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The issue of reliability and the cost of failure or maintenance costs of renewable energy sources, including wind farms, is becoming increasingly important, especially as the volume of electricity supply from such installations increases.

Do people know their own risk preferences, or do risk choices change with experience and observation? We provide a straightforward test in the laboratory. People make an initial decision concerning a lottery choice and then experience 24 unpaid practice periods in which they roll the dice, record the outcome, and record the would-be payoff. They then make a final decision for the lottery choice; one of the first and last periods is randomly chosen for payment. Our primary hypothesis is that people will become less risk-averse by having made and experienced the practice rolls. We do find that people are significantly more likely to become less risk-averse than more risk-averse over time. We note that this move towards assuming increased risk goes in the opposite direction from what is at least arguably predicted by loss aversion and reference dependence. We find that women's preferences change much less during a session than men's preferences change. We feel that our literally hands-on approach ensures a degree of engagement that helps to accelerate the learning process. We argue that measures obtained after people have had experience with a mechanism are more meaningful, and that this principle might well extend more generally to other elicitation tasks. [ABSTRACT FROM AUTHOR]

Empirical legal studies (ELS) is a sibling discipline to law and economics. Conceived by a visionary scholar almost 40 years ago, it has today become a reality. ELS is currently one of the most interesting phenomena in legal academia. We here celebrate its founder Theodore Eisenberg, and provide a glimpse of this important step forward in modern legal scholarship, for a law and economics audience. [ABSTRACT FROM AUTHOR]

We use different incentive schemes to study truth-telling in a die-roll task when people are asked to reveal the number rolled privately. We find no significant evidence of cheating when there are no financial incentives associated with the reports, but do find evidence of such when the reports determine financial gains or losses (in different treatments). We find no evidence of loss aversion in the standard case in which subjects receive their earnings in a sealed envelope at the end of the session. When subjects manipulate the possible earnings, we find evidence of less cheating, particularly in the loss setting; in fact, there is no significant difference in behavior between the non-incentivized case and the loss setting with money manipulation. We interpret our findings in terms of the moral cost of cheating and differences in the perceived trust and beliefs in the gain and the loss frames. [ABSTRACT FROM AUTHOR]

The paper has a twofold aim. On the one hand, it provides what appears to be the first game-theoretic modeling of Napoléon’s last campaign, which ended dramatically on June 18, 1815, at Waterloo. It is specifically concerned with the decision Napoléon made on June 17, 1815, to detach part of his army and send it against the Prussians, whom he had defeated, though not destroyed, on June 16 at Ligny. Military strategists and historians agree that this decision was crucial but disagree about whether it was rational. Hypothesizing a zero-sum game between Napoléon and Blücher, and computing its solution, we show that dividing his army could have been a cautious strategy on Napoléon’s part, a conclusion which runs counter to the charges of misjudgment commonly heard since Clausewitz. On the other hand, the paper addresses some methodological issues relative to “analytic narratives”. Some political scientists and economists who are both formally and historically minded have proposed to explain historical events in terms of properly mathematical game-theoretic models. We liken the present study to this “analytic narrative” methodology, which we defend against some of objections that it has aroused. Generalizing beyond the Waterloo case, we argue that military campaigns provide an especially good opportunity for testing this new methodology. [ABSTRACT FROM AUTHOR]

The study of effort provision in a controlled setting is a key research area in experimental economics. There are two major methodological paradigms in this literature: stated effort and real effort. In the stated-effort paradigm the researcher uses an “effort function” that maps choices to outcomes. In the real-effort paradigm, participants work on a task, and outcomes depend on their performance. The advantage of the stated-effort design is the control the researcher has over the cost of effort, which is particularly useful when testing theory. The advantage of the real-effort design is that it may be a better match to the field environment, particularly with respect to psychological aspects that affect behavior. An open question in the literature is the degree to which the results obtained by the two paradigms differ, and if they do, why. We present a review of methods used and discuss the results obtained from using these different approaches, and issues to consider when choosing and implementing a task. [ABSTRACT FROM AUTHOR]

