Tobias Cagala, Ulrich Glogowsky, Veronika Grimm, Johannes Rincke
This paper studies public goods provision in an experiment in which contributors repeatedly interact with rent-extracting administrators. Our main result is that the presence of an administrator reduces contributions but only because rent extraction lowers the MPCR. Analysing the dynamic interactions between the contributors and the administrator, we demonstrate that rent-extraction and cooperation shocks trigger short-run adjustments in the agents’ behaviour. However, shocks do not have permanent effects. This explains the long-run resilience of cooperation to rent extraction. We also show that cooperative attitudes and trust are traits that explain permanent differences in the short-run volatility of public goods provision.
{"title":"Public Goods Provision with Rent-Extracting Administrators","authors":"Tobias Cagala, Ulrich Glogowsky, Veronika Grimm, Johannes Rincke","doi":"10.2139/ssrn.3111920","DOIUrl":"https://doi.org/10.2139/ssrn.3111920","url":null,"abstract":"This paper studies public goods provision in an experiment in which contributors repeatedly interact with rent-extracting administrators. Our main result is that the presence of an administrator reduces contributions but only because rent extraction lowers the MPCR. Analysing the dynamic interactions between the contributors and the administrator, we demonstrate that rent-extraction and cooperation shocks trigger short-run adjustments in the agents’ behaviour. However, shocks do not have permanent effects. This explains the long-run resilience of cooperation to rent extraction. We also show that cooperative attitudes and trust are traits that explain permanent differences in the short-run volatility of public goods provision.","PeriodicalId":113748,"journal":{"name":"Public Economics: Publicly Provided Goods eJournal","volume":"7 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2017-11-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"115302621","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In the United States, about 28 lives are lost daily in motor vehicle accidents that involve an alcohol-impaired driver. While most states have enacted traffic-safety laws to address this phenomenon, little consensus exists on the causal impact of these laws in reducing drunk-driving fatalities. This paper exploits quasi-random variation in state-level laws to estimate the causal effect of select traffic laws on the frequency of fatal accidents involving a drunk driver. This is identified from the discontinuities in policy treatments among homogeneous contiguous-counties that are separated by a shared state border. This approach addresses the econometric issues created due to spatial heterogeneity that may have biased previous studies. We present convincing evidence that the estimates in the literature are prone to an upward bias. Further, if the effective laws were adopted as a federal mandate in 1986, they could have prevented about 24% of drunk-driving motor-vehicle fatalities.
{"title":"New Evidence on the Causal Impact of Traffic Safety Laws on Drunk Driving Fatalities","authors":"N. Wright, La-troy Lee","doi":"10.2139/ssrn.3069811","DOIUrl":"https://doi.org/10.2139/ssrn.3069811","url":null,"abstract":"In the United States, about 28 lives are lost daily in motor vehicle accidents that involve an alcohol-impaired driver. While most states have enacted traffic-safety laws to address this phenomenon, little consensus exists on the causal impact of these laws in reducing drunk-driving fatalities. This paper exploits quasi-random variation in state-level laws to estimate the causal effect of select traffic laws on the frequency of fatal accidents involving a drunk driver. This is identified from the discontinuities in policy treatments among homogeneous contiguous-counties that are separated by a shared state border. This approach addresses the econometric issues created due to spatial heterogeneity that may have biased previous studies. We present convincing evidence that the estimates in the literature are prone to an upward bias. Further, if the effective laws were adopted as a federal mandate in 1986, they could have prevented about 24% of drunk-driving motor-vehicle fatalities.","PeriodicalId":113748,"journal":{"name":"Public Economics: Publicly Provided Goods eJournal","volume":"286 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2017-11-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"116453504","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Public goods are dealt with in two literatures that neglect each other. Mechanism design advises a social planner that expects individuals to misrepresent their valuations. Experiments study the provision of the good when preferences might be non-standard. We introduce the problem of the mechanism design literature into a public good experiment. Valuations for the good are heterogeneous. To each group we add a participant with power to impose a contribution scheme. We study four settings: the authority has no personal interest and (1) valuations are common knowledge or (2) active participants may misrepresent their types; the authority has a personal interest (3) and must decide before learning her own valuation or (4) knows her own valuation. Disinterested social planners predominantly choose a payment rule that gives every group member the same ?nal payoff, even if misrepresentation is possible. Authorities are overly optimistic about truth telling. Interested social planners abuse their power, except if the opportunity cost of a more balanced rule is small.
