An Introduction to the Law & Economics of Information
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When Does Behavioural Economics Really Matter?
When does behavioural economics really matter? Ian McAuley, University of Canberra and Centre for Policy Development (www.cpd.org.au) Paper to accompany presentation to Behavioural Economics stream at Australian Economic Forum, August 2010. Summary Behavioural economics integrates the formal study of psychology, including social psychology, into economics. Its empirical base helps policy makers in understanding how economic actors behave in response to incentives in market transactions and in response to policy interventions. This paper commences with a short description of how behavioural economics fits into the general discipline of economics. The next section outlines the development of behavioural economics, including its development from considerations of individual psychology into the fields of neurology, social psychology and anthropology. It covers developments in general terms; there are excellent and by now well-known detailed descriptions of the specific findings of behavioural economics. The final section examines seven contemporary public policy issues with suggestions on how behavioural economics may help develop sound policy. In some cases Australian policy advisers are already using the findings of behavioural economics to advantage. It matters most of the time In public policy there is nothing novel about behavioural economics, but for a long time it has tended to be ignored in formal texts. Like Molière’s Monsieur Jourdain who was surprised to find he had been speaking prose all his life, economists have long been guided by implicit knowledge of behavioural economics, particularly in macroeconomics. Keynes, for example, understood perfectly the “money illusion” – people’s tendency to think of money in nominal rather than real terms – in his solution to unemployment. -
The Process of Inflation Expectations' Formation
The Process of Inflation Expectations’ * Formation Anna Loleyt** Ilya Gurov*** Bank of Russia July 2010 Abstract The aim of the investigation is to classify and systematize groups of economic agents with different types of inflation expectations in information economy. Particularly it’s found out that it is not feasible to exclude the possibility of current signals perception by economic agents. The analysis has also shown that there is an uncertainty in economy when authorities redeem monetary policy promises, but their action wouldn’t influence on average inflation expectations of economic agents. The investigation results testify the flat existence of agents in economy which are characterizing with rational, quasi-adaptive (including adaptive) and also arbitral inflation expectations. Keywords: information economy, information signal, information perception, agent belief in information, inflation expectations, quasi-adaptive expectations, arbitral expectations. *Acknowledgments: The first authors gratefully acknowledge support through the Bank of Russia. Especially we would like to thank Mr. Alexey V. Ulyukaev for helpful research assistance and Mrs. Nadezhda Yu. Ivanova for strong support. We are also grateful to Mr. Sergey S. Studnikov for his comments. **General Economic Department, Bank of Russia, 12 Neglinnaya Street, Moscow, 107016 Russia Faculty of Economics, Lomonosov Moscow State University, Moscow, Russia Email: [email protected] ***General Economic Department, Bank of Russia, 12 Neglinnaya Street, Moscow, 107016 Russia Faculty of Economics, Lomonosov Moscow State University, Moscow, Russia Email: [email protected] Abbreviations: a variety of information signals. W an element of a variety of information signals that is an information signal. w economic agents. x q a number of signals. -
The Chilean Experience with Price-Cap Regulation [With Comments] Author(S): Rafael Di Tella, Alexander Dyck, Alexander Galetovic and William W
Cost Reductions, Cost Padding, and Stock Market Prices: The Chilean Experience with Price-Cap Regulation [with Comments] Author(s): Rafael Di Tella, Alexander Dyck, Alexander Galetovic and William W. Hogan Source: Economía, Vol. 8, No. 2 (Spring, 2008), pp. 155-196 Published by: Brookings Institution Press Stable URL: https://www.jstor.org/stable/20065527 Accessed: 22-11-2019 16:55 UTC JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact [email protected]. Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at https://about.jstor.org/terms Brookings Institution Press is collaborating with JSTOR to digitize, preserve and extend access to Economía This content downloaded from 206.253.207.235 on Fri, 22 Nov 2019 16:55:23 UTC All use subject to https://about.jstor.org/terms RAFAEL DI TELLA ALEXANDER DYCK Cost Reductions, Cost Padding, and Stock Market Prices: The Chilean Experience with Price-Cap Regulation Every four years, you feel you are going to war. Alejandro Jadresic, former Minister of Energy of Chile The flaws of traditional rate-of-return regulation are well known. They include a lack of incentives to reduce costs, as well as a tendency for firms to choose the wrong mix of inputs and to misreport costs in order to inflate the revenues allowed by the regulator. -
Does the United States Have a Productivity Slowdown Or a Measurement Problem?
