This paper presents a novel technique to measure motivation for working on a task using deviations from the money-maximising benchmark in a real-effort experiment. Although we find that average output increases in response to team incentives and observation, we also find that workers with high intrinsic motivation do not respond to team incentives. The reason is that highly motivated workers already work hard, and team incentives are not strong enough to overcome the high cost of additional effort.
{"title":"Work motivation and teams","authors":"Simone Haeckl , Rupert Sausgruber , Jean-Robert Tyran","doi":"10.1016/j.econlet.2024.112020","DOIUrl":"10.1016/j.econlet.2024.112020","url":null,"abstract":"<div><div>This paper presents a novel technique to measure motivation for working on a task using deviations from the money-maximising benchmark in a real-effort experiment. Although we find that average output increases in response to team incentives and observation, we also find that workers with high intrinsic motivation do not respond to team incentives. The reason is that highly motivated workers already work hard, and team incentives are not strong enough to overcome the high cost of additional effort.</div></div>","PeriodicalId":11468,"journal":{"name":"Economics Letters","volume":"244 ","pages":"Article 112020"},"PeriodicalIF":2.1,"publicationDate":"2024-10-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142531022","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-10-11DOI: 10.1016/j.econlet.2024.112021
Rong Tang, Shi Pu, Shou Chen
This paper incorporates liquidity constraints into a discrete three-stage model to investigate the consumption-savings decisions of present-biased agents. We derive the analytical solution for consumption choices of sophisticated and naive agents who hold illiquid assets that are untradable until the last period. Then, we investigate how the proportion of illiquid assets, liquidity premium and agents’ preferences affect the consumption of both agents. Our findings reveal that naive agents not always consume more than their sophisticated counterparts. Moreover, we theoretically find that illiquid assets may improve the welfare of agents and have a pre-commitment effect on both agents.
{"title":"Present-biased preferences and the effect of illiquid assets","authors":"Rong Tang, Shi Pu, Shou Chen","doi":"10.1016/j.econlet.2024.112021","DOIUrl":"10.1016/j.econlet.2024.112021","url":null,"abstract":"<div><div>This paper incorporates liquidity constraints into a discrete three-stage model to investigate the consumption-savings decisions of present-biased agents. We derive the analytical solution for consumption choices of sophisticated and naive agents who hold illiquid assets that are untradable until the last period. Then, we investigate how the proportion of illiquid assets, liquidity premium and agents’ preferences affect the consumption of both agents. Our findings reveal that naive agents not always consume more than their sophisticated counterparts. Moreover, we theoretically find that illiquid assets may improve the welfare of agents and have a pre-commitment effect on both agents.</div></div>","PeriodicalId":11468,"journal":{"name":"Economics Letters","volume":"244 ","pages":"Article 112021"},"PeriodicalIF":2.1,"publicationDate":"2024-10-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142531024","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-10-10DOI: 10.1016/j.econlet.2024.112013
Kwangmin Jung , Seyoung Park
We examine the optimal reinsurance and asset allocation strategies for an insurer who minimizes the ruin probability and faces a systemic surplus shock. Analytically tractable solutions are obtained when this shock occurs at an uncertain time. We then demonstrate that the systemic surplus shock results in a nonstandard form of market incompleteness, which alters both qualitative and quantitative features of existing strategies without the surplus shock. In particular, a specific form of the marginal value for the insurer’s minimized ruin probability plays a key role in the characterization of optimal policies with the systemic surplus shock.