{"title":"Experimental Social Planners: Good Natured, But Overly Optimistic","authors":"C. Engel, Svenja Hippel","doi":"10.2139/ssrn.3074350","DOIUrl":"https://doi.org/10.2139/ssrn.3074350","url":null,"abstract":"Public goods are dealt with in two literatures that neglect each other. Mechanism design advises a social planner that expects individuals to misrepresent their valuations. Experiments study the provision of the good when preferences might be non-standard. We introduce the problem of the mechanism design literature into a public good experiment. Valuations for the good are heterogeneous. To each group we add a participant with power to impose a contribution scheme. We study four settings: the authority has no personal interest and (1) valuations are common knowledge or (2) active participants may misrepresent their types; the authority has a personal interest (3) and must decide before learning her own valuation or (4) knows her own valuation. Disinterested social planners predominantly choose a payment rule that gives every group member the same ?nal payoff, even if misrepresentation is possible. Authorities are overly optimistic about truth telling. Interested social planners abuse their power, except if the opportunity cost of a more balanced rule is small.","PeriodicalId":113748,"journal":{"name":"Public Economics: Publicly Provided Goods eJournal","volume":"310 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2017-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"126026913","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Belligerents could in principle avoid the ex post costs of conflict by revealing all private information about their violent capabilities and then calculating odds of success ex ante. Incentives to misrepresent private information for strategic gain, however, can cause miscalculations that lead to war. I argue some private information can lead to miscalculation not because it is purposefully misrepresented for strategic gain but because it is too decentralized to be easily revealed. The decentralized private information that produces improvised weapons requires a process of discovering suitable local resources and battlefield testing driven by local military entrepreneurs which frustrates information revelation. Decentralized private information used to improvise new weapons and capabilities like those which emerged in Afghanistan and Iraq show that it can take many years, decades, or even an indeterminate amount of time for fighting to reveal relevant information about violent capabilities.
{"title":"The Enemy Votes: Weapons Improvisation and Bargaining Failure","authors":"G. Wood","doi":"10.2139/ssrn.3155979","DOIUrl":"https://doi.org/10.2139/ssrn.3155979","url":null,"abstract":"Belligerents could in principle avoid the ex post costs of conflict by revealing all private information about their violent capabilities and then calculating odds of success ex ante. Incentives to misrepresent private information for strategic gain, however, can cause miscalculations that lead to war. I argue some private information can lead to miscalculation not because it is purposefully misrepresented for strategic gain but because it is too decentralized to be easily revealed. The decentralized private information that produces improvised weapons requires a process of discovering suitable local resources and battlefield testing driven by local military entrepreneurs which frustrates information revelation. Decentralized private information used to improvise new weapons and capabilities like those which emerged in Afghanistan and Iraq show that it can take many years, decades, or even an indeterminate amount of time for fighting to reveal relevant information about violent capabilities.","PeriodicalId":113748,"journal":{"name":"Public Economics: Publicly Provided Goods eJournal","volume":"50 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2017-10-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"120993860","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Giuseppe Albanese, Marika Cioffi, Pietro Tommasino
We explore how electoral rules and cultural traits (namely, the degree of civicness) interact in shaping elected officials' behaviour. We use a dataset that includes the expenditure proposals sponsored by members of the Italian Senate from 1993 to 2012 (as well as other individual and district characteristics) and exploit the 2005 electoral reform that transformed a mainly majoritarian system into a proportional one. As a first step, we can confirm previous empirical findings: legislators elected in first-past-the-post districts show a higher propensity to sponsor locally oriented bills and to put effort into legislative activity than those elected with a closed-list proportional system. More importantly, however, we find that the effects of the change in the electoral rules are muted in areas with a high degree of civicness. We also propose a simple probabilistic voting model with altruistic preferences that is able to rationalize this finding.
{"title":"Legislators' Behaviour and Electoral Rules: Evidence from an Italian Reform","authors":"Giuseppe Albanese, Marika Cioffi, Pietro Tommasino","doi":"10.2139/ssrn.3051102","DOIUrl":"https://doi.org/10.2139/ssrn.3051102","url":null,"abstract":"We explore how electoral rules and cultural traits (namely, the degree of civicness) interact in shaping elected officials' behaviour. We use a dataset that includes the expenditure proposals sponsored by members of the Italian Senate from 1993 to 2012 (as well as other individual and district characteristics) and exploit the 2005 electoral reform that transformed a mainly majoritarian system into a proportional one. As a first step, we can confirm previous empirical findings: legislators elected in first-past-the-post districts show a higher propensity to sponsor locally oriented bills and to put effort into legislative activity than those elected with a closed-list proportional system. More importantly, however, we find that the effects of the change in the electoral rules are muted in areas with a high degree of civicness. We also propose a simple probabilistic voting model with altruistic preferences that is able to rationalize this finding.","PeriodicalId":113748,"journal":{"name":"Public Economics: Publicly Provided Goods eJournal","volume":"18 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2017-09-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"130617260","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Recent empirical work has suggested that there is an important distinction between short-run versus long-run scheduling behaviour of commuters, reflected in differences in values of time and schedule delays, as well as in preferred arrival moments, for the short-run versus the long-run problem. Peer et al. (2015) for example find that the average value of time when consumers form their routines in the long-run problem may exceed by a factor 6 the short-run value that governs departure time choice given these routines. For values of schedule delay, in contrast, the short-run value exceeds the long-run value, by a factor 2. And, when forming routines, consumers in fact choose a most preferred arrival time that may deviate from the value they would choose in absence of congestion because a change in routines may mean that shorter delays will be encountered. This paper investigates whether this distinction between short-run and long-run scheduling decisions affect optimal pricing of a congestible facility. Using a stochastic dynamic model of flow congestion for describing short-run equilibria and integrating it with a dynamic model of routine formation, it is found that consistent application of short-run first-best optimal congestion pricing does not optimally decentralize the optimal formation of routines in the long-run problem. A separate instrument, next to road pricing, is therefore needed to optimize routine formation.
