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Exempting agents from any burden sharing: A lab-experimental study on the distribution of a monetary loss
No full textWe present findings of an experimental study of negotiations over the share of a monetary loss. Groups of four agents with differing initial endowments must unanimously agree on the contribution that each member is expected to make so that a financial loss imposed on the group is covered. Two types of proposals are of particular interest: Either the agent with the lowest endowment or the agents with the lowest and second lowest endowment are to be exempted from any monetary contribution. These types of proposals can be related to alternative models of loss sharing that will be briefly discussed before presenting the experimental results. We find that exempting the agent with the lowest endowment only was expressed in 120 proposals, exempting the lowest and the second lowest agents only accounted for 50% of all 428 proposals. We consider two different treatments in case of no agreement among the group members, namely a random mechanism among all the proposals made before the bargaining procedure has ended, and, alternatively, a decision taken by the experimenter after bargaining time has elapsed. We also discuss a third type of proposal that we call "other exemptions" which contains rather nasty loss-division proposals that contradict the very idea of fairness and examine our findings in such contexts particularly under the aspect of gender difference
Biased-manager hiring in a market with network externalities and product compatibility
No full textThis paper studies biased-manager hiring in a market with network externalities and product compatibility. We show that the aggressivity of a biased manager has a non-linear relationship with product compatibility; however, since both owners want to hire aggressive managers, product compatibility is irrelevant to the type of manager the owner hires. In Cournot competition, product compatibility is crucial in alleviating the 'prisoner’s dilemma' due to the net network effect of network externalities with product compatibility. In Bertrand competition, the 'prisoner’s dilemma' is resolved when the augmented net network effect of product compatibility is large
Diverging Ethnic Hierarchies? Cultural Distance, Right-Wing Authoritarianism, and Social Distance Perceptions in the Netherlands
No full textThe existence of hierarchies of ethnic preferences in society is well-documented. However, there is little research about how such ethnic hierarchies can be explained. Improving upon previous studies, we investigated whether individuals' cultural distance toward ethnic outgroups and their level of right-wing authoritarianism (RWA) contribute to differences in their perception of social distance toward these groups. Our study is based on a survey in the Netherlands ( N = 1249) and provides robust evidence for an ethnic hierarchy in the majority group's perception of social distance toward 36 ethnic groups. However, this hierarchy is not universal. For more right-wing authoritarian individuals, the ethnic hierarchy is particularly steep, meaning they discriminate more between outgroups. By contrast, less right-wing authoritarian individuals differentiate little between outgroups. Furthermore, the relationship between RWA and social distance is moderated by cultural distance. We interpret this finding with symbolic threat theory, according to which greater cultural distance "activates" authoritarian attitudes, which affect the perception of social distance to varying degrees. Our results contribute to understanding the ethnic hierarchy in social distance perceptions by showing that it is determined by characteristics of the perceiving individual (RWA) and of the perceived group (cultural distance) as well as by their interaction
Rally post-terrorism
No full textThis study examines whether the “rally ’round the flag” phenomenon is present after terrorist attacks, and investigates explanations for this increase in confidence in national political institutions and approval of the country leader’s job performance. I exploit variations in terrorist occurrences and results (success or failure) across subnational EU regions where at least one attack took place during the data period. I show empirically that both terrorist occurrences and results are plausibly exogenous to the prior political and economic climate. Conducting a difference-in-differences analysis, I compare changes in political confidence and approval among individuals who were exposed to an attack in their region with those who were not. Utilizing another more sophisticated identification, I also compare such political changes after successful attacks with those after failed attacks. I find that post-terrorism, individual political confidence and support significantly increased by more than 10 percentage points, and that this political increment was over 5 percentage points after successful attacks relative to failed ones. Such rally effects were temporary and faded away within a year. Furthermore, I explore various potential channels suggesting patriotism and civic engagement as mechanisms while rejecting perceived economic capture and political acquisition as alternative explanations
Optimal bank credit financing and cost-reducing knowledge for a supplier under different channel structures
