Hard evidence on bias in expert reviews and its consequences for ratings is rare. This holds particularly true for conflicts of interest that are thought to be common in non-blind product reviews but are not readily observable: ad hoc relationships between reviewers and producers. We present a textbook case of a long-running expert product review in the food service industry for which we happen to know the reviewer's conflict of interest: being affiliated to one particular producer. As is typical, only insiders were aware of the possible source of bias in the review. The review resembles other non-blind tests of product quality. We obtained detailed data to map the consequences of the conflict of interest. We find evidence of a sizable bias in the reviewers' ratings. Our findings suggest that reviewers' ad hoc relationships with producers, often dismissed as `coming with the job', can be very harmful.
{"title":"Bias in Expert Product Reviews","authors":"B. Vollaard, J. van Ours","doi":"10.2139/ssrn.3847682","DOIUrl":"https://doi.org/10.2139/ssrn.3847682","url":null,"abstract":"Hard evidence on bias in expert reviews and its consequences for ratings is rare. This holds particularly true for conflicts of interest that are thought to be common in non-blind product reviews but are not readily observable: ad hoc relationships between reviewers and producers. We present a textbook case of a long-running expert product review in the food service industry for which we happen to know the reviewer's conflict of interest: being affiliated to one particular producer. As is typical, only insiders were aware of the possible source of bias in the review. The review resembles other non-blind tests of product quality. We obtained detailed data to map the consequences of the conflict of interest. We find evidence of a sizable bias in the reviewers' ratings. Our findings suggest that reviewers' ad hoc relationships with producers, often dismissed as `coming with the job', can be very harmful.","PeriodicalId":401540,"journal":{"name":"CEPR: Industrial Organization (Topic)","volume":"28 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-05-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"133668619","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}
Christoph K. Becker, Tigran Melkonyan, E. Proto, Andis Sofianos, S. Trautmann
Bayesian Updating is the dominant theory of learning in economics. The theory is silent about how individuals react to events that were previously unforeseeable or unforeseen. Recent theoretical literature has put forth axiomatic frameworks to analyze the unknown. In particular, we test if subjects update their beliefs in a way that is consistent "reverse Bayesian", which ensures that the old information is used correctly after an unforeseen event materializes. We find that participants do not systematically deviate from reverse Bayesianism, but they do not seem to expect an unknown event when this is reasonably unforeseeable, in two pre-registered experiments that entail unforeseen events. We argue that participants deviate less from the reverse Bayesian updating than from the usual Bayesian updating. We provide further evidence on the moderators of belief updating.
{"title":"Reverse Bayesianism: Revising Beliefs in Light of Unforeseen Events","authors":"Christoph K. Becker, Tigran Melkonyan, E. Proto, Andis Sofianos, S. Trautmann","doi":"10.2139/ssrn.3722401","DOIUrl":"https://doi.org/10.2139/ssrn.3722401","url":null,"abstract":"Bayesian Updating is the dominant theory of learning in economics. The theory is silent about how individuals react to events that were previously unforeseeable or unforeseen. Recent theoretical literature has put forth axiomatic frameworks to analyze the unknown. In particular, we test if subjects update their beliefs in a way that is consistent \"reverse Bayesian\", which ensures that the old information is used correctly after an unforeseen event materializes. We find that participants do not systematically deviate from reverse Bayesianism, but they do not seem to expect an unknown event when this is reasonably unforeseeable, in two pre-registered experiments that entail unforeseen events. We argue that participants deviate less from the reverse Bayesian updating than from the usual Bayesian updating. We provide further evidence on the moderators of belief updating.","PeriodicalId":401540,"journal":{"name":"CEPR: Industrial Organization (Topic)","volume":"33 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"131920470","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}
Pub Date : 2020-11-01DOI: 10.1920/wp.ifs.2020.3720
Kate Smith, M. O'Connell, R. Griffith
We evaluate the impact of a price floor for alcohol introduced in Scotland in 2018, using a difference-in-differences strategy with England as a control group. We show that the policy led to the largest reductions in alcohol units purchased among the heaviest drinkers – the group who, at the margin, are likely to create the largest externalities from drinking. The price floor is well targeted at heavy drinkers because they buy a much greater fraction of their units from cheap products and switched away from these products strongly, with only limited substitution towards more expensive products. We show that if the marginal external cost of drinking is at least moderately higher for heavy than lighter drinkers, then a price floor outperforms an ethanol tax. However, more flexible tax systems can achieve similar reductions in externalities to the price floor, but avoid the large transfers from public funds to the alcohol industry that arise under the floor.
