הפקולטה למדעי הרוח והחברה

פרופ' תומר בלומקין

מאמרים בכתבי עת

Blumkin, T., Danziger, L., and Yashiv, E. (2017) “Optimal Unemployment Benefits Policy and the Firm Productivity Distribution," International Tax and Public Finance 24, 36-59.

This paper provides a novel justification for a declining time profile of unemployment benefits that does not rely on moral-hazard or consumption-smoothing considerations. We consider a simple search environment with homogeneous workers and low- and high-productivity firms. By introducing a declining time profile of benefits, the government can affect the equilibrium wage profile in a manner that enhances the sorting of workers across low- and high-productivity firms. We demonstrate that optimal government policy depends on the dispersion and skewness of the firms' productivity distribution.

דר' נדב בן זאב

מאמרים בכתבי עת

1. van der Beek, K., Ben-Zeev, N., and Mokyr, J. (2017) “Flexible Supply of Apprenticeship in the British Industrial Revolution," Journal of Economic History 77, pp. 208-250.

This paper examines the supply responsiveness of Britain's apprenticeship system in the presence of the technological shocks that led to the Industrial Revolution using annual information on apprenticeships between 1710 and 1805. It finds a high supply elasticity in the sense that tuitions increased only slightly in response to a percentage increase in the number of apprentices and returned to their equilibrium level in the long-run. This finding implies that the apprenticeship system could supply the skilled mechanical workers required to accommodate technological changes and provides supports to the view that the agility in which Britain's economic institutions adapted to changes in the environment was the institutional advantage that provided it with an edge for the Industrial Revolution.

2. Ben Zeev, N. Pappa, E., and Vicondoa, A. (2017) “Emerging Economies Business Cycles: The Role of Commodity Terms of Trade News," Journal of International Economics," 108, pp. 368-376.

Recent empirical work has challenged the hypothesis that terms-of-trade shocks are an important source of cyclical fluctuations in emerging economies. We show that ignoring the news component in the terms-of-trade movements results in misleading conclusions about their importance as a source of cyclical fluctuations. Using a sample of Latin American countries, we identify news-augmented Commodity-terms-of-trade (CTOT) shocks by maximizing the forecast error variance share of the CTOT series at a finite future horizon. Our identification does not rely on zero impact restrictions typically used in the literature for recovering news shocks. Accounting for news almost doubles the contribution of CTOT to explain cyclical fluctuations: news-augmented CTOT shocks explain almost half of output variations in emerging economies.

דר' כורש גליל

מאמרים בכתבי עת

1. Afik, Z., Arad, O., and Galil, K. (2016) “Using Merton's Model for Default Prediction: An empirical assessment of selected alternatives," Journal of Empirical Finance 35, pp.43–67.

It is surprising that although four decades passed since the publication of Merton (1974) model, and despite the development and publications of various extensions and alternative models, the original model is still used extensively by practitioners, and even academics, to assess credit risk. We empirically examine specification alternatives for Merton model and a selection of its variants, concluding that default prediction goodness is mainly sensitive to the choice of assets expected return and volatility. A Down-and–Out Option pricing model and a simple naïve model outperform the most common variants of the Merton model, therefore we recommend using the simple model for its easy implementatio

פרופ' לייף דנציגר

מאמרים בכתבי עת

1. Blumkin, T., Danziger, L., and Yashiv, E. (2017) “Optimal Unemployment Benefits Policy and the Firm Productivity Distribution," International Tax and Public Finance 24, 36-59.

2. Danziger, L. and Ben-Yashar, R. (2016) “The Unanimity Rule and Extremely Asymmetric Committees," Journal of Mathematical Economics 64, pp. 107-112.

This paper analyzes how to allocate experts into committees that use the unanimity rule to make decisions. We show that an optimal allocation of experts is extremely asymmetric. To reach the optimal allocation, therefore, one needs only to rank the experts in terms of their abilities and then allocate adjacent experts such that an expert's ability tends to vary inversely with the size of his committee. In the special case of three-member committees, we show that the optimal allocation maximizes the sum of the products of the experts' skills in each committee.

