Strategic wage contracts
In: Journal of economics, Band 50, Heft 2, S. 129-137
ISSN: 1617-7134
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In: Journal of economics, Band 50, Heft 2, S. 129-137
ISSN: 1617-7134
SSRN
Working paper
In: Søkelys på arbeidslivet, Band 38, Heft 2, S. 166-169
ISSN: 1504-7989
In: American economic review, Band 100, Heft 3, S. 1261-1268
ISSN: 1944-7981
We analyze the existence of policy reversal, the phenomenon sometimes observed that a certain policy (say extreme left-wing) is implemented by the "unlikely" (right-wing) party. We formulate a Downsian signaling model where the incumbent government, through its choice of policy, reveals information both regarding own preferences and external circumstances that may call for a particular policy. We show that policy reversal may indeed exist as an equilibrium phenomenon. This is partly because the incumbent party has superior opportunities to reveal information, and partly because its reputation protects a left-wing incumbent when advertising a right-wing policy.
In: Public choice, Band 134, Heft 3, S. 139-146
ISSN: 0048-5829
In: Public choice, Band 134, Heft 3-4, S. 139-146
ISSN: 1573-7101
We consider a game in which three committee members must divide up a benefit among themselves. In response to the large literature on sequential procedures in this type of game, we propose an institution that is inspired by auction theory. The (sealed) bids of the players are proposals for a distribution of the benefit and are given simultaneously. If any of the bids is preferred to all others in a pairwise comparison (i.e., a Condorcet winner exists) then this proposal is implemented. If such a bid does not exist then an equal split of the benefit is assumed. An equilibrium of this game is for each player to suggest that one of the opponents should receive the lion's share of the benefit, even though each player cares only about his own share. We call this phenomenon 'rational benevolence'. Although the end that is desired by the players is purely egoistic, the means of achieving it may be perceived as benevolent. Several applications of the game are suggested. Adapted from the source document.
In: Public choice, Band 134, Heft 3-4, S. 139-146
ISSN: 1573-7101
In: Journal of economics, Band 73, Heft 2, S. 167-191
ISSN: 1617-7134
In: European Journal of Political Economy, Band 14, Heft 4, S. 605-625
In: European journal of political economy, Band 14, Heft 4, S. 605
ISSN: 0176-2680
In: Public choice, Band 87, Heft 1-2, S. 177-184
ISSN: 1573-7101
In: Public choice, Band 87, Heft 1-2, S. 177-184
ISSN: 0048-5829
In: Ufuk Akcigit and John Van Reenen (eds). The Economics of Creative Destruction. Harvard University Press, Forthcoming.
SSRN
Petroleum administration can be regarded as a principal-agent problem. The government allocates exploration and production rights to petroleum companies on behalf of the population. The government is the principal and the companies are agents. With the aim of capturing revenue for the state, the government devises a petroleum tax system which takes account of the investment decisions made by the companies, while acknowledging for the fact that the companies may report strategically to the government. An important issue is how tax deductions are to be treated in investment analysis. A discrepancy arises here between assumptions made in some areas of tax theory and the actual investment analyses conducted by the companies. Tax theory has given rise to discussion and controversial tax proposals for the petroleum sector in Norway, Denmark and Australia. It led, for example, to reductions in tax-related depreciation for the Norwegian petroleum industry in May 2013. The article reviews this tax debate and analyses the implications of basing tax design on counter-factual investment behaviour.
BASE
In: CESifo working paper series 5046
In: Public finance
Petroleum administration can be regarded as a principal-agent problem. The government allocates exploration and production rights to petroleum companies on behalf of the population. The government is the principal and the companies are agents. With the aim of capturing revenue for the state, the government devises a petroleum tax system which takes account of the investment decisions made by the companies, while acknowledging for the fact that the companies may report strategically to the government. An important issue is how tax deductions are to be treated in investment analysis. A discrepancy arises here between assumptions made in some areas of tax theory and the actual investment analyses conducted by the companies. Tax theory has given rise to discussion and controversial tax proposals for the petroleum sector in Norway, Denmark and Australia. It led, for example, to reductions in tax-related depreciation for the Norwegian petroleum industry in May 2013. The article reviews this tax debate and analyses the implications of basing tax design on counter-factual investment behaviour.