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leadership and cooperation: a natural experiment

NB: Peter Sellers trying to set an example of good humor in The Party, Blake Edwards

The frosts of December usually brings two calamities , especially for the university that I am, the weather (snow, ice and other climatic merrymaking) surveillance and investigation.
Maybe I should not destroy the illusions of our little darlings, brown and other colors of hair displayed by our student (s), but, no, I'm not going to review my subscriptions with a light step and serene, happy to do my duty as a teacher and a sleep without sleeping troubles in post-tests which I know they happened in peace, in order that my students have the best chance to get away with gusto and can spend Christmas holidays with peace of mind.

[if the above sentence seems incomprehensible to you, reader, used the ax with which thou hast certainly pledged to kill one or two Christmas trees to cut, please, where you good fit. Advance, thank you]

So in the middle of last week, I went as usual at this time to a monitoring review. Then I come to my supervision, delayed for reasons that it is unnecessary to explain here, and I see that we are two monitors to one hundred students, which is roughly consistent with the standard. The other person was not a teacher-researcher (at least in business, universities sometimes using extra pensioners out of necessity, the number of teachers can not ensure their regulatory oversight is not negligible) and was paid for it. In my case, surveillance is part of my service obligations, and, like many academics in France are not remunerated.

I then started to perform routine tasks at the beginning of trial in such circumstances: card check students pointing present and verification of the total in each event. Then came the most difficult period, that of surveillance "pure", in which the supervisor goes through the examination room, or do not travel, or traveling from time to time (delete as appropriate depending your personal experience). In my case, I still tend to get around frequently, but not always and above all, guided by the interests of fairness, I make sure to watch "serious" to minimize the risk of fraud.

The other supervisor was at that moment sitting in the back of the room and placed me on the other side of the room. I present some administrative documents required to complete and endow me the usual package of leaves and other brouilllons review copies and inserts that will ask me, in all likelihood, students now compose. Then I start to walk the room with a firm step.
At this point, the supervisor who stands with me, then also starts to go (but with no less determined than I am seems to me there) the examination room.
After one or two rounds of room, I sat on the chair and sit. I see that my colleague is then the back of the room and sits well.
Moments pass, time to connect my computer to access my mail, then I take back my package of copies, and get up in the idea of a new route to the amphitheater. Ten seconds later, my fellow sufferer gets up and is in turn a journey as I continue my own. Then, once completed my course and some students have satisfied their urge to white paper and another copy, I sit back in the pulpit. My colleague then also sits. Having noticed this little game, I wait a few minutes to make sure it is not a mere coincidence, he did not simply lifted along with me a few seconds apart, chance that we have modeled upon one another our cycle surveillance. I decided to wait a little longer in the sitting position. He remains silent, concentrated in the reading I do not know which magazine. I set it and then get up again with a determined air. Five seconds later he gets up too and did the same route as above. Then again, I sit and it sits well. This game was repeated as at least five times before I am busy with other pursuits relating always to the same supervision.

After the test, amused by the experience that I had to live (he does not take much to liven up this boring exercise, as you see reader), I tried to discern the behavioral foundations, the outcome of this game like me seemed particularly clear.

How to describe the situation? A monitoring review is more effective (to minimize fraud) and just that the level of effort and cooperation of supervisors is important. More supervisors roam the examination room, students can be more focused on their work and even get a copy or another when they need it. In fact, the situation is that once the public good. Every supervisor who exerts a costly oversight in fact benefit the students and all supervisors in the room, then he would prefer to read either France or West Matthew Rabin, or his favorite blogs economy.

In this situation, we find the usual behavior of a position of contribution to public good: there are contributors fans, who will go through the room in all directions to deter fraud and effectively to meet student demand. There are also riders who will do as little as possible, sitting down to read them newspaper and / or eat their sandwiches while others do the job, and he will not do you move an inch. There are also those who discuss and gather between free riders "like attracts like" the saying goes).
Then there are conditional contributors, those who are waiting to see what you do to decide.
In my case, depending on my mood and level of occupation, I'm a contributor unconditional or conditional. But if the other decides to do nothing or do very little, I think it's impossible for me to do the same, where the race will turn the show and at that time, I exercise a significant level of effort to compensate for the free riding on the other. Moreover, if the other is very far, I break a bit until I found it relaxes (sometimes, very rarely, that never happens) and now here I am then relay.

In these circumstances, the role of a "leader", that is to say a person who chooses to work to show what he thinks it is good to be decisive, as I have had some sort of evidence from the monitoring mentioned above.