פרופ' דוד וטשטיין

מאמרים בכתבי עת

Perez-Castrillo, D. and Wettstein, D. (2016) “Discrimination in a Model of Contests with Incomplete Information about Ability," International Economic Review 57(3), pp. 881-914

We study contests with private information and identical contestants, where contestants' efforts and innate abilities generate output of varying qualities. The designer's revenue depends on the quality of the output and she offers a reward to the contestant achieving the highest quality. We characterize the equilibrium behavior, outcomes and payoffs for both nondiscriminatory and discriminatory (where the reward is contestant-dependent) contests. We derive conditions under which the designer obtains a larger payoff when using a discriminatory contest and describe settings where these conditions are satisfied.
Prabal-Goswami, M. and Wettstein, D. (2016) “Rational Bidding in a Procurement Auction with Subjective Evaluations," International Journal of Industrial Organization 44, pp. 60-67.

In practice, procurement auctions often involve subjective evaluations of bids, especially when consisting of quality or design parameters which are hard to quantify. We formally define a notion of subjectivity in an auction environment and analyze the implications for rational bidding behavior. Our findings explain some observed bidding behaviors that are inconsistent with standard equilibrium predictions. Finally we examine the way subjectivity facilitates the practice of favoritism on part of the auctioneer.

פרופ' אוסקר ווליך

מאמרים בכתבי עת

Volij, O. (2016) “An Alternative Proof of Hardy, Littlewood, and Pólya's (1929) Necessary Condition for Majorization," Economic Theory Bulletin 4(2), pp. 347–350.

A game-theoretic proof of Hardy, Littlewood, and Pólya's (1929) necessary condition for majorization

דר' קארין ואן דר ביק

מאמרים בכתבי עת

1. van der Beek, K. and Feldman, N. (2016) “Skill Choice and Skill Complementarity in Eighteenth Century England," Explorations in Economic History 59, pp. 94-113.

This paper analyzes the effects of technological change on skill acquisition during the British Industrial Revolution. Based on a unique set of data on apprenticeships between 1710 and 1772, we show that both the number of apprentices and their share in the cohort of the fifteen year-olds- increased in response to inventions. The strongest response was in the highly skilled mechanical trades. These results suggest that technological change in this period was skill biased due to the expansion of the machinery sector they induced.

2. van der Beek, K., Ben-Zeev, N., and Mokyr, J. (2017) “Flexible Supply of Apprenticeship in the British Industrial Revolution," Journal of Economic History 77, pp. 208-250.

דר' רועי זולטן

מאמרים בכתבי עת

1. Sagi, D., Fischer, S. and Zultan, R. (2017) “Potential Pareto Public Goods." Journal of Public Economics 146, pp. 87–96.

Potential Pareto Public Goods create an aggregate benefit to society while harming some members of the community. As the overall benefit outweighs the harm incurred, provision may lead to Pareto improvement if the gains from cooperation are used to compensate the harmed parties. Such situations are ubiquitous, e.g., in not-in-my-backyard (NIMBY) problems. We study experimentally voluntary contributions to Potential Pareto Public Goods, in which provision is efficient but harms a minority in the group. We test the effects of punishment and reward institutions, with and without communication. We find that contributions to Potential Pareto Public Goods are not viewed as unequivocally socially desirable and do not increase with communication or punishment. With the reward institution, communication facilitates compensation, undoing the harm imposed on the minority player by majority contributions. Consequently, contributions are no longer viewed as socially undesirable, and majority contributions increase. Taken together, our results establish that perceptions and behavior in voluntary contributions to Potential Pareto Public Goods are dramatically different than with universal public goods that benefit all members of the community. We suggest that the underlying mechanism is team reasoning: individuals consider what is good for the group, and play their part in achieving that goal.

2. Llorente-Saguer, A. and Zultan, R. (2017) “Collusion and Information Revelation in Auctions," European Economic Review 95, pp. 84–102.

The theoretical literature on collusion in auctions suggests that the first-price mechanism can deter the formation of bidding rings. However, such analyses neglect to consider the effects of failed collusion attempts, wherein information revealed in the negotiation process may affect bidding behaviour. We experimentally test a setup in which theory predicts no collusion and no information revelation in first-price auctions. The results reveal a hitherto overlooked failing of the first-price mechanism: failed collusion attempts dis- tort bidding behaviour, resulting in a loss of seller revenue and efficiency. Moreover, the first-price mechanism does not result in less collusion than the second-price mechanism. We conclude that, while the features of the first-price mechanism may have the potential to deter bidder collusion, the role of beliefs in guiding bidding behaviour make it highly susceptible to distortions arising from the informational properties of collusive negotiation. Auction designers should take this phenomenon into account when choosing the auction mechanism.

3. Ravid, O., Malul, M., and Zultan, R. (2017) “The Effect of Economic Cycles on Job Satisfaction in A Two-Sector Economy," Journal of Economic Behavior & Organization 138, pp. 1–9.

