Richard O. Beil

Strategic Uncertainty, Equilibrium Selection, and Coordination Failure in Average Opinion Games

Deductive equilibrium analysis often fails to provide a unique equilibrium solution in many situations of strategic interdependence. Consequently, a theory of equilibrium selection would be a useful complement to the theory of equilibrium points. A salient equilibrium selection principle would allow decision makers to implement a mutual best response outcome. This paper uses the experimental method to examine the salience of payoff-dominance, security, and historical precedents in related average opinion games. The systematic and, hence, predictable behavior observed in the experiments suggests that it should be possible to construct an accurate theory of equilibrium selection.

Are Economists More Selfish Than Other 'Social' Scientists?

There is considerable professional disagreement among economists about whether economists are less cooperative than non-economists. It has been argued that once an individual has been schooled in the self-interest model of individual human behavior (s)he exhibits more selfish behavior than other, ostensibly similar individuals who have not been taught to fully appreciate Homo economicus. Heretofore, the empirical debate has centered around classroom experiments designed to compare the “honesty” of undergraduate economics majors versus non economics majors. However, methodological problems have plagued these studies, leaving both sides at an impasse. We offer unique and compelling real-world evidence that suggests economists are no less cooperative than non-economists. Indeed, after comparing the incidence of “cheating” on their Association dues, we find that professional economists are significantly more honest/cooperative than professional political scientists, and especially, professional sociologists.

Competition and the Price of Municipal Cable Television Services: An Empirical Study

This paper investigates the effect of competition in the provision of cable television services on social welfare. We develop a simple theoretical model that suggests that competition will be welfare enhancing so long as it results in lower market prices. We empirically test for the presence of this condition by estimating a five equation system: First, the local franchising authority is viewed as self-selecting into a competitive or non-competitive environment in order to maximize its rents. Given this selection, the remaining four equations specify basic service and pay service penetration rate and price equations. Following Mayo and Otsuka (1991), the resulting system is estimated by two-stage least squares. We find that competition among suppliers lowers average basic cable rates by about

Entry and product quality under price regulation

3.85 and the typical pay service rate by about

Tacit Coordination Games, Strategic Uncertainty, and Coordination Failure

1.10, certis paribus. Mutatis mutandis estimates of these effects imply that monopoly franchising of cable service results in roughly

Asset Markets as an Equilibrium Selection Mechanism: Coordination Failure, Game Form Auctions, and Tacit Communication

3.6 billion per year national welfare loss.

Do people rely on the self-interested maximization of others?: an experimental test

Spence (1975, footnote 5, p. 420) has shown that, in equilibrium, a price-regulated monopoly will supply a socially suboptimal level of quality. This tendency to undersupply quality has been used to justify an expansion of regulatory controls to the quality dimension in certain regulated industries (e.g., electricity and telecommunications). In this paper, we examine the effects of entry on equilibrium product quality in an industry which is price-regulated. A generalized conjectural variation model is used which allows both monopolistic and oligopolistic market structures. Using this model, we find that regulation generally leads to a socially nonoptimal (either too high or too low) level of quality, where the direction of the resulting departure from optimal quality depends upon the conjectures that firms form. Spences result is obtained as a special case. We then demonstrate that a policy that encourages (or, at least, does not discourage) entry into the regulated market will cause equilibrium quality to move in a social-welfare-improving direction, regardless of the direction of the original distortion.