We advance the measurement of trust in economics in two ways. First, we highlight the importance of clearly identifying the target of trust, particularly for obtaining concordance between attitudinal and behavioral measures of trust. Second, we introduce a novel behavioral measure of (dis)trust, based on individuals? willingness to pay to avoid being vulnerable to the target of trust. We conduct an experiment in which we vary the target of trust among passersby at several locations around a city, measuring both behavioral distrust and trust attitudes towards these varying targets. We find that subjects discriminate based on perceived characteristics of different targets in determining whether to trust, in a manner consistent with trust elicited using attitudinal measures and with actual trustworthiness. Risk aversion and altruism do not correlate highly with our measure of distrust.
The paper proposes a new estimator for the fixed effects ordered logit model. In contrast to existing methods, the new procedure allows estimating the thresholds. The empirical relevance and simplicity of implementation is illustrated in an application to the effect of unemployment on life satisfaction.
I expose the risk of false discoveries in the context of multiple treatment effects. A false discovery is a nonexistent effect that is falsely labeled as statistically significant by its individual t-value. Labeling nonexistent effects as statistically significant has wide-ranging academic and policy-related implications, like costly false conclusions from policy evaluations. I eexamine an empirical labor market model by using state-of-the art multiple testing methods and I provide simulation evidence. By merely using individual t-values at conventional significance levels, the risk of labeling probably nonexistent treatment effects as statistically significant is unacceptably high. Individual t-values even label a number of treatment effects as significant, whereas multiple testing indicates false discoveries in these cases. Tests of a joint null hypothesis such as the well-known F-test control the risk of false discoveries only to a limited extent and do not optimally allow for rejecting individual hypotheses. Multiple testing methods control the risk of false discoveries in general while allowing for individual decisions in the sense of rejecting individual hypotheses.
This paper studies the effect of leadership on the level and evolution of pro-social behavior using an artefactual field experiment on local public good provision. Participants decide how much to contribute to an actual conservation project. They can then revise their donations after being randomly matched in pairs on the basis of their authority and having observed each other’s contributions. Authority is measured through a social ranking exercise identifying formal and moral leaders within the community. I find that giving by a pair is higher and shows a lower tendency to decrease over time when a leader is part of a pair. This is because higher-ranked pair members in general, and leaders in particular, donate more and are less likely to revise contributions downwards after giving more than their counterparts. Leadership effects are stronger when moral authority is made salient within the experiment, in line with the ethical nature of the decision under study. These findings highlight the importance of identifying different forms of leadership and targeting the relevant leaders in projects aimed at local public good provision.
What determines reciprocity in employment relations? We conducteda controlled field experiment to measure the extent to whichmonetary and non-monetary gifts affect workers’ performance. We findthat non-monetary gifts have a much stronger impact than monetarygifts of equivalent value. We also observe that when workers are offeredthe choice, they prefer receiving money but reciprocate as if theyreceived a non-monetary gift. This result is consistent with the commonsaying, “it’s the thought that counts”. We underline this point byshowing that also monetary gifts can effectively trigger reciprocity ifthe employer invests more time and effort into the gift’s presentation.
Recently, there has been a renewed interest in modeling economic time series by vectorautoregressive moving-average models. However, this class of models has been unpopularin practice because of estimation problems and the complexity of the identication stage.These disadvantages could have led to the dominant use of vector autoregressive modelsin macroeconomic research. In this paper, several simple estimation methods for vectorautoregressive moving-average models are compared among each other and with purevector autoregressive modeling using ordinary least squares by means of a Monte Carlostudy. Dierent evaluation criteria are used to judge the relative performances of the algorithms.
Retinal detachment results in visual loss and requires surgical treatment. The risk of retinal detachment depends, among other factors, on the vitreous rheology, which varies with age. To date, the viscoelasticity of the vitreous body has only been measured in cadaver eyes. However, the ex vivo and in vivo viscoelasticity may differ as a result of the effect of intravitreal membranes. Therefore, an MRI method and appropriate postprocessing tools were developed to determine the vitreous deformation and viscoelastic properties in the eyes of living humans. Nineteen subjects (eight women and 11 men; mean age, 33 years; age range, 14-62 years) gazed at a horizontal sinusoidal moving target during the segmented acquisition of complementary spatial modulation of magnetization images. The center of the lens and the scleral insertion of the optic nerve defined the imaging plane. The vitreous deformation was tracked with a dedicated algorithm and fitted with the commonly used viscoelastic model to determine the model parameters: the modified Womersley number a and the phase angle b. The vitreous deformation was successfully quantified in all 17 volunteers having a monophasic vitreous. The mean and standard deviation of the model parameters were determined to be 5.5 ± 1.3 for a and -2.3 ± 0.2 for b. The correlation coefficient (-0.76) between a and b was significant. At the eye movement frequency used, the mean storage and loss moduli of the vitreous were around 3 ± 1 hPa. For two subjects, the vitreous deformation was clearly polyphasic: some compartments of the vitreous were gel-like and others were liquefied. The borders of these compartments corresponded to reported intravitreal membrane patterns. Thus, the deformation of the vitreous can now be determined in situ, leaving the structure of the intravitreal membranes intact. Their effect on vitreous dynamics challenges actual vitreous viscoelastic models. The determination of the vitreous deformation will aid in the quantification of local vitreous stresses and their correlation with retinal detachment.
Should workers of a firm be organizationally integrated to realize benefits from benchmarking? Or should they be separated to preclude horizontal social comparisons? This paper highlights a trade-off that arises if social comparisons in firms are endogenous. We analyze a principal multi-agent model in which the principal trades off the reduction of agents' risk exposures by use of relative performance evaluation and the thereby induced social comparisons for which agents must be compensated. Contrary to standard theoretical predictions, relative performance evaluation is optimal only if the performance measures are sufficiently correlated relative to the agents' regard for others
Many statistical applications require the forecast of a random variable of interest over several periods into the future. The sequence of individual forecasts, one period at a time, is called a path forecast, where the term path refers to the sequence of individual future realizations of the random variable. The problem of constructing a corresponding joint prediction region has been rather neglected in the literature so far: such a region is supposed to contain the entire future path with a prespecified probability. We develop bootstrap methods to construct joint prediction regions. The resulting regions are proven to be asymptotically consistent under a mild high-level assumption. We compare the finitesample performance of our joint prediction regions to some previous proposals via Monte Carlo simulations. An empirical application to a real data set is also provided.
We develop a novel geometric approach to mechanism design using an important result in convex analysis: the duality between a closed convex set and its support function. By deriving the support function for the set of feasible interim values we extend the wellknown Maskin-Riley-Matthews-Border conditions for reduced-form auctions to social choice environments. We next refine the support function to include incentive constraints using a geometric characterization of incentive compatibility. Borrowing results from majorization theory that date back to the work of Hardy, Littlewood, and P�olya (1929) we elucidate the "ironing" procedure introduced by Myerson (1981) and Mussa and Rosen (1978). The inclusion of Bayesian and dominant strategy incentive constraints result in the same support function, which establishes equivalence between these implementation concepts. Using Hotelling's lemma we next derive the optimal mechanism for any social choice problem and any linear objective, including revenue and surplus maximization. We extend the approach to include general concave objectives by providing a fixed-point condition characterizing the optimal mechanism. We generalize reduced-form implementation to environments with multi-dimensional, correlated types, non-linear utilities, and interdependent values. When value interdependencies are linear we are able to include incentive constraints into the support function and provide a condition when the second-best allocation is ex post incentive compatible.