Economic growth improves the material well-being of all workers. However, when remuneration in the public sector is less sensitive to economic cycles than in the private sector, as is typically the case, economic growth will worsen the position of workers in the public sector relative to workers in the private sector, even though their income improves in absolute terms. As a result, job satisfaction may be countercyclical in the public sector. We test this counterintuitive hypothesis in a real-effort laboratory experiment that simulates an economy with two sectors differing only in their remuneration scheme. Economic cycles are introduced in order to test for their effect on job satisfaction and productivity in each sector. We find that job satisfaction in the “public" sector is negatively correlated with the state of the economy. This effect, however, does not carry over to productivity: even though an increase in a worker's productivity in the public sector reduces his relative income, in comparison to a similar private sector worker, we find that this does not have a negative effect on job satisfaction.

4. Soraperra, I., Weisel, O., Zultan, R., Kochavi, S., Leib, M., Hadar Shalev, H., and Shalvi, S. (2017). “The Bad Consequences of Teamwork," Economics Letters 160, pp. 12–15.

People are rather dishonest when working on collaborative tasks. We experimentally study whether this is driven by the collaborative situation or by mere exposure to dishonest norms. In the collaborative treatment, two participants in a pair receive a payoff (equal to the reported outcome) only if both report the same die-roll outcome. In the norm exposure treatment, participants receive the same information regarding their partner's action as in the collaborative treatment, but receive payoffs based only on their own reports. We find that average dishonesty is similarly high with and without collaboration, but the frequency of dyads in which both players are honest is lower in collaboration than in the norm exposure setting.

5. Weisel, O. and Zultan, R. (2016) “Social Motives in Intergroup Conflict: Group Identity and Perceived Target of Threat," European Economic Review 90, pp. 122–133.

We experimentally test the social motives behind individual participation in intergroup conflict by manipulating the perceived target of threat—groups or individuals— and the symmetry of conflict. We find that behavior in conflict depends on whether one is harmed by actions perpetrated by the out-group, but not on one's own influence on the outcome of the out-group. The perceived target of threat dramatically alters decisions to participate in conflict. When people perceive their group to be under threat, they are mobilized to do what is good for the group and contribute to the conflict. On the other hand, if people perceive to be personally under threat, they are driven to do what is good for themselves and withhold their contribution. The first phenomenon is attributed to group identity, possibly combined with a concern for social welfare. The second phenomenon is attributed to a novel victim effect. Another social motive—reciprocity—is ruled out by the data.

פרופ' אורי חיימנקו

מאמרים בכתבי עת

1. Einy, E., Haimanko, O., Orzach, R., and Sela, A. (2016) “Common-Value All-Pay Auctions with Asymmetric Information and Bid Caps," International Journal of Game Theory 45(1), pp. 63-88.

We study a class of two-player common-value all-pay auctions (contests) with asymmetric information under the assumption that one of the players has an information advantage over his opponent and both players are budget-constrained. We extend the results for all-pay auctions with complete information, and show that in our class of all-pay auctions with asymmetric information, sufficiently high (but still binding) bid caps do not change the players' expected total effort compared to the benchmark auction without any bid cap. Furthermore, we show that there are bid caps that increase the players' expected total effort compared to the benchmark. Finally, we demonstrate that there are bid caps which may have an unanticipated effect on the players' expected payoffs—one player's information advantage may turn into a disadvantage as far as his equilibrium payoff is concerned.

2. Haimanko, O. and Kajii, A. (2016) “Approximate Robustness of Equilibrium to Incomplete Information," International Journal of Game Theory 45(4), pp. 839-857.

We relax the Kajii and Morris (Econometrica 65:1283–1309) notion of equilibrium robustness by allowing approximate equilibria in close incomplete information games. The new notion is termed “approximate robustness". The approximately robust equilibrium correspondence turns out to be upper hemicontinuous, unlike the (exactly) robust equilibrium correspondence. As a corollary of the upper hemicontinuity, it is shown that approximately robust equilibria exist in all two-player zero-sum games and all two-player two-strategy games, whereas (exactly) robust equilibria may fail to exist for some games in these categories.

3. Einy, E., Goswami, M.P., Haimanko, O., Orzach, R., and Sela, A. (2017) “Common-Value All-Pay Auctions with Asymmetric Information," International Journal of Game Theory 46(1), pp. 79-102.