After all, why this behavior on the part of the supervisor? He thought that since I was a teacher-researcher and her supervisor simple, I had a kind of ex post checks on him, the risk is that I indicate insufficient effort monitoring? I do not know too much and like what was happening was too good to be true (it was a sort of natural experiment), I tried to remember what was said by the experimental literature on the topic of leadership. More precisely, a leader is simply someone whose departure we observe the behavior, this observation help us form our decision.

Imagine for example a sequential prisoner's dilemma, a player playing in the first and one second. The second therefore observed the action of the first, and say he is the follower, the first player being the leader.
If the first player cooperates, the second player can decide to be strictly rational to defect, which brings in the maximum gain. Moreover, it may also decide to cooperate and get the Pareto-optimal gain. But the argument of backward induction advocates show that the balance of the game is the defection of players successively, as in the extensive form game given below:

The effect of leadership has been extensively studied in experimental economics for ten years, the theoretical reflection on this theme is initiated by Hermalin in 1998.

In the experiment conducted for example by Guth et al., 2007, to study the influence of leadership on the levels of cooperation, the chosen game is a classic game of contribution to public good. One of the treatments used as a benchmark (benchmark) and consists of a simultaneous game of contribution to public good (VCM: Voluntary Contributions Mechanism) under standard conditions (see here for new readers or Readers who have forgotten). In other treatments, a randomly selected entrant (the leader) determines its level of contribution to public good first, which is announced to the other three members of the group (followers) before they determine their own level simultaneously Contribution (VCM With leadership). From a theoretical viewpoint, the fact that a player announces his first contribution leads to the same theoretical predictions as in the case of simultaneous contributions: the dominant strategy is to pick a contribution level equal to zero, we fall back on classical problem of free riding behavior. These authors also treatment they call "strong leadership": the leader chooses its contribution, announced the three followers, who determine their own contribution, then after that, the leader becomes aware of these levels of cooperation and may decide exclude one of the followers for the next period (each participant can player up to 25 times that game). In this case, the excluded player earns its endowment and can not take this opportunity related to the public good.

Furthermore, the leader is determined in two ways: either he was drawn early in the session and remains the leader during the first 16 periods of the repeated game of contributions (there are 25 repetitions in all), or the 4 participants will have the opportunity to be a leader for the same number of periods (4 times each then), the sequence of successive leaders being announced in early Thurs
In fact, it's a little more subtle like design (that's why I always liked what was Werner Güth, it is both rigorous and subtle an experimental point of view ), the first 16 periods of the game determine the leader exogenously, and the periods from 17 to 24 give participants the opportunity to each group to choose endogenously their leader. In fact, during the period between 16 and 20, participants have the opportunity to vote, or that they want to keep their leader (or not) or to say who they want to have as a leader among the 4 members of group. The graph below shows the results on the average contribution of the participants in the benchmark treatment (control), a leader and strong leader:

Source: Guth et al., 2007, JPE

The results are both expected and intriguing: the average contribution level is all higher than the power of the leader is strong: it can announce its contribution and exclude (punish) a member of the group, the average contribution is twice as strong as in the case of simultaneous game without a leader, and represents approximately 80 % of the total allocation given to each participant (25 tokens). For treatment Leadership "simple" (without exclusion power), the average level of cooperation is a bit higher, but the impact of leadership tends to wane over time to converge to the average contribution level without leadership. The power of exclusion is a clear difference in terms of level of cooperation!

They reported no significant effect on the determination of exogenous leader: having always the same leader or there is rotation does not influence the levels of cooperation. The most important result is that they measure a significant correlation between the contribution to the Leader and the contribution of followers, which runs counter to theoretical predictions of the simplest (mutual defection).

course, they also find that the probability of being excluded for a follower is more important than its contribution is small compared to the average contributions of his group. On average, the leader has ruled out a follower in 20% of cases, exclusion is even stronger than the deviation of the contribution of the follower relative to the mean was significant (only the negative deviations, my contribution is lower the medium-increased the probability of exclusion).

In short, leadership increases the level of cooperation so essential, that remains an enigma as a theoretical point of view. In another recent experimental study, David Levy, Kail Padgitt, Sandra Peart, Erte Xiao and Daniel Houser (2010) show that this positive effect is real only leadership if the leader is human and not a robot (not a joke, it was published in the Journal of Economic Behavior and Organization).

And I thought to send my copy robotic within a few years to monitor my place neither seen nor known. Blood and Guts, I'm like a rat! Unless the other supervisor can not guess this is my copy ...

