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Although conformity as a major driver for human cultural evolution is a well-accepted and intensely studied phenomenon, its importance for non-human animal culture has been largely overlooked until recently. This limited for decades the possibility of studying the roots of human culture. Here, we provide a historical review of the study of conformity in both humans and non-human animals. We identify gaps in knowledge and propose an evolutionary route towards the sophisticated cultural processes that characterize humanity. A landmark in the study of conformity is Solomon Asch's famous experiment on humans in 1955. By contrast, interest in conformity among evolutionary biologists has only become salient since the turn of the new millennium. A striking result of our review is that, although studies of conformity have examined many biological contexts, only one looked at mate choice. This is surprising because mate choice is probably the only context in which conformity has self-reinforcing advantages across generations. Within a metapopulation, i.e. a group of subpopulations connected by dispersing individuals, dispersers able to conform to the local preference for a given type of mate have a strong and multigenerational fitness advantage. This is because once females within one subpopulation locally show a bias for one type of males, immigrant females who do not conform to the local trend have sons, grandsons, etc. of the non-preferred phenotype, which negatively and cumulatively affects fitness over generations in a process reminiscent of the Fisher runaway process. This led us to suggest a sex-driven origin of conformity, indicating a possible evolutionary route towards animal and human culture that is rooted in the basic, and thus ancient, social constraints acting on mating preferences within a metapopulation. In a generic model, we show that dispersal among subpopulations within a metapopulation can effectively maintain independent Fisher runaway processes within subpopulations, while favouring the evolution of social learning and conformity at the metapopulation scale; both being essential for the evolution of long-lasting local traditions. The proposed evolutionary route to social learning and conformity casts surprising light on one of the major processes that much later participated in making us human. We further highlight several research avenues to define the spectrum of conformity better, and to account for its complexity. Future studies of conformity should incorporate experimental manipulation of group majority. We also encourage the study of potential links between conformity and mate copying, animal aggregations, and collective actions. Moreover, validation of the sex-driven origin of conformity will rest on the capacity of human and evolutionary sciences to investigate jointly the origin of social learning and conformity. This constitutes a stimulating common agenda and militates for a rapprochement between these two currently largely independent research areas.

National audience; We study how the random assignment of new students to introductory-week groups shapes subsequent friendship networks. Both women and men report being much more likely to be friends with same-gender students with whom they were (randomly) assigned in a group during their first week on campus, and the effect is much stronger for women. When students from the same cohort play a repeated trust game in the experimental laboratory, their behavior helps explain what we observed in the field. Women display more stability and less flexibility than men in their interactions with individuals with whom they had previously played. This difference is enough to generate homophily in the observational data even though subjects show no intrinsic preference for same-gender interaction.

We investigate the impact of professional networks on men's and women's earnings, using a dataset of European and North American executives. The size of an individual's network of influential former colleagues has a large positive association with remuneration, with an elasticity of around 21%. However, controlling for unobserved heterogeneity using various fixed effects as well as a placebo technique, we find that the real causal impact of networks is barely positive for men and significantly lower for women. We provide suggestive evidence indicating that the apparent discrimination against women is due to two factors: first, both men and women are helped more by own-gender than other-gender connections, and men have more of these than women do. Second, a subset of employers we identify as ‘female friendly firms’ recruit more women but reward networks less than other firms.

National audience; Are religious believers more prosocial than other people? In a trust game field experiment with 774 subjects in Haiti, we elicit willingness to pay to play in the presence of religious images, and argue that this can be interpreted as a measure of the strength of religiosity. More religious individuals trust others more and reciprocate more than others, with effect sizes between 14% and 21% of mean behaviour depending on the measure. They do not reciprocate more in the presence of religious images than without them, nor towards members of the same denomination as themselves. The results support the view that religious affiliation is correlated with intrinsic trustworthiness. We show that lab behaviour correlates with intuitive measures of religiosity outside the lab and with participation in borrowing and lending networks.