We study two-player common-value all-pay auctions in which the players have ex-ante asymmetric information represented by finite connected partitions of the set of states of nature. Our focus is on a family of such auctions in which no player has an information advantage over his opponent. We find sufficient conditions for the existence of equilibrium with monotone strategies, and show that such an equilibrium is unique. We further show that the ex-ante distribution of equilibrium effort is the same for every player (and hence the players' expected efforts are equal), although their expected payoffs are different and they do not have the same ex-ante probability of winning.

דר' דני כהן-זדה

מאמרים בכתבי עת

1. Cohen-Zada, D., Krumer, A., Shapir, O., and Rosenboim, M. (2017) “Choking under Pressure and Gender: Evidence from professional tennis," Journal of Economic Psychology 61, pp. 176-190.

We exploit a unique setting in which two professionals compete in a real-life tennis contest with high monetary rewards in order to assess how men and women respond to competitive pressure. Comparing their performance in low-stakes versus high-stakes situations, we find that men consistently choke under competitive pressure, but with regard to women the results are mixed. Furthermore, even if women show a drop in performance in the more crucial stages of the match, it is in any event about 50% smaller than that of men. These findings are robust to different specifications and estimation strategies.

2. Cohen-Zada, D., Krumer, A., and Shtudiner, Z. (2017) “Psychological Momentum and Gender," Journal of Economic Behavior and Organization 135, pp. 66-81.

We exploit a natural experiment in which two professionals compete in a one-stage contest without strategic motives and where one contestant has a clear exogenous psychological momentum advantage over the other in order to estimate the causal effect of psychological momentum on performance. This unique setting commonly occurs in bronze medal fights in professional judo. Based on data on all major international tournaments during the period between 2009 and 2013 we find that men's performance is significantly affected by psychological momentum, while women's is not. This result is robust to different specifications and estimation strategies. Our results are in line with evidence in the biological literature that testosterone, which is known to enhance performance of both men and women, commonly increases following victory and decreases following loss only among men.

3. Cohen-Zada, D., Margalit, Y., and Rigbi, O. (2016) “Does Religiosity Affect Support for Political Compromise? International Economic Review 57, pp. 1085-1106.

Does religiosity affect adherents' attitude toward political compromise? To address this question and overcome the potential simultaneity of religious activity and political attitudes, we exploit exogenous variation in the start date of the Selichot (“Forgiveness"), a period in which many Jews, including non-adherents, take part in an intense prayer schedule. Using a two-wave survey, we find that an increase in the salience of religiosity leads to the adoption of more hard-line positions against a land-for-peace compromise. Examining several potential mechanisms for this attitudinal shift, our evidence points to the impact of the intensified prayer period on adherents' tolerance for risk.

דר' אריאל לוי

מאמרים בכתבי עת

Levy, A. and Lieberman, O. (2016) “Active Flows and Passive Returns," Review of Finance 20(1), pp. 373-401.

The positive relationship between money flows into investment products and their return performance is an important market indicator for market practitioners and academics. This article studies the impact that active versus passive investment styles have on this relationship. We further evaluate the effects of a passive approach in two crucial stages: portfolio selection and asset allocation. We find that a passive investment style in either stage weakens the relationship between flows and returns compared with an active style. However, the investment style in the asset allocation stage has a greater effect than in the portfolio selection stage, on the relationship between flows and returns.

דר' שירלי ליכטמן-שדות

מאמרים בכתבי עת

Lichtman-Sadot, S. (2016). “Does Banning Carbonated Beverages in Schools Decrease Student Consumption?," Journal of Public Economics, 140, pp. 30-50.

I evaluate the effectiveness of carbonated beverage bans in schools by investigating their impact on household soda consumption. I match households in Nielsen Homescan Data to their school district's carbonated beverage policies over an eight-year period (2002-2009). I find that when high schools ban the sale of carbonated beverages to students, households with a high school student experiencing the ban increase their consumption of non-diet soda by roughly the equivalent of 3.4 cans per month. I present evidence that this is a substantial offsetting (67-75%) of the average non-diet carbonated beverage consumption in high schools, when these are available to students, thus demonstrating the persistence of preferences when attempting to alter unhealthy habits.
Lichtman-Sadot, S. (2016) “Improving Academic Performance through Conditional Benefits: Open/Closed Campus Policies in High School and Student Outcomes," Economics of Education Review 54, pp. 95-112.