The Holt and Laury (American Economic Review, 92(5), 1644-1655, 2002) mechanism (HL) is the most widely-used method for eliciting risk preferences in economics. Participants typically make ten decisions with different variance options, with one of these choices randomly chosen for actual payoff. For this mechanism to provide an accurate measure of risk aversion, participants need to understand the choices and give consistent responses. Unfortunately, inconsistent and even dominated choices are often made. Can these mistakes lead to a misrepresentation of economic phenomena? We use gender differences in risk taking to test this question. In contrast to many findings in the literature, HL results typically do not find significant gender differences. We compare the HL approach, where we replicate the lack of significant gender differences, with a simpler presentation of the same choices in which participants make only one of the ten HL decisions; this simpler presentation yields strong gender differences indicating that women are more risk averse than men. We also find gender differences in the consistency of decisions. We believe that the results found in the simpler case are more reflective of underlying preferences, since the task is considerably easier to understand. Our results suggest that the complexity and structure of the risk elicitation mechanism can affect measured risk preferences. The issue of complexity and comprehension is also likely to be present with elicitation mechanisms in other realms of economic preferences. [ABSTRACT FROM AUTHOR]

We critically survey explicit discussions of the narrativity of economic agents by economists. Narrativity broadly refers to the way humans construct and use stories, notably to define their personal identity. We borrow from debates outside of economics to provide the critical dimension of our survey. Most contributions on the narrativity ofeconomicagents do not discuss one another. To establish communication, we suggest a structure of oppositions that characterize these contributions taken as a whole. These oppositions are notably characterized by threetensions: in terms of methodological attitudes (‘scientism’ vs. ‘humanism’), of underlying theories of personal identity postulating the existence of a unique sense of self or not (‘diachronicity’ vs. ‘episodicity’) and of the normative implications of narrativity (‘welfare-increasing’ vs. ‘welfare-decreasing’). The main goal is to clarify the structure of opposite positions within a more or less explicit debate about the identity of individuals in economics. [ABSTRACT FROM PUBLISHER]

The measurement of urbanization rates and other uses of statistical information, for example the use of historical town growth to measure long-term economic growth, are usually based on an ad hoc population threshold to define and practically classify settlements as towns. The method, however, trades off accuracy and precision for convenience and simplicity. This paper proposes a new threshold that uses the town size distribution together with agricultural data to derive an appropriate cutoff value. The relevance of agricultural income is integrated into the classification scheme through the differential effect of local agricultural endowments on settlement size. The threshold is chosen such that the size of towns above the cutoff is statistically not influenced by local agricultural endowments, while the size of villages, which is below the threshold, is indeed shaped by them. This new approach is practically demonstrated with an application to the urban system of the nineteenth century in the German region of Saxony. This setting is used to investigate the relevance of a different classification for the development of urbanization over time and Gibrat's law. The results demonstrate that the underlying classification scheme matters strongly for the conclusions drawn from historical urban data. They also indicate that the use of a common population threshold for a comparative analysis or temporal comparisons in a historical context increases the misclassifications of settlements. [ABSTRACT FROM AUTHOR]

In some experiments participants make multiple decisions; this feature facilitates gathering a considerable amount of incentivized data over the course of a compact session. A conservative payment scheme is to pay for the outcome from every decision made. An alternative approach is to pay for the outcome of only a subset of the choices made, with the amount at stake for this choice multiplied to compensate for the decreased likelihood of that choice’s outcome being drawn for payoff. This “pay one” approach can help to avoid wealth effects, hedging, and bankruptcy considerations. A third method is to pay only a subset of the participants for their choices, thereby minimizing transactions costs. While the evidence on differences across payment methods is mixed, overall it suggests that paying for only a subset of periods or individuals is at least as effective as the “pay all” approach and can well be more effective. We further the discussion about how to best choose an incentive structure when designing an experiment. [ABSTRACT FROM AUTHOR]

