infonet-economy

The present paper shows that a sufficient condition for the existence of a stable solution to an autoregressive neural network model is the continuity and boundedness of the activation function of the hidden units in the multi layer perceptron (MLP). In addition, uniqueness of a stable solution is ensured by global lipschitzness and some conditions on the parameters of the system. In...

The goal of this paper is to assess, for the first time, the empirical impact of "Keynes’ beauty contest", or "higher order beliefs", on asset price volatility. The paper shows that heterogeneous expectations induce higher order beliefs and that heterogeneous expectation asset pricing models theoretically generate more volatility than rational expectation models....

We analyze a Bayesian merger game under two-sided asymmetric information about firm types. We show that the standard prediction of the lemons market model–if any, only low-type firms are traded–is likely to be misleading: Merger returns, i.e. the difference between pre- and post-merger profits, are not necessarily higher for low-type firms. This has two implications. First, under...

"People not only obtain utility from actual outcomes but also from the conditions which lead to these outcomes. The paper proposes an economic concept of this notion of procedural utility. Preferences beyond outcome can be manifold. We distinguish proceduralnutility people get from institutions as such, i.e. from how allocative and redistributive decisions are taken, procedural...

This paper reports on a two-task principal-agent experiment in which only one task is contractible. The principal can either offer a piece-rate contract or a (voluntary) bonus to the agent. Bonus contracts strongly outperform piece rate contracts. Many principals reward high efforts on both tasks with substantial bonuses. Agents anticipate this and provide high efforts on both tasks...

"Women earn less than men but are not less satisfied with life. This paper argues that norms on the appropriate pay for women compared to men explain thesenfindings. We take citizens’ approval of an equal rights amendment to the Swissnconstitution as a proxy for the norm that “women and men shall have the right to equal pay for work of equal value”. We...

A nonparametric data envelopment analysis (DEA) is performed on hospitals in the federal state of Saxony (Germany) and in Switzerland. This study is of interest from three points of view. First, contrary to most existing work, patient days are not treated as an output but as an input. Second, the usual DEA assumption of a homogeneous sample is tested and rejected for a large part of...

We model the interbank market for overnight credit with heterogeneous banks and asymmetric information. An unsophisticated bank justntrades to compensate its liquidity imbalance, while a sophisticated bank willnexploit its private information about the liquidity situation in the market. It is shown that with positive probability, the liquidity effect (Hamilton, 1997) is reversed, i.e...

A global signaling game is a sender-receiver game in which the sender is only imperfectly informed about the receiver's preferences. The paper considers an economically relevant class of signaling games that possessnmore than one Perfect Bayesian equilibrium. For this class of games, it is shown that a Perfect Bayesian equilibrium is una®ected by a small perturbation of the...