Pamela Bethke-Langenegger, The Differentiated Workforce – Effects of Categorisation in Talent Management on Workforce Level, In: Chair Human Resource Management, No. 18, 2012. (Working Paper)
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Zhigang Feng, Begoña Domínguez, The Effect of Time-Consistent Capital Taxation on Capital Accumulation and Welfare , In: SSRN, No. 2084721, 2012. (Working Paper)
This paper analyzes the effects of time-consistent capital taxation on the level of capital and welfare. We find that a commitment to a zero capital tax shifts the time inconsistency problem towards labor taxes and the provision of public consumption. By comparing the worst timeconsistent policies with and without a commitment to zero capital taxes, we find that the mere existence of a capital tax might lead to capital tax rates that are as high as 90% at steady state and capital stocks that are 84% lower. There the welfare gains of a commitment to zero capital taxes are about 7,4% of initial steady state consumption. At the other end, comparing the best time-consistent policies, we find that the welfare losses of a commitment to zero capital taxes are about 0,9% of consumption. |
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Piero Gottardi, Felix Kübler, Dynamic competitive economies with complete markets and collateral constraints, In: NCCR, No. 750, 2012. (Working Paper)
In this paper we examine the competitive equilibria of a dynamic stochastic economywith complete markets. We show that the completeness of the market requires both theset of asset payo¤s and collateral levels to be su¢ ciently rich, so as to allow to decentral-ize the equilibrium allocations obtained in Arrow-Debreu markets subject to a series ofappropriate limited pledgeability constraints. We provide then su¢ cient conditions forequilibria to be Pareto e¢ cient and show that when collateral is scarce equilibria are alsooften constrained ine¢ cient, in the sense that imposing tighter borrowing restrictionscan make everybody in the economy better o¤.We derive su¢ cient conditions for the existence of Markov equilibria and show thatthey often have ?nite support. The model is then tractable and its equilibria can becomputed with arbitrary accuracy. We carry out on this basis a quantitative assessmentof the risk sharing and e¢ ciency properties of equilibria. |
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Paul Ryan, Uschi Backes-Gellner, Silvia Teuber, Karin Wagner, Apprentice pay in Britain, Germany and Switzerland: institutions, market forces, market power, In: Swiss Leading House "Economics of Education" Working Paper, No. 75, 2012. (Working Paper)
Although trainee pay is central to the economics of work-based training, institutionalists have paid it little attention, while economists typically assume that it is set by market clearing. We document large differences in the pay of metalworking apprentices in three countries: relative to the pay of skilled employees, it is high in Britain, middling in Germany, and low in Switzerland. Combining fieldwork evidence with national survey data, we associate apprentice pay with both institutional attributes and market forces: specifically, with trade union presence and goals, employer organisation, the contractual status of apprentices, the supply of eligible and interested young people, and public subsidies. Apprentice pay appears to have fallen in Britain and Germany as bargaining coverage has declined. |
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Christian Rupietta, Uschi Backes-Gellner, How firms' participation in apprenticeship training fosters knowledge diffusion and innovation, In: Swiss Leading House "Economics of Education" Working Paper, No. 74, 2018. (Working Paper)
Previous studies typically relate apprenticeship training or more generally Vocational Education and Training (VET) to training that is highly specific and that uses well-established technologies. Accordingly, apprenticeship training is typically not expected to have positive effects on innovation. In contrast, we argue in this paper that the type of dual apprenticeship training seen in Switzerland (or Germany) does create positive innovation effects due to these VET-systems' built-in and institutionalized curriculum development and updating processes. These processes ensure that firms participating in apprenticeship training gain access to knowledge that is close to the innovation frontier and that ultimately fosters innovation. We provide theoretical explanations of how this knowledge diffusion works and how it can help to generate innovation in participating firms. We use the Swiss VET system as one example and derive hypotheses about the relationship between firms' participation in apprenticeship training and their innovation outcomes. Empirical analyses support our hypotheses. In a VET system with a built-in curriculum-updating process like the one in Switzerland (or Germany), firms participating in apprenticeship training have higher innovation outcomes than do non-participating firms. |