{"title":"Optimal reinsurance with a systemic surplus shock","authors":"Kwangmin Jung , Seyoung Park","doi":"10.1016/j.econlet.2024.112013","DOIUrl":"10.1016/j.econlet.2024.112013","url":null,"abstract":"<div><div>We examine the optimal reinsurance and asset allocation strategies for an insurer who minimizes the ruin probability and faces a systemic surplus shock. Analytically tractable solutions are obtained when this shock occurs at an uncertain time. We then demonstrate that the systemic surplus shock results in a nonstandard form of market incompleteness, which alters both qualitative and quantitative features of existing strategies without the surplus shock. In particular, a specific form of the marginal value for the insurer’s minimized ruin probability plays a key role in the characterization of optimal policies with the systemic surplus shock.</div></div>","PeriodicalId":11468,"journal":{"name":"Economics Letters","volume":"244 ","pages":"Article 112013"},"PeriodicalIF":2.1,"publicationDate":"2024-10-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142531021","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-10-10DOI: 10.1016/j.econlet.2024.112014
Xue Lei, Xueguo Xu
This study investigates the economic impact of typhoon disasters on corporate innovation activities, a critical driver of economic growth and resilience. Utilizing a comprehensive dataset of Chinese public companies from 2010 to 2022 and employing a wind field model to construct a city-level typhoon destruction index, we apply difference-in-differences and instrumental variable methods to analyze the effects on corporate innovation. Our findings reveal that typhoon disasters significantly reduce both patent filings and R&D investment intensity, particularly in coastal areas and technology-intensive industries. The adverse effects are transmitted through financial constraints, human capital loss, and infrastructure damage. This research contributes to understanding the microeconomic implications of extreme weather events on innovation-driven economic growth, offering insights for disaster resilience policies in vulnerable regions.
{"title":"Storm clouds over innovation: Typhoon shocks and corporate R&D activities","authors":"Xue Lei, Xueguo Xu","doi":"10.1016/j.econlet.2024.112014","DOIUrl":"10.1016/j.econlet.2024.112014","url":null,"abstract":"<div><div>This study investigates the economic impact of typhoon disasters on corporate innovation activities, a critical driver of economic growth and resilience. Utilizing a comprehensive dataset of Chinese public companies from 2010 to 2022 and employing a wind field model to construct a city-level typhoon destruction index, we apply difference-in-differences and instrumental variable methods to analyze the effects on corporate innovation. Our findings reveal that typhoon disasters significantly reduce both patent filings and R&D investment intensity, particularly in coastal areas and technology-intensive industries. The adverse effects are transmitted through financial constraints, human capital loss, and infrastructure damage. This research contributes to understanding the microeconomic implications of extreme weather events on innovation-driven economic growth, offering insights for disaster resilience policies in vulnerable regions.</div></div>","PeriodicalId":11468,"journal":{"name":"Economics Letters","volume":"244 ","pages":"Article 112014"},"PeriodicalIF":2.1,"publicationDate":"2024-10-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142438375","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-10-10DOI: 10.1016/j.econlet.2024.112011
Joseph E. Harrington Jr.
Consider a data analytics company supplying a pricing algorithm that adjusts price to a changing demand state. For this setting, I show the pricing algorithm is designed and priced so that higher demand variability results in more firms adopting the pricing algorithm. Furthermore, there is a critical threshold for demand variability whereby there is complete or near-complete adoption of the pricing algorithm. While widespread adoption of a third party’s pricing algorithm among competitors has raised concerns of collusive conduct, it could instead reflect a strong efficiency delivered by a third party.
{"title":"The effect of demand variability on the adoption and design of a third party’s pricing algorithm","authors":"Joseph E. Harrington Jr.","doi":"10.1016/j.econlet.2024.112011","DOIUrl":"10.1016/j.econlet.2024.112011","url":null,"abstract":"<div><div>Consider a data analytics company supplying a pricing algorithm that adjusts price to a changing demand state. For this setting, I show the pricing algorithm is designed and priced so that higher demand variability results in more firms adopting the pricing algorithm. Furthermore, there is a critical threshold for demand variability whereby there is complete or near-complete adoption of the pricing algorithm. While widespread adoption of a third party’s pricing algorithm among competitors has raised concerns of collusive conduct, it could instead reflect a strong efficiency delivered by a third party.</div></div>","PeriodicalId":11468,"journal":{"name":"Economics Letters","volume":"244 ","pages":"Article 112011"},"PeriodicalIF":2.1,"publicationDate":"2024-10-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142438374","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-10-09DOI: 10.1016/j.econlet.2024.112018
Naohito Abe , D.S. Prasada Rao
We show that the normalization conditions for a CES utility function with time-varying preferences (Redding and Weinstein, 2020) must be of weighted-geometric mean form to ensure commensurability of price indexes, and numerically illustrate failure of additive normalization to satisfy commensurability.