This paper concentrates on the scientific work of Elinor Ostrom (1933–2012), who for more than forty years carried out theoretical and empirical research on common-pool resources. Ostrom theorizes that the commons often prevent resource exhaustion more effectively than the state, international institutions, or private owners. However, one of the foundations of commons, as an alternative program to the private/state dualism, ought to be the principle of equality that includes a gender perspective in theory and practice. The goal of this article is to provide thoughtful ways of incorporating gender in economic research from the viewpoint of feminist epistemology and to indicate the place of gender in Ostrom’s work. The methodology of this study could be used for reading economic publications through a gender perspective as well as for inspiring economists to use both gender as a category of analysis and gender-sensitive language in their theoretical and empirical studies. [ABSTRACT FROM AUTHOR]

Evidence of illusion of control-the fact that people believe to have control over pure chance events-is a recurrent finding in experimental psychology. Results in economics find instead little to no support. In this paper we test whether this dissonant result across disciplines is due to the fact that economists have implemented only one form of illusory control. We identify and separately tests in an incentive-compatible design two types of control: (a) over the resolution of uncertainty, as usually done in the economics literature, and (b) over the choice of the lottery, as sometimes done in the psychology literature but without monetary payoffs. Results show no evidence of illusion of control, neither on choices nor on beliefs about the likelihood of winning. [ABSTRACT FROM AUTHOR]

Social vertebrates have a rich repertoire of communication signals and modalities. Recent work on the social insects has uncovered a diverse set of communication modalities including chemical, tactile, visual, and auditory signals to communicate a wide variety of information on the location of distant food sites, distress, and aggression. Here, we investigated abdominal wagging in the fire ant, Solenopsis invicta. We found that the abdominal 'wagging' that occurred inside the fire ant nests differed significantly from the abdominal 'flagging' that is known to occur outside the fire ant nests. Neither sounds nor venom was emitted during abdominal wagging inside the fire ant nests. Moreover, the incidence and duration of abdominal wagging was greater when workers were tending brood or ingesting food than when engaged in non-brood related tasks or in donating food. Lastly, inside the nests, abdominal wagging neither attracted nor repelled nearby workers. Thus, we speculate that wagging is an expression of pleasure while tending brood or ingesting food that falls along the continuum between the aggressive nature of abdominal flagging and the distress call of abdominal stridulation. [ABSTRACT FROM AUTHOR]

People believe that, even in very large samples, proportions of binary signals might depart significantly from the population mean. We model this 'nonbelief in the Law of Large Numbers' by assuming that a person believes that proportions in any given sample might be determined by a rate different than the true rate. In prediction, a nonbeliever expects the distribution of signals will have fat tails. In inference, a nonbeliever remains uncertain and influenced by priors even after observing an arbitrarily large sample. We explore implications for beliefs and behavior in a variety of economic settings. [ABSTRACT FROM AUTHOR]

This paper estimates social effects of incentivizing people in teams. In three field experiments featuring exogenous team formation and opportunities for repeated social interactions, we find large team effects that operate through social channels. In particular, assignment to a team treatment increases productivity by 9%-17% relative to an individual incentive treatment, even though the individual incentive yields a higher private return. Further, we find that in a choice treatment individuals overwhelmingly prefer the individual incentive to the team incentive, despite the latter being more effective. These results are most consistent with the team effects operating through guilt or social pressure as opposed to pure altruism. [ABSTRACT FROM AUTHOR]

The fire ant, Solenipsis invicta, has successfully invaded and colonized ecosystems worldwide. Like humans, fire ants build permanent domiciles to house family members, establish well-defined territories for foraging and fight to the death when invading neighbors breach the borders. One of the more striking behaviors of fire ants is their ability to form a living raft when springtime rains flood their domiciles. What are the survival benefits, if any, to collective behavior during a flood? To address this question, we quantified the survival of individuals as solitary swimmers compared to cooperative rafters. We found that large workers and matriarchs survived equally well as solitary swimmers or rafters. In contrast, small workers drowned whether they were solitary swimmers or rafters. However, when rafting with large workers or matriarchs, the mortality of small workers declined three-fold. We propose a behavior phenotype classification scheme to catalog the diverse behaviors observed in this series of experiments. Although the ultimate goal of rafting behavior by fire ant workers is to protect their matriarch, the proximate goal for the vast majority of fire ants is to save themselves first and to save others if the opportunity arises. [ABSTRACT FROM AUTHOR]