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Erich Walter Farkas, Daniel Egloff, Markus Leippold, American Options with Stopping Time Constraints, In: SSRN, No. 798124, 2005. (Working Paper)
This paper concerns the pricing of American options with stochastic stopping time constraints expressed in terms of the states of a Markov process. Following the ideas of Menaldi, Robin and Sun [21] we transform the constrained into an unconstrained optimal stopping problem. The transformation replaces the original payoff by the value of a generalized barrier option. We suggest a new Monte Carlo method to numerically calculate the option value also for multidimensional Markov processes. Because of presence of stopping time constraints the classical Longstaff-Schwartz least-square Monte Carlo algorithm or its extension introduced in [7] cannot be directly applied. We adapt the Longstaff-Schwartz algorithm to solve the stochastic Cauchy-Dirichlet problem related to the valuation problem of the barrier option along a set of simulated trajectories of the underlying Markov process. |
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Henrik Hasseltoft, Dominic Burkhardt, Understanding Asset Correlations, In: Swiss Finance Institute Research Paper, No. 12-38, 2012. (Working Paper)
We document an inverse relation between stock-bond correlations and correlations of growth and inflation. We find that rising inflation uncertainty lowers stock prices but can either lower or raise nominal bond prices depending on whether inflation is counter- or procyclical. We show that the time-varying comovement of growth and inflation has important implications for how inflation impacts asset prices. We explain our findings in a long-run risk model with non-neutral inflation shocks and regime shifts, allowing for countercyclical and procyclical inflation regimes. The model can produce an upward-sloping real yield curve and rationally explains the so-called Fed-model. Finally, inflation and monetary policy shocks were important drivers of stock-bond correlations during the countercyclical period 1965-2000 while output shocks dominated during the procyclical period 2000-2011. |
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Alexandre Ziegler, Fred Henneberger, Alfonso Sousa-Poza, Performance Pay, Sorting, and Outsourcing, In: IZA Discussion Paper, No. 3019, 2007. (Working Paper)
Implementing performance pay requires that workers' output be measured. When measurement costs differ among firms, those with a measurement cost advantage choose to implement performance pay. They attract the best workers, and both the level and variability of compensation are higher at these firms than at salary firms. Workers may select firms with different compensation methods at different stages of their work life. Productive workers start at performance pay firms and switch to salary firms once their productivity is revealed. The magnitude of the resulting worker flows depends on the payoff from effort and is therefore related to the age profile of the wage differential between performance pay and salary firms. Advantages in measuring worker productivity constitute a plausible explanation for the emergence of specialized business related service (BRS) firms. Accordingly, BRS firms should make a much wider use of performance pay and employ better workers than diversified corporations. Data from the 1998 Swiss Wage Structure Survey confirm the model's predictions both for the economy at large and for BRS firms. |
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Roger Luethi, Margit Osterloh, Wikipedia: Ein neues Produktionsmodell und seine rechtlichen Hürden, In: CREMA Working Paper Series, No. 2010-09, 2010. (Working Paper)
Die erfolgreiche Internet-Enzyklopädie Wikipedia demonstriert das Potential alternativerProduktionsmodelle für bedeutende Innovationen, die mit traditionellen Methoden nicht erreichbarsind. Sie arbeitet einerseits mit einem barrierefreien Zugang und setzt andererseits – etwa bezüglich Umfang und Aktualität – neue Maßstäbe. In der Rechtsentwicklung wird dies noch kaum berücksichtigt. Die laufende Regulierung des Internets zielt fast ausschließlich darauf ab, die herkömmlichen, auf umfassenden immaterialgüterrechten basierenden Produktionsmodelle zu stärken. Alternative Produktionsmodelle wie Wikipedia sind dadurch bedroht und damit auch die Innovationen, die sie hervorbringen. |