{"title":"Price Floors and Externality Correction","authors":"Kate Smith, M. O'Connell, R. Griffith","doi":"10.1920/wp.ifs.2020.3720","DOIUrl":"https://doi.org/10.1920/wp.ifs.2020.3720","url":null,"abstract":"\u0000 We evaluate the impact of a price floor for alcohol introduced in Scotland in 2018, using a difference-in-differences strategy with England as a control group. We show that the policy led to the largest reductions in alcohol units purchased among the heaviest drinkers – the group who, at the margin, are likely to create the largest externalities from drinking. The price floor is well targeted at heavy drinkers because they buy a much greater fraction of their units from cheap products and switched away from these products strongly, with only limited substitution towards more expensive products. We show that if the marginal external cost of drinking is at least moderately higher for heavy than lighter drinkers, then a price floor outperforms an ethanol tax. However, more flexible tax systems can achieve similar reductions in externalities to the price floor, but avoid the large transfers from public funds to the alcohol industry that arise under the floor.","PeriodicalId":401540,"journal":{"name":"CEPR: Industrial Organization (Topic)","volume":"10 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"133931362","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 research explores the relationship between personal values and the tendency to take cyber-risks. We first develop and add six cyber-risk items to the well-known Domain-Specific Risk-Taking (DOSPERT) scale. Importantly, we show that like the other five domains examined by the scale (Health, Ethical, Financial, Recreational, and Social), these cyber items form a separate cluster. Separate clusters are essential in order to employ the DOSPERT scale. We then examine the association between values and cyber risk taking behavior. We find that "conservation (conservatism)" values are negatively correlated with the tendency to take cyber risks. Thus, individuals for whom this value is important are less likely to take cyber risks. We also find that "openness to change" values are positively associated with the tendency to take cyber-risks. Individuals with high scores for this value are more likely to take cyber risks. The findings point to possible "values based" interventions in order to increase cyber-security.
{"title":"Personal Values and Cyber Risk-Taking","authors":"Zohar B. Weinstein, Sonia Roccas, Neil Gandal","doi":"10.2139/ssrn.3714173","DOIUrl":"https://doi.org/10.2139/ssrn.3714173","url":null,"abstract":"This research explores the relationship between personal values and the tendency to take cyber-risks. We first develop and add six cyber-risk items to the well-known Domain-Specific Risk-Taking (DOSPERT) scale. Importantly, we show that like the other five domains examined by the scale (Health, Ethical, Financial, Recreational, and Social), these cyber items form a separate cluster. Separate clusters are essential in order to employ the DOSPERT scale. We then examine the association between values and cyber risk taking behavior. We find that \"conservation (conservatism)\" values are negatively correlated with the tendency to take cyber risks. Thus, individuals for whom this value is important are less likely to take cyber risks. We also find that \"openness to change\" values are positively associated with the tendency to take cyber-risks. Individuals with high scores for this value are more likely to take cyber risks. The findings point to possible \"values based\" interventions in order to increase cyber-security.","PeriodicalId":401540,"journal":{"name":"CEPR: Industrial Organization (Topic)","volume":"656 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-10-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"122960814","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}
C. Zimmermann, Xiadong Liu, Michael D. König, Chih-Sheng Hsieh
This paper studies the impact of collaboration on research output. First, we build a micro founded model for scientific knowledge production, where collaboration between researchers is represented by a bipartite network. The equilibrium of the game incorporates both the complementarity effect between collaborating researchers and the substitutability effect between concurrent projects of the same researcher. Next, we develop a Bayesian MCMC procedure to estimate the structural parameters, taking into account the endogenous matching of researchers and projects. Finally, we illustrate the empirical relevance of the model by analyzing the coauthorship network of economists registered in the RePEc Author Service.
{"title":"Collaboration in Bipartite Networks, with an Application to Coauthorship Networks","authors":"C. Zimmermann, Xiadong Liu, Michael D. König, Chih-Sheng Hsieh","doi":"10.2139/ssrn.3688804","DOIUrl":"https://doi.org/10.2139/ssrn.3688804","url":null,"abstract":"This paper studies the impact of collaboration on research output. First, we build a micro founded model for scientific knowledge production, where collaboration between researchers is represented by a bipartite network. The equilibrium of the game incorporates both the complementarity effect between collaborating researchers and the substitutability effect between concurrent projects of the same researcher. Next, we develop a Bayesian MCMC procedure to estimate the structural parameters, taking into account the endogenous matching of researchers and projects. Finally, we illustrate the empirical relevance of the model by analyzing the coauthorship network of economists registered in the RePEc Author Service.","PeriodicalId":401540,"journal":{"name":"CEPR: Industrial Organization (Topic)","volume":"21 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-08-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"130197535","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}
Causal evidence from random assignment has been labeled "the most credible." We argue it is generally incomplete in finance/economics, omitting central parts of the true empirical causal chain. Random assignment, in eliminating self-selection, simultaneously precludes signaling via treatment choice. However, outside experiments, agents enjoy discretion to signal, thereby causing changes in beliefs and outcomes. Therefore, if the goal is informing discretionary decisions, rather than predicting outcomes after forced/mistaken actions, randomization is problematic. As shown, signaling can amplify, attenuate, or reverse signs of causal effects. Thus, traditional methods of empirical finance, e.g. event studies, are often more credible/useful.
