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We provide evidence that tax shifts in the Italian cigarette industry are not homogeneous across price categories and are associated with differences in the excise structure. We take the gap betwee...

In terms of urban and extra-urban driving environments, one of the most common phenomena of the last two decades has been the proliferation of roundabouts, which in some cases have replaced the traffic light systems and, in other cases, the horizontal signs typical of road junctions. In the management of traffic flows, roundabouts are often regarded as satisficing solutions, that is, they increase average traffic speed while reducing the number of road accidents satisfactorily. Besides from the role played by physical, structural features, deeply investigated by designers, engineers, and other scientists alike, the social outcome of roundabouts largely depends on the behaviour they are capable of inducing in motorists—and drivers in general—as well as on social cognition. It is very likely, though, that drivers’ behaviour differs across individual agents because of exogenous factors, such as cultural and local traditions, education, family upbringing, and other social backgrounds and cognitive relationships. Here, we study the behaviour of motorists found in metadata, that is, data collected in other studies, with a particular focus on Italy and the United States. The basic idea is to compare the decisions made by motorists at urban and extra-urban roundabouts to those made by economic agents interacting in an Ultimatum Game with discrete offers. Nonetheless, the novelty and relevance of this work lie primarily in the emergence of roundabouts theoretically understood as bargaining environments examined through the Ultimatum Game. Analysing some metadata, we find that motorists might behave as rational agents, although fundamental heuristic factors still need to be thoroughly investigated in future work. This approach allows us both to add very preliminary findings to the vast economic literature dealing with the experimental evidence about Subgame Perfect Nash Equilibria in Ultimatum Games and, above all, to develop a research project based on large-scale natural experimentation and data mining, from classical to modern behavioural economics, there and back again.

The aim of this paper is to investigate whether banks adopt Environmental, Social, and Governance (ESG) practices to reduce reputational damage due to financial penalties and whether the adoption of ESG factors can reduce the probability to receive sanctions. This study extends a previous research (Guerello et al., North American Journal of Economics and Finance, 2018, 48, 591–612) by including ESG scores as determinant of the probability to be sanctioned. The econometric analyses in this paper are based on a sample of 13 Italian banks for the years 2008–2018 and includes ESG scores provided by both Thomson Reuters and Bloomberg. The research shows that ESG score and the probability of sanctions are positively related. However, a careful analysis of causal directions clarifies the meaning of such positive relationship: receiving financial penalties is detrimental for banks reputations, therefore it's necessary for banks to improve their reputation through the adoption of ESG practices.

This investigation exploits a new database, which merges the balance sheet items of Italian banks with sanctions by Bank of Italy and CONSOB in the last decade. We highlight the informative content of sanctions as key for the success of the supervisory activity. First, we evaluate the effects of sanctions on bank performance: we find a negative impact, more pronounced for those banks that were repeatedly sanctioned, for reasons mainly related to risk assessment and funding strategies. Second, we identify a set of bank ratios related to sanctions: we find a strong predictive power of indicators related to efficiency, productivity, and both funding and asset management. Overall, we show that after the first sanction several banks were not able to correct their strategies to avoid further penalties, because likely they were not provided with enough information on the motivations behind sanctions, hence on the required adjustments.

Traditional models of tax enforcement assume that the decision to be tax compliant is the result of an interaction between individual taxpayers and a dedicated tax agency. Evidence shows that tax compliance is the result of a far more complex decision rule, involving both individual and group motivations, along with non-monetary components. In this paper, we consider a game in which the individual decision to be tax compliant is affected both by strategic competition between taxpayers and the psychological cost of being detected (i.e., shame). We ran a laboratory experiment using a sample of 138 students at the Centro di Economia Sperimentale A Roma Est (CESARE) to evaluate the efficiency of random versus targeted audit rules and to verify the interaction between strategic competition and shame. The experimental results show that strategic competition between taxpayers plays a critical role in reducing tax evasion. In addition, shame reinforces this competition, but plays no significant role on its own (i.e., without competition).

In this study, we investigate how economic agents choose gambling partners and how paired risky choices differ from individual ones. To this aim, we develop a simple model and design a laboratory experiment that allows us to compare individual versus paired decisions across two treatments, where pairs are, respectively, exogenously and endogenously formed. In both treatments, paired subjects decide individually and independently how to allocate their wealth over a portfolio of lotteries and fully commit to share any winnings. The main result from our experiment is that whenever agents are allowed to choose a gambling partner they decide to team up with other agents who display the same degree of risk aversion as themselves. Moreover, paired choices consistently involve higher risk taking than individual choices. This finding is more evident when information on subjects’ risk attitudes is made available and when subjects team up in homogeneous pairs, thereby confirming that subjects successfully exploit the benefits of mutual insurance.

In this article, we explore the possibility that the percentage of litigations settled outside of court is affected by the degree of contingency of lawyers’ fees. In our view, a litigation is a game where not only the plaintiff and the defendant, but also their lawyers are independent players. The main consequence of this assumption is that the authority to settle is allocated endogenously to either the clients or their lawyers, depending on the value of the relevant parameters. In this game theoretical setup, (1) we compare the incentives to settle provided by contingent and non-contingent lawyers’ fees, and (2) we state the conditions under which settlement is more likely to happen.