Objectives: Iron deficiency is common in pregnancy, postpartum, inflammatory bowel disease, chronic kidney disease, chronic heart failure, heavy uterine bleeding, cancer and following surgery. We estimate the budget impact (BI) on the Swiss mandatory health insurance associated with substituting iron sucrose (standard) with ferric carboxymaltose (new treatment) using real-life data. Methods: Resource use was based on recent primary data (Polyquest Prescriber Analysis, Anemia Patient Record Study in Switzerland). Personnel costs were estimated using the Swiss Tarmed fee-for-service reimbursement system. Drug costs and costs of materials used were based on official tariffs (Spezialitätenliste, MiGeL). Actual IMS sales data of both products were used to verify the BI model (1 CHF ≈ 1 USD, Jan 2013). Results: Ferric carboxymaltose was associated with cost savings of 30-44 % per patient per treatment cycle compared to iron sucrose. Costs per 200/500/1,000 mg total dosage treatment cycle were CHF 101/210/420 for ferric carboxymaltose and CHF 144/375/721 for iron sucrose. This results in cost savings of CHF 22-31 million across all indications in 2009. Savings were driven by personnel cost reductions (application time and number of applications). Sensitivity analyses confirmed these cost savings, even for the higher application costs of ferric carboxymaltose, with minimum savings of CHF 17 million per year. Conclusions: Treating iron deficiency involves substantial costs to the Swiss MHI which may be reduced by substituting iron sucrose with ferric carboxymaltose. The use of real-life data raises methodological questions about the fundamental compatibility of this data with the conceptual framework of BI analysis. [ABSTRACT FROM AUTHOR]

Highlights: [•] We test a mechanism where groups can grow and shrink via voluntary voting. [•] The mechanism successfully induces efficient outcome in group size and contribution. [•] This is driven by economies of scale combined with concern about being left out. [•] ‘Redemption’ is not rare; many people become good citizens after initially not. [Copyright &y& Elsevier]

We examine elicitation effects in a multi-stage bargaining experiment with escalating stakes conducted under direct-response and strategy-method elicitation. We find a significantly greater incidence of decisions leading to bargaining failure under direct responses. In addition, the predictive power of alternative risk attitude measures differs between the elicitation methods. Potential sources of the effects and resulting implications are discussed. [ABSTRACT FROM AUTHOR]

Recent years have seen an increasing number of empirical papers using subjective indicators in cross-country quantitative analyses of growth. We evaluate potential observer biases in the three most commonly employed subjective measures of property rights – taken from the Heritage Foundation, Fraser Institute, and World Economic Forum. Drawing on cross-national data for 156 countries during the years 2000 – 2010, we use Granger causality tests to assess whether exposure to recent information on economic performance introduces bias to coding of property rights scores. Further, we evaluate whether the Great Recession led observers to change property rights scores in advanced nations. We find consistent evidence that observers who provide subjective coding of property rights scores rated nations more positively when their economic performance was positive, and more negatively during the recent global financial crisis. Taken together, our findings suggest that coding of commonly employed property rights measures are subject to substantial observer bias. [ABSTRACT FROM AUTHOR]

This paper explores the implications of the recent revival of Hegel studies for the philosophy of economics. We argue that Hegel's theory of Objective Spirit anticipates many elements of modern approaches in cognitive sciences and of the philosophy of mind, which adopt an externalist framework. In particular, Hegel pre-empts the theories of social and distributed cognition. The pivotal elements of Hegelian social ontology are the continuity thesis, the performativity thesis, and the recognition thesis, which, when taken together, imply that all mental processes are essentially dependent on externalizations, with the underlying pattern of actions being performative. In turn, performative action is impossible without mutual recognition in an intersubjective domain. We demonstrate the implications for economic theory in sketching an externalist approach to institutions and preferences. [ABSTRACT FROM AUTHOR]

