Browsing Working Papers (ECON) by Year Published
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Andersen, Steffen; Harrison, Glenn W.; Lau, Morten Igel; Rutström, Elisabet E. (, 2009)[More information][Less information]
Abstract: We make the case that psychologists should make wider use of econometric methods for the estimation of structural models. These methods involve the development of maximum likelihood estimates of models, where the likelihood function is tailored to the structural model. In recent years these models have been developed for a wide range of behavioral models of choice under uncertainty. We explain the components of this methodology, and illustrate with applications to major models from psychology. The goal is to build, and traverse, a constructive bridge between the modeling insights of psychology and the statistical tools of economists. URI: http://hdl.handle.net/10398/7800 Files in this item: 1
wp2009-4.pdf (1.471Mb) -
hvordan får vi mest vækst for pengene?Skaksen, Jan Rose; Kirk, Jens Sand; Stephensen, Peter (Frederiksberg, 2009)[More information][Less information]
URI: http://hdl.handle.net/10398/7987 Files in this item: 1
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Andersen, Steffen; Harrison, Glenn W.; Lau, Morten Igel; Rutström, Elisabet E. (, 2009)[More information][Less information]
Abstract: The most popular models of decision making use a single criteria to evaluate projects or lotteries. However, decision makers may actually consider multiple criteria when evaluating projects. We consider a dual criteria model from psychology. This model integrates the familiar tradeoffs between risk and utility that economists traditionally assume, allowance for rank-dependent decision weights, and consideration of income thresholds. We examine the issues involved in full maximum likelihood estimation of the model using observed choice data. We propose a general method for integrating the multiple criteria, using the logic of mixture models, which we believe is attractive from a decision-theoretic and statistical perspective. The model is applied to observed choices from a major natural experiment involving intrinsically dynamic choices over highly skewed outcomes. The evidence points to the clear role that income thresholds play in such decision making, but does not rule out a role for tradeoffs between risk and utility or probability weighting. URI: http://hdl.handle.net/10398/7798 Files in this item: 1
wp2-2009.pdf (282.4Kb) -
Baghdasaryan, Delia; la Cour, Lisbeth (København, 2009)[More information][Less information]
Abstract: This study empirically investigates if competition’s impact on firm performance depends on the ownership structure. Our results show that an increase in import competition has a positive effect on firms with concentrated ownership and a negative effect on firms with dispersed ownership, regardless of the level of domestic competition. Given that the optimal level of ownership concentration with respect to firm productivity is high (low) if tariffs are low (high) in the case when import competition is high these results are consistent with theoretical findings that competition has positive effects in companies that are a priori efficient but not in unproductive firms. If tariffs are high, however, they support inferences based on the x-inefficiency literature. Contrary to what has been suggested by some theoretical results, the riskiness of a firm’s environment does not seem to influence our results. URI: http://hdl.handle.net/10398/7660 Files in this item: 1
wp1-2009.pdf (296.5Kb) -
Andersen, Steffen; Fountain, John; Harrison, Glenn W.; Rutström, E. Elisabet (, 2009)[More information][Less information]
Abstract: Subjective probabilities play a role in many economic decisions. There is a large theoretical literature on the elicitation of subjective probabilities, and an equally large empirical literature. However, there is a gulf between the two. The theoretical literature proposes a range of procedures that can be used to recover subjective probabilities, but stresses the need to make strong auxiliary assumptions or “calibrating adjustments” to elicited reports in order to recover the latent probability. With some notable exceptions, the empirical literature seems intent on either making those strong assumptions or ignoring the need for calibration. We illustrate how one can jointly estimate risk attitudes and subjective probabilities using structural maximum likelihood methods. This allows the observer to make inferences about the latent subjective probability, calibrating for virtually any well-specified model of choice under uncertainty. We demonstrate our procedures with experiments in which we elicit subjective probabilities. We calibrate the estimates of subjective beliefs assuming that choices are made consistently with expected utility theory or rank-dependent utility theory. Inferred subjective probabilities are significantly different when calibrated according to either theory. URI: http://hdl.handle.net/10398/7801 Files in this item: 1
wp2009-5.pdf (435.4Kb) -
