Gernot Sieg

Stability, chaos and multiple attractors: a single agent makes a difference

Abstract This paper provides an example in which a slight behavioral heterogeneity may fundamentally change the dynamical properties of a nonlinear cobweb market with a quadratic cost function and an isoelastic demand function. We consider two types of producers; cautious adapters and naive optimizers. In a market of naive optimizers a single cautious adapter stabilizes the otherwise exploding market. In a market of cautious adapters a single naive optimizer may destabilize the market; without him there exists at most one periodic attractor in the market but with him there may appear many (and even infinitely many) coexisting periodic attractors.

Complex Dynamics in a Cobweb Model With Adaptive Production Adjustment

Chaos occurs in a nonlinear cobweb model with normal demand and supply, naive expectations and adaptive production adjustment. The model differs from existing ones in that it includes adaptive production adjustment instead of adaptive expectations. The model exhibits observable chaos (strange attractors) as well as topological chaos (horseshoes) associated with homoclinic points. As numerical simulations show, the faster suppliers adjust their production and the more inelastic demand is, the more likely the market behaves chaotically. Keyword(s): Nonlinear cobweb model; Adaptive production adjustment; Topological chaos; Observable chaos; Homoclinic point

A political business cycle with boundedly rational agents

Abstract This paper shows that being “rational” is not crucial for rational opportunistic political business cycle theory. Partisan and independent central banks initiate a political business cycle even if voters and central banks adapt to positive rewards. I consider a central bank that is independent but has party preferences. Voters prefer competence, but do not know the governments competence. Therefore, the central bank signals competence through an expansive monetary policy. The approach used is a simulation of artificial adaptive agents in an evolutionary programming setup. In contrast to a model with complete rationality, the convergence of the evolutionary path is not unique in the simulation. Political, non-political and non-equilibria (in a game theoretical sense) coexist. Coordination occurs frequently.

Evolutionary Dynamics in the Voting Game

Voter participation is immense but theoretically doubtful because there exists cost of voting and the probability of casting the deciding ballot is low. Game theoretic models (Palfrey and Rosenthal, 1985) confirm this paradox of voting. Individual optimization in the voting game is problematic with respect to the rationality and information requirements of traditional game theory. Therefore in this paper a non-optimizing but learning individual is considered. By individual learning the adjustment processes and equilibria of voter turnout are determined. Voters are able to learn to participate and substantial voter turnout is possible.

A Model of an Opportunistic-Partisan Political Business Cycle

According to political business cycle theory, separate opportunistic and partisan approaches exist. It is obvious, as seen from theoretical and empirical points of view, that politicians aim for both opportunistic as well as partisan goals. This paper presents a model of a pre-election political business cycle that manifests an indication of competence and a post-election political business cycle that occurs because of the uncertainty of an elections winner monetary policy. In the pre-election period competent governments expand the economy. The post-election cycle depends on whether a leftist or a conservative government is in power in the pre-election period, and if they are re-elected or not.

Welfare effects of subsidizing a dead-end network of less polluting vehicles

This article shows that in the presence of environmental externalities, it may be welfare enhancing to overcome a technological lock-in by a dead- end technology through governmental intervention. It is socially desirable to subsidize a dead-end technology if its environmental externality is small relative to the one of the established technology, if the installed base and/or the strength of the network effect is small and if future generations matter. Applying our results to the private transport sector, governments promoting alternatives to gasoline-driven vehicles have to be aware of these opposing welfare effects.

Public Service Broadcasting of Sport, Shows, and News to Mitigate Rational Ignorance

Rational individuals may use a tax or license-fee financed public service TV channel to mitigate the paradox of rational ignorance. The approach presented in this article assumes that increased consumption of information by voters improves democratic decisions, but marginal returns decrease. Depending on how fast marginal returns decrease, the public service TV channel broadcasts either only (unbiased serious) news or, to induce voters to watch the informational content, sports and shows (entertainment) as well.

Crunch Time: A Policy to Avoid the 'Announcement Effect' when Terminating a Subsidy

Abstract If the government announces the termination of a subsidy paid for an irreversible investment under uncertainty, investors might decide to realize their investment so as to obtain the subsidy. These investors might have postponed an investment if future payment were assured. Depending on the degree of uncertainty and the time preference, the termination of the subsidy might cost the government more in toto than granting the subsidy on a continuing basis. A better strategy would be to reduce the subsidy in parts rather than to terminate the subsidy in its entirety.

Streiks und die Zuverlässigkeit der Verkehrsbedienung

ZusammenfassungMit der Privatisierung und der Aufhebung des Prinzips der Tarifeinheit haben die Arbeitskämpfe im Verkehrswesen stark zugenommen. Die Zuverlässigkeit der Verkehrsbedienung ist gefährdet und unbeteiligte Dritte haben oft das Nachsehen. Der Wissenschaftliche Beirat beim Bundesminister für Verkehr und digitale Infrastruktur hat eine Stellungnahme vorgelegt, die Empfehlungen ausspricht, wie das Streikrecht im Verkehrswesen neu geregelt werden kann.AbstractOf late, Germany has been hit by unprecedented strike actions by airline and railway staff. Lufthansa’s pilots staged 13 walkouts between April 2014 and September 2015, resulting in the cancellation of 8,500 flights and affecting around one million passengers. The one week strike by Lufthansa’s cabin crews in November 2015 forced the company to cancel another 4,700 flights. The trend towards industrial action in the German transportation sector is not limited to airline pilots and cabin crew, however. In addition, security agents and ground staff at several airports have gone on strike, and most of all, train drivers walk out with increasing frequency. In this article, measures are proposed to balance the legal, and legitimate, right of workers to use strikes as a tool of last resort in wagebargaining processes with the no less important right of customers to have access to reliable transportation services. While many other Western countries have regulations in place for the conduct of wage bargaining, including rules on work stoppages in core public service sectors, no such rules exist in Germany.

Are Commercial Ceilings Appropriate for the Regulation of Free-to-Air TV Channels?

Abstract Commercial ceilings not only restrict broadcasters in their decisions about commercial broadcasting time, but also affect their differentiation of program content. This study examines the welfare effects of commercial ceilings in a two-sided free-to-air TV market, taking into account welfare with respect to content differentiation. We identify a second-best commercial ceiling that maximizes welfare in the absence of enforceable program content regulation and identify the situations in which laissez faire is optimal. The deregulation of commercial broadcasting can improve welfare, even if the laissez-faire level of commercial broadcasting time is excessive.