Open campus privileges in high schools can be conditional on students' academic (GPA, test scores, etc.) or behavioral (absences, probation, etc.) performance. I evaluate the effectiveness of this incentive scheme in improving student academic outcomes using a dataset covering over 460 California high schools over a 10-year period and their open/closed campus policies, while distinguishing between conditional and unconditional open campus policies. The results show an increase of roughly 0.1 of a standard deviation in student test scores when a conditional open campus policy is in place, in comparison to an unconditional open campus policy, thus suggesting that the incentive scheme intended by the conditional open campus policy is effective as a means for improving student test score outcomes. While the incentive scheme seems to improve test outcomes both for high and low-performing students, the magnitude of the effect is greater for lower-performing students, which is consistent with the fact that the academic thresholds under the conditional open campus policies are generally very minimal. The evidence also suggests that the incentive scheme is more effective for 9th and 10th grade students than it is for 11th grade students.
Lichtman-Sadot, S. and Bell, N.P (2017) “Child Health Outcomes in Elementary School following California's Paid Family Leave Program," Journal of Policy Analysis and Management 36, pp. 790-827.

We evaluate changes in elementary school children health outcomes following the introduction of California's Paid Family Leave (PFL) program, which provided parents with paid time off following the birth of a child. Our health outcomes—overweight, ADHD, and hearing-related problems—are characterized by diagnosis rates that only pick up during early elementary school. Moreover, our health outcomes have been found to be negatively linked with many potential implications of extended maternity leave—increased breastfeeding, prompt medical checkups at infancy, reduced prenatal stress, and reduced non-parental care during infancy. Using the Early Childhood Longitudinal Studies (ECLS) within a difference-in-differences framework, our results suggest improvements in health outcomes among California elementary school children following PFL's introduction. Furthermore, the improvements are driven by children from less advantaged backgrounds, which is consistent with the notion that California's PFL had the greatest effect on leave-taking duration after childbirth mostly for less advantaged mothers who previously could not afford to take unpaid leave.

פרופ' ענר סלע

מאמרים בכתבי עת

2. Einy, E., Goswami, M.P., Haimanko, O., Orzach, R., and Sela, A. (2017) “Common-Value All-Pay Auctions with Asymmetric Information," International Journal of Game Theory 46(1), pp. 79-102.

3. Krumer, A., Megidish, R., and Sela. A. (2017) “First-Mover Advantage in Round-Robin Tournaments," Social Choice and Welfare 48(3), pp. 633-658.

We study round-robin tournaments with either three or four symmetric players whose values of winning are common knowledge. With three players there are three rounds, each of which includes one pair-wise game such that each player competes in two rounds only. The player who wins two games wins the tournament. We characterize the subgame perfect equilibrium and show that each player's expected payoff and probability of winning is maximized when he competes in the first and the last rounds. With four players there are three rounds, each of which includes two sequential pair-wise games where each player plays against a different opponent in every round. We again characterize the subgame perfect equilibrium and show that a player who plays in the first game of each of the first two rounds has a first-mover advantage as reflected by a significantly higher winning probability as well as by a significantly higher expected payoff than his opponents

פרופ' עזרא עיני

מאמרים בכתבי עת

3. Einy, E., Moreno. D., and Shitovitz, B. (2017) “The Value of Public Information in Common Value Tullock Contests," Economic Theory 63(4), pp. 925-942.

Consider a symmetric common-value Tullock contest with incomplete information in which the players' cost of effort is the product of a random variable and a deterministic real function of effort, d. We show that the Arrow–Pratt curvature of d, Rd,, determines the effect on equilibrium efforts and payoffs of the increased flexibility/reduced commitment that more information introduces into the contest: If Rd is increasing, then effort decreases (increases) with the level of information when the cost of effort (value) is independent of the state of nature. Moreover, if Rd is increasing (decreasing), then the value of public information is nonnegative (nonpositive).

דר' אורן רגבי

מאמרים בכתבי עת

1. Cohen-Zada, D., Margalit, Y., and Rigbi, O. (2016) “Does Religiosity Affect Support for Political Compromise? International Economic Review 57, pp. 1085-1106.

2. Rigbi, O., Ater, I., and Givati, Y. (2017) “The Economics of Rights: Does the Right to Counsel Increase Crime?" American Economic Journal: Economic Policy 9(2), pp. 1-27.

We examine the broad consequences of the right to counsel by exploiting a legal reform in Israel that extended the right to publicly provided legal counsel to suspects in arrest proceedings. Using the staggered regional rollout of the reform, we find that the reform reduced arrest duration and the likelihood of arrestees being charged. We also find that the reform reduced the number of arrests made by the police. Lastly, we find that the reform increased crime. These findings indicate that the right to counsel improves suspects' situation, but discourages the police from making arrests, which results in higher crime.

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