Richard H. Clarida, Benjamin M. Friedman, The Behavior of U.S. Short-Term Interest Rates Since October 1979, The Journal of Finance, Vol. 39, No. 3, Papers and Proceedings, Forty-Second Annual Meeting, American Finance Association, San Francisco, CA, December 28-30, 1983 (Jul., 1984), pp. 671-682

We study a repeated game of price leadership in which a firm proposes supermarkups over Bertrand prices to a coalition of rivals. Supermarkups and marginal costs are recoverable from data on prices and quantities using the model’s structure. In an application to the beer industry, we find that price leadership increases profit relative to Bertrand competition by 17 percent in fiscal years 2006 and 2007, and by 22 percent in 2010 and 2011, with the change mostly due to consolidation. We simulate two mergers, which relax binding incentive compatibility constraints and increase supermarkups. These coordinated effects arise even with efficiencies that offset price increases under Bertrand competition.

Results of recent empirical and theoretical research have shown the applicability of consumer demand theory in describing and predicting choices of nonhuman consumers (see A. Covich, D. Rapport and J. Turner, Battalio et al., Kagel et al., 1975, 1980). Commodities used in these studies have been largely limited to different kinds of edibles: food grains, water, and sweet tasting (preferred) fluids. A natural extension of the commodity choice model is to consider leisure as a good. This paper presents results of experiments showing that nonhuman workers (pigeons) are willing to trade off income for leisure if the price is right. More specifically our results show that the Slutsky-substitution effect is positive for (exactly) compensated wage decreases, and that leisure is a normal good at all points in the choice space. In addition to demonstrating the pervasiveness of income-leisure tradeoffs, the experiments show strong regularities in the size of the substitution and income effects at varying wage rates; with increases in real wages both income and substitution effects get smaller, but the substitution term decreases more rapidly than the income term resulting in a backward bending labor supply curve at higher wages. The plan of the paper is as follows. In Section I we characterize the procedures employed in the laboratory for studying labor supply, and summarize well-established characteristics of this behavior as it is relevant to the present experiments. Sections II and III describe the hypotheses tested and the experimental procedures employed in the tests. Results of the experiments are given in Section IV. Some of the implications of these results are discussed in a brief concluding section. Space considerations do not permit a detailed discussion of the reasons why economists should take seriously the investigation of economic theories using nonhuman subjects (see Kagel and Battalio for this argument). For the more skeptical reader we simply note that if one defines economics as .. . .the study of the allocation of scarce resources among unlimited and competing uses (Albert Rees, 1968, p. 472), then animal psychologists, ecologists and biologists have been involved in studying economic behavior for some time now (Rapport and Turner; Jack Hirschleifer; H. Rachlin). It is but a small step to take the technologies of these related disciplines and apply them to behavior of interest to economists, for example labor supply behavior. At a minimum, such studies expand considerably the scope for comparative economic analysis. At a maximum they provide a laboratory for identifying, testing, and better understanding general laws of economic behavior. Use of this laboratory is predicated on the fact that behavior as well as structure vary continuously across species, and that principles of economic behavior would be unique among behavioral principles if they did not apply, with some variation, of course, to the behavior of nonhumans.

There has been a great deal of discussion about whether the marginal utility of income rises with income. Most notably, Milton Friedman and Leonard J. Savage argued in their classic paper that the willingness to gamble implies that the marginal utility of income is rising over a range. The discussions of rising marginal utility and of Friedman-Savage gambles have proceeded independently of the literature on time preference, although the issues are in fact related logically. Drawing on this logical relationship we shall show 1) that at least when intertemporal utility is separable, the stable levels of consumption that are usually observed imply that the marginal utility of income decreases as income rises. 2) Even if the marginal utility of income does increase, Friedman-Savage gambles normally will not maximize utility; saving and dissaving can attain the levels of consumption which generate the most utility per dollar of income at a lower cost than gambles unless imperfections in the capital market are severe. 3) Even when the utility function is not temporally separable, repeated gambling cannot be a rational way of dealing with a rising marginal utility of income. We therefore conclude that observed gambling is seldom if ever explained by the logic set out in Friedman and Savage's seminal paper. In view particularly of the stability of consumption levels and the lack of FriedmanSavage gambles, we conclude that marginal utility of income does not rise with income. I. A Conceptual Framework

Inexperienced women, along with economics and business majors, are much more susceptible to the winner’s curse, as are subjects with lower SAT/ACT scores. There are strong selection effects in bid function estimates for inexperienced and experienced subjects due to bankruptcies and bidders who have lower earnings returning less frequently as experienced subjects. These selection effects are not identified using standard econometric techniques but are identified through experimental treatment effects. Ignoring these selection effects leads to misleading estimates of learning.

Whereas most U.S. corporations are widely held, the predominant form of ownership in East Asia is control by a family, which often supplies a top manager. These features of “crony capitalism” are actually more pronounced in Western Europe. In both regions, the salient agency problem is expropriation of outside shareholders by controlling shareholders. Dividends provide evidence on this. Group-affiliated corporations in Europe pay higher dividends than in Asia, dampening insider expropriation. Dividend rates are higher in Europe, but lower in Asia, when there are multiple large shareholders, suggesting that they dampen expropriation in Europe, but exacerbate it in Asia.