Preliminary Experimental Evidence from Matrilineal and Patriarchal SocietiesBulte, Erwin; List, John A.; Gneezy, Uri; Andersen, Steffen (København, 2008)[More information][Less information]
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Hussinger, Katrin; Schneider, Cedric; Czarnitzki, Dirk (København, 2008)[More information][Less information]
Abstract: The knowledge produced by academic scientists has been identified as a potential key driver of technological progress. Recent policies in Europe aim at increasing commercially orientated activities in academe. Based on a sample of German scientists across all fields of science we investigate the importance of academic patenting. Our findings suggest that academic involvement in patenting results in greater knowledge externalities, as academic patents appear to generate more forward citations. We also find that in the European context of changing research objectives and funding sources since the mid-90’s, the "importance” of academic patents declines over time. We show that academic entrants have patents of lower "quality” than academic incumbents but they did not cause the decline, since the relative importance of patents involving academics with an existing patenting history declined over time as well. Moreover, a preliminary evaluation of the effects of the abolishment of the "professor privilege” (the German counterpart of the U.S. Bayh-Dole Act) reveals that this legal disposition led to an acceleration of this apparent decline. URI: http://hdl.handle.net/10398/7666 Files in this item: 1
wp5-2008.pdf (305.8Kb) -
Veugelers, Reinhilde; Schneider, Cedric (København, 2008)[More information][Less information]
Abstract: Recent policy initiatives in the EU aim at supporting so-called Young Innovative Companies (YICs). This paper provides empirical evidence from German CIS data on the innovative performances of this specific type of firms, supporting why they matter. We first characterize YICs in the sample of innovation active firms. We show that firms that combine newness, smallness and high R&D intensity, are rare in the sample of innovative firms, but achieve significantly higher innovative sales than other innovative firms, especially innovative sales that are new to the market. Not surprisingly, YICs view financial constraints, both internal and external, as an important factor hampering their innovation activities, significantly more so than other innovation active firms. This access to finance problem is an often used motive for government intervention. In Germany, subsidies schemes for innovation are general and not particularly targeted at YICs. When assessing the effectiveness of these public funding schemes for our sample firms, we find that they are not effective to increase the innovative sales of YICs, unlike the average innovative firm in our sample. URI: http://hdl.handle.net/10398/7663 Files in this item: 1
wp4-2008.pdf (209.8Kb) -
Munch, Jakob Roland; Rose Skaksen, Jan; Malchow-Møller, Nikolaj (København, 2008)[More information][Less information]
Abstract: In this paper, we propose and test a novel effect of immigration on the wages of native workers. Existing studies have focused on the wage effects that result from changes in the aggregate labour supply in a competitive labour market. We argue that if labour markets are not fully competitive, the use of immigrants may also affect wage formation at the most disaggregate level – the workplace. Using linked employeremployee data, we find that an increased use of workers from less developed countries has a significantly negative effect on the wages of native workers at the workplace – also when controlling for potential endogeneity of the immigrant share using both fixed effects and IV. Additional evidence suggests that this effect works at least partly through a general effect on the wage norm in the firm of hiring employees with poor outside options (the immigrants). URI: http://hdl.handle.net/10398/7665 Files in this item: 1
wp7-2008.pdf (243.0Kb) -
Boom, Anette (København, 2008)[More information][Less information]
Abstract: This paper uses an adapted version of the linear tracing procedure, suggested by Harsanyi and Selten (1988), in order to discriminate between two types of multiple Nash equilibria. Equilibria of the same type are pay-off equivalent in the analysed multiple-unit unit price auction where two sellers compete in order to serve a fixed demand. The equilibria where the firm with the larger capacity bids the maximum price, serves the residual demand and is undercut by the low capacity firm that sells its total capacity risk dominate the equilibria where the roles are interchanged. URI: http://hdl.handle.net/10398/7664 Files in this item: 1
wp2-2008.pdf (302.0Kb) -
Schneider, Cedric (København, 2008)[More information][Less information]
Abstract: This paper analyzes the effects of mixed public-private R&D incentives and empirically tests whether patents that were publicly sponsored are more important than non-subsidized ones. Blending patents and public subsidies will allow the funding agency to subsidize inventions that would otherwise not elicit investment because the private incentive will not fully cover the cost of the invention. Thus, the policy maker will only subsidize inventions that have a high social value. The empirical analysis shows that subsidized inventions result in more important patents, as measured by the number of forward citations. URI: http://hdl.handle.net/10398/7662 Files in this item: 1
