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Productivity and credibility in industry equilibrium. Working paper
, 2011
"... I analyze a model of production in a competitive environment with heterogeneous …rms. E ¢ cient production requires individuals within the organization to take noncontractible actions for which rewards must be informally promised rather than contractually assured. The credibility of such promises em ..."
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Cited by 9 (0 self)
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I analyze a model of production in a competitive environment with heterogeneous …rms. E ¢ cient production requires individuals within the organization to take noncontractible actions for which rewards must be informally promised rather than contractually assured. The credibility of such promises emerges from a …rm’s future competitive rents. Equilibrium competitive rents are ine ¢ ciently concentrated at the top. I explore several policy and empirical implications of this result. (JEL D21, D24, L14, L22)
Cooperation in anonymous dynamic social networks
, 2013
"... Abstract We study the extent to which cooperative behavior can be sustained in large, anonymous, evolving social networks. Individuals strategically form relationships under a social matching protocol and engage in prisoner's dilemma interactions with their partners. We characterize a class of ..."
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Cited by 2 (2 self)
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Abstract We study the extent to which cooperative behavior can be sustained in large, anonymous, evolving social networks. Individuals strategically form relationships under a social matching protocol and engage in prisoner's dilemma interactions with their partners. We characterize a class of equilibria that support cooperation as a stationary outcome. When cooperation is possible, its level is uniquely determined. While neither community enforcement nor contagion mechanisms have force in our setting, the endogenous dynamics of the social network imply that cooperation allows an individual to gradually accumulate a large network of profitable interactions, while defection results in social marginalization. Even as players become perfectly patient, equilibrium allows for full cooperation, only autarky, or the coexistence of cooperation and defection, depending on payoffs. Smaller levels of cooperation can be sustained by a form of exclusivity among cooperators. * We thank
Contractual Incompleteness, Unemployment, and Labor Market Segmentationy
, 2013
"... This paper provides evidence that involuntary unemployment, and the segmentation of labor markets into firms offering “good ” and “bad ” jobs, may both arise as a con-sequence of contractual incompleteness. We provide a simple model that illustrates how unemployment and market segmentation may joint ..."
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This paper provides evidence that involuntary unemployment, and the segmentation of labor markets into firms offering “good ” and “bad ” jobs, may both arise as a con-sequence of contractual incompleteness. We provide a simple model that illustrates how unemployment and market segmentation may jointly emerge as part of a market equilibrium in environments where work effort is not third-party verifiable. Using ex-perimental labor markets that differ only in the verifiability of effort, we demonstrate empirically that contractual incompleteness can cause unemployment and segmenta-tion. Our data are also consistent with the key channels through which the model explains the emergence of both phenomena.