Department of Economics Working Papers

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Now showing 1 - 5 of 6
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    "A Tale of Two Gravities"
    (Working Papers, 2020-06) Bowman, Jason H.; Chen, Xiaoping; Li, Ben G.
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    "Inequality and Peer Punishment in a Common-pool Resource Experiment"
    (Working Paper, 2020-03) De Geest, Lawrence R.; Kingsley, David C.
    We test the effect of inequality on peer punishment in a common-pool resource (CPR) experiment with equal endowments (Equal) or unequal endowments (Unequal). Peer punishment reduces extractions in both treatments, but it is more effective in Unequal. Subjects with lower endowments coordinated around an Equal Earnings norm, subjects with higher endowments matched, and peer punishment tightened this coordinate-and-match dynamic. By contrast, there was less coordination in Equal, and as a result, more peer punishment and lower payoffs.
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    "Norm Enforcement with Incomplete Information"
    (Working Paper, 2019-11) De Geest, Lawrence R.; Kingsley, David C.
    We study the emergence of norms and their enforcement in a public goods game with private information about endowments. Subjects were randomly assigned a Low or High endowment and across treatments endowments were either Observed or Unobserved. We estimate contribution norms and then estimate the expected costs of noncompliance. We find that incomplete information does not affect norms, but rather their enforcement. In both Observed and Unobserved we see a “contribute-your-endowment” norm emerge. Enforcement in Observed is close to theoretic predictions. However, enforcement in Unobserved depended on how well subjects could map contributions to endowments in a given round. When at least one High type pooled with Low types (by contributing less than or equal to the Low endowment), punishment was used to protect Low rather than attack High: contributions equal to the Low endowment were not punished (in case they came from a cooperative Low type) while contributions of zero were punished as if they were from a High type. This kept cooperation from unraveling, but it also enabled High types to hide behind small endowments. Our results dovetail with results from bargaining games and suggest that in settings with incomplete information, norms emerge to attenuate rather than eliminate non-cooperative behavior.
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    "What Drives Trends in Employment and Hours Worked per Worker? A Cross Country Analysis."
    (Workin Paper, 2021-04-02) Ramnath, Shanthi; Mukherjee, Rahul; Finkelstein Shapiro, Alan; Epstein, Brendan
    Hours worked are fundamentally important for aggregate economic activity, and their long run trends diverge considerably in Europe versus the United States. Yet, canonical macroeconomic models even tax-inclusive ones fail at replicating these di¤ering trend behaviors. We develop a simple extension of the canonical macroeconomic model that decomposes trend hours into exten- sive and intensive margins via household-side employment-attainment costs and rm-side employment adjustment costs. Predictions of a tax-inclusive version of this model track very well the trend behavior of hours and its two underlying margins in both the United States and a host of European countries. The model shows that taxes and, in particular, capital taxes, impact the two margins of labor quite di¤erently. Therefore, if these margins are not disentangled the full impact of taxes on work hours does not come through. The model has im- plications related to the relative rigidity of labor markets across countries and also to international risk sharing that are in line with the data and, therefore, validate its structure. The model s success in tracking work hours in a range of countries suggests that it can be used as a laboratory to study a broad set of issues regarding the trend behavior of labor markets.
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    Does prompting for revision influence subjects' offers in willingness to accept -- willingness to pay lab experiments?
    (Economics Bulletin, 2012-11-16) Kingsley, David C.; Brown, Thomas C.
    The willingness to accept – willingness to pay disparity raises questions about accepted economic theory. Plott and Zeiler (2005) have suggested that the disparity is the result of subject misconception about experimental procedures and, in an experiment designed to control for subject misconception, they show that the disparity can be turned on and off. This paper investigates a single feature of their experimental procedure—the prompt for subjects to consider revising their offers. Using the post-prompt and revision offers, we, like Plott and Zeiler, are unable to reject equality between WTA and WTP. However, using the pre-prompt and revision offers the disparity between WTP and WTA is shown to be significant. Results suggest that the prompt and revision opportunity systematically influences offers. Future research must determine whether the pre- or post-prompt offers more accurately reflect underlying preferences.
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