DAVID M. BYRNE Federal Reserve Board JOHN G. FERNALD Federal Reserve Bank of San Francisco MARSHALL B. REINSDORF International Monetary Fund Does the United States Have a Productivity Slowdown or a Measurement Problem? ABSTRACT After 2004, measured growth in labor productivity and total factor productivity slowed. We find little evidence that this slowdown arises from growing mismeasurement of the gains from innovation in information technology–related goods and services. First, the mismeasurement of infor- mation technology hardware is significant preceding the slowdown. Because the domestic production of these products has fallen, the quantitative effect on productivity was larger in the 1995–2004 period than since then, despite mismeasurement worsening for some types of information technology. Hence, our adjustments make the slowdown in labor productivity worse. The effect on total factor productivity is more muted. Second, many of the tremendous consumer benefits from the “new” economy such as smartphones, Google searches, and Facebook are, conceptually, nonmarket: Consumers are more productive in using their nonmarket time to produce services they value. These benefits raise consumer well-being but do not imply that market sector pro- duction functions are shifting out more rapidly than measured. Moreover, esti- mated gains in nonmarket production are too small to compensate for the loss in overall well-being from slower market sector productivity growth. In addi- tion to information technology, other measurement issues that we can quantify (such as increasing globalization and fracking) are also quantitatively small relative to the slowdown. 109 110 Brookings Papers on Economic Activity, Spring 2016 The things at which Google and its peers excel, from Internet search to mobile software, are changing how we work, play and communicate, yet have had little discernible macroeconomic impact. -
Group Size and Collective Action: Third Party Monitoring in Common
COMPARATIVEAgrawal, Goyal / THIRD-PARTYPOLITICAL STUDIES MONITORING / February 2001 This article examines the hypothesis that group size is inversely related to successful collective action. A distinctive aspect of the article is that it combines the analysis of primary data collected by the authors with a game-theoretic model. The model considers a group of people protecting a commonly owned resource from excessive exploitation. The authors view monitoring of indi- vidual actions as a collective good and focus on third-party monitoring. We argue that the costs of monitoring rise more than proportionately as group size increases. This factor along with lumpiness in the monitoring technology yields the following theoretical conclusion: Medium-sized groups are more likely than small or large groups to provide third-party monitor- ing. The authors find that the empirical evidence is consistent with this theoretical result. GROUP SIZE AND COLLECTIVE ACTION Third-Party Monitoring in Common-Pool Resources ARUN AGRAWAL Yale University SANJEEV GOYAL Erasmus University his article examines the relationship between group size and collec- Ttive action in the following setting: There is a group of people who have to protect a common-pool resource from overexploitation.1 They formulate rules of extraction. Enforcement of rules requires monitoring of individual 1. Familiar examples of common-pool resources include forests, pastures, fisheries, and irrigation works owned and managed by villagers. AUTHORS’ NOTE: We are grateful to the late Mancur Olson for helpful suggestions that have significantly improved this article. We also thank James Caporaso, Geoffrey Garrett, Jana Kunicova, Elinor Ostrom, and four anonymous referees for their useful comments. -
Behavioral Law & Economics and Consumer Financ
Consumer Financial Protection Bureau Behavioral Economics Symposium Panel 2: Behavioral Law & Economics and Consumer Financial Protection The Role of Behavioral Economics in Consumer Protection Policy: Reflections of a Consumer Economist Janis K. Pappalardo, Ph.D.1 Assistant Director, Division of Consumer Protection Bureau of Economics, Federal Trade Commission Washington, DC September 19, 2019 1 The views expressed are those of the author and may not reflect the views of the Federal Trade Commission or any individual Commissioner. This statement draws from my prior work. I thank Jason Chen and Scott Syms for research assistance and many colleagues who have contributed to my understanding of this topic over the years, but I am responsible for any errors. Background on my Perspective Let me tell you a bit about my experience to shed light on my perspective. I joined the Federal Trade Commission’s Bureau of Economics, Division of Consumer Protection in 1986 immediately after obtaining a Ph.D. from Cornell University with a major field in consumer economics and minor fields in industrial organization and statistics. As a staff economist, I analyzed consumer protection legal and policy matters related to unfair or deceptive practices, provided expert declarations for litigation, and conducted research on information regulation. I have published work in the American Economic Review: Papers & Proceedings, Journal of Consumer Affairs, Antitrust Law Journal, Review of Industrial Organization, and Journal of Public Policy and Marketing, from which I received two outstanding article awards. I serve on the editorial review boards of the Journal of Consumer Affairs and the Journal of Public Policy and Marketing, and I am co-editing a symposium on the economics of consumer protection for Economic Inquiry. -
The Attention Economy of Online Advertising∗
