Volume 24, Issue 3

In this paper, we consider asymmetric performance evaluation contracts under different product market configurations with managerial delegation and specify the optimal decision-making by the social and relative performance evaluation firms. We present a reversal result on the owner’s choice of the social performance and relative performance evaluation contract as the product market competition type changes from quantity to price competition. Surprisingly, results indicate that the consumer surplus increases as the degree of product substitution increases under quantity competition in a specific economic environment. A firm that considers social performance evaluation produces less, charges a higher price, and earns a lower profit than a firm that uses relative performance evaluation. We also endogenize the choice of performance evaluation systems. While relative performance emerges as the endogenous choice under both modes of product market competition, it leads to lower consumer surplus and social welfare in comparison to an asymmetric performance evaluation system.

In this paper, we studied the spillover effects of cooperative and competitive incentive schemes on subsequent decisions involving altruism and cooperation. We collected data with a laboratory experiment where subjects were asked to perform Mini Dictator games and a Public Good game after playing an incentivized real effort task. We found that cooperative incentives foster higher subsequent altruism and cooperation as compared with competitive or individual incentives. By contrast, competitive incentives induced more envy towards competitor peers and more spiteful behaviour when giving implies a larger payoff for the recipient. The effect of incentives on altruism and cooperation was moderated by relative rank in the incentivized effort task and by individual level of impulsivity.

We analyse university admissions using a statistical discrimination model where students differ by ability and social group. In this university system, candidates are evaluated on the basis of their expected human capital, which includes both their innate abilities and the knowledge acquired during their schooling. Consequently, students determine their study effort based on the behaviour of universities. Interestingly, we find that students from a less advantaged group need a lower grade to gain admission to the best universities. If a university cannot discriminate between social groups, all students with the same grade will attend universities of the same quality, but with different levels of human capital.

Despite recent calls for increased taxation of firearms, there has been little quantification of the impact that this would have on the market. Using tax receipts and recent estimates of supply and demand elasticities, this paper measures the size of the U.S. gun market at equilibrium, and the effects of current and higher tax rates. Baseline estimates indicate that market equilibrium is $14.11 billion and current taxes reduce sales by 14.5 percent. Taxing firearms at rates comparable to taxes on alcohol would cut sales to roughly three-quarters of equilibrium and increase tax revenue by 58 percent; raising gun taxes to the rate on tobacco would reduce sales to about half of the equilibrium level and double federal tax revenue.

Using the 1979 and 1997 waves of the National Longitudinal Survey of Youth, this paper shows that the growing return to social skills documented by Deming (2017. “The Growing Importance of Social Skills in the Labor Market.” Quarterly Journal of Economics 132 (4): 1593–640) has been largely concentrated on college-educated workers, rather than on high school-educated workers. These findings are corroborated by the pronounced occupational sorting of college-educated workers into occupations requiring high levels of social skills. Moreover, the wage premium for college-educated workers employed in these occupations has increased markedly. Our empirical evidence provides one possible source of rising wage inequality within and between education levels.

Was the Affordable Care Act (ACA) effective in the U.S. territories? This paper explores this question by examining the impact of the ACA’s dependent mandate and Medicaid expansion in Puerto Rico. The dependent mandate led to a 4.3 percentage point increase in health insurance coverage for Puerto Rican young adults due to increased employer-sponsored insurance coverage, and the Medicaid Expansion increased Medicaid coverage by 2.4 percentage points. The impact of both policies in Puerto Rico is smaller than in the mainland, highlighting the importance of considering how federal legislation affects territories with economic and health environments dissimilar to the mainland.

