We prove generic existence of recursive equilibrium for overlapping generations economies with uncertainty. "Generic" here means in a residual set of utilities and endowments. The result holds provided there is sufficient intragenerational household heterogeneity.
We argue that differences between the landscapes of influence situations in Indian and American societies induce Indians to accommodate to others more often than Americans. To investigate cultural differences in situation-scapes, we sampled interpersonal influence situations occurring in India and the United States from both the influencee's (Study 1) and the influencer's (Study 2) perspectives. We found that Indian influence situations were dramatically more likely than U.S. situations to feature other-serving motives and to result in positive consequences for the relationship.
In every period, an aggressive country seeks concessions from a non-aggressive country with private information about their cost. The aggressive country can force concessions via war, and both countries suffer from limited commitment.We characterize the efficient sequential equilibria. We show that war is necessary to sustain peace and that temporary wars can emerge because of the coarseness of public information. In the long run, temporary wars can be sustained only if countries are patient, if the cost of war is large, and if the cost of concessions is low.
Telecommunications infrastructure goes through technology-induced phases, and the regulatory regime follows. Telecom 1.0, based on copper wires, was monopolistic in market structure and led to a Regulation 1.0 with government ownership or control. Wireless long-distance and then mobile technologies enabled the opening of that system to one of multi-carrier provision, with Regulation 2.0 stressing privatization, entry, liberalization, and competition. But now, fiber and high-capacity wireless are raising scale economies and network effects, leading to a more concentrated market.
The preferred risk habitat hypothesis, introduced here, is that individual investors select stocks whose volatilities are commensurate with their risk aversion. The data, 1995-2000 holdings of over 20,000 clients at a large German broker, are consistent with the predictions of the hypothesis: the portfolios contain highly similar stocks in terms of volatility, when stocks are sold they are replaced by stocks of similar volatilities, and the more risk averse customers indeed hold and trade into less volatile stocks.
It is now widely accepted that the institutional interventions of states are a foundational influence on the dynamics of organizational forms. But why do states act? In this paper, we apply the behavioral theory of the firm to develop an explanation of state actions based on the fact that they are boundedly rational rivals. The instrument of state competition we examine is the founding of business incubators, a primary tool in the entrepreneurial strategy of economic development.
In November of 2007, the New York City Department of Education assigned each elementary and middle school a letter grade (A to F) as part of a new accountability system. Grades were based on continuous numeric scores derived from levels and changes in student achievement and other school environmental factors such as attendance, and were linked to a system of rewards and consequences for schools and principals. We use the discontinuities in the assignment of grades to estimate the impact of accountability in the short run.
New goods play a central role in many trade and growth models. We use detailed trade and firm-level data from India to investigate the relationship between declines in trade costs, imports of intermediate inputs and domestic firm product scope. We estimate substantial gains from trade through access to new imported inputs. Moreover, we find that lower input tariffs account on average for 31 percent of the new products introduced by domestic firms.