我们表明，具有时变偏好的 CES 效用函数（Redding 和 Weinstein，2020 年）的归一化条件必须是加权几何平均形式，才能确保价格指数的可比性，并用数字说明了加法归一化无法满足可比性。
{"title":"Commensurability and Characterization of Normalization Conditions for Cost-of-Living Comparisons under Time-Varying CES Preferences","authors":"Naohito Abe , D.S. Prasada Rao","doi":"10.1016/j.econlet.2024.112018","DOIUrl":"10.1016/j.econlet.2024.112018","url":null,"abstract":"<div><div>We show that the normalization conditions for a CES utility function with time-varying preferences (Redding and Weinstein, 2020) must be of weighted-geometric mean form to ensure commensurability of price indexes, and numerically illustrate failure of additive normalization to satisfy commensurability.</div></div>","PeriodicalId":11468,"journal":{"name":"Economics Letters","volume":"244 ","pages":"Article 112018"},"PeriodicalIF":2.1,"publicationDate":"2024-10-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142416149","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-10-09DOI: 10.1016/j.econlet.2024.112000
Konrad Juel Thide , Felix Johannes Pettersson Bøgh , Birthe Larsen
This paper examines the impact of relative age on Attention Deficit Hyperactivity Disorder (ADHD) prescriptions among school-aged children. Using a regression discontinuity design, we leverage the quasi-experimental variation in school starting age. We use administrative data for all children aged 6–16 from 2010 to 2019 in Denmark. We find a significant decrease in ADHD prescription rates for girls who are relatively old compared to their class mates. We do not find any significant results for boys. We further test the social gradient in relative age on ADHD prescriptions and find that the effect is entirely driven by girls from low income families.
{"title":"Gender and socioeconomic dimensions of relative age effects on ADHD prescriptions: Evidence from Denmark","authors":"Konrad Juel Thide , Felix Johannes Pettersson Bøgh , Birthe Larsen","doi":"10.1016/j.econlet.2024.112000","DOIUrl":"10.1016/j.econlet.2024.112000","url":null,"abstract":"<div><div>This paper examines the impact of relative age on Attention Deficit Hyperactivity Disorder (ADHD) prescriptions among school-aged children. Using a regression discontinuity design, we leverage the quasi-experimental variation in school starting age. We use administrative data for all children aged 6–16 from 2010 to 2019 in Denmark. We find a significant decrease in ADHD prescription rates for girls who are relatively old compared to their class mates. We do not find any significant results for boys. We further test the social gradient in relative age on ADHD prescriptions and find that the effect is entirely driven by girls from low income families.</div></div>","PeriodicalId":11468,"journal":{"name":"Economics Letters","volume":"244 ","pages":"Article 112000"},"PeriodicalIF":2.1,"publicationDate":"2024-10-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142432047","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-10-09DOI: 10.1016/j.econlet.2024.112005
Kiet Tuan Duong , Luu Duc Toan Huynh , Anh Dang Bao Phan , Nam T. Vu
We propose a novel explanation for why sanctions on Russian firms might not work as intended: these firms’ ability to diversify sanction risks via partner countries friendly with Russia. Using indirect links with partner firms as a plausibly exogenous proxy for this risk-sharing channel, we show that exposed Russian firms were able to leverage these links to alleviate the negative impacts of sanctions in 2014.
{"title":"From Russia with love: International risk-sharing, sanctions, and firm investments","authors":"Kiet Tuan Duong , Luu Duc Toan Huynh , Anh Dang Bao Phan , Nam T. Vu","doi":"10.1016/j.econlet.2024.112005","DOIUrl":"10.1016/j.econlet.2024.112005","url":null,"abstract":"<div><div>We propose a novel explanation for why sanctions on Russian firms might not work as intended: these firms’ ability to diversify sanction risks via partner countries friendly with Russia. Using indirect links with partner firms as a plausibly exogenous proxy for this risk-sharing channel, we show that exposed Russian firms were able to leverage these links to alleviate the negative impacts of sanctions in 2014.</div></div>","PeriodicalId":11468,"journal":{"name":"Economics Letters","volume":"244 ","pages":"Article 112005"},"PeriodicalIF":2.1,"publicationDate":"2024-10-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142416147","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-10-06DOI: 10.1016/j.econlet.2024.112015
Qiubin Huang, Mingting Kou
Climate policy uncertainty (CPU) has been a topical issue given its widespread impacts, but its effect on corporate investment efficiency is arguable. Based on a sample of Chinese listed firms, we find that higher CPU results in lower investment levels while higher investment sensitivity to investment opportunities. This suggests that CPU improves investment efficiency by pushing firms to reduce investment expenditures and align their investment decisions more in line with investment opportunities. We name this finding as the pushback effect of CPU and find that it is more pronounced for firms with overinvestment or tight financial conditions.