The paradox of widespread cooperation in an intensely competitive natural world has been a major focus of theory and research in evolutionary biology and related disciplines over the past several decades. While much of the earlier work in this vein was gene-centered and grounded in inclusive fitness (or kin selection) theory, more recent developments suggest that it might also be useful to view cooperation (and biological complexity) from a bioeconomic perspective. Here I will briefly explore the case for a paradigm shift, with special reference to the role of functional synergy as a distinct class of interdependent causal influences in evolution. I will argue that synergies of various kinds have been important drivers for cooperation in living systems at all levels. From this perspective, inclusive fitness and other factors may be enablers for cooperation, but the many exceptions show that genetic relatedness is neither necessary nor sufficient for the emergence of cooperative phenomena. [ABSTRACT FROM AUTHOR]

People have a tendency to procrastinate when faced with aversive tasks-but they also procrastinate in relation to beneficial matters whose rewards are instantaneous. If agents value present anticipations of future consumption, revision of consumption plans may be viewed as a benign form of self-deception. We consider a minimal generalization of the Samuelson discounted utility model to allow for utility linked to next period consumption. Agents are assumed to vary with respect to their sophistication. In this context, commitment and self-control are obstacles to the pursuit of increased utility. We also examine different environments that are likely to facilitate repeated revisions. [ABSTRACT FROM AUTHOR]

Abstract: In the paper I bring to the attention of the economists and historians of economic thought the idea of economic dynamics that can be found in the first book by Morishima published in 1950 but has been totally overlooked. It has a great interest not only because there it appears for the first time the application of new mathematical concepts (“structural stability”) but also because Morishima pursues a way of dynamizing general equilibrium theory that has been neglected in the postwar developments inspired by Samuelson''s Foundations. The paper has three parts. In the first and second I outline the development of economic dynamics and its applications to general equilibrium elaborated by Morishima; in the third a comparison between the prevailing idea of economic dynamics as originally put forward by Samuelson and that elaborated by Morishima is advanced and discussed. [Copyright &y& Elsevier]

A history of economic thought perspective on The Economics of Time and Ignorance reveals that the book rehabilitates some major themes in the Austrian tradition that were all but lost subsequent to the formalist revolution in economics that took place in the middle of the twentieth-century. The book also anticipates some important ideas that were extended and applied in Austrian economics after it was first published. Reviews have claimed that the book was a 'classic' and also 'original'. The book is too close in a temporal sense to judge whether or not future generations will canonize it as a 'classic'. Using Stigler's criteria as to what constitutes scientific 'originality', it is concluded that, taken as a whole, the book was not original. From the vantage point of the overall discipline of economics, it was a work advancing controversial ideas that would not easily change the beliefs, practices and interests of economists in general but it offered sound reasons for taking the Austrian thought-trajectory more seriously. It would be more fitting to view the authors as providers of many innovations contributing to the mature Austrian economics of the twenty-first century. [ABSTRACT FROM AUTHOR]

Abstract: Are men more willing to take financial risks than women? The answer to this question has immediate relevance for many economic issues. We assemble the data from 15 sets of experiments with one simple underlying investment game. Most of these experiments were not designed to investigate gender differences and were conducted by different researchers in different countries, with different instructions, durations, payments, subject pools, etc. The fact that all data come from the same basic investment game allows us to test the robustness of the findings. We find a very consistent result that women invest less, and thus appear to be more financially risk averse than men. [Copyright &y& Elsevier]

By drawing attention to the planning islands of firm organizations in a market economy, Coase makes us believe that besides the price mechanism, there is another means of coordination, namely deliberate coordination. With the firm as an exemplary case of deliberate coordination was introduced into landscape of economics, Coase initiated a new research program which is to inquire into how efficiency is (and could be) achieved via various kinds of institutional arrangements, from the price mechanism, to firms, to government regulations. This paper acknowledges the positive role Coase has played in drawing economists' attention to the generally neglected field of organizational research. It criticizes, however, his research program for viewing the economy, or society, from the perspective of some concrete decision-making entity. [ABSTRACT FROM AUTHOR]

Abstract: In this article we explore the issues that surround within-subject and between-subject designs. We describe experiments in economics and in psychology that make comparisons using either of these designs (or both) that sometimes yield the same results and sometimes do not. The overall goal is to establish a framework for understanding which critical questions need to be asked about such experimental studies, what authors of such studies can do to ameliorate fears of confoundedness, and which scenarios are particularly susceptible to divergent results from the two approaches. Overall, we find that both designs have their merits, and the choice of designs should be carefully considered in the context of the question being studied and in terms of the practical implementation of the research study. [Copyright &y& Elsevier]

