Search results

In games with strategic complementarities, public information about the state of the world has a larger impact on equilibrium actions than private information of the same precision, because the former is more informative about the likely behavior of others. This may lead to welfare-reducing “overreactions” to public signals as shown by Morris and Shin (2002). Recent experiments on games with strategic complementarities show that subjects attach a lower weight to public signals than theoretically predicted. The purpose of this paper is to reconsider the welfare effects of public signals accounting for the weights observed in experiments.

Aggregate behavior observed in experiments on games with strategic complementarities can be explained by a cognitive hierarchy model where subjects employ limited levels of reasoning. They respond in a rational way to the non-strategic part of a game and they account for other players responding rationally, but they neglect that other players also account for others’ rationality. This paper analyzes the welfare effects of public information under such limited levels of reasoning.

In the model by Morris and Shin (2002) public information is always welfare improving if strategies are derived from such low reasoning levels. The optimal degree of publicity is decreasing in the levels of reasoning. For the observed average level of reasoning, full transparency is optimal, if public information is more precise than private information. If the policy maker has instruments that are perfect substitutes to private actions, the government should secretly respond to its information without disclosing or signaling it to the private sector independent of the degree of private agents’ rationality.

This paper takes experimental evidence back to theory and shows that the main result obtained by the theory under rational behavior breaks down if theory accounts for the bounded rationality observed in experiments.

The purpose of this paper is to introduce the upcoming symposium on experimental macroeconomics in the November issue.

Experimental, survey of articles in the symposium.

The paper describes how experiments can be used in macroeconomics.

The paper discusses the rationale for using behavioral experiments in macroeconomics, and summarizes the papers in the symposium.

How can laboratory experiments help us understand banking crises, including the usefulness of various policy responses? After giving a concise introduction to the field of experimental economics more generally, the author attempts to provide answers. The paper aims to discuss this issue.

The author discusses methodology and surveys relevant work.

History is often too complicated to be meaningfully revamped or modified in the lab, for purposes of insight-by-analogy. But as people argue about how to understand financial history, they bring ideas to the table. It is possible and useful to test the empirical relevance of these ideas in lab experiments.

The paper pioneers broad discussion of how lab experiments may shed light on banking crises.

The purpose of this paper is to consider whether asymmetric information about correlations between assets can induce financial contagion. Contagion, unjustified by fundamentals, would arise if participants react in one market to uninformative trades in the other market that actually convey no relevant information. The authors also consider whether the market accurately disseminates insider information about fundamental value correlations when such information is indeed present.

The authors employ experimental asset markets to answer the research questions. The experimental markets allow participants to simultaneously trade two assets for multiple rounds. In each round, a shock occurs, which either have an idiosyncratic effect on the shocked asset, or a systematic effect on both assets. Half of the time, there exist insiders who know the true nature of the shock and how it affects the value of the other asset. The other half of the time, no agent knows whether there is a correlation between the assets. In such cases, there is the potential for the appearance of information mirages. Uninformed traders, in either condition, do not know whether or not there exist insiders, but can try to infer this from the market activity they observe.

The results of the experiment show that when inside information about the nature of the correlation between assets does exist, it is readily disseminated in the form of market prices. However, when there is no private information (PI), mirages are common, demonstrating that financial contagion can arise in the absence of any fundamental relationship between assets. An analysis of individual behavior suggests that some unprofitable decisions appear to be related to an aversion to complex distributions of lottery payoffs.

The study focusses on one of the triggers of unjustified financial contagion, namely, asymmetric information. The authors have studied financial contagion in a controlled experimental setting where the authors can carefully control information, and specify the fundamental interdependence between assets traded in different markets.

The purpose of this paper is to explore the ability of monetary policy to generate real effects in laboratory general equilibrium production economies.

To understand why monetary policy is not consistently effective at stabilizing economic activity, the author vary the types of agents interacting in the economy and consider treatments where subjects are playing the role of households (firms) in an economy where automated firms (households) are programmed to behave rationally.