National audience; We conducted an experimental study in Haiti testing for the relationship between religious belief and individual risk taking behavior. 774 subjects played lotteries in a standard neutral protocol and subsequently with reduced endowments but in the presence of religious images of Catholic, Protestant and Voodoo tradition. Subjects chose between paying to play a lottery with an image of their choice, and saving their money to play with no image. Those who chose the former are dened as image buyers and those who chose the latter as non-buyers. Image buyers, who tend to be less educated, more rural, and to exhibit greater religiosity, bet more than non-buyers in all games. In addition, in the presence of religious images all participants took more risk, and buyers took more risk when playing in the presence of their chosen images than when playing with other images. We develop a theoretical model calibrated with our experimental data to explore the channels through which religious images might a ect risk-taking. Our results suggest that the presence of images tends to increase individuals' subjective probability of winning the lottery, and that subjects therefore believe in a god who intervenes actively in the world in response to their requests.

National audience; Do people discriminate between co-ethnics and others in cooperative interactions? In an experiment in China, we find that participants in trust games send around 15% more to partners they know to be co-ethnics than to those whose ethnicity they do not know. Re- ceivers’ behavior is determined by amounts received and not by perceived ethnicity. In line with previous literature we find that subjects contribute more to public goods in ethnically homogeneous groups than in mixed groups. We find evidence for a new explanation that is not due to different intrinsic preferences for cooperation with ingroup and outgroup members. Instead, subjects’ willingness to punish in-group members for free-riding is re- duced when out-group members are present. This leads to lower contributions and net earnings in mixed groups. Thus favoritism towards co-ethnics can hurt both those engag- ing in favoritism and those being favored.

National audience; Political philosophers have long drawn explicitly or implicitly on claims about the ways in which humanbehaviour is shaped by interactions within society. These claims have usually been based on introspection,anecdotes or casual empiricism, but recent empirical research has informed a number of early views abouthuman nature. We focus here on five components of such views: (1) what motivates human beings; (2)what constraints our natural and social environments impose upon us; (3) what kind of society emerges asa result; (4) what constitutes a fulfilling life; and (5) what collective solutions can improve the outcome.We examine social contract theory as developed by some early influential political philosophers (Hobbes,Locke and Rousseau), who viewed the social contract as a device to compare the‘natural’state of humanswith their behaviour in society. We examine their views in the light of recent cross-cultural empiricalresearch in the evolutionary social sciences. We conclude that social contract theorists severely underes-timated human behavioural complexity in societies lacking formal institutions. Had these theorists beenmore informed about the structure and function of social arrangements in small-scale societies, theymight have significantly altered their views about the design and enforcement of social contracts.

This article provides experimental support for the hypothesis that insurance can be a motive for religious donations. We randomize enrollment of members of a Pentecostal church in Ghana into a commercial funeral insurance policy. Then church members allocate money between themselves and a set of religious goods in a series of dictator games with significant stakes. Members enrolled in insurance give significantly less money to their own church compared with members who only receive information about the insurance. Enrollment also reduces giving toward other spiritual goods. We set up a model exploring different channels of religiously based insurance. The implications of the model and the results from the dictator games suggest that adherents perceive the church as a source of insurance and that this insurance is derived from beliefs in an interventionist God. Survey results suggest that material insurance from the church community is also important and we hypothesize that these two insurance channels exist in parallel.

National audience; This paper investigates an unexplored rationale for joint ownership of a production project. We model projects with autocorrelated productivity shocks as creating an option value of investing over time so that later investments benefit from the information revealed by the realization of earlier investments. However, internal and external interest groups may pressurize owners into paying out early revenues. Joint ownership provides a commitment mechanism against them, thereby enabling more efficient levels of investment. The Business Environment and Enterprises Performance survey data corroborate the model's prediction that organizations under interest-group lobbying pressure are more likely to choose joint ownership.

National audience; The fact that adherents of most religions subscribe sincerely to many counter-empirica beliefs has been argued to pose a challenge to evolutionary explanations of religion, since natural selection is considered to have developed sophisticated cognitive mechanisms to enable prehistoric foragers to survive in harsh environments. I argue here that most counter-empirical beliefs held by members of most religions are optional most of the time, and were optional all of the time in prehistory. Beliefs held by foragers and other individuals in situations where survival may depend on them are not very counter-empirical compared to locally available alternatives. More generally, human beings are cognitively extravagant—that is, they are capable of entertaining beliefs about a large number of things other than their immediate physical environment, but it is only in modern environments that their cognitive extravagance typically becomes costly enough to pose a problem for evolutionary explanation. In a nutshell, counter-empirical beliefs are a by-product rather than precondition of religious membership and practice, and were unlikely to have been adaptively costly in environments that were evolutionarily relevant for human beings.

