Articles

Jess Benhabib, Pengfei Wang. Financial Constraints, Endogenous Markups, And Self-Fulfilling Equilibria

We show that self-fulfilling equilibria and indeterminacy can easily arise in a simple financial accelerator model with reasonable parameter calibrations and without increasing returns in production. A key feature for generating indeterminacy in our model is the countercyclical markup due to the procyclical loan to output ratio. We illustrate, via simulations, that our financial accelerator model can generate rich business cycle dynamics, including hump-shaped output in response to demand shocks...

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Dennis A. V. Dittrich. Wages, Length of Relationship and Bargaining Power: An experimental study in a world of complete contracts

To explain potential sources of wage rigidity this article analyzes a model of reciprocal kindness applied to a repeated ultimatum game with changing and nonzero conflict payoffs. The model is also tested in a laboratory experiment. The results are compatible with the rentsharing approach to wage rigidity. Wages adjust to 'market pressure' but are less flexible when employees demand their wages, i. e. when they are in a relatively strong bargaining position.

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Gary Charness, Ramón Cobo-Reyes, Juan A. Lacomba, José María Pérez, Francisco Lagos. Social Comparisons in Wage Delegation: Experimental Evidence

This article examines whether social comparisons have behavioral effects on workers’ performance when a firm can choose workers’ wages or let them choose their own. Firms can delegate the wage decision to neither, one or both workers in the firm. We vary the information workers receive, finding that social comparisons concerning both wages and decision rights affect workers’ performance. Moreover, the relative effect of discrimination in relation to decision rights is larger than in relation to ...

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Liliana Winkelmann, Rainer Winkelmann. Does Inequality Harm the Middle-Class?

The paper provides estimates of the e ect of economic inequality on middle class well being in Switzerland. Economic well being is proxied by a person's satisfaction with his/her income. Two inequality indicators are used, one standard (the Gini coecient of the pre-tax income distribution) and one novel (the number of luxury car registrations per 1000 population). Identi cation is through cross-sectional variation of these indicators at various levels of spatial aggregation. Results using data ...

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Bruno S. Frey. Punishment and beyond

This paper argues that the Economics of Crime concentrates too much on punishment as a policy to fight crime, which is unwise for several reasons. There are important instances in which punishment simply cannot reduce crime. Several feasible alternatives to punishment exist, such as offering positive incentives or handing out awards for law abiding behavior. These alternative approaches tend to create a positive sum environment. When people appreciate living in a society that is to a large exten...

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Bruhin, A; Winkelmann, R. Happiness functions with preference interdependence and heterogeneity: the case of altruism within the family

This study investigates the prevalence and extent of altruism by examining the relationship between parents' and their adult children's subjective well-being in a data set extracted from the German Socio-Economic Panel. To segregate the share of parents with altruistic preferences from those who are selfish, we estimate a finite mixture regression model. We control for various sources of potential bias by taking advantage of the data's panel structure. To validate our modeling approach, we show ...

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