The Attention Economy of Online Advertising∗ Alexander Whitey Kamal Jainz July 23, 2019 Abstract Internet users often surf to multiple websites in order to accomplish a single task. When this happens, do these different sites face the right incentives when choosing their advertising policies? We build a model showing that websites face an interesting tradeoff: on the one hand, they are prone to over-advertise (similar to double marginalization); on the other hand, they tend to misallocate ads across sites (a distortion we call misplacement). Standard solutions to the double marginalization problem, such as adding competition among certain sites, make the misplacement problem more severe. This tradeoff is important for news aggregators and social networks, as it affects their decisions whether to link to external content providers or to expand the amount of content they offer by themselves. Understanding these incentives helps to inform the current debate regarding the concentration of influence among a small set of online platforms. Keywords: Platforms, Advertising, Misplacement, Market Power JEL Codes: D21, D40, L23, L42, L86 ∗We thank seminar audiences at the U.S. Federal Communications Commission, the University of Virginia, the University of Miami, Peking University and Hong Kong University as well as Simon Anderson, Gary Biglaiser, Marc Bourreau, Denis Charles, Jacques Cremer,´ Eric Horvitz, Bruno Jullien, Chris Meek, Martin Peitz, Paul Seabright, Sven Seuken, Wing Suen, Thomas Tregouet, Glen Weyl and Mike Whinston for comments/discussions, Yunhao Huang, Keyan Li and Lingxuan “Sean” Wu for exceptional research assistance. White acknowledges financial support for this research from the Chaire Orange de l’innovation & r´egulation. -
Markets in Higher Education: Can We Still Learn from Economics' Founding Fathers?* Abstract
Research & Occasional Paper Series: CSHE.4.06 UNIVERSITY OF CALIFORNIA, BERKELEY http://cshe.berkeley.edu/ MARKETS IN HIGHER EDUCATION: CAN WE STILL LEARN * FROM ECONOMICS’ FOUNDING FATHERS? March 2006 Pedro Nuno Teixeira Assistant Professor of Economics; Research Associate, CEMPRE and CIPES University of Porto and Visiting Scholar, Center for Studies in Higher Education, UC Berkeley Copyright 2006 Pedro Nuno Teixeira, all rights reserved. ABSTRACT Markets or market-like mechanisms are playing an increasing role in higher education, with visible consequences both for the regulation of higher education systems as a whole, as well as for the governance mechanisms of individual institutions. This article traces the history of economists’ views on the role of education, from Adam Smith, John Stuart Mill, Alfred Marshall, and Milton Friedman, to present-day debates about the relevance of market economies to higher education policy. Recent developments in higher education policy reflect both the rising strength of market mechanisms in higher education worldwide, and a certain ambivalence about these developments. The author argues that despite the peculiarities of the higher education sector, economic theory can be a very useful tool for the analysis of the current state of higher education systems and recent trends in higher education policy. Introduction Markets or market-like mechanisms are playing an increasing role in higher education, with visible consequences both for the regulation of higher education (HE) * The author is Assistant Professor in the Economics Department at the University of Porto and Research Associate of CEMPRE (Centre for Macroeconomics and Forecasting) and CIPES (Portuguese National Research Centre on Higher Education Policy). -
Information Asymmetry and the Protection of Ordinary Investors
William & Mary Law School William & Mary Law School Scholarship Repository Faculty Publications Faculty and Deans 11-2019 Information Asymmetry and the Protection of Ordinary Investors Kevin S. Haeberle William & Mary Law School, [email protected] Follow this and additional works at: https://scholarship.law.wm.edu/facpubs Part of the Securities Law Commons Repository Citation Haeberle, Kevin S., "Information Asymmetry and the Protection of Ordinary Investors" (2019). Faculty Publications. 1954. https://scholarship.law.wm.edu/facpubs/1954 Copyright c 2019 by the authors. This article is brought to you by the William & Mary Law School Scholarship Repository. https://scholarship.law.wm.edu/facpubs Information Asymmetry and the Protection of Ordinary Investors Kevin S. Haeberle* To some, the reductions in information asymmetry provided by the main securities-specific disclosure, fraud, and insider-trading laws help ordinary investors in meaningful ways. To others, whatever their larger social value, such reductions do little, if anything for these investors. For decades, these two sides of this investor-protection divide have mostly talked past each other. This Article builds on economic theory to reveal something striking: The reductions in information asymmetry provided by the core securities laws likely impose a long-overlooked cost on buy-and-hold ordinary investors. More specifically, I explain why there is much reason to believe that the reductions take away investment return from these investors, while providing them with only limited benefits. Thus, the article presents a serious challenge to conventional wisdom on information asymmetry and the protection of ordinary investors, and argues in favor of a shift in investor-protection efforts away from the main securities laws and to areas of regulation that have received relatively little attention to date. -
Introduction to Endogenous Growth