This chapter explores economist Paul Seabright's argument that there is a “darker dimension to what makes us human,” which Robert Boyd largely leaves aside. Human beings are the most ecologically adaptable and massively cooperative species on the planet. Seabright argues that humans are also the most spectacularly and violently competitive, and the most deviously manipulative of all species. This might seem an incoherent description, but in fact the latter qualities are deeply implicated in the former ones. It is precisely the fact of humans' extraordinary cooperativeness that allows them to create the massive resource gains that provoke their competitiveness and manipulativeness. Indeed, Seabright contends that “a much larger part of the communication that takes place around norms in most societies is about individuals manipulating other individuals” than one would think from Boyd's examples.

This comment focuses on difficulties in establishing causality among various phenomena present in early modern Europe at the beginning of the Industrial Revolution. It concludes that, rather than focus on a single cause out of many candidates, we should consider the possibility of a set of mutually reinforcing causes, among which those suggested by Life History Theory may be included.

This paper examines how networks of professional contacts contribute to the development of the careers of executives of North American and European companies. We build a dynamic model of career progression in which career moves may both depend upon existing networks and contribute to the development of future networks. We test the theory on an original dataset of nearly 73 000 executives in over 10 000 firms. In principle professional networks could be relevant both because they are rewarded by the employer and because they facilitate job mobility. Our econometric analysis suggests that, although there is a substantial positive correlation between network size and executive compensation, with an elasticity of around 20%, almost all of this is due to unobserved individual characteristics. The true causal impact of networks on compensation is closer to an elasticity of 1 or 2% on average, all of this due to enhanced probability of moving to a higher-paid job. And there appear to be strongly diminishing returns to network size.

Both parents and offspring have evolved mating preferences that enable them to select mates and children-in-law to maximize their inclusive fitness. The theory of parent-offspring conflict predicts that preferences for potential mates may differ between parents and offspring: individuals are expected to value biological quality more in their own mates than in their offspring's mates and to value investment potential more in their offspring's mates than in their own mates. We tested this hypothesis in China using a naturalistic 'marriage market' where parents actively search for marital partners for their offspring. Parents gather at a public park to advertise the characteristics of their adult children, looking for a potential son or daughter-in-law. We presented 589 parents and young adults from the city of Kunming (Yunnan, China) with hypothetical mating candidates varying in their levels of income (proxy for investment potential) and physical attractiveness (proxy for biological quality). We found some evidence of a parent-offspring conflict over mate choice, but only in the case of daughters, who evaluated physical attractiveness as more important than parents. We also found an effect of the mating candidate's sex, as physical attractiveness was deemed more valuable in a female potential mate by parents and offspring alike.

We show that in family or household firms, credit constraints can make business investment a direct competitor to educational investment. We test this theory on data collected in Cameroon. Households that are not restricted by credit constraints invest more in education when demand for the product they produce and sell increases. However, credit-constrained households react in the opposite way: when demand increases, they invest less in education, as predicted by our theory. We obtain these results controlling for endogeneity of family size, of demand conditions, and credit constraints.

We test two hypotheses, based on sexual selection theory, about gender differences in costly social interactions. Differential selectivity states that women invest less than men in interactions with new individuals. Differential opportunism states that women’s investment in social interactions is less responsive to information about the interaction’s payoffs. The hypotheses imply that women’s social networks are more stable and path dependent and composed of a greater proportion of strong relative to weak links. During their introductory week, we let new university students play an experimental trust game, first with one anonymous partner, then with the same and a new partner. Consistent with our hypotheses, we find that women invest less than men in new partners and that their investments are only half as responsive to information about the likely returns to the investment. Moreover, subsequent formation of students’ real social networks is consistent with the experimental results: being randomly assigned to the same introductory group has a much larger positive effect on women’s likelihood of reporting a subsequent friendship.

Water theft carried out by manipulating water meters constrains volumetric pricing in semi-arid regions. Cooperative management can reduce theft and improve incentives for efficient water use by inducing peer monitoring. Using a theoretical model, we show that theft is more likely when prices are high, punishments are weak, and cooperatives are large. We also show how cooperative membership and punishment levels are determined endogenously by constraints on monitoring. We test the model on data from Tunisia for the years 2001-2003, relying on instruments that proxy for unobservable monitoring costs. The results confirm that well-designed incentives can reduce theft, and that constraints on monitoring costs affect institutional design.

