Stefan Boes, Kevin E Staub, Rainer Winkelmann. Relative status and satisfaction

A key result of the previous literature on income and reported life satisfaction is the relevance of income comparisons. People appear to care not only for absolute but also for relative income, usually defined in terms of distance to a reference income level (Clark and Oswald, 1996; McBride, 2001; Easterlin, 2001; Ferrer-i-Carbonell, 2005; Luttmer, 2005; Dynan and Ravina, 2007; Clark et al., 2008). A more recent literature has begun to investigate the role of income as a provider of status where...

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Gilles Saint-Paul. Economic Science and Political Influence

When policymakers and private agents use models, the economists who design the model have an incentive to alter it in order to influence outcomes in a fashion consistent with their own preferences. I discuss some consequences of the existence of such ideological bias. In particular, I analyze the role of measurement infrastructures such as national statistical institutes, the extent to which intellectual competition between different schools of thought may lead to polarization of views over some...

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Neil Bendle, Philip Chen. Behavioural Economics for Kids

The aim of this book is to illustrate what we already know. People behave in predictable ways that don’t always reflect the ideal behaviour that social scientists like to theorize about. On the negative side sometimes our choices are short-sighted, incoherent, self-destructive or even malicious. On a more positive note, sometimes we are more sociable than might be predicted by a traditional economic view of decision making. Furthermore most of us seem to do a surprisingly good job of coping with ...

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Jess Benhabib. A Note on Regime Switching, Monetary Policy, and Multiple Equilibria

When monetary policy is subject to regime switches conditions for determinacy become more complex. Davig and Leeper (2007) and Farmer, Waggoner and Zha (2009a) have studied such conditons. Using some new results from stochastic processes, we characterize the moments of the stationary distribution of inflation under regime switiching to obtain conditions for indeterminacy that can be easily checked and interpreted in terms of expected values of Taylor coefficients. In the last section, we outline...

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Dennis A. V. Dittrich, Martin G. Kocher. Monitoring and Pay: An Experiment on Employee Performance under Endogenous Supervision

We present an experimental test of a shirking model where monitoring intensity is endogenous and effort a continuous variable. Wage level, monitoring intensity and consequently the desired enforceable effort level are jointly determined by the maximization problem of the firm. As a result, monitoring and pay should be complements. In our experiment, between and within treatment variation is qualitatively in line with the normative predictions of the model under standard assumptions. Yet, we also...

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Geoffrey M. Hodgson. The Evolution of Institutions: An Agenda for Future Theoretical Research

This article reviews some theoretical questions concerning the processes of institutional evolution. The necessity of assuming the prior existence of some other institutions, such as language, is underlined. Arguably, the emergence and stability of some institutions may be enhanced by processes of ‘downward causation’ through which institutional constraints lead to the formation of concordant habits of thought and behaviour. Having pointed to the importance of pre-existing, as well as emerging, ...

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