Contributions in Merlin

Both biosociological and psychological models, as well as animal research, suggest that testosterone has a key role in social interactions. Evidence from animal studies in rodents shows that testosterone causes aggressive behaviour towards conspecifics. Folk wisdom generalizes and adapts these findings to humans, suggesting that testosterone induces antisocial, egoistic, or even aggressive human behaviours. However, many researchers have questioned this folk hypothesis, arguing that testosterone is primarily involved in status-related behaviours in challenging social interactions, but causal evidence that discriminates between these views is sparse. Here we show that the sublingual administration of a single dose of testosterone in women causes a substantial increase in fair bargaining behaviour, thereby reducing bargaining conflicts and increasing the efficiency of social interactions. However, subjects who believed that they received testosterone-regardless of whether they actually received it or not-behaved much more unfairly than those who believed that they were treated with placebo. Thus, the folk hypothesis seems to generate a strong negative association between subjects' beliefs and the fairness of their offers, even though testosterone administration actually causes a substantial increase in the frequency of fair bargaining offers in our experiment.

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In distributed work systems, individual users perform work for other users. A significant challenge in these systems is to provide proper incentives for users to contribute as much work as they consume, even when monitoring is not possible. We formalize the problem of designing incentive-compatible accounting mechanisms that measure the net contributions of users, despite relying on voluntary reports. We introduce the Drop-Edge Mechanism that removes any incentive for a user to manipulate via misreports about work contributed or consumed. We prove that Drop-Edge provides a good approximation to a user’s net contribution, and is accurate in the limit as the number of users grows. We demonstrate very good welfare properties in simulation compared to an existing, manipulable mechanism. In closing, we discuss our ongoing work, including a real-world implementation and evaluation of the Drop- Edge Mechanism in a BitTorrent client.

In this paper, we empirically evaluate competing approaches for combining inflation density forecasts in terms of Kullback–Leibler divergence. In particular, we apply a similar suite of models to four different datasets and aim at identifying combination methods that perform well throughout different series and variations of the model suite. We pool individual densities using linear and logarithmic combination methods. The suite consists of linear forecasting models with moving estimation windows to account for structural change. We find that combining densities is a much better strategy than selecting a particular model ex ante. While combinations do not always perform better than the best individual model, combinations always yield accurate forecasts and, as we show analytically, provide insurance against selecting inappropriate models. Logarithmic combinations can be advantageous, in particular if symmetric densities are preferred.

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This study examines discretionary bonus payments by firms to senior-level executives. Interpreting discretionary bonuses as the result of implicit incentive contracts, I analyze an analytical model that includes a contractible and a non-contractible performance measure. The model yields the primary hypothesis that discretionary bonuses occur when the outcome of the contractible measure is either low or high, but not when the contractible outcome falls in the medium range. Based on a sample collected from public sources, I find empirical support for the notion that discretionary bonuses are paid based on non-contractible performance measures that are related to future financial performance. Moreover, discretionary bonus payments occur significantly more often when the contractible performance measure falls in the tails of the distribution. In contrast, I do not find support for the predictions that discretionary bonus payments are related to the manipulability of the contractible performance measures or that discretionary bonus payments are related to the power of the executives in the companies.

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