Sanctions are widely used to promote compliance in principal-agent-relationships. While there is ample evidence confirming the predicted positive incentive effect of sanctions, it has also been shown that imposing sanctions may in fact reduce compliance by crowding-out intrinsic motivation. We...

In this paper, we introduce the concept of payoff distortion in the standard prisoner's dilemma game when strategies are driven by psychological behaviors. This concept enables to take account each player's assessment of the other player's behavior and the asymmetry of information. We determine...

This paper investigates the relevance of government purchasing behavior for innovation-based economic growth. We construct a parsimonious Schumpeterian growth model in which demand from the public sphere can effectively alter the economy's rate of technological change. We incorporate results of...

This paper shows the inappropriatedness of approximation procedures for welfare rankings across suboptimal policy strategies. On the grounds of a simple general equilibrium model, we find that even commonly accepted techniques are not suitable to achieve accurate welfare orderings. This result...

This paper provides a novel explanation of educated unemployment, which is a salient feature of the labor markets in a number of developing countries. In a simple job-search framework we show that educated unemployment is caused by the perspective of international migration, that is, by the...

Quite often, migrants appear to exert little effort to absorb the mainstream culture and to learn the language of their host society, even though the economic returns (increased productivity and enhanced earnings) to assimilation are high. We show that when interpersonal comparisons affect...

A framework that yields different possible patterns of migration as optimal solution to a simple utility maximization problem is presented and explored. It is shown that seasonal migration arises as an optimal endogenous response to a comparison of costs (of living and of separation) and returns...

A new general-equilibrium model that links together rural-to-urban migration, the externality effect of the average level of human capital, and agglomeration economies shows that in developing countries, unrestricted rural-to-urban migration reduces the average income of both rural and urban...

Illegal migrants supply a valuable productive input: effort. But their status as illegals means that these migrants face a strictly positive probability of expulsion. A return to their country of origin entails reduced earnings when the wage at origin is lower than the wage at destination. This...

In the recent New Keynesian literature a standard assumption is that the price for which an intermediate good is sold to the final good firm is equal to the marginal costs of the intermediate good firm. However, there is empirical evidence that this need not to hold. This paper introduces price...