No full textThis study examines a supply chain consisting of a capital-constrained supplier and a retailer. The supplier sells wholesale products to consumers through the retailer and may also sell directly to consumers via an online channel. Given that the supplier's initial working capital may be insufficient to cover production, investment, or online channel expenses, they have the option to borrow funds from a bank-a practice referred to as bank credit financing (BCF). We develop models with and without direct selling and BCF to analyze the supplier's optimal decisions regarding cost-reducing investments and the BCF policy. Our findings indicate that, in the absence of direct selling, the supplier's optimal BCF decision depends on its initial working capital and the investment cost factor. Notably, BCF can enable the supplier to shift from forgoing cost-reducing investments to actively engaging in them when the initial working capital falls within a certain range. Furthermore, under the direct selling model, the supplier's optimal decision is influenced by a combination of factors, including its initial working capital, investment cost factor, and direct selling cost
Uncertainty, deep regional trade agreements, and global value chain trade
No full textThis study explores the role of regional trade agreements (RTAs) in mitigating the negative effects of uncertainty on trade, focusing on their depth and differential impacts on global value chain (GVC) and traditional trade. By employing an augmented gravity model with data from 70 countries spanning 1995 to 2020, the analysis reveals that deep RTAs, incorporating WTO-plus and WTO-extra provisions beyond tariff reductions, significantly alleviate the negative effects of uncertainty on both GVC and traditional exports. In contrast, shallow RTAs do not provide such mitigation. This study further highlights the resilience of GVC trade to uncertainty, driven by relationship-specific investments and long-term partnerships, while also recognizing its vulnerability to cumulative trade costs. Deep RTAs demonstrate more pronounced and persistent uncertainty-mitigation effects for GVC trade compared to traditional trade. Furthermore, we also find that WTO-extra provisions exert a more pronounced impact on both GVC and traditional exports. These findings underscore the critical importance of deep RTAs in fostering economic resilience and sustaining global supply chains amidst increasing global uncertainties, offering valuable policy implications for the design of trade agreements
Predicting the uptake of long-term care benefits in Austria
No full textWe use administrative microdata and statistical learning methods to analyze how personal characteristics and the consumption of healthcare services help predict the first-time receipt of "long-term care allowance" (LTCA), a needs-tested cash-for-care benefit in Austria. Our findings suggest that short-term information from the healthcare sector, particularly in the quarter prior to LTCA enrollment, provides substantial explanatory power. Apart from old age, the most influential predictors include the frequency of doctor visits and hospital stays as well as diagnoses such as dementia, cerebral infarction, and hypertension. Our findings emphasize the importance of datadriven approaches in anticipating the uptake of long-term care benefits and informing policy, especially against the background of the demographic transition
Political participation and competition in concurrent elections: Evidence from Italy
No full textThis paper investigates how concurrent national and local elections affect the local political participation and competition. Leveraging a quasi-experimental framework provided by Italy's staggered electoral timing, the paper employs a difference-in-differences design. Estimates reveal that municipalities holding concurrent elections exhibit lower levels of local participation and competition. Moreover, the concurrent election increases participation by candidates with nationally-established parties, while decreases participation with independent parties. This further translates into a higher votes share for nationally-established parties and a consequent higher probability of election. Elected mayors tend to have lower education and experience in office, while they are more likely to be from the municipality they were elected in. Further, elected mayors are able to attract more intergovernmental transfers, without substantially affecting local spending patterns
Determinants of value-added tax revenue transfers in municipalities of emerging economies
No full textThis paper aims to test the hypothesis of the existence of significant tax competition between communes, which mainly concerns the share of value-added tax (VAT) proceeds, by exploring the system for allocating intergovernmental transfers in Morocco and analyzing the determinants of VAT transfers to local authorities. It contributes to fiscal federalism by assessing the design of the decentralized system and intergovernmental transfers. It aims to explore and understand the variables determining decentralization in Moroccan Municipalities over the period 2014-2018, based on institutional, budgetary, and political justifications, as well as their influence on local tax efficiency, highlighting the importance of intergovernmental transfers and their impacts on local government autonomy. We find that VAT revenue transfer antecedents include factors such as public expenditure, fiscal potential, tax effort, and political alignment. The results of this study can help better understand the relationship between VAT and economic variables and guide government tax policies in an emerging economy. This paper offers original perspectives on the importance of an informed vision for government decision-makers to develop effective tax policies considering stringent local budget constraints, the need for VAT revenue autonomy across levels of government, and the need for meeting the redistributive goals of the current VAT system