Francisco Lagos

Immigration and Pension Benefits in the Host Country

This paper examines the role that low-skilled immigration plays in determining pension benefits of the host population. With an overlapping-generations model which allows identifying which groups of native population are in favour or against immigration, we find that despite immigrants having low average productivity, an open borders policy would be implemented since most of current domestic cohorts gain from immigration. Only younger workers might be against immigration since they will coincide with immigrants in their retirement periods. Moreover, we show how a larger immigrant quota would increase the probability of a Pareto improvement for the current domestic population.

Political election on legal retirement age

In the context of the current debate surrounding the reform of pension systems, this paper analyzes the political economy of the legal retirement age. Using a life-cycle model in which individuals differ by age and by wage, we analyze the outcome of a majority voting process on the legal retirement age in a Pay-As-You-Go pension system. The results show that the older an individual is, the closer her optimal retirement age is to the status quo age. That is, the status quo retirement age acts as a magnet. Additionally, we find that the preferred legal retirement age of most of the working population increases when the pension system is more redistributive. We also observe a positive relationship between the preferred legal retirement age and the status quo age.

Dysfunctional involvement of emotion and reward brain regions on social decision making in excess weight adolescents

Obese adolescents suffer negative social experiences, but no studies have examined whether obesity is associated with dysfunction of the social brain or whether social brain abnormalities relate to disadvantageous traits and social decisions. We aimed at mapping functional activation differences in the brain circuitry of social decision making in adolescents with excess versus normal weight, and at examining whether these separate patterns correlate with reward/punishment sensitivity, disordered eating features, and behavioral decisions. In this fMRI study, 80 adolescents aged 12 to 18 years old were classified in two groups based on age adjusted body mass index (BMI) percentiles: normal weight (n = 44, BMI percentiles 5th–84th) and excess weight (n = 36, BMI percentile ≥ 85th). Participants were scanned while performing a social decision‐making task (ultimatum game) in which they chose to “accept” or “reject” offers to split monetary stakes made by another peer. Offers varied in fairness (Fair vs. Unfair) but in all cases “accepting” meant both players win the money, whereas “rejecting” meant both lose it. We showed that adolescents with excess weight compared to controls display significantly decreased activation of anterior insula, anterior cingulate, and midbrain during decisions about Unfair versus Fair offers. Moreover, excess weight subjects show lower sensitivity to reward and more maturity fears, which correlate with insula activation. Indeed, blunted insula activation accounted for the relationship between maturity fears and acceptance of unfair offers. Excess weight adolescents have diminished activation of brain regions essential for affective tracking of social decision making, which accounts for the association between maturity fears and social decisions. Hum Brain Mapp, 36:–237, 2015.

On the Escalation and De-Escalation of Conflict

We introduce three variations of the Hirshleifer-Skaperdas conflict game to study experimentally the effects of post-conflict behavior and repeated interaction on the allocation of effort between production and appropriation. Without repeated interaction, destruction of resources by defeated players can lead to lower appropriative efforts and higher overall efficiency. With repeated interaction, appropriative efforts are considerably reduced because some groups manage to avoid fighting altogether, often after substantial initial conflict. To attain peace, players must first engage in costly signaling by making themselves vulnerable and by forgoing the possibility to appropriate the resources of defeated opponents.

The Role of Immigration in the Retirement Age Reform : A Theoretical Analysis

Abstract This paper examines the role played by the low-skilled immigrant labor force in countries aiming to reform their public pensions systems by postponing the pensionable age. With an overlapping-generations model in continuous time and a fully redistributive pension scheme, the arrival of immigrants affects the retirement benefits of the host population in a different manner according to whether they share or not pension benefits. Our results suggest that governments attempting to delay the legal retirement age should take into account the effect of immigration on the optimal retirement age of native individuals.

Who makes the pie bigger? An experimental study on co-opetition

The tension between cooperation and competition that characterizes many business relationships is experimentally studied in a ‘pie’-creation game; value is created and increased through cooperation in a repeated prisoners dilemma game. At the end, the player with the greater stake in the joint pie decides on the division of the pie. Three treatments of the pie-creation game are considered: in the first treatment, rivals create the pie; in the second, non-rivals create the pie; finally, in the third, the pie is created by subjects who do not know about the future pie-division. The data show that the competition for the right to split the pie biases behaviors towards defection when subjects play with their rival.

Defined contribution plan vs. defined benefits plan: reforming the legal retirement age

In the context of the current debate surrounding the reform of most social security systems, this paper analyzes the political economy of the legal retirement age. Using a life‐cycle model, we study the effects of changing the redistributive parameters on the optimal legal retirement age in a Pay‐As‐You‐Go social security system. Two pension plans are studied, with opposite results. In a defined contribution plan, an increase in the redistribution levels will delay the preferred legal retirement age. On the other hand, in a defined benefits plan, the same increase in the redistribution levels will lower this preferred age.

The Lazarillo’s game: Sharing resources with asymmetric conditions

The Lazarillo of Tormes’ picaresque novel introduces a story where two subjects sequentially extract (one, two or three) tokens from a common pool in an asymmetric information framework (the first player cannot observe her partners’ actions). By introducing a reward for both subjects in case that in every period at least one subject had taken one single token, we define an interesting coordination game. We conduct an experiment with 120 undergraduate students to study their behavior in this framework. We find that if the second player is allowed to take more tokens than her partner, then the frequency of cooperators does not seem to be affected by the informational asymmetry. Nevertheless, this asymmetry (i) incentives the second player to use her ‘power of extraction’ while the social externality is still available, (ii) yields to more asymmetric profit distributions when subjects win the social externality and (iii) delays the breach period in case of coordination failure. Furthermore, the first choice of the first player is determinant for getting the reward.

Reforming the Retirement Scheme: Flexible Retirement versus Legal Retirement Age

We compare a social security system where people can retire at an age of their own choice with one in which there is a legal retirement age elected through a majority voting process. We show that individuals prefer a legal retirement age higher than the one they would choose in the flexible scheme. In spite of this, we show that when the legal retirement age significantly limits the retirement age of high-wage workers, a flexible scheme would improve the financing of the pension system. Finally, we show that even when pension benefits are higher with a legal retirement age, a flexible system might be implemented.