This note proposes a growth model that is derived from the standard Solow growth model by replacing the neoclassical production function with Kaldor’s technical progress function while maintaining a marginalist theory of factor prices in the spirit suggested by von Weizsäcker (1966, 1966b). The hybrid model so obtained accounts for balanced growth in a way that appears less arbitrary than the Solow model, especially because it directly accounts for Harrod neutral technical change, without any need for further assumptions.

Physicians' treatment decisions determine the level of health care spending to a large extent. The analysis of physician agency describes how doctors trade off their own and their patients' benefits, with a third party (such as the collective of insured individuals or the taxpayers) bearing the costs. Professional norms are viewed as restraining physicians' self-interest and as introducing altruism towards the patient. We present a controlled experiment that analyzes the impact of professional norms on prospective physicians' trade-offs between her own profits, the patients' benefits, and the payers' expenses for medical care. We find that professional norms derived from the Hippocratic tradition shift weight to the patient in the physician's decisions while decreasing his self-interest and efficiency concerns.

This paper investigates the effects of a low bound price. To do so, a popular and

empirically proven model (Stahl (89') [11]) is used. The model is extended to include

an exogenously given bound on prices sellers can offer, excluding prices below such

bound. The finding are rather surprising - when the bound is set sufficiently high

expected price offered (EPO) by sellers drops significantly. The result seem to be

robust in the parameters of the model, and driven by the information provided to

consumers by such legislation step: when the limitation is set at sufficiently high

levels all consumers anticipate the bound price, and searchers reject any price above

it. As a result sellers offer the bound price as a pure strategy.

The Stahl model is one of the most applied consumer search models, with many

applications and an empirical background. The present paper explores an extension

where sellers have asymmetries, which is mostly excluded by the literature. Sellers

with heterogeneous numbers of stores are introduced, reflecting a typical market

structure. As in the original Stahl model, a market consists of several sellers, and

consumers, where some face a cost when sequentially searching. The paper shows

that no symmetric Nash equilibrium exists in the extension. Additional results

suggest that smallest sellers will be the ones offering the lowest prices, in line with

several real world examples provided in the paper. However, profits remain in most

cases fixed per store, making a larger firm more profitable, yet with lower quantity

sold. The findings suggest that on some level price dispersion will still exist, together with some level of price stickiness, both observed in reality.

On purpose to extract trend and cycle from a time series many competing techniques have been developed. The probably most prevalent is the Hodrick Prescott filter. However this filter suffers from diverse shortcomings, especially the subjective choice of its penalization parameter. To this point penalized splines within a mixed model framework offer the advantage of a data driven derivation of the penalization parameter. Nevertheless the Hodrick-Prescott filter as well as penalized splines fail to estimate trend and cycle when one deals with times series that contain structural breaks. This paper extends the technique of splines within a mixed model framework to account for break points in the data. It explains how penalized splines as mixed models can be used to avoid distortions caused by breaks and finally provides an empirical application to German data which exhibit structural breaks due to the reunification in 1990.

Search models are used in a variety of fields. One of those is consumer search

and in it the Stahl model is one of the most popular search models. The literature

in search models concentrates mainly on equilibria with a consumer reserve price.

This is a simplifying condition, which narrows down severely the freedom of the

consumer. For example, once the model has a finite number of sellers who select

different strategies a situation may arise where reserve price may not exist. This

paper addresses the possibility of equilibria without reserve price, when sellers can use asymmetric strategies. Here a condition is given which ensures existence of reserve price in all equilibria. The condition involves prices where sellers set mass points, and undercutting those prices. The condition states that if a searcher is satisfied with such price, she should be satisfied also when a small discount is offered to that price. Assuming this, it

is possible to concentrate only on equilibria with reserve price, and investigate also situations where the sellers are heterogeneous, or equilibria are not symmetric.

We analyze distributional preferences in games in which a decider chooses the provision

of a good that benefits a receiver and creates costs for a group of payers.

The average decider takes into account the welfare of all parties and has concerns

for efficiency. However, she attaches similar weights to small and large groups so

that she neglects large provision costs that are dispersed among many payers. This

holds regardless of whether the decider benefits from the provision or not. A CES

utility function which rationalizes average behavior implies altruism in bilateral

situations and welfare-damaging actions when costs are dispersed.

We take a first pass at quantifying the magnitudes of debt relief achieved through default and restructuring in two distinct samples: 1979-2010, focusing on credit events in emerging markets, and 1920-1939, documenting the official debt hangover in advanced economies that was created by World War I and its aftermath. We examine the economic performance of debtor countries during and after these overhang episodes, by tracing the evolution of real per capita GDP (levels and growth rates); sovereign credit ratings; debt servicing burdens relative to GDP, fiscal revenues, and exports; as well as the level of government debt (external and total). Across 45 crisis episodes for which data is available we find that debt relief averaged 21 percent of GDP for advanced economies (1932-1939) and 16 percent of GDP for emerging markets (1979-2010), respectively. The economic landscape after a final debt reduction is characterized by higher income levels and growth, lower debt servicing burdens and lower government debt. Also ratings recover markedly, albeit only in the modern period.

This paper reports findings of a laboratory experiment, which explores how elfassessment regarding the own relative performance is perceived by others. In particular, I investigate whether overconfident subjects or underconfident subjects are considered as more likable by others, and who of the two is expected to achieve a higher performance in a real effort task. I observe that underconfidence beats overconfidence in both respects. Underconfident subjects are rewarded significantly more often than overconfident subjects, and are significantly more often expected to win the competitive real-effort task. It seems as if subjects being less convinced of their performance are taken as more congenial and are expected to be more ambitious to improve, whereas overconfident subjects are rather expected to rest on their high beliefs. While subjects do not anticipate the stronger performance signal of underconfidence, they anticipate its higher sympathy value. The comparison to a non-strategic setting shows that men strategically deflate their self-assessment to be rewarded by others. Women, in contrast, either do not deflate their self-assessment or do so even in non-strategic situations, a behavior that might be driven by nonmonetary image concerns of women.

This paper proposes a novel explanation for the context dependency of individual choices in two-player games. Context dependency refers to the well-established phenomenon that a player, when choosing from a given opportunity set created by the other player’s strategy, chooses differently in different situations because of different alternatives to the other player’s strategy. The utility model used to explain this kind of context dependency incorporates a preference for net-loss reciprocation. Net-loss reciprocation means that a player’s willingness to impose a net loss (i.e., loss minus gain) on the other player increases in the net loss that he or she derives from the other player’s strategy. I show that net-loss reciprocation together with the method for calculating net losses developed in this paper explains the context dependencies in individual behaviour that have been documented in a number of experimental studies, whereas existing models of intention-based reciprocity fail to explain all the evidence.