In this paper, we present a first survey of the literature regarding whether the strategy method, in which a responder makes conditional decisions for each possible information set, leads to different experimental results than does the more standard direct-response method, in which the responder learns the action of the first mover and then chooses a response. Of the twenty-nine existing comparisons, sixteen find no difference, while four do find differences, and nine comparisons find mixed evidence. We also find some indications about the underlying determinants of when the two methods lead to different responses. For example, it appears that levels of punishment are substantially lower with the strategy method. In addition, it also appears that difference across these elicitation methods are more likely when people make fewer contingent choices. Finally, in no case do we find that a treatment effect found with the strategy method is not observed with the direct-response method. [ABSTRACT FROM AUTHOR]

Abstract: We study experimentally how males and females differ in the way same-gender peers observing their action affects their social behavior. In our experiment, people play a Prisonerʼs Dilemma game with a partisan audience watching the choice. Two groups participated in each session; these groups could be both all-male, both all-female, or one all-male and one all-female. Groups were separated into two rooms. Each person in the group played the game once with an audience of the same group and once with audience of the other group. Behavior is significantly affected by the interaction of gender and place: males cooperate substantially less often when observed by their peer group, while females cooperate substantially more often. We discuss a possible explanation for this pattern: Males and females wish to signal their in-group peers, but males wish to signal their formidability and females wish to signal their cooperativeness. [Copyright &y& Elsevier]

We devise an experiment to explore the effect of different degrees of bargaining power on the design and the selection of contracts in a hidden-information context. In our benchmark case, each principal is matched with one agent of unknown type. In our second treatment, a principal can select one of three agents, while in a third treatment an agent may choose between the contract menus offered by two principals. We first show theoretically how different ratios of principals and agents affect outcomes and efficiency. Informational asymmetries generate inefficiency. In an environment where principals compete against each other to hire agents, these inefficiencies may disappear, but they are insensitive to the number of principals. In contrast, when agents compete to be hired, efficiency improves dramatically, and it increases in the relative number of agents because competition reduces the agents' informational monopoly power. However, this environment also generates a high inequality level and is characterized by multiple equilibria. In general, there is a fairly high degree of correspondence between the theoretical predictions and the contract menus actually chosen in each treatment. There is, however, a tendency to choose more 'generous' (and more efficient) contract menus over time. We find that competition leads to a substantially higher probability of trade, and that, overall, competition between agents generates the most efficient outcomes. [ABSTRACT FROM AUTHOR]

Law and economics is going through a paradigm shift as the influential behavioral school is challenging and remolding its very foundation, i.e., homoeconomicus model. However, neither of the approaches captures the essence of interaction between entrepreneurial heterogeneous agents. The Misesian homoagens approach adequately addresses the deficiencies of the predominant paradigm, opening doors to a far richer legal-economic analysis incorporating real world dynamics of complex market processes. [ABSTRACT FROM AUTHOR]

Endemic to a small island off the coast of China, the Shedao pit viper, Gloydius shedaoensis, is known for its 'accidental altruism.' Juvenile pit vipers often kill passerine birds too large to swallow. Large prey carcasses are scavenged by neighboring adults. In turn, adult pit vipers kill hawks that prey on juvenile pit-vipers, but are not a threat to the adults themselves. Using agent-based computer simulations, we quantified the lifetime fitness of pit viper breeders with one of three genotypes: selfish, altruistic or both selfish and altruistic. Our simulation was based on a four-dimensional (4D) model of social behavior which included interactions of pit viper offspring with predators and prey as well as conspecifics. Results showed that, over ten breeding seasons, pit viper breeders with flexible altruistic and selfish genotypes averaged seven times the number of surviving offspring relative to breeders with pure-selfish genotypes, and 23 times the number of surviving offspring as breeders with pure-altruistic genotypes. In summary, viewing animal behavior through the lens of the 4D model will extend our understanding of the evolutionary pathway to social behaviors through natural selection processes. [ABSTRACT FROM AUTHOR]