PS: the picture that illustrates this post has nothing to do with the connection, but the temptation make a fitting tribute to Blake Edwar, who left to join Peter Sellers in paradise geniuses last week, was too strong.

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What Does An Apendix Look Like

Notes primary schools: helpful or not?

Twenty personalities, Michel Rocard, Daniel Pennac, Richard Descoings, Marcel Rufo and researchers as Axel Kahn and Eric Maurin, a colleague, among others, have recently joined an appeal launched in September by AFEV aimed at eliminating the use of notes in elementary school. The main arguments are well known, the notes would discourage students, undermine their confidence in them and the conclusion also striking to note how a school cooperation rather than a school competition (see here ).

As a teacher, my view is actually shared personal assessment must be part of the route of a pupil or student, because it takes many elements it needs to be within the absolute respect and possibly all of these comrades. Moreover, this assessment does not necessarily reduce to a note, but can take many forms. I also understand the arguments of Eric Maurin, which probably gives a more sociological reading of the problem, based on factual evidence that is indisputable. As an economist, I must say that incentives have an effect, and the whole issue is whether the incentives from the rating is more effective or less effective for student achievement that the lack of system incentive or another incentive scheme.

Moreover, by the way, striking the notes is also an issue of public policy, insofar as the effectiveness of education policies, when it is measured - is often gauged through the variation of performance Student against those famous notes. Obviously, this approach to evaluation by the notes can be only very partial, and it was said long ago that the effectiveness of education reforms should be judged on multiple criteria other than performance terms of notes, for example through the impact on the general condition and behavior of children and adolescents (health, tendency to addiction, etc.).. I quote including Bowles and Gintis Obsborne in 2001 in the American Economic Review about the limitations of the notes (test scores) for evaluation performance in school and the need to go beyond:

"(Economists) Need Broader Indicators of School Success, Including Measures based On The contribution of schooling to behavioral and personality traits"

It also appears that the relationship between grades in schooling and income earned by people later became active is relatively thin .

From a behavioral perspective, the question that is asked is whether the impact of information that can get people on their performance current levels of effort to come and future performance. Or, put differently, what is the incentive effect of these famous notes on the level of effort in the work of students?

This issue of the impact of feedback is at the heart of the work on the economics of human resources (I do not know better translated "personal economics," but said it may be just the economy of staff), which is little or my specialty. The empirical literature, especially experimental, has been important in recent years on this issue. I already

mentioned in this ticket problems there might be trying to establish a system of incentives in a context of education, the perverse effect is that extrinsic motivations substitute for intrinsic motivation and the Total net effect could ultimately be negative. Mutatis mutandis, the effect of motivation related to the notes could oust the taste of staff work and effort.

particular, the question of efficiency scores (feedback in general) can be approached from two aspects: the fact that the level of my note gives me information Absolute on my performance, and secondly, the relative level of my grade compared to other students, if this information is public. If it is public, it can take many forms, my grade can be compared to an average possibly coupled with a standard deviation provided by the school, show up to a perfect knowledge of the distribution of ratings.
From an economic standpoint, feedback on past performance can affect my performance standard either directly, as past and present performance are substitutes or complements in the utility function of the agents, or indirectly by revealing to the individual information on the performance of its effect (signaling effect).

This controversy is timely, since the literature on this issue is booming in the experimental field. Recently, Azmat and Irriberi, 2010 published the results of two studies that focus particularly on the impact of feedback in part on performance, but also on the welfare assessed. They focus in particular on the impact of feeback on the performance of individuals. They observed a significant effect on scores on the final performance of students, and therefore their level of motivation, on the occasion of a natural experiment. They confirm these results in this paper , but also highlight the negative effects on the well being of students below the average of a measurement system relative to an absolute measurement system.

However, the study's most interesting because the nearest of the question is that of Todd Cherry & Larry Ellis, in an article published in 2005 in the International Review of Economics Education . These authors compare the impact of an absolute evaluation system (my my grade or rank on a scale of 1 to 10 for example) compared to a rating system on. In the evaluation system on my score (my final) is determined on the performance of other students. For example, if I answer more questions than 90% of my class, I get an A. If I say better than 75% of my class, I get a B, etc.. This system is particularly strong competition in front of students.

is precisely the effectiveness of any scheme of assessment on the final performance students they wish to measure. As they have 4 classes in an introductory course in macroeconomics, they set up for two of these groups on an assessment (rank order grading) and the other two absolute evaluation (Criterion-referenced grading). The chart below shows the distribution of scores finally obtained in the examination according to the two incentive schemes by Notes:

Source: Cherry & Ellis, 2005

As it is difficult to draw a clear conclusion, these authors make an econometric analysis of the score through the treatment as an explanatory variable "rank order grading 'treated as a variable dummy. The results are quite explicit: the average score of students is better in the scheme which provides an assessment on the student rather than an absolute assessment. They are cautious, however, and insist that this kind of rating system is not necessarily appropriate if the goal is to promote cooperation among students, the evaluation system is absolute, in these conditions, probably better.