This study addresses the issue of how to set a consumer price of a vaccination against an infectious disease. We especially focus on the effects of strategic behaviors of individuals within a social group. In characterizing an equilibrium level of vaccination rate, the spill-over effect of vaccination is important not only in the light of group efficiency but also from each individual’s viewpoint. By constructing a simple game-theoretic model under the Nash conjecture where individuals rationally predict the resulting vaccination rate based on their own information, we analyze how the efficient vaccination subsidy is related to epidemiological as well as economic variables. In particular, we show that individuals over-react to the changes in their expectations over the virulency of a disease and also over the scale of adverse effects of vaccinations. We also discuss the necessary adjustment of a vaccination price when the public have misperception over certain epidemiological parameters.

China is experiencing an organ shortage crisis. We experimentally test the effectiveness of the family-priority allocation rule on organ donation and argue that such incentive would be highly motivating in Chinese family-oriented culture. Results of our experiment show that introducing the family-priority rule can not only increase donor registration but also promote family consent. Such priority rule would be particularly effective to increase deceased organ donation in China, as it will significantly promote donor registration and meanwhile generate a consistent higher family consent rate in a more family-orientated culture.

We investigate the extent to which a real-effort effect and an inequality effect impact individuals’ prosocial behavior in the multilevel public goods game. We explore two symmetrical treatments: one where everyone participates in a preliminary task to obtain their initial endowment, and another where no one does, to assess the real-effort effect. Additionally, we examine two asymmetrical treatments where only individuals from one local group engage in the preliminary task to study the inequality effect. We find evidence that the contribution to the local public good is stable across all treatments, while the contribution to the global public good is significantly lower when both groups perform the preliminary task.

We examine international environmental agreements (IEAs) in which heterogeneous countries work together to not only participate in the abatement of greenhouse gas emissions but also develop breakthrough technologies. In this paper, the country with the most advanced technology (i.e. the technological leader) develops a new abatement technology and distributes it to other countries (i.e. technological laggards) through licensing. We design a new mechanism to achieve cooperation among heterogeneous countries through an initial payment and refunding (IPR) scheme and licensing involving third-party organizations (TPOs). Under our new IPR scheme with licensing, the cost incurred by a technology leader in developing new technology is covered by licensing fees using a portion of the initial payments collected from technological laggards by a TPO. As a result, TPOs sustain IEAs by flexibly adjusting technological laggards’ share of costs for licensing, comprising initial payments and refunds, and the amount of the licensing payment made to the technological leader.

We exploit a field experiment by (Chong, A., and M. Valdivia. 2023. “Edutainment, Savings, and Generational Differences in Rural Areas of Peru.” In Working Paper . Department of Economics, Georgia State University) and test whether poor women from rural areas in developing countries that are able to save seek dwelling-related assets and find causal evidence that this is indeed the case. Furthermore, we also find that the older cohort of women, those aged forty and higher, also prioritize material assets related to health-related expenditures, in particular, access to public sewerage system.

Food labels are supposed to quickly inform consumers about the nutritional values of products. We provide evidence that in a system where labels are voluntary, they are systematically distorted. The probability of finding a label on a product of the category with the highest nutritional value is 51 percentage points larger than in the lowest category.

There is ample empirical literature on the contributions of different income sources to total income inequality. In contrast, studies estimating the contributions of income sources to income poverty are scarce. This paper presents a new decomposition of the Foster–Greer–Thorbecke poverty index, based on a marginal approach previously employed to decompose income inequality. We apply these marginal decompositions to data for 15 EU countries and classify six income sources according to their impact on inequality and poverty. Our results indicate that there are significant differences in the contributions of income sources to poverty compared to their respective contributions to inequality.

This paper utilizes administrative employer–employee data to analyze the effect of job loss on interregional migration and to study how family connections, related to childhood family members and birth region preferences, shape these location choices. The results reveal that job loss due to establishment closures increases the probability of interregional migration by nearly 80 %. While local family member connections and birth region preferences pose substantial obstacles to moving, they do not necessarily lead to relocation in response to job loss. Instead, displaced workers tend to migrate to non-birth regions where they have no observed family member connections, although higher economic gains in these regions may partly offset the loss of utility resulting from these factors.