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Manish Gupta, Agency Issues and Financing Constraints - Evidence from REITs, In: NCCR FINRISK Working Paper, No. 743, 2012. (Working Paper)
Given a firms investment policy, its dividend policy is irrelevant (Miller and Modigliani (1961)). REITs, by law, pay at least 90 % of their corporate income as dividends, so that their dividend policy is given. This is a reversal of the dividend irrelevance theorem through regulatory means. Such a high dividend payment also means lower retained earnings, leaving firms with little free cash flow. Jensen (1986) argues that lower free cash flow results in mitigated agency problems. In this paper, I ask two questions. First, how does an average REIT, given its dividend policy restricted through regulation, respond to its investment opportunities? Second, does an average REIT, with mitigated agency problems, face less severe financing constraints? In response to the first question, I find that an average REITs investment responsiveness (as measured by Tobins q) is higher than that of firms in other industries. In response to the second question, I find that, despite mitigated agency costs, an average REIT faces, in fact, more severe financing constraints (as measured by sensitivity to cash ow) than other firms. Finally, using the natural experiment provided by the 2001 REIT Modernization Act (RMA) that allowed REITs to own taxable REIT subsidiaries (TRS) and reduce their dividend distribution from 95% to 90%, I show that, for a given increase in internal funds, the negative impact arising from increased agency problems dominates the positive impact of the wealth effect, resulting in a lower overall responsiveness of REITs to their investment opportunities. |
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Sven Seuken, David C. Parkes, Eric Horvitz, Kamal Jain, Mary Czerwinski, Desney Tan, Market User Interface Design, In: Harvard University, No. 1, 2011. (Working Paper)
Despite the pervasiveness of electronic markets in our lives, only little is known about the role
of user interfaces (UIs) in promoting good performance in market domains. How does the way
we display market information to end-users, and the set of choices we offer, influence economic
efficiency? In this paper, we introduce a new research agenda on “market user interface design.”
We take the domain of 3G bandwidth allocation as an illustrative example, and consider the design
space of UIs in terms of varying the number of choices offered, fixed vs. changing market prices,
and situation-dependent choice sets. The UI design induces a Markov decision process, the solution
to which provides a gold standard against which user behavior is studied. We provide a systematic,
empirical study of the effect of different UI levers on user behavior and market performance, along
with considerations of behavioral factors including loss aversion, incomplete search, and position
effects. Finally, we fit a quantal-best response model to users’ actions and evaluate an optimized
market user interface. |
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Sven Seuken, Michel Meulpolder, Dick H. J. Epema, David C. Parkes, Johan A. Pouwelse, Jie Tang, Work Accounting Mechanisms: Theory and Practice, In: Harvard University, No. 1, 2011. (Working Paper)
The Internet has enabled a new paradigm of economic production, where individual users per-
form work for others, often in small units, for short periods of time, and without formal contracts
or monetary payments. These distributed work systems can arise in many places, for example in
peer-to-peer (P2P) ¯le-sharing networks, in ad-hoc wireless routing networks, or in 3G content
distribution systems. The particular challenge is to incentivize users to perform work for others,
even though all interactions are bilateral and monitoring is not possible. In this paper, we formal-
ize the problem of designing incentive-compatible work accounting mechanisms that measure the
net contributions of users, despite relying on voluntary reports. We describe a fully distributed
accounting mechanism called BarterCast and introduce the Drop-Edge extension which re-
moves any incentive for a user to make misreports about its own interactions. We prove that the
information loss necessary to achieve this incentive compatibility is small and vanishes in the limit
as the number of users grows. In some domains, users may be able to cheaply create fake identities
(i.e, sybils) and use those to manipulate the accounting mechanism. A striking negative result is
that no sybil-proof accounting mechanism exists if one requires responsiveness to a single positive
report. To evaluate the welfare properties of BarterCast+DropEdge, we ¯rst present results
from a discrete, round-based simulation, showing that the mechanism achieves very high e±ciency.
