAR forecasts of output using fiscal and monetary policy instruments also suggest only a minor role for active policy. Nazi policies deliberately crowded out private demand to ensure high rates of rearmament. Military spending dominated civilian work-creation already in 1934. Investment in autobahn construction was minimal during the recovery and gained momentum only in 1936 when full employment was approaching. We find some effects of the Four Years Plan of late 1936, which boosted government spending further and tightened public control over the economy.
This paper surveys recent advances in the application of random dynamical systems theory in economics. It illustrates the usefulness of this framework for modeling and analysis of economic phenomena with stochastic components, mainly focusing on stochastic dynamic models in economic growth. The paper also highlights some directions for further applications and interdisciplinary research on random dynamical systems.
In this paper, we study the effect of financial markets on the investment of a two-good two-country economy with stochastic production in a dynamic framework. Each country produces and invests only one good and, therefore, makes decisions as a central planner in an optimal growth model. Trade between consumers of both countries, however, takes place on competitive (spot or financial) markets. Wencompare the investment-consumption decisions of both `market' models with the benchmark-case of an integrated world-equilibrium. In the log-linear case, we can uniquely characterize the state-dependent preferences of consumers that lead to dynamically efficient investment decisions. We show that the investment decisions in both `market' models are, in general, inefficient as compared with the efficient, ornintegrated world economy, case.n
This paper presents a complete analysis of a stochastic version of the Solow growth model in which all parameters are ergodic random variables. Applying random dynamical systems theory, we prove that the dynamics and, in particular, the long-runnbehavior is uniquely determined by a globally attracting stable random fixed point. We also discuss the relation of our approach to that of ergodic Markov equilibria.
Stock option grants to top managers have largely contributed to the dramatic increase in US executive pay in recent years. In this paper it is argued that stock options, compared to other forms of compensation, have created strong incentives for managers to engage in lobbying activities for higher compensation. The empirical results presented for the S&P 500 firms and the years from 1992 to 1997 show that the relative success of such skimming activities is shaped by institutional controls. Stock option grants are substantially lower when control by the board of directors and the shareholders is higher, and competition on the product market of a firm is stronger.
Adam Smith's idea that wage differences reveal preferences for risk rests on firm theoretical foundations. This paper argues, however, that the standard approach to identify these differentials in practice may be flawed. Empirical practice usually identifies compensating wage differentials for risk by regressing individual wages on aggregate measures of risk, usually industry or occupation average risk. If jobs differ within industries or occupations, the ''aggregate approach'' may identify arbitrary compensating differentials for risk. In a dataset with precise information on job risk as well as aggregate risk, I demonstrate that using aggregate risk identifies wage differentials that are two to five times larger than wage differentials based on job riskninformation. This result is robust to controlling for time constant unobserved individual or job heterogeneity.
"Informal sanctions are a major determinant of a society’s social capital because they are key to the enforcement of implicit agreements and social norms. Yet, little is known about the driving forces behind informal sanctions. We systematically examine the determinants of informal sanctions by a large number of experiments. Our experiments allow us to identify the relative importance of three major potential factors: (i) strategic sanctioning for selfish reasons, (ii) non-strategic sanctions driven by spitefulness, and (iii) non-strategic sanctions that are driven by the violation of fairness principles. In addition, the observed sanctioning patterns provide insights into the relevance of different fairness principles.nOur findings show that the violation of fairness principles is the most important driving force of sanctions but, in addition, a non-negligible part of the sanctions is driven by spitefulness. We find surprisingly little evidence for strategic sanctions that are imposed to create future material benefits. While non-strategic sanctions are of major importance in our experiments, strategic sanctions seem to play a negligible role. Within the class of fairnessdrivennsanctions the motive to harm those who committed unfair actions seems mostnimportant."
"This paper advances two propositions, one concerning content, the other concerning research strategy.n(1) The advent of wide-spread internet publishing reduces the stifling impact of the refereeing process on the papers accepted and submitted to journals. Economics scholars are less bound to devoting a large part of their time and effort on formalisms. They have more leeway to concentrate on matters of content. This greater freedom also improves the chances of the advice and suggestions proposed by economic methodologists being put into practice.n(2) Economic methodology is only able to influence the practice of economics if it takes into account the incentives to which scholars are subjected when they want to pursue an academic career and become prominent. Incentives are transmitted by institutions; it is therefore necessary for economic methodology to analyse how institutions work and how they may change in the future."
This paper considers the European countries' output of eminent economists, i.e. the 160 most often cited academics in the period 1993-96. The influence of the size of the population and GNP is analyzed, and a ranking of the top-20 scholars is provided. The United Kingdom outperforms: it is leading with respect to the absolute number, per capita, and GNP per capita. More surprisingly, most small countries do very well if size is accounted for. The four large Continental countries only do well according to the absolute number of eminent economists. But weighted by population and GNP they chop back dramatically.