Funding from the ANR Labex Institute for Advanced Study in Toulouse is gratefully acknowledged. There is a very old question in social science about whether religion is favorable or antithetical to economic activity. There have of course been ascetic currents within all of the world’s major religions. Right up to the present day, denunciations of the commercial spirit, and more generally of the excesses associated with economic development, can be heard from within virtually all religious tra...

This paper models how migration both influences and responds to differences in disease prevalence between cities, regions and countries, and show how the possibility of migration away from high-prevalence areas affects long-run steady state disease prevalence. We develop a dynamic framework where both migration and prevention behaviour respond to the prevalence of disease, to the costs of migration and of treatment, and to current and anticipated health regulations. The model treats disease prevalence as an endogenous consequence of other features of the areas concerned, notably their economic endowments. It explores how pressure for migration in response to differing equilibrium levels of disease prevalence causes countervailing differences in city characteristics, notably in land rents. Competition for scarce housing in low-prevalence areas can create pressures for segregation, with disease concentrated in high-prevalence "sinks". We show that multiple steady states may exist and explore their comparative static properties. In particular we find that migration can have positive health benefits, in that reductions in barriers to migration can reduce steady-state disease incidence in low-prevalence areas while having no impact on prevalence in high-prevalence areas. This may have important consequences for policy; in some circumstances, public health measures may need to avoid discouraging migration away from high-disease areas.

We investigate the impact of social networks on earnings using a dataset of over 20,000 senior executives of European and US firms. The size of an individual's network of influential former colleagues has a large positive association with current remuneration. An individual at the 75th percentile in the distribution of connections could expect to have a salary nearly 20 per cent higher than an otherwise identical individual at the median. We use a placebo technique to show that our estimates reflect the causal impact of connections and not merely unobserved individual characteristics. Networks are more weakly associated with women's remuneration than with men's. This mainly reflects an interaction between unobserved individual characteristics and firm recruitment policies. The kinds of firm that best identify and advance talented women are less likely to give them access to influential networks than are firms that do the same for the most talented men.

Any author is lucky to have readers, but to have three readers as subtle, attentive, and generous as Geoff Brennan (GB), Ben Fraser (BF), and Kim Sterelny (KS) is a privilege indeed. I have learned much from all three of them, both from these pieces and more generally from their other writings and the discussions we have had. I am grateful to them for the many generous things they say about The Company of Strangers (hereafter TCOS), and in particular for agreeing that the ease with which we citizens of prosperous modern societies interact with strangers is a puzzle given our prehistoric origins. But all three chide me, diplomatically though firmly, for imprecision about some crucial aspects of the transition of humankind from hunting and gathering to modern society, for appealing to metaphors (such as ‘‘tunnel vision’’ and ‘‘honorary friends’’) instead of mechanisms. I think there is much truth in this criticism, and I would like to take this opportunity to say more about what we know—and, crucially, about what we still don’t know—about how this transition happened. To do this I propose not to answer the questions and criticisms of the three commentators point by point. Instead I shall set out six broad questions about the transition, each of which is posed explicitly or implicitly by one or more of these commentators and about which they are right to point out that TCOS does not have enough to say. In some cases this is because the state of our collective knowledge is inadequate, in others because TCOS does not clearly enough reflect that collective knowledge. These are the questions: (1) Was Pleistocene life transparent enough for prudent calculation based on self-regarding preferences to support cooperation via mutual monitoring, punishment of defectors, and incentives for reputation building? (2) How violent was the Pleistocene? And how much of this violence was intra-group rather than inter-group? (3) Was interaction with strangers frequent or rare? (4) What exactly would have been necessary for a psychology adapted to the Pleistocene to make sense of a much more frequent exposure to strangers in the Holocene? Was it just a matter of adjusting to a higher frequency of stranger contact or was it a qualitative shift? (5) What ensured that when agriculture arrived the social contract did not either (a) collapse, or (b) remain sufficiently robust to resist substantial increases in inequality? (6) In what sense, precisely, does the psychology we inherited from the Pleistocene continue to shape (either in the sense of enabling, or in the sense of constraining) the way we interact with strangers in modern societies?