wp6-2008.pdf (150.8Kb) -
Blomgren-Hansen, Niels (København, 2008)[More information][Less information]
Abstract: In most countries labor is organzed in cooperating skill-speci c unions rather than in industrial unions or separately bargaining skill-speci c unions. Within an extremely simple model of a small open economy facing imperfect competition we show that this way of organizing labor can be explained as the outcome of rational (optimizing) behavior on the part of the unions and the employers. Organizing labor in local industrial cartels (regardless of skill) or a single economy wide cartel results in a real wage level that is inappropriately low both from the point of view of labor and the society as a whole unless labor has close to monopoly power in the wage setting process. Organizing labor in local or economy wide skill-speci c unions may result in a wage level that is too high. In addition, a labor market organized in non-cooperating unions is likely to be unstable. This dilemma calls for a compromise: A cartel of cooperating, independent skill-speci c unions. The degree and the form of the cooperation depend inter alia on the bargaining power of the employer, the number of skills and competing rms and the rigidity with which the unions enforce lines of demarcations. URI: http://hdl.handle.net/10398/7599 Files in this item: 1
wp3-2008.pdf (467.4Kb) -
Boom, Anette (København, 2007)[More information][Less information]
Abstract: We compare investments in generating capacities of an integrated monopolist with the aggregate investments of two vertically integrated competing firms. The firms invest in their capacity and fix the retail price while electricity demand is uncertain. The wholesale price is determined in a unit price auction where the firms know the level of demand when they bid their capacities. Total capacities can be larger or smaller with a duopoly than with a monopoly. If the two firms select the Pareto dominant equilibrium, then the retail price is always higher and the social welfare lower in the duopoly case. URI: http://hdl.handle.net/10398/7572 Files in this item: 1
wp3-2007.pdf (552.5Kb) -
An analysis of the proposed Dutch yardstick mechanismBogetoft, Peter; Mikkers, Misja C.; Halbersma, Rein; Agrell, Per J. (København, 2007)[More information][Less information]
Abstract: Health care provision is undergoing major reforms in Europe as a reaction to rapidly increasing expenditure and lowered political acceptance to commit public finance to cover the deficits. The Dutch government will decide in 2007 if the current budget system will be replaced by a more competitive mechanism, based on the yardstick regulation principle by Shleifer (1985). One of the proposed systems for the reform can be compared to a revenue-cap implementation of a multi-product cost-yardstick mechanism. The redistribution of the sector’s relevant cost is made in proportion to the individual hospitals share of total weighted output. No regulation is made of the multi-lateral contractual relations between users, insurers and hospitals. The scaling weights are updated periodically for new services and as a function of observed excess demand (waiting lists). The mechanism is shown to provide cost-reducing (effort-inducing) incentives for profit-maximizing rational agents in a single-period bargaining game. The game also shows that the regulation acts as a countervailing power for the insurers to reinforce bargaining power. The local distortion of the output profile induced by the regulation is a function of demand elasticity and cost function convexity. In case the revenue target is not binding, no welfare loss is incurred. The regime also provides incentives for cost-reducing investments in the short and the long run. These incentives manifest themselves in local reallocations of output to more efficient producers. The analysis shows that care should be taken in the updating of the weights as to provide incentives for service innovation, as well as to guarantee convergence of the price system. Although this requires econometric analyses, the alternative with a cost-based yardstick is considered superior to a revenue-based ditto for this application. URI: http://hdl.handle.net/10398/7661 Files in this item: 1
wp1-2007-yardstick.pdf (1.159Mb) -
Andersen, Steffen; Harrison, Glenn W.; Lau, Morten Igel; Rutström, Elisabeth E. (København, 2007)[More information][Less information]
Abstract: We make the case that psychologists should make wider use of structural econometric methods. These methods involve the development of maximum likelihood estimates of models, where the likelihood function is tailored to the structural model. In recent years these models have been developed for a wide range of behavioral models of choice under uncertainty. We explain the components of this methodology, and illustrate with applications to major models from psychology. The goal is to build, and traverse, a constructive bridge between the modeling insights of psychology and the statistical tools of economists. URI: http://hdl.handle.net/10398/7571 Files in this item: 1