This paper analyzes the welfare effects of the recently revised Italian corporate law, that allows limited liability companies (so called societa a responsabilita limitata) to replace the fulfillment of strict capital requirements with the subscription of insurancecontracts that make capital available in case of default. We find that such insurance contracts are not convenient for insurers. However, if a benevolent planner is willing to subsidize insurers' expected losses, these contracts turn out to be welfare improving for a wide range of the relevantparameters. By calibrating the model with Italian data, we find that social welfare is maximized when the premium charged by the subsidized insurance companies is about 10% of total capitalrequirements; moreover, in this case the planner faces negligible expected losses.

In this paper we develop a conceptual framework to define small and medium-sized enterprise development banks (SMEDB). This conceptual effort is motivated by the lack of a clear definition of SMEDB. Once a consistent definition of SMEDB is provided, we compare a sample of banks that are SMEDB according to such definition with a sample of commercial banks. We conclude that it is possible to separate SMEDB from commercial banks in a statistically significant manner by taking into consideration a set of relevant financial indicators and we confirm the widespread idea that SMEDB play a crucial public/social role.

This paper focuses on how structural funds from the EU might alleviate the credit crunch on Italian SMEs. We found that resources directly available to SMEs represent only 0.19% of 2013 loan facilities: moreover, the allotted resources for SMEs in 2014–2020 programs is expected to be even less. Not only are available resources scarce, but they are also allocated in an inefficient way through procedures that are not always transparent. We conclude that it would be very useful to improve efficiency and transparency, by adopting simpler procedures and reducing compliance costs.

Italian SMEs go public much less than SMEs located in other European countries, even though their relevance for the national economy is relatively higher in terms of employment and value added. Why do Italian SMEs so scarcely rely on equity as an external source of finance, despite the option of getting listed on SME-dedicated stock market segments? In this paper we address this question by analyzing the responses to a questionnaire that we submitted to a sample of listed firms and institutional investors. We also suggest policy interventions to provide Italian SMEs with the appropriate incentives for listing.

We performed an experimental investigation to assess whether the “restricted auction” mechanism proposed by Berkovitch, Israel and Zender in 1997 works effectively as an optimal bankruptcy law or not. An optimal bankruptcy law is a commitment device that implements efficient choices both before (ex ante) and after (ex post) financial distress, even if moral hazard is binding. We designed an experiment focused on ex ante efficiency and we found that the restricted auction mechanism was able to direct an optimal amount of effort toward entrepreneurial activities. This result confirms the theoretical predictions. Nonetheless, we found that under a plain unrestricted auction mechanism our experimental subjects chose to allocate into their firms a larger amount of effort than that predicted by theory. Although difficult to justify on theoretical grounds, this experimental evidence is robust. Our behavioral interpretation is that this result is due to “moral sentiments”, such as the natural propensity of subjects toward socially desirable behaviors. In fact, we show that it vanishes once these motives are removed.

Italian SMEs go public much less than SMEs located in other European countries, even though their relevance for the national economy is relatively higher in terms of employment and value added. Why do Italian SMEs so scarcely rely on equity as an external source of finance, despite the option of getting listed on SME-dedicated stock market segments? In this paper we address this question by analyzing the responses to a questionnaire that we submitted to a sample of listed firms and institutional investors. We also suggest policy interventions to provide Italian SMEs with the appropriate incentives for listing.

We propose a marriage model where assortative matching results in equilibrium for reasons other than those driving similar results in the search and matching literature. A marriage is a joint venture where husband and wife contribute to the couple’s welfare by allocating their time to portfolios of risky activities. Men and women are characterised by different preferences over risk and the optimal match is between partners with the same level of risk aversion. In our model no two men (women) rank the same woman (men) as most desirable. Given that there is no unanimous ranking of candidates, everyone marries in equilibrium their most preferred partner

A ÞrmÕs decision of obeying environmental regulatory standards depends crucially on its chances of being detected and on the costs it must bear in case of detection. We investigate the relationship between the amount of resources devoted to environmental monitoring and the extent of non-compliancy, using a game theoretical model to capture the strategic implications of the monitoring process. In our model a population of Þrms, each of whom decides whether or not to be compliant, and a monitoring agency, that can detect non-compliance only by monitoring signals, strategically interact (more precisely, each Þrm interacts both with the monitoring agency and all other Þrms). In particular, each Þrm produces a signal, the distribution of which is (not perfectly) correlated with its behavior, while the agency, that is resource constrained, chooses some (optimal) fraction of the signals to monitor; hence, the probability of being monitored for each Þrm depends crucially on the behavior of both the monitoring agency and all other Þrms. Simply put, if a large fraction of Þrms chooses not to obey regulatory standards, the probability of being monitored for non-compliant Þrms is small. The main consequence of the strategic interaction among Þrms is that a more aggressive monitoring policy may end up relaxing the resource constraint of the monitoring agency as long as enough Þrms, perceiving a higher chance of being detected, become compliant. In fact, while in a framework with no strategic interaction a more aggressive monitoring policy simply induces a larger fraction of Þrms to be compliant (we call this e!ect, recognized by Becker and Stigler in their seminal contributions, Òimpact effectÓ), in our model a more aggressive monitoring policy also implies a higher probability of being monitored for the remaining non-compliant Þrms, and, in turn, implies a further switch to compliancy. We show that this further switch, that we call ÒmagniÞcation effectÓ, can be very relevant; hence, when monitoring policies are to be designed, our advice is to take strategic interaction among Þrms in the right consideration.