Search results

Self-regulatory organizations (SROs) can be found in education, healthcare, and other not-for-profit sectors as well as in the accounting, financial, and legal professions. DeMarzo et al. (2005) show theoretically that SROs can create monopoly market power for their affiliated agents, but that governmental oversight, even if less efficient than oversight by the SRO, can largely offset such market power. We provide an experimental test of this conjecture. For carefully rationalized parameterizations and implementation details, we find that the predictions of DeMarzo et al. (2005) are borne out.

Despite the benefits of delegation, anecdotal and survey-based evidence suggests that firms do not optimally delegate decision-making authority. However, to date, no quantifiable evidence supports this claim.

We design an experiment to explore the superior’s choice between delegation and information elicitation. We also examine the effect of the superiors’ choice on the amount of effort provided by subordinates to gather decision-facilitating information.

We find that, compared to economic predictions, superiors delegate less often than they should. Subordinates exert lower effort when superiors elicit information than when superiors delegate the decision to them. As a result, superiors earn lower profit when they elicit information than when they delegate decision-making authority.

Our empirical evidence supports two main tenets espoused in the literature on the allocation of decision rights. First, the evidence of under delegation contributes to the literature which maintains that superiors’ tendency to under-delegate leads firms to become overly centralized.

By designing a novel experimental, we identify systematic ways in which behavior deviates from economic theory and contribute to the discussion on how firms utilize information. In particular, under delegation prevents firms from exploiting economies that arise from local capabilities and task specialization, and results in forgone profits.

Efforts in the spirit of this special issue aim at improving the reproducibility of experimental economics, in response to the recent discussions regarding the “research reproducibility crisis.” We put this endeavor in perspective by summarizing the main ways (to our knowledge) that have been proposed – by researchers from several disciplines – to alleviate the problem. We discuss the scope for economic theory to contribute to evaluating the proposals. We argue that a potential key impediment to replication is the expectation of negative reactions by the authors of the individual study, and suggest that incentives for having one’s work replicated should increase.

What would have been the hypothetical effect of monetary policy shocks had a country never joined the euro area, in cases where we know that the country in question actually did join the euro area? It is one thing to investigate the impact of joining a monetary union, but quite another to examine two things at once: joining the union and experiencing actual monetary policy shocks. The authors propose a methodology that combines synthetic control ideas with the impulse response functions to uncover dynamic response paths for treated and untreated units, controlling for common unobserved factors. Focusing on the largest euro area countries, Germany, France, and Italy, the authors find that an unexpected rise in interest rates depresses inflation and significantly appreciates exchange rate, whereas gross domestic product (GDP) fluctuations are less successfully controlled when a country belongs to the monetary union than would have been the case under the independent monetary policy. Importantly, Italy turns out to be the overall beneficiary, since all three channels – price, GDP, and exchange rate – deliver the desired results. The authors also find that stabilizing an economy within a union requires somewhat smaller policy changes than attempting to stabilize it individually, and therefore provides more policy space.

The authors provide a way to represent spatial and temporal equilibria in terms of error correction models in a panel setting. This requires potentially two different processes for spatial or network dynamics, both of which can be expressed in terms of spatial weights matrices. The first captures strong cross-sectional dependence, so that a spatial difference, suitably defined, is weakly cross-section dependent (granular) but can be non-stationary. The second is a conventional weights matrix that captures short-run spatio-temporal dynamics as stationary and granular processes. In large samples, cross-section averages serve the first purpose and the authors propose the mean group, common correlated effects estimator together with multiple testing of cross-correlations to provide the short-run spatial weights. The authors apply this model to the 324 local authorities of England, and show that our approach is useful for modeling weak and strong cross-section dependence, together with partial adjustments to two long-run equilibrium relationships and short-run spatio-temporal dynamics. This exercise provides new insights on the (spatial) long-run relationship between house prices and income in the UK.

Portfolios of mortgage loans played an important role in the Great Recession and continue to compose a material part of bank assets. This chapter investigates how cross-sectional dependence in the underlying properties flows through to the loan returns, and thus, the risk of the portfolio. At one extreme, a portfolio of foreclosed mortgage loans becomes a portfolio of real estate whose returns exhibit substantial cross-sectional and spatial dependence. Near the other extreme, almost all loans perform and yield constant returns, which do not correlate with other performing loan returns. This suggests that loan performance effectively censors the random returns of the underlying properties. Following the statistical properties of the correlations among censored variables, the authors build off this foundation and show how the loan return correlations will rise as economic conditions deteriorate and the defaulting loans reveal the underlying housing correlations. In this chapter, the authors (1) adapt tools from spatial statistics to document substantial cross-sectional dependence across house price returns and examine the spatial structure of this dependence, (2) investigate the nonlinear nature of correlations among loan returns as a function of the default rate and the underlying house price correlations, and (3) conduct a simulation exercise using parameters from the empirical data to show the implications for holding a portfolio of mortgages.

Resurgent interest in the life and work of the Italian Cambridge economist Piero Sraffa is leading to New Directions in Sraffa Scholarship. This chapter introduces readers to some of these developments. First and perhaps foremost is the fact that as of September 2016 Sraffa’s archival material has been uploaded onto the website of the Wren Library, Trinity College, Cambridge University, as digital colour images; this chapter introduces readers to the history of these events. This history provides sharp relief on the extant debates over the role of the archival material in leading to the final publication of Production of Commodities by Means of Commodities, and readers are provided a brief sketch of these matters. The varied nature of Sraffa scholarship is demonstrated by the different aspects of Sraffa’s intellectual legacy which are developed and discussed in the various entries of our Symposium. The conclusion is reached that we are on the cusp of an exciting phase change of tremendous potential in Sraffa scholarship.

This chapter focuses on the impact of digitization on the conception, development and examination of the doctoral thesis in the contemporary university.

The approach taken is that of reflective inquiry. The author has taken a lead role in the editing of two handbooks for Sage: one on e-learning research and the other on the digital dissertation/thesis, and this chapter reflects on the changes taking place in higher education as a result of digitization. A number of examples are used to illustrate the possibilities afforded by digitization not only at doctoral levels but also in all dissertations.

It is proposed that digitization affects not only the conception and direction of doctoral research for the student but it has implications also for supervisors, those who ‘upgrade’ work from MPhil to PhD levels and also for examiners and librarians. Changes in the format of the presentation of the digital thesis allow moving image and sound, as well as still images, to be incorporated into the main body of the text rather than be relegated to an appendix (e.g. in a CD-Rom). The storage of the completed thesis in digital form, via a number of different repositories, allows for greater access and use.

One of the major implications of the digital thesis is that all universities must regularly re-visit their regulations to ensure that the parameters for doctoral research are clear, and that they are appropriate for the kind of research that is undertaken by students. Many universities are now making a digital copy of the thesis for principal submission, with print copies as optional.

Consideration of the implications of the digital thesis for students and universities is essential not only in terms of knowledge creation but also in terms of validation of such knowledge and its dissemination and use.