We investigate whether there are systematic gender differences in communication behavior by telephone. First, we report a study of anonymized billing records of 3103 subscribers to a large mobile operator in Italy and Greece over 2 years from 2006 to 2008. Faced with identical tariffs, women make fewer calls than men, and their calls last 16% longer controlling for other factors. Secondly, we report a study of some 92,000 person-days of calls to call-center employees of a large consumer services company operator at four sites in Germany. Calls randomly allocated to women last 15% longer than those of men controlling for other factors. There is no evidence, however, that this results in the women being any less effective employees than the men; indeed, in operations involving sales where it is possible to measure productivity by this criterion, female employees make slightly more sales per shift than men. It appears instead to reflect systematic gender differences in communication strategies, though it may reflect also an element of preference by both men and women for speaking to women. The findings of both studies are highly statistically significant and are found across all age groups. The magnitude of gender differences is sensitive to the costs of communication. The results have implications for possible explanations of gender clustering in the labor market.

This paper explores the implications for public policy of the fact that individuals have incomplete but private information about their exposure to infectious disease when they make migration decisions. In a 2-period model we study conditions under which the presence of quarantine measures may lead to inefficient outcomes by strengthening individuals' interest in migration to escape centres of disease and thereby imposing negative externalities on other uninfected individuals. We show first that when the disease has an epicentre, the marginal migrant imposes a net negative externality. Secondly, quarantine policies may sometimes encourage migration instead of discouraging it. Thirdly, even when they succeed in discouraging migration, quarantine policies may lower social welfare, and even increase overall disease incidence, if they go too far, thereby discouraging those intra-marginal migrants for whom private benefits exceed private costs by more than the negative externality they impose on others.

Cet article offre un guide aux decideurs politiques perplexes sur la facon de tirer des lecons pratiques de la litterature vaste et souvent confuse sur le climat des affaires et son role dans le developpement economique. Nous utilisons le cas analogue d’un medecin traitant un patient et qui doit tirer un ensemble d’informations des reponses subjectives du patient, des etudes cliniques sur les reactions du patient moyen au traitement, et des antecedents detailles du patient. Nous soutenons que les decideurs politiques peuvent utiliser trois series complementaires de conclusions provenant : des rapports subjectifs des dirigeants d’entreprise, des analyses en coupe transversale au niveau pays, et des experiences des pays ou des regions. Ces conclusions sont souvent moins contradictoires qu’elles n’y paraissent, pourvu qu’elles soient interpretees avec soin. Bien qu’il reste beaucoup a apprendre, nous donnons beaucoup d’exemples de conclusions pratiques utiles qui peuvent etre tirees de cette litterature.

We examine whether a reduction in the cost of applying for jobs that leads to an increase in the number of candidates applying for jobs at a firm, may make the firm worse off. We build a model where there is worker heterogeneity and firms can choose to screen workers at a cost. In equilibrium, a reduction in application costs can lower a firm's payoff by raising the number of applications from workers who, on average, are of lower quality than those who apply when application costs are high. An additional candidate can impose a negative externality on the firm by adversely affecting the statistical quality of its candidate pool. We discuss applications to the phenomenon of attention congestion through advances in digital technology.

International audience; We test the hypothesis that smiles perceived as honest serve as a signal that has evolved to induce cooperation in situations requiring mutual trust. Potential trustees (84 participants from Toulouse, France) made two video clips averaging around 15 seconds for viewing by potential senders before the latter decided whether to ‘send’ or ‘keep’ a lower stake (4 euro) or higher stake (8 euro). Senders (198 participants from Lyon, France) made trust decisions with respect to the recorded clips. If money was sent to the trustee, stakes were tripled and trustees could decide to keep all, two thirds or one half of the tripled stakes. Clips were further rated concerning the genuineness of the displayed smiles. We observe that smiles rated as more genuine strongly predict judgments about the trustworthiness of trustees, and willingness to send them money. We observe a relation between costs and benefits: smiles from trustees playing for higher stakes are rated as significantly more genuine. Finally, we show that those rated as smiling genuinely return more money on average to senders. An increase of one standard deviation in rating of smile genuineness is associated with an unconditional expected gain of about one dollar and thirty cents to senders in the two trials of the experiment. Potential gains for senders could be significantly increased from taking smiles rated as genuine into account.

