Institutions that form to reduce moral hazard often eliminate discretion and pool the actions of heterogeneous agents. An unintended consequence of this pooling is that agents' types cannot be determined by their actions. While in the short run such mechanisms may be optimal, in the long run...

This paper deals with the identification of, and explanations for, co-movement in regional business cycles using data for Australian states and territories (regions). We show that both raw growth rates and the deviations from a Hodrick-Prescott trend reflect noise in the series as well as any...

This paper examines the choice of government expenditure on public goods and transfer payments, in the form of a pension, in an overlapping generations model. Government expenditure is tax-financed on a pay-asyou- go basis. A utilitarian judge chooses expenditures to maximize a social welfare...

Evidence shows that real-effort investments can affect bilateral bargaining outcomes. This paper investigates whether similar investments can inhibit equilibrium convergence of experimental markets. In one treatment, sellers’ relative effort affects the allocation of production costs, but a...

This paper presents evidence that the demand for costly norm enforcement can be affected by the availability of the means for enforcing the norm. Participants in a laboratory experiment can reward or punish to enforce a distribution norm. Controlling for the extent of norm violation, we find...

A normative conflict arises when there exist multiple plausible norms of behavior. In such cases, norm enforcement can lead to a sequence of mutual retaliatory sanctions, which we refer to as a feud. We investigate the hypothesis that normative conflict enhances the likelihood of a feud in a...

We analyze the competitive effects of backward vertical integration in a model with oligopolistic firms that exert market power upstream and downstream. In contrast to previous literature, we show that a small degree of vertical integration is always procompetitive because efficiency effects...

These notes demonstrate how one can define optimization problems whose solutions can be interpreted as the Delta and the Fieller confidence intervals for a ratio of normally distributed parameter estimates. Also included in these notes are the details of the derivation of the slope of a...