{"title":"Optimal Congestion Pricing with Diverging Long-Run and Short-Run Scheduling Preferences","authors":"E. Verhoef","doi":"10.2139/ssrn.3041237","DOIUrl":"https://doi.org/10.2139/ssrn.3041237","url":null,"abstract":"Recent empirical work has suggested that there is an important distinction between short-run versus long-run scheduling behaviour of commuters, reflected in differences in values of time and schedule delays, as well as in preferred arrival moments, for the short-run versus the long-run problem. Peer et al. (2015) for example find that the average value of time when consumers form their routines in the long-run problem may exceed by a factor 6 the short-run value that governs departure time choice given these routines. For values of schedule delay, in contrast, the short-run value exceeds the long-run value, by a factor 2. And, when forming routines, consumers in fact choose a most preferred arrival time that may deviate from the value they would choose in absence of congestion because a change in routines may mean that shorter delays will be encountered. This paper investigates whether this distinction between short-run and long-run scheduling decisions affect optimal pricing of a congestible facility. Using a stochastic dynamic model of flow congestion for describing short-run equilibria and integrating it with a dynamic model of routine formation, it is found that consistent application of short-run first-best optimal congestion pricing does not optimally decentralize the optimal formation of routines in the long-run problem. A separate instrument, next to road pricing, is therefore needed to optimize routine formation.","PeriodicalId":113748,"journal":{"name":"Public Economics: Publicly Provided Goods eJournal","volume":"10 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2017-08-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"129127058","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This article explores the feasibility of utilizing pure public good characteristics in a business peer-to-peer network by designing and developing a prototype for a centralized service that implements the Clarke-Groves mechanism for sharing operational costs.
{"title":"Sharing Operational Costs in Business Peer-to-Peer Systems with a Centralized Clarke-Groves Service","authors":"O. Drozd, Benjamin Fabian","doi":"10.2139/ssrn.3005370","DOIUrl":"https://doi.org/10.2139/ssrn.3005370","url":null,"abstract":"This article explores the feasibility of utilizing pure public good characteristics in a business peer-to-peer network by designing and developing a prototype for a centralized service that implements the Clarke-Groves mechanism for sharing operational costs.","PeriodicalId":113748,"journal":{"name":"Public Economics: Publicly Provided Goods eJournal","volume":"101 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2017-07-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"129360139","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In the first half of the twentieth century, economists associated with the Austrian school argued information necessary to effective economic calculation requires the use of market prices and cannot be centralized in a way that would make central planning a viable alternative. It followed from this conclusion that socialism, in any meaningful sense, is impossible. But new technology leads some to question that claim. Voices from Lange in the 1970s to those more contemporary hold that if only technology could become advanced enough, central planning would work. Given the large technological leaps of the past few decades, the socialist claim has never seemed more plausible. The rise of the Internet of things, ever-faster supercomputers, and gigabit Internet access provides a glimpse into the now radically connected world in which precise information about minute details of goods is transmitted around the world at near the speed of light. Some on the socialist side are now claiming that the very information that the Austrians told them had to be decentralized and conveyed by market prices can now be assimilated by computers. This paper analyzes whether current, or any conceivable, proposals that the radically connected modern age could solve the knowledge problem and make central planning a viable method of economic organization. It finds that claims that technology can solve the problems with central planning simply miss the point of the Austrian critique. Central planning, using the Internet or any other means, still cannot dispense with the competitive market process without which the discovery of the information necessary for economic calculation is impossible.