This paper examines how market entry and privatization have affected the margins and marginal costs of banks in the post-communist transition. We estimate bank revenue and cost functions, allowing the estimated parameters to change over time. In the first sub-period (1995–98), we find that privatized banks earned higher margins than other banks, while foreign start-ups had lower marginal costs. In the third sub-period (2002–2004), foreign banks remained low marginal cost service providers, while privatized domestic banks had the widest margins. Subtracting marginal costs from margins to calculate mark-ups, an indication of demand for services, shows that initially privatized banks had the largest mark-ups. However, by the third sub-period, differences among private banks diminished. In comparison to private banks, state banks persistently under-performed in controlling costs and attracting demand. Our evidence therefore indicates that foreign bank entry promoted lower costs and that privatization and market entry encouraged more demand for services.

This article sets out and comments on the arguments of Binmore's Natural Justice, and specifically on the empirical hypotheses that underpin his social contract view of the foundations of justice. It argues that Binmore's dependence on the hypothesis that individuals have purely self-regarding preferences forces him to claim that mutual monitoring of free-riding behavior was sufficiently reliable to enforce cooperation in hunter-gatherer societies, and that this makes it hard to explain why intuitions about justice could have evolved, since in such a society intuitions about justice would have had no adaptive advantage. I argue that it is empirically plausible that human beings display systematic other-regarding preferences (even if these are not always very strong). These could be incorporated into Binmore's general framework in a way that would enrich it and make it more useful for solving practical problems about justice.

We use data from the airline industry to examine the extent to which the costs of airline operations are affected by rents accruing to workers, and the extent to which these rents depend inter alia upon the degree of competition in the industry. Our empirical results based on a panel of twelve European and seven major United States airlines confirm that state ownership substantially increases rents to labour, while the effects of competition are more subtle and ambiguous; airline profits tend to be associated with higher rents to employees. The gains from further privatisation and liberalisation may be quite large. Does competition have significant effects on productive as well as allocative efficiency? Convincing empirical answers to this question have been hard to find, for two reasons. First, data of the quality required for robust estimation of productive efficiency are only rarely available. Secondly, there is frequently no convincing standard against which the efficiency of an industry or a firm may be compared, since when the degree of competition varies many other things (such as technology, network structures and firm sizes) typically vary as well. These problems do not automatically make comparison impossible, but they compound the need for high quality data. One industry which is likely to be well suited to investigating questions of this kind is the international airline industry. The industry contains a large number of firms - thus ensuring at least enough potential competition to make questions about the effects of competition interesting - but the scope for these firms to compete with one another has been influenced to varying degrees over the years by different national and international regulatory regimes. In particular, deregulation of the United States industry in 1978 provided a kind of natural experiment that has led not only to comparisons of the 'before and after' variety, but also to comparisons between the United States industry and that of other global regions (notably Europe). Such comparisons are far from straightforward, but they are facilitated by the fact that the technology of civil aviation is more or less internationally standardised, and by the relatively high quality of available data in the industry.'

This paper examines two ways in which competition works in modern capitalist economies to improve productivity. The first is through incentives: encouraging improvements in technology, organisation and effort on the part of existing establishments and firms. The second is through selection: replacing less-productive with more productive establishments and firms, whether smoothly via the transfer of market shares from less to more productive firms, or roughly through the exit of some firms and the entry of others. We report evidence from the UK suggesting that selection is responsible for a large proportion of aggregate productivity growth in manufacturing, and that much of this is due in turn to selection between plants belonging to multi-plant firms. We also investigate whether the nature of the selection process varies across the business cycle and report evidence suggesting that it is less effective in booms and recessions. Finally, although in principle productivity catch-up by low-income countries ought to be easier than innovation at the frontier, in the absence of a well functioning competitive infrastructure (a predicament that characterises many poor countries), selection may be associated with much more turbulence and a lower rate of productivity growth than in relatively prosperous societies. We report results of a survey of firms in transition economies suggesting that, particularly in the former Soviet states (excluding the Baltic states), poor output and productivity performance has not been due to an unwillingness on the part of firms to change and adapt. On the contrary, there has been a great deal of restructuring, much new entry and large reallocations of output between firms; but such activity has been much more weakly associated with improved performance than we would expect in established market economies.