{"title":"Signaling, Random Assignment, and Causal Effect Estimation","authors":"Gilles Chemla, C. Hennessy","doi":"10.2139/ssrn.3540327","DOIUrl":"https://doi.org/10.2139/ssrn.3540327","url":null,"abstract":"Causal evidence from random assignment has been labeled \"the most credible.\" We argue it is generally incomplete in finance/economics, omitting central parts of the true empirical causal chain. Random assignment, in eliminating self-selection, simultaneously precludes signaling via treatment choice. However, outside experiments, agents enjoy discretion to signal, thereby causing changes in beliefs and outcomes. Therefore, if the goal is informing discretionary decisions, rather than predicting outcomes after forced/mistaken actions, randomization is problematic. As shown, signaling can amplify, attenuate, or reverse signs of causal effects. Thus, traditional methods of empirical finance, e.g. event studies, are often more credible/useful.","PeriodicalId":401540,"journal":{"name":"CEPR: Industrial Organization (Topic)","volume":"43 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-08-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"115577420","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 paper provides a theory of strategic innovation project choice by incumbents and start-ups. We show that prohibiting killer acquisitions strictly reduces the variety of innovation projects. By contrast, we find that prohibiting other acquisitions only has a weakly negative innovation effect, and we provide conditions under which the effect is zero. Furthermore, for both killer and other acquisitions, we identify market conditions under which the innovation effect is small, so that prohibiting acquisitions to enhance competition would be justified.
{"title":"Killer Acquisitions and Beyond: Policy Effects on Innovation Strategies","authors":"Igor Letina, A. Schmutzler, Regina Seibel","doi":"10.2139/ssrn.3673150","DOIUrl":"https://doi.org/10.2139/ssrn.3673150","url":null,"abstract":"This paper provides a theory of strategic innovation project choice by incumbents and start-ups. We show that prohibiting killer acquisitions strictly reduces the variety of innovation projects. By contrast, we find that prohibiting other acquisitions only has a weakly negative innovation effect, and we provide conditions under which the effect is zero. Furthermore, for both killer and other acquisitions, we identify market conditions under which the innovation effect is small, so that prohibiting acquisitions to enhance competition would be justified.","PeriodicalId":401540,"journal":{"name":"CEPR: Industrial Organization (Topic)","volume":"20 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-08-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"131595376","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}
We propose a simple mechanism of mimetic dominance whereby a person’s valuation for consuming an object or possessing an attribute is increasing in others’ unmet desire for it. Such mimetic preferences help explain a host of market anomalies and generate novel predictions in a variety of domains. In bilateral exchange, people exhibit a social endowment effect, and there is an increased demand for goods that become relatively more scarce. A classic monopolist earns excess profit by randomly excluding some people from being able to purchase the product. We test the predictions of the model empirically across several exchange environments. When auctioning a private good, we find that randomly excluding people from the opportunity to bid substantially increases average bids amongst those who retain this option. Furthermore, exclusion leads to greater expected revenue than increasing competition through inclusion. This effect is absent when bidders know that those who are excluded have lower desires for the good. We demonstrate that mimetic preferences matter even for basic exchange: a person’s demand for a good increases substantially when others are explicitly excluded from the opportunity to buy the same kind of good. Mimetic preferences have implications for both price and non-price based methods of exclusion: the model predicts Veblen effects, rationalizes attitudes against redistribution and trade, and provides a novel motive for social stratification and discrimination.