While the majority of participants’ expectations respond to monetary policy in the direction intended, subjects do form expectations adaptively, relying heavily on past variables and forecasts in forming two-steps-ahead forecasts. Moreover, in the presence of counterparts that are boundedly rational, forecast accuracy worsens significantly. When interacting with automated households, updating firms’ prices respond modestly to monetary policy and significantly to anticipated marginal costs and future prices. The greatest deviations in behavior from theoretical predictions arise from human households (HH). Households persistent oversupply of labor and under-consumption is attributed to precautionary saving and debt aversion. The results provide evidence that the effects of monetary policy on decision making hinge on the distribution of indebtedness of households.

The author present causal evidence of the effects of potential bounded rationality on agents’ consumption and labor decisions.

FEW visitors to the Business Efficiency Exhibition held in London a few weeks ago can be in any doubt that electronic “brains” and other electro‐mechanical developments will be used more widely in business in future for preparing up‐to‐date records of production and sales and for doing such laborious, time‐consuming tasks as the bookkeeping necessary in the banks.

Presents, in this study, how a marketing standpoint is adopted to assess and solve the problems of a non‐profit making organisation in the UK, that also provides a service, creating an illuminating perspective for thought and analysis. Shows how this approach was able to shed new light on the problems of making ‘Outward Bound’ attractive to the employers, and to result in the formulation of some practical suggestions as to how problems may be overcome. Shows marketing to be an adaptable tool, essentially a framework for customer‐oriented thinking.

Acceptance of the benefits of market segmentation is so pervasive that it seems almost sacrilegious to question the validity of this faith in the power of segmentation as a marketing tool. But, at the risk of being labelled heretics, argues that segmentation is not the marketers’ nirvana it is sometimes made out to be. Discusses a number of assumptions and arbitrary decisions involved in the segmentation process, including beliefs about the selection of base variables, the analysis method chosen, the number and composition of segments, the validity of the solution and its stability over time. Reviews techniques for assessing the reliability of the outcome, and concludes that managers should be more aware of the limitations of segmentation studies.

Practice demonstrates and research validates that entrepreneurship is moving from the individual to the organization and from the private sector to the social and not‐for‐profit sectors. The present study endeavors to complement the emerging public entrepreneurship literature by aiming to identify which of those factors that stimulate corporate entrepreneurship in the public sector are preferred by entrepreneurial civil servants.

A questionnaire was completed by a random sample (n=247) of public servants across 15 Greek prefectures. Results are based on Bayesian factor analysis, conjoint analysis and cluster analysis.

Results provide preliminary evidence about entrepreneurial civil servants' preferences and make available a well‐documented framework for addressing corporate entrepreneurship in the public sector.

The reported research relied on self‐reporting. In addition, because the sample consisted entirely of public servants across Greek prefectures, findings may not be applicable to other public sector contexts (such as hospitals) and other countries. Data are cross‐sectional and alternative relationships may exist. Future research should be multinational and longitudinal to test the assumptions of the present study.

The results of the study are useful both to academics and policy makers interested in formulating a strategy that fosters corporate entrepreneurship in the public sector.

During the last 15 years, considerable effort has been devoted to developing more effective, more efficient, and more flexible public organizations. Using qualitative methods, the results of the present exploratory research identify which factors that foster corporate entrepreneurship in the public sector are preferred by entrepreneurial public servants.

The built environment has high potential to reduce overall greenhouse gas emissions and with around 1‐2 per cent of new buildings added to the total stock annually, the scope for reductions lies with adaptation of existing stock. Existing buildings comprise a variety of attributes and present challenges and opportunities with regards to adaptation and sustainability, and integrating retrofit measures that lessen energy, water and resource consumption.

Through a quantitative analysis of a Building Adaptation database, this paper addresses the questions; what is the nature of adaptations in relation to Premium quality office building stock in the Central Business District (CBD) and, what is the extent and scope for sustainable retrofits to Premium grade office buildings.

The nature and extent of adaptations to Premium office buildings are identified and quantified in respect of attributes such as adaptation level, building age, location, construction form, envelope, shape and height and operating costs.

The findings provide an insight for policy makers and others in respect of the nature and type of adaptations typically undertaken in Premium office buildings. The research identifies the typical attributes found in buildings undergoing adaptation and specifies the type of sustainable retrofit measures particularly suited to buildings with those attributes.

The research is based on an analysis of “all” office building adaptations from 1998 to 2008, which facilitates a unique study of what has occurred with regards to adaptation practices. From this starting point it is possible to determine where opportunities lie to capitalise on work being undertaken.