{"title":"Economic Flaws in Computerized Socialism","authors":"Joseph Kane","doi":"10.2139/ssrn.3139881","DOIUrl":"https://doi.org/10.2139/ssrn.3139881","url":null,"abstract":"In the first half of the twentieth century, economists associated with the Austrian school argued information necessary to effective economic calculation requires the use of market prices and cannot be centralized in a way that would make central planning a viable alternative. It followed from this conclusion that socialism, in any meaningful sense, is impossible. But new technology leads some to question that claim. Voices from Lange in the 1970s to those more contemporary hold that if only technology could become advanced enough, central planning would work. \u0000Given the large technological leaps of the past few decades, the socialist claim has never seemed more plausible. The rise of the Internet of things, ever-faster supercomputers, and gigabit Internet access provides a glimpse into the now radically connected world in which precise information about minute details of goods is transmitted around the world at near the speed of light. Some on the socialist side are now claiming that the very information that the Austrians told them had to be decentralized and conveyed by market prices can now be assimilated by computers. This paper analyzes whether current, or any conceivable, proposals that the radically connected modern age could solve the knowledge problem and make central planning a viable method of economic organization. It finds that claims that technology can solve the problems with central planning simply miss the point of the Austrian critique. Central planning, using the Internet or any other means, still cannot dispense with the competitive market process without which the discovery of the information necessary for economic calculation is impossible.","PeriodicalId":113748,"journal":{"name":"Public Economics: Publicly Provided Goods eJournal","volume":"233 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2017-07-07","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127376566","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The Japanese higher education sector has seen increases in tuition with stagnant household incomes in a society where family support for university students has been the norm. Student loans from government have grown rapidly to sustain the gradual increase in university enrolments. These time-based loans have created financial hardship for increasing numbers of loan recipients and their families through high interest rates for late repayments. There is some evidence that prospective students from low-income households are forgoing a university education to avoid student loan debt. The Japanese government has introduced some measures attempting to overcome these problems. These measures include grants for students and an income-contingent loan scheme that is available to 12 per cent of loan applicants. The income-contingent loan scheme, introduced in 2017, is a positive development, but it requires further reform and broader coverage if it is to adequately address the challenges facing higher education financing in Japan and alleviate repayment and default problems for loan recipients.
{"title":"Financing Higher Education in Japan and the Need for Reform","authors":"Masayuki Kobayashi, S. Armstrong","doi":"10.2139/SSRN.3056850","DOIUrl":"https://doi.org/10.2139/SSRN.3056850","url":null,"abstract":"The Japanese higher education sector has seen increases in tuition with stagnant household incomes in a society where family support for university students has been the norm. Student loans from government have grown rapidly to sustain the gradual increase in university enrolments. These time-based loans have created financial hardship for increasing numbers of loan recipients and their families through high interest rates for late repayments. There is some evidence that prospective students from low-income households are forgoing a university education to avoid student loan debt. The Japanese government has introduced some measures attempting to overcome these problems. These measures include grants for students and an income-contingent loan scheme that is available to 12 per cent of loan applicants. The income-contingent loan scheme, introduced in 2017, is a positive development, but it requires further reform and broader coverage if it is to adequately address the challenges facing higher education financing in Japan and alleviate repayment and default problems for loan recipients.","PeriodicalId":113748,"journal":{"name":"Public Economics: Publicly Provided Goods eJournal","volume":"119 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2017-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"123257705","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Second-best theory established that a policy's effect on community welfare (or any other objective function) varies with its specific context. In contrast, Ng argues that fulfilling first-best conditions piecemeal is optimal whenever the policy-maker's information is insufficient to determine the direction of the change in the variable under consideration that will raise welfare, irrespective of the conditions in that market. It is argued in the present paper: (i) that Ng's own assumptions imply not that first-best conditions should be established under these circumstances, but that the status quo should be maintained; (ii) that when Ng's key assumption is altered to be empirically relevant, all policy decisions become fully context-specific; and (iii) that Woo's argument for accepting Ng's conclusions in spite of point (ii) is incorrect. The conclusion discusses valid uses of piecemeal welfare theory in spite of second best.
{"title":"Generality versus Context Specificity: First, Second and Third Best in Theory and Policy","authors":"R. Lipsey","doi":"10.1111/1468-0106.12220","DOIUrl":"https://doi.org/10.1111/1468-0106.12220","url":null,"abstract":"Second-best theory established that a policy's effect on community welfare (or any other objective function) varies with its specific context. In contrast, Ng argues that fulfilling first-best conditions piecemeal is optimal whenever the policy-maker's information is insufficient to determine the direction of the change in the variable under consideration that will raise welfare, irrespective of the conditions in that market. It is argued in the present paper: (i) that Ng's own assumptions imply not that first-best conditions should be established under these circumstances, but that the status quo should be maintained; (ii) that when Ng's key assumption is altered to be empirically relevant, all policy decisions become fully context-specific; and (iii) that Woo's argument for accepting Ng's conclusions in spite of point (ii) is incorrect. The conclusion discusses valid uses of piecemeal welfare theory in spite of second best.","PeriodicalId":113748,"journal":{"name":"Public Economics: Publicly Provided Goods eJournal","volume":"9 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2017-05-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"126400085","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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