María Paz Espinosa

Altruism and Social Integration

We report on a two-stage experiment in which i) we first elicit the social network within a section of undergraduate students and ii) we then measure their altruistic attitudes by means of a standard Dictator game. We observe that more socially integrated subjects are also more altruistic, as betweenness centrality and reciprocal degree are positively correlated with the level of giving, even after controlling for framing and social distance, which have been shown to significantly affect giving in previous studies. Our findings suggest that social distance and social integration are complementary determinants of altruistic behavior.

Exchange-of-Information Clauses in International Tax Treaties

This paper examines bilateral double taxation treaties, with an emphasis on information exchange among tax authorities. A major objective is to understand which countries are more likely to sign a tax-relief treaty and when information-exchange clauses will be added to a treaty. A simple model with two asymmetric countries and repeated interactions among governments is used. The paper shows that no information exchange clause may be added to a tax treaty when there is a reciprocity requirement, when there is a high cost of negotiation, when there is a cost of providing information, or with one-way capital flows. It is also shown that an information clause increases the gains from a tax relief treaty, but may make it less sustainable.

Should multiproduct firms provide divisional or corporate incentives

Abstract This paper points out some of the implications of the internal organization of a multiproduct firm for its market conduct. In particular, we study the strategic use of organizational forms based on corporate incentives versus forms based on divisional incentives. The equilibrium internal organization is determined in a model with full information. It is shown that firms provide corporate incentives when goods are substitutes and divisional incentives when goods are complements, and the result holds both in the case of quantity setting and price setting.

A model of optimal advertising expenditures in a dynamic duopoly

This paper develops a dynamic model of oligopolistic advertising competition. The model is general enough to include predatory advertising and informative advertising as particular cases. The analysis is conducted in a differential game framework and compares the open-loop and feedback equilibria to the efficient outcome. It is found that for the informative advertising competition game, advertising levels are closer to the collusive outcomes in a feedback equilibrium. In the case of predatory advertising, expenditures are inefficiently high in a feedback equilibrium and the open-loop solution is more efficient.

Endogenous formation of competing partnerships with moral hazard

Abstract We analyze the formation of competing partnerships as a sequential game with moral hazard within coalitions. In a linear Cournot model, we show that when moral hazard is very severe, no partnerships will form. However, when moral hazard is not too severe, the coalition structure may be more concentrated than it is in the absence of moral hazard. Concerning industry profits, in the absence of moral hazard too many coalitions are formed in equilibrium as compared to the efficient outcome, but moral hazard may be responsible for an inefficiency of opposite sign.

Prosocial behavior and gender

This study revisits different experimental data sets that explore social behavior in economic games and uncovers that many treatment effects may be gender-specific. In general, men and women do not differ in “neutral” baselines. However, we find that social framing tends to reinforce prosocial behavior in women but not men, whereas encouraging reflection decreases the prosociality of males but not females. The treatment effects are sometimes statistically different across genders and sometimes not but never go in the opposite direction. These findings suggest that (i) the social behavior of both sexes is malleable but each gender responds to different aspects of the social context; and (ii) gender differences observed in some studies might be the result of particular features of the experimental design. Our results contribute to the literature on prosocial behavior and may improve our understanding of the origins of human prosociality. We discuss the possible link between the observed differential treatment effects across genders and the differing male and female brain network connectivity, documented in recent neural studies.

The Role of Personal Involvement and Responsibility in Unfair Outcomes: A Classroom Investigation

This paper explores new motivations behind giving. Specifically, it focuses on personal involvement and responsibility to explain why decision makers give positive amounts in dictatorial decisions. The experiment is designed to uncover these motivations. Subjects face the problem of a dictators allocation of an indivisible amount to one of two players; indivisibility creates an extremely unequal outcome and the dictator is given a chance to correct this outcome at a cost. The willingness to pay to correct the outcome is examined under different scenarios so that we learn about several features concerning preferences.

Unraveling public good games

This paper provides experimental evidence on how players predict end-game effects in a linear public good game. Our regression analysis yields a measure of the relative importance of priors and signals on subjects’ beliefs on contributions and allows us to conclude that, first, the weight of the signal is relatively unimportant, while priors have a large weight and, second, priors are the same for all periods. Hence, subjects do not expect end-game effects and there is very little updating of beliefs. We argue that the sustainability of cooperation is related to this pattern of belief formation.

Do Students Behave Rationally in Multiple-Choice Tests? Evidence from a Field Experiment

A disadvantage of multiple choice tests is that students have incentives to guess. To discourage guessing, it is common to use scoring rules that either penalize wrong answers or reward omissions. In psychometrics, penalty and reward scoring rules are considered equivalent. However, experimental evidence indicates that students behave differently under penalty or reward scoring rules. These differences have been attributed to the different framing (penalty versus reward). In this paper, we model students’ behavior in multiple choice tests as a choice among lotteries. We show that strategic equivalence among penalty and reward scoring rules holds only under risk neutrality. Therefore, risk aversion could be an alternative explanation to the previously found differences in students’ behavior when confronted with penalty and reward scoring rules. We suggest the use of a modified penalty scoring rule which is equivalent to the reward rule for whatever risk attitudes students might have. To disentangle the effect of framing and risk aversion on students’behavior we design a field experiment with three treatments, each one with a different scoring rule. Two of these scoring rules are equivalent but have different framing, while the third is not equivalent but has the same framing as one of the other two. The experimental results indicate that differences in students’ behavior are due to risk aversion and not due to different framing.

Switching from Feed-in Tariffs to a Tradable Green Certificate Market

Feed-in tariffs have been the key support system for electricity from renewable sources in Spain and other European countries. However, given the growing criticism of this incentive scheme mainly due to its financial burden, the Spanish government has recently cancelled subsidies for any new electricity from renewable sources (RD-l 1/2012 2012). Since tariffs do not benefit from market signals, subsidies to some technologies may be either too high or too low to attain the regulator’s objectives. Existing literature on tradable green certificates suggests that a switch to a green certificates setup could be an efficient solution when substantial investments in renewable energy are already in place and technologies are at a mature stage. This chapter analyzes the implementation of a green certificates scheme as an instrument to foster renewables. We solve a sequential game where we analyze the interaction between the electricity pool and the tradable green certificates market. We focus on the retailer regulation design that would give lead to a decreasing green certificates demand and simulate the effect of such regulation on the price of certificates.