Mechanisms that terminate signals from activated receptors have potential to influence the magnitude and nature of cellular responses to insulin. The aims of this study were to determine in rat liver endosomes (the subcellular site of insulin signal termination) whether dissociation of insulin from its receptor was a pre-requisite for ligand degradation and whether the state of receptor phosphorylation influenced the dissociation and hence endosomal degradation of insulin and/or receptor recycling. Following in vivo administration of 125I-[A14]-insulin or analogues (native, X10 or H2, relative binding affinities 1:7:67) livers were removed and endosomes prepared. In the endosomal preparations a significantly greater percentage of both analogues were receptor-bound than native insulin with concomitantly less ligand degradation. When rats were injected with protein-tyrosine phosphatase inhibitors (peroxovanadium compounds bpV(phen) or bpV(pic)) before insulin, endosomal insulin receptor phosphotyrosine content, assessed by Western blotting, was increased as was receptor-bound 125I-[A14]-insulin, whilst insulin degradation was decreased. Peroxovanadiums also completely inhibited recycling of insulin receptors from endosomes. However, treatment of freshly isolated endosomes with acid phosphatase which completely dephosphorylated the insulin receptor, did not return the rate of insulin dissociation and degradation to control values, suggesting that peroxovanadium compounds elicit their effect on binding and degradation via a mechanism other than as protein-tyrosine phosphatase inhibitors. We conclude that promotion of sustained receptor binding decreases endosomal insulin degradation and extends the half-life of the activated endosomal receptor, which in turn would be expected to potentiate insulin signalling from this intracellular compartment.

All activities involve a combination of the exercise of skill and the exercise of judgment. This paper distinguishes these types of talent along three dimensions: the ease with which their exercise can be monitored, the delay before its effects are realised, and codifiability of the tasks involved. It then presents a two-period model of the allocation of multiple tasks within an organization. It shows that the incentives for bundling and separation of tasks within such an organization depend on the relative ease of monitoring of the two tasks, as well as on the extent of correlation between the talents they require. It demonstrates that organizations may rationally place “too much” emphasis on routine tasks, provided these reveal information about talents that may be valuable in non-routine tasks, and in spite of the fact that the incentives to perform the non-routine tasks well will thereby be blunted. The results are applied to the work of aid-giving agencies, to the role of banks in transition economies and to the structure of incentives within the economics profession.

State aids Making EU policy properly reflect geography and subsidiarity The use of state aids to industry is a poorly understood part of competition policy. Currently, the EU Commission presumes that state aids distort competition, yet it approves 98% of applications, often for social or distributional reasons. We argue that proper regulation of state aids should focus on two issues, the externalities generated and the inefficiencies arising from failures in competition between governments. We thus develop a new framework for EU policy and compare its implications with the existing practice of the EU Commission. — Timothy Besley and Paul Seabright

Insulin degradation within isolated rat liver endosomes was studied in vitro with the aid of three 125I-insulin isomers specifically labelled at tyrosine (A14, B16 and B26). Chloroquine and 1,10-phenanthroline were used to minimize insulin proteolysis during endosome preparation, whereas the manipulation of endosomal processing of insulin in vitro by Co2+ ions (to activate) and 1,10-phenanthroline (to inhibit) permitted the study of degradation intermediates and their time-dependent production. Structural and kinetic analysis of intermediates isolated from both intra- and extra-endosomal compartments allowed the determination of major cleavage sites and the probable sequence of proteolytic events. It was found that 125I-tyrosine is the ultimate labelled degradation product of all iodo-insulin isomers, suggesting that endosomal proteases are able to degrade insulin to the level of its constituent amino acids. 125I-tyrosine was also the only radiolabelled product able to cross the endosomal membrane. Intra-endosomal insulin degradation proceeds via two inter-related cleavage routes after metalloendoprotease cleavage of the B-chain. One pathway results from an initial cleavage in the centre region of the B-chain (B7–19), probably at B14-15, whereas the major route results from a cleavage at B24-25. B24-25 cleavage removes the B-chain C-terminal hexapeptide (B25–30), which is subsequently cleaved by an aminopeptidase activity to produce first the pentapeptide B26–30 and then 125I-tyrosine. The isolation of intact radiolabelled A-chain from the degradation of 125I-[A14]-insulin suggests that further degradation of proteolytic intermediates containing cleaved B-chain proceeds via interchain disulphide reduction. The A-chain is then processed by several cleavages, one of which occurs at A13-14.