We have also implemented the mechanism in Tribler, a BitTorrent software client, that is al-
ready deployed in the real world and has thousands of users. Experimental results using Tribler
demonstrate that the mechanism successfully prevents free-riding in P2P-¯le-sharing systems, and
achieves better e±ciency than the standard BitTorrent protocol. |
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Mike Ruberry, Sven Seuken, Sharing in BitTorrent can be Rational, In: Harvard University, No. 1, 2011. (Working Paper)
The widely used BitTorrent protocol is regularly extended
to produce new protocols with empirically preferable characteristics, like
shorter le acquisition times and fewer upload bandwidth usage. How-
ever, these advances have outpaced theoretical understanding, necessary
for formally analyzing the eciency and rationality of existing protocols,
and the design of new ones. We address this discrepancy by presenting a
new model, a stochastic \goal oriented" game, that captures BitTorrent's
salient features more accurately. In particular, players only obtain a posi-
tive payo when all pieces of a le are acquired. Our model leads to equi-
librium results that are distinct from prior work. We show that without
altruists, it is irrational for peers to share with each other using BitTor-
rent, while with altruists, a sharing equilibrium exists. Furthermore, we
present the design of an expanded protocol using \cheap pseudonyms",
such that sharing becomes an equilibrium even without the presence of
altruists. The usefulness of cheap pseudonyms in this setting is surprising
as it contrasts with prior research showing that cheap pseudonyms are a
negative externality. |
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Sven Seuken, Denis Charles, Max Chickering, Mary Czerwinski, Kamal Jain, David C. Parkes, Sidd Puri, Desney Tan, Design and Analysis of a Hidden Peer-to-peer Backup Market, In: Harvard University, No. 1, 2010. (Working Paper)
We present a new market design for a peer-to-peer (p2p) backup application and provide a
theoretical and experimental analysis. In domains such as p2p backup, where many non-expert
users find markets unnatural or unexpected, it is often a pragmatic requisite to remove or hide the
market’s complexities. To this end, we introduce a new design paradigm which we call “hidden
market design,” and show, how a market and its user interface (UI) can be designed to hide
the underlying complexities, while maintaining the market’s functionality. We enable the p2p
backup market using a virtual currency only, and we develop a novel market UI that makes the
interaction for the users as seamless as possible. The UI hides or simplifies many aspects of the
market, including combinatorial resource constraints, prices, account balances and payments. In
a real p2p backup system, we can expect users to update their settings with a delay upon price
changes. Therefore, the market is designed to work well even out of equilibrium, by maximizing
the buffer between demand and supply. The main theoretical result is an existence and uniqueness
theorem, which also holds if a certain percentage of the user population is price-insensitive or even
adversarial. However, we also show that the more freedom we give the users, the less robust the
system becomes against adversarial attacks. Furthermore, the buffer size has limited controllability
via price changes alone and we show how to address this. We introduce a price update algorithm
that uses daily aggregate supply and demand data to move prices towards the equilibrium, and
we prove that the algorithm converges quickly towards the equilibrium. Finally, we present results
from a formative usability study of the market UI, where we found encouraging results regarding
the hidden markets paradigm. The market design presented here is implemented as part of a
Microsoft research project and an alpha version of the software has been successfully tested. |
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Paul Ryan, Karin Wagner, Silvia Teuber, Uschi Backes-Gellner, Financial aspects of apprenticeship training in Germany, Great Britain and Switzerland, In: Arbeitspapier, Bildung und Qualifizierung, No. 241, 2011. (Working Paper)
Financial attributes are potentially important influences on the viability of apprenticeship as a mode of vocational education and training. Two financial aspects are considered: apprentices’ pay, which determines the division of training costs between the trainee and the employer; and corporate ownership, which may influence the incentive
to employers to provide training, insofar as it promotes or deters short-termist practice concerning investment in employees’ skills.