Introduction to Endogenous Growth The economics of ideas Econ 4960: Economic Growth Review of the Exogenous (Solow) Growth Model ! " Investment cannot be the source of long-run growth ! " Only TFP growth generates sustained growth ! " Where does TFP growth come from? We don’t know ! " Endogenous growth models seek to explain the behavior of TFP growth. ! " These are called “endogenous-”, exactly because TFP is determined within the model.. That is, “endogenously.” Econ 4960: Economic Growth Road Map for Coming Lectures ! " Economics of Ideas (CJ, Chapter 4) ! " Basic Endogenous Growth: The AK Model (Romer 1986, Lucas 1988) CJ, Chapter 8 ! " The Full Model in Romer 1990 Econ 4960: Economic Growth The Economics of Ideas ! " Ideas improve the technology of production: ! " Ford paid double the market wages and got much higher labor productivity. ! " Schwab made workers in different shifts compete to improve output per worker. ! " Japanese companies, Wal-mart and others developed and improved Just-in-Time (JIT) Production and Inventory management techniques ! " Amazon, Apple, Google, Facebook, etc. Econ 4960: Economic Growth Key feature of Ideas ! " Ideas are very different than most economic goods. They are non-rivalrous: ! " One person using an idea does not preclude others from using it. ! " Ideas are not the only non-rivalrous good: national defense, satellite TV, digital music, etc. ! " The key feature of all non-rival goods is that: (i) very high fixed cost and (ii) ~zero marginal cost of production ! " Non-rival goods are often called “intellectual property” ! " Paul Romer was one of the first to appreciate the importance of the non-rival feature of ideas for growth. -
An Introduction to the Digital Commons: from Common-Pool Resources to Community Governance Melanie Dulong De Rosnay, Hervé Le Crosnier
An Introduction to the Digital Commons: From Common-Pool Resources to Community Governance Melanie Dulong de Rosnay, Hervé Le Crosnier To cite this version: Melanie Dulong de Rosnay, Hervé Le Crosnier. An Introduction to the Digital Commons: From Common-Pool Resources to Community Governance. Building Institutions for Sustain- able Scientific, Cultural and genetic Resources Commons, Sep 2012, Louvain-la-Neuve, Belgium. http://biogov.uclouvain.be/iasc/index.php?page=fullpapers. halshs-00736920 HAL Id: halshs-00736920 https://halshs.archives-ouvertes.fr/halshs-00736920 Submitted on 30 Sep 2012 HAL is a multi-disciplinary open access L’archive ouverte pluridisciplinaire HAL, est archive for the deposit and dissemination of sci- destinée au dépôt et à la diffusion de documents entific research documents, whether they are pub- scientifiques de niveau recherche, publiés ou non, lished or not. The documents may come from émanant des établissements d’enseignement et de teaching and research institutions in France or recherche français ou étrangers, des laboratoires abroad, or from public or private research centers. publics ou privés. An Introduction to the Digital Commons: From Common-Pool Resources to Community Governance Mélanie Dulong de Rosnay, Institute for Communication Sciences of CNRS, Paris Hervé Le Crosnier, University of Caen and Institute for Communication Sciences of CNRS, Paris Abstract This article proposes an introductory analysis of digital resources and commons-based peer production online communities with the framework of the common pool-resources. Trying to go beyond the classic economy dichotomy between physical resources scarcity and informational resources reproducibility, the approach allows to focus not only on the nature of the resources, but mostly on the governance by the communities to produce resources which remain available for all to share and build upon, while avoiding risks of pollution, degradation, underuse or enclosure by the market. -
The Attention Economy
Vol.2 No.5 - May 5th. 1997 Much recent commentary on the Internet in particular and information society in general has proclaimed the death of economics. Such commentators are either vague about what they mean by economics, or unclear about what is to replace it, completing their arguments with more hype than substance. A few, like Michael Goldhaber in his paper, "The Attention Economy", published in the previous issue of First Monday, have something valuable to say about the way people will trade goods and services, in whatever shape, in the realm of cyberspace. Yet, like Goldhaber - "The old concepts will just not have value in that new context," - even commentators with original thoughts apparently feel that the irrelevance of classical economic ideas must be exaggerated in order that ideas of their own be seriously considered. Perhaps this is true - the information revolution is even more forcefully heralded as panacea or as poison than its agricultural and industrial predecessors, and has been driven by belief in its powers as much as anything - but it hardly serves to clarify our perception of the new revolution's mechanisms. Authors like Goldhaber, perhaps recognising this, start their papers with denunciations of the tools of classical economics, and later go on to use these very tools as they attempt to clarify their ideas. Contents What is economics? Trade, demand and supply The money economy? Tools for reasoning 1 From www.firstmonday.dk/issues/issue2_5/ghosh/index.html 22 December 2004 What is economics? Paul Samuelson provided the textbook definition of economics as the "study of how societies use scarce resources to produce valuable commodities and distribute them among different people." Would this definition apply to the information age - or to life on the Internet? Controversies in current literature relate primarily to the words "scarce", "resource" (and hence "commodity") and "produce".