This paper examines the impact of entry decisions into oligopolistic markets upon the entry and exit decisions of rival producers. When learning economies are important, entry by one firm may paradoxically make entry more attractive to others by weakening the ability of a dominant incumbent to produce at low cost. The likelihood of this outcome depends upon the extent to which variable costs of production decline as output increases, and is enhanced by scope economies in the presence of multi-market contact, as well as by the degree of cost asymmetry between firms. It is suggested that entry-inducing entry may actually have occurred in part of the market for large civilian passenger aircraft. Whether or not this is so, a more general conclusion is robust: in industries where scale and scope effects are large, the impact of entry is not just upon competition but on costs, and these effects work in opposite directions to influence the entry decisions of other firms.

This paper approaches the question of the appropriate level of decentralisation of power in government as a problem in the allocation of control rights under incomplete contracts. The model of the paper compares allocations of power to local, central and regional government as alternative means of motivating governments to act in the interests of citizens. Centralisation allows benefits from policy coordination but has costs in terms of diminished accountability, which can be precisely defined as the reduced probability that the welfare of a given region can determine the re-election of the government. The model is extended to allow for conflicts of interest within regions, and externalities between central and local governments in a federation. It is also applied to determining levels of fiscal transfer between localities, and to circumstances where governments may act as Leviathans appropriating resources for their own use.

Acknowledgments ix Part One Prehistory Chapter 1: Introduction 3 Chapter 2: Sex and Salesmanship 27 Chapter 3: Seduction and the Emotions 40 Chapter 4: Social Primates 60 Part Two Today Chapter 5: Testing for Talent 93 Chapter 6: What Do Women Want? 111 Chapter 7: Coalitions of the Willing 126 Chapter 8: The Scarcity of Charm 141 Chapter 9: The Tender War 157 Notes 183 References 211 Index 233

Two decades after the end of central planning, we investigate the extent to which the advantages bequeathed by planning in terms of high investment in physical infrastructure and human capital compensated for the costs in allocative inefficiency and weak incentives for innovation. We assemble and analyse three separate types of evidence. First, we find that countries that were initially relatively poor prior to planning benefited more, as measured by long-run GDP per capita levels, from infrastructure and human capital than they suffered from weak market incentives. For initially relatively rich countries the opposite is true. Second, using various measures of physical stocks of infrastructure and human capital we show that at the end of planning, transition countries had substantially different endowments from their contemporaneous non-transition counterparts. However, these differences were much more important for poor than for rich countries. Finally, we use firm-level data to measure the cost of a wide range of constraints on firm performance, and we show that after more than a decade of transition in 2002-05, poor transition economies differ much more from their non-transition counterparts, in respect to both good and bad aspects of the planning legacy, than do relatively rich transition countries. However, the persistent beneficial legacy effects disappeared under the pressure of strong growth in transition economies in the run-up to the global financial crisis.

This paper investigates a hitherto unexplored rationale for firms to have joint ownership of a production project. We model risky projects with autocorrelated productivity shocks as creating an option value of investing over time so that later investments benefit from the information revealed by the realization of earlier investments. However, internal and external interest groups are likely to pressurize owners into paying out early revenues from such investments precisely when the autocorrelation of productivity implies they should be reinvesting them in the project. Joint ownership provides a commitment mechanism against interest groups, thereby enabling more efficient levels of investment. The Business Environment and Enterprises Performance survey data corroborate the model's prediction that organizations under conditions favorable to internal or external lobbying pressure are more likely than other firms to choose joint ownership.

This paper examines how networks of professional contacts contribute to the development of the careers of executives of European and US companies. We build a dynamic model of career progression in which career moves both depend upon existing networks and contribute to the development of future networks. We test the theory on an original dataset of nearly 6000 executives in over 3000 firms. We find evidence that professional networks are relevant both because valuable for the employer and because they facilitate job mobility. Our estimates of the elasticity of executives' salaries with respect to the size of their professional networks vary between around 6% and around 26% depending on the specification, with a point estimate under our preferred specification of 7.6%.