{"title":"Mimetic Dominance and the Economics of Exclusion: Private Goods in Public Contexts","authors":"A. Imas, Kristóf Madarász","doi":"10.2139/ssrn.3630697","DOIUrl":"https://doi.org/10.2139/ssrn.3630697","url":null,"abstract":"We propose a simple mechanism of mimetic dominance whereby a person’s valuation for consuming an object or possessing an attribute is increasing in others’ unmet desire for it. Such mimetic preferences help explain a host of market anomalies and generate novel predictions in a variety of domains. In bilateral exchange, people exhibit a social endowment effect, and there is an increased demand for goods that become relatively more scarce. A classic monopolist earns excess profit by randomly excluding some people from being able to purchase the product. We test the predictions of the model empirically across several exchange environments. When auctioning a private good, we find that randomly excluding people from the opportunity to bid substantially increases average bids amongst those who retain this option. Furthermore, exclusion leads to greater expected revenue than increasing competition through inclusion. This effect is absent when bidders know that those who are excluded have lower desires for the good. We demonstrate that mimetic preferences matter even for basic exchange: a person’s demand for a good increases substantially when others are explicitly excluded from the opportunity to buy the same kind of good. Mimetic preferences have implications for both price and non-price based methods of exclusion: the model predicts Veblen effects, rationalizes attitudes against redistribution and trade, and provides a novel motive for social stratification and discrimination.","PeriodicalId":401540,"journal":{"name":"CEPR: Industrial Organization (Topic)","volume":"4 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"116053227","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}
We study the implications of transparency policies on decentralized public good provision by the non-profit sector. We present a model where imperfect monitoring of the use of funds interacts with the competitive structure of the non-profit sector under alternative informational regimes. Increasing transparency regarding the use of funds may have ambiguous effects on total public good provision and on donors’ welfare. On the one hand, transparency encourages all non-profit firms to engage more actively in curbing fund diversion. On the other hand, it tilts the playing field against non-profits facing higher monitoring costs, pressing them to give up on their missions. This effect on the extensive margin implies that transparency policies lead to a reduction in the diversity of social missions addressed by the non-profit sector. We show that the negative impact of transparency on social missions variety and on donors’ welfare is highest for intermediate levels of asymmetry in monitoring costs.
{"title":"The Dark Side of Transparency: Mission Variety and Industry Equilibrium in Decentralized Public Good Provision","authors":"Gani Aldashev, E. Jaimovich, T. Verdier","doi":"10.1093/ej/uead036","DOIUrl":"https://doi.org/10.1093/ej/uead036","url":null,"abstract":"\u0000 We study the implications of transparency policies on decentralized public good provision by the non-profit sector. We present a model where imperfect monitoring of the use of funds interacts with the competitive structure of the non-profit sector under alternative informational regimes. Increasing transparency regarding the use of funds may have ambiguous effects on total public good provision and on donors’ welfare. On the one hand, transparency encourages all non-profit firms to engage more actively in curbing fund diversion. On the other hand, it tilts the playing field against non-profits facing higher monitoring costs, pressing them to give up on their missions. This effect on the extensive margin implies that transparency policies lead to a reduction in the diversity of social missions addressed by the non-profit sector. We show that the negative impact of transparency on social missions variety and on donors’ welfare is highest for intermediate levels of asymmetry in monitoring costs.","PeriodicalId":401540,"journal":{"name":"CEPR: Industrial Organization (Topic)","volume":"59 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"125779963","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}
Firms make decisions under uncertainty and differ in their ability to collect and process information. As a result, in changing environments, firms have heterogeneous beliefs on the behavior of other firms. This heterogeneity in beliefs can have important implications on market outcomes, efficiency, and welfare. This paper studies the identification of firms' beliefs using their observed actions -- a revealed preference and beliefs approach. I consider a general structural model of market competition where firms have incomplete information and their beliefs and profits are nonparametric functions of decisions and state variables. Beliefs may be out of equilibrium. The framework applies both to continuous and discrete choice games and includes as particular cases models of competition in prices or quantities, auction models, entry games, and dynamic investment games. I focus on identification results that exploit a natural exclusion restriction in models of competition: an observable variable that affects a firm's cost (or revenue) but does not have a direct effect on other firms' profits. I present identification results under three scenarios --- common in empirical IO --- on the data available to the researcher.
{"title":"Identification of Firms' Beliefs in Structural Models of Market Competition","authors":"Victor Aguirregabiria","doi":"10.1111/CAJE.12503","DOIUrl":"https://doi.org/10.1111/CAJE.12503","url":null,"abstract":"Firms make decisions under uncertainty and differ in their ability to collect and process information. As a result, in changing environments, firms have heterogeneous beliefs on the behavior of other firms. This heterogeneity in beliefs can have important implications on market outcomes, efficiency, and welfare. This paper studies the identification of firms' beliefs using their observed actions -- a revealed preference and beliefs approach. I consider a general structural model of market competition where firms have incomplete information and their beliefs and profits are nonparametric functions of decisions and state variables. Beliefs may be out of equilibrium. The framework applies both to continuous and discrete choice games and includes as particular cases models of competition in prices or quantities, auction models, entry games, and dynamic investment games. I focus on identification results that exploit a natural exclusion restriction in models of competition: an observable variable that affects a firm's cost (or revenue) but does not have a direct effect on other firms' profits. I present identification results under three scenarios --- common in empirical IO --- on the data available to the researcher.","PeriodicalId":401540,"journal":{"name":"CEPR: Industrial Organization (Topic)","volume":"106 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"124773460","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}
京公网安备 11010802042870号
京ICP备2023020795号-1
扫码关注我们
求助内容：
应助结果提醒方式：