artikel 16.pdf (1.442Mb) -
Tvede, Mich; Olai Hansen, Bodil (København, 2007)[More information][Less information]
Abstract: In the present paper a model of competition between sports clubs in a sports league is presented. Clubs are endowed with initial players but at a cost clubs are able to sell their initial players and buy new players. The results are that: if the quality of players is one-dimensional, then equilibria in pure strategies exist, and; if the quality of players is multi-dimensional, then there need not exist equilibria in pure strategies, but equilibria in mixed strategies exist. Equilibria in mixed strategies resemblance signings just before the transfer window closes in european soccer. competition between sports clubs, dimension of quality of players, equilibrium in pure strategies, equilibrium in mixed strategies. URI: http://hdl.handle.net/10398/7555 Files in this item: 1
wp10-2007.pdf (380.2Kb) -
The Role of Competition and of the Initial Firm Efficiency. Evidence from the Czech Republicla Cour, Lisbeth; Ionascu, Delia (København, 2007)[More information][Less information]
Abstract: It has been argued that the effect of competition on a company’s incentive to innovate and to reduce managerial slack depends on the initial level of efficiency. For example, while firms close to the technology frontier invest more in innovation if competition increases, backward firms reduce innovation. On a panel data of Czech companies, for the years 1993-2005, we empirically assess the impact of increased competition on firm productivity and the importance of the initial firm efficiency level. We depart from the empirical literature on emerging markets by taking into account both domestic and foreign competition. In line with the theory, our results show that there is an inverted U-relationship between domestic competition and firm productivity. Our results also confirm that trade liberalization has a positive impact on productivity. However, the effect is less significant if domestic competition is not taken into account. In addition, we find that both domestic and foreign competition have an effect on productivity in companies close to the technology frontier but not in backward companies. URI: http://hdl.handle.net/10398/7653 Files in this item: 1
wp9-2007.pdf (2.398Mb) -
Kongsted, Hans Christian; Meisner Nielsen, Kasper; Bennedsen, Morten (København, 2007)[More information][Less information]
Abstract: Boards are endogenously chosen institutions determined by observable and unobservable firm characteristics. Empirical studies of large publicly traded firms have successfully controlled for observable determinants of board size and shown a robust negative relationship between board size and firm performance. The evidence on smaller closely held firms is less clear; we argue that existing work has been incomplete in analyzing the causal relationship due to weak identification strategies. Using a rich data set of almost 6,000 small and medium-sized closely held corporations we provide a causal analysis of board size effects on firm performance using a novel instrument given by the number of children of the founders of the firms. First, we find no empirical evidence of adverse board size effects when the size of the board lies in the typical range for closely held corporations of three to six directors. Second, we find a significantly negative board size effect for the minority of closely held firms that are characterized by having comparatively large boards of seven or more members and non-complex operations. URI: http://hdl.handle.net/10398/7600 Files in this item: 1
wp14-2007.pdf (428.8Kb) -
Keiding, Hans; Hansen, Bodil O. (København, 2007)[More information][Less information]
Abstract: In the paper, we use the theory of mechanism design to exhibit the cost of efficient provision of healthcare, defined as the uniquely defined sum of individual side payments which would eliminate moral hazard. It is argued that this cost may be used to assess the costs arising from use of the treatment in cases where it is not appropriate from a strictly medical point of view. An example is given to indicate how this assessment might enter into practical cost-effectiveness analysis. URI: http://hdl.handle.net/10398/7626 Files in this item: 1
wp.05.07.pdf (264.4Kb) -
Waisman, Gisela; Larsen, Birthe (København, 2007)[More information][Less information]
Abstract: The eects of discrimination of immigrants on the labour market are studied within a search and wage-bargaining setting including a risk of losing skills during the experience of unemployment. The negative eects of discrimination in the form of higher unemployment and lower wages spread to all workers, immigrants and natives, in all sectors of the economy. The eect is stronger for immigrants, but natives suer as well. An increase in the share of immigrants in the economy exacerbates the problem of discrimination. URI: http://hdl.handle.net/10398/7634 Files in this item: 1
wp12-2007.pdf (768.8Kb)