{"title":"Does climate policy uncertainty impair or improve corporate investment efficiency?","authors":"Qiubin Huang, Mingting Kou","doi":"10.1016/j.econlet.2024.112015","DOIUrl":"10.1016/j.econlet.2024.112015","url":null,"abstract":"<div><div>Climate policy uncertainty (CPU) has been a topical issue given its widespread impacts, but its effect on corporate investment efficiency is arguable. Based on a sample of Chinese listed firms, we find that higher CPU results in lower investment levels while higher investment sensitivity to investment opportunities. This suggests that CPU improves investment efficiency by pushing firms to reduce investment expenditures and align their investment decisions more in line with investment opportunities. We name this finding as the <em>pushback effect</em> of CPU and find that it is more pronounced for firms with overinvestment or tight financial conditions.</div></div>","PeriodicalId":11468,"journal":{"name":"Economics Letters","volume":"244 ","pages":"Article 112015"},"PeriodicalIF":2.1,"publicationDate":"2024-10-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142416143","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-10-05DOI: 10.1016/j.econlet.2024.112016
Kyungyeon (Rachel) Koh
In previous studies, the asset growth anomaly is found to be driven by less profitable firms or firms with losses. However, we provide contrary evidence that the risk-adjusted return on the low-minus-high asset growth portfolio is statistically and economically significant among more profitable firms, when controlling for financing constraints. In fact, the asset growth effect is most pronounced in firms with both high profitability and high financing constraints. We present a theoretical framework demonstrating that these results are consistent with q-theory, supporting the hypothesis that the discount-rate channel underlies the asset growth effect. In our analysis, we employ the most up-to-date, machine-learning-based indices developed by Linn and Weagley (2023), to enhance accuracy of measuring financing constraints.
在以往的研究中，资产增长异常被发现是由盈利能力较低的公司或亏损公司驱动的。然而，我们提供了相反的证据，即在控制融资约束的情况下，低减高资产增长组合的风险调整收益在盈利能力较强的企业中具有显著的统计和经济意义。事实上，资产增长效应在高盈利能力和高融资约束的企业中最为明显。我们提出了一个理论框架，证明这些结果符合 q 理论，支持贴现率渠道是资产增长效应基础的假设。在分析中，我们采用了 Linn 和 Weagley（2023 年）开发的基于机器学习的最新指数，以提高衡量融资约束的准确性。
{"title":"New findings on the asset growth anomaly: The joint effect of profitability and financing constraints","authors":"Kyungyeon (Rachel) Koh","doi":"10.1016/j.econlet.2024.112016","DOIUrl":"10.1016/j.econlet.2024.112016","url":null,"abstract":"<div><div>In previous studies, the asset growth anomaly is found to be driven by less profitable firms or firms with losses. However, we provide contrary evidence that the risk-adjusted return on the low-minus-high asset growth portfolio is statistically and economically significant among more profitable firms, when controlling for financing constraints. In fact, the asset growth effect is most pronounced in firms with both high profitability and high financing constraints. We present a theoretical framework demonstrating that these results are consistent with q-theory, supporting the hypothesis that the discount-rate channel underlies the asset growth effect. In our analysis, we employ the most up-to-date, machine-learning-based indices developed by Linn and Weagley (2023), to enhance accuracy of measuring financing constraints.</div></div>","PeriodicalId":11468,"journal":{"name":"Economics Letters","volume":"244 ","pages":"Article 112016"},"PeriodicalIF":2.1,"publicationDate":"2024-10-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142416150","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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