Evidence is taken from fieldwork interviews with senior managers in 56 companies, spread across two sectors (metalworking, retailing) in three countries (Germany, Britain, Switzerland). The companies are matched by products and technologies, differentiated by bargaining status and type of ownership.
The importance of apprenticeship relative to recruitment as a source of skills is found to vary greatly across companies. The pay of apprentices differs markedly between
countries (highest in Britain, lowest in Switzerland) in association with the attributes of labour markets, trade unionism, and education systems. Listing on a stock market
and having dispersed ownership are associated with more frequent financial upheaval and a lower training effort than are other ownership types. |
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Kenneth Judd, Philipp Johannes Renner, Karl Schmedders, Finding all pure-strategy equilibria in games with continuous strategies, In: Swiss Finance Institute Research Paper, No. 10-45, 2011. (Working Paper)
Static and dynamic games are important tools for the analysis of strategic interactions among economic agents and have found many applications in economics. In many games equilibria can be described as solutions of polynomial equations. In this paper we describe state-of-the-art techniques for finding all solutions of polynomial systems of equations and illustrate these techniques by computing all equilibria of both static and dynamic games with continuous strategies. We compute the equilibrium manifold for a Bertrand pricing game in which the number of equilibria changes with the market size. Moreover, we apply these techniques to two stochastic dynamic games of industry competition and check for equilibrium uniqueness. |
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Daniel Stadel, Florian Stahl, Raghuram Iyengar, Andreas Herrmann, Intertemporal trade-offs between contract periods, price discounts and flexibility, In: Department of Business Administration, No. 2011, 2011. (Working Paper)
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Daniel Halbheer, Florian Stahl, Oded Koenigsberg, Donald R Lehmann, Optimal sampling of paid content, In: Columbia Business School Working Paper, No. 4609, 2011. (Working Paper)
This paper analyzes optimal sampling and pricing of paid content for publishers of news websites. Publishers offer free content samples both to disclose journalistic quality to consumers and to generate online advertising revenues. We examine sampling where the publisher sets the number of free sample articles and consumers select the articles of their choice. Consumerslearn from the free samples in a Bayesian fashion and base their subscription decisions on posterior quality expectations. We show thatsampling enhances subscription demand only if consumers have low quality expectations in relation to actual quality. Taking advertising and subscription revenues into account, we find that the publisher should employ either a paid-only or a free content strategy when consumers have high quality expectations. When consumers have low quality expectations, employing a sampling strategy may be optimal for the publisher. |
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Peter Ising, IFRS and the financial market crisis, In: University of Zurich, Department of Business Administration, Chair for Accounting Working Papers, No. 1, 2008. (Working Paper)
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Thorsten Hens, Anke Gerber, Modelling Alpha-Opportunities Within the CAPM, In: NCCR FinRisk Working Paper Series, No. 317, 2006. (Working Paper)
We consider a simple CAPM with heterogenous expectations on assets mean returns while keeping the assumption of homogenous expectations on the covariance of returns. Our first result derives the security market line as an aggregation result without using the two-fund-separation property. In particular every investor can hold optimal portfolios that are underdiversified.In our model alpha-opportunities can be explained as a feature of financial market equilibria and we can show that alpha-opportunities erode with the assets under management and that the hunt for alphaopportunities is a zero-sum game. Then we endogenize the agents information by allowing them to be either passive, in which case they invest according to the average expectation embodied in the market returns, or to be active, in which case they can acquire superior information at some cost. It is shown that expecting a positive alpha is not necessarily a good criterion for becoming active. Moreover, the less risk averse investors are more inclined to be active and delegating active investment to portfolio managers only makes sense if the performance fee increases with the skill of the portfolio manager. Finally, in our model it turns out that only a market in which all investors are passive and share the same correct belief is stable with respect to information acquisition. Hence the standard CAPM with homogenous beliefs can be seen as the long run outcome of our model. |
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