To conclude this post, this is not the rating itself appears to be a problem but how this notation is used by teachers and students to compare themselves to others. That can backfire. However, the effects of competition are not always bad (I'm sorry to remind so obvious, but many get carried away in a big discussion about the perverse effects of competition, forgetting some of his indisputable merits). Finally, I borrow from this week's Telerama conclusion that I found beautiful. A French teacher told a student collapsed by its note of 7 / 20:

"You are not what 7 / 20. This 7 / 20 is what your work was worth last week between 8 am and noon. Made the difference. "

is one who has all inclusive pedagogy. More reason not to break the thermometer too fast and think of a weighted potential consequences of the abolition of the notes.

The Best Unblocked Games

Facebook, gas prices and the role of approving

I read the newspapers very rarely. I always more or less hated this, perhaps in response to this period of my childhood when, during the rainy vacation days spent in my native Morvan, my only resource to fight against boredom was reading the Superman strips taken by the newspaper La Montagne ...

More generally, I always vaguely challenged this view the news through the small end of the telescope, which is more interested in the boules competition Petaouchnouk friendly-sur-Sevre that the conflict in Darfur, and these newspapers in which the major interest of many readers is to consult obituaries if his neighbor will be included.

[I am a little moody, probably disrupted by the switch to winter time]

However, there are few, having at my disposal one of the bibles of Breton medium (outside The Holy Bible of course), namely the newspaper Ouest France, I came across this little story present in the edition of 27 October I am going to narrate.

Once upon a time, in a small town of Ille-et-Vilaine, a nice head of station, named Eric. This was exposed, like all his fellows, the recurrent difficulties of fuel supply due to deposits blocked by hundreds of trade unionists - a dozen police said, opposed the pension reform.

Being of a generous nature, he said it would be desirable to inform all those poor motorists wandering like lost souls in search of the Grail container, not the blood of Christ, but good and heavy diesel. He then had the idea to inform them in real time (?) Via the Facebook page of the large area which holds the gas station. Alas, far from stopping there, noting that competitors' prices soar during this period of shortage, the margins from his post of about 1% to 6% for certain, he courageously decides to lower fuel prices it provides and, icing on the cake, to increase its capacity by hiring extras to limit the length of queues.
Result? dozens of messages of encouragement and appreciation for this welcome improvement and these generous prizes on the Facebook page of the supermarket. Eric, moved to tears (well, there I am a bit of a film) decides to organize a challenge : If before 8 am Tuesday, October 26, one hundred were clicked "love" on the popular Facebook page, the price of fuel down. But Eric goes further, if in addition to that, 800 Internet users say they are fans of the aforementioned page, diesel oil is sold at cost. Apotheosis: If the page has over 1000 fans, all fuels are at cost.

In fact, at the end of the period, 109 people said they "liked" it, and suddenly Eric, overwhelmed by an emotion that one can not declare legitimate decided to provide all fuel cost all day going far beyond its initial commitment. Therefore predictable supply disruption from 17.45 on the same day!

player, do you doubt that what I'm interested in here is to give a little economic sense in this paradox: a manager who agrees to sell at cost upon the fact that anonymous users have served him in sufficient numbers they were nice! Notes that many users may have said the friendly, it does not cost much and moreover, they may actually find it really unpleasant, but that's all that matters, is that ultimately, a sufficient number of people have reported finding its sympathetic action.

What I mean by that is that the power of retaliation by the Internet in case of non compliance with the floor manager is relatively limited. These are not 100 Internet, which, moreover, are not necessarily regular customers of the resort, which will be able to punish the manager by boycotting their station for example. Furthermore, one might think that an objective of building a reputation by the manager to its clients is probably real, but not necessarily the main motivation for his behavior.

The question is whether this type of reward ("I" on Facebook) or punishment ("I do not like") has a symbolic effect on the behavior of individuals. This idea is as old as the world or almost one of those who argued so serious as for example the sociologist Emile Durkheim.

These penalties / rewards are said to be immaterial (also known as positive or negative feedback in the experimental literature) in the sense that they do not affect the material welfare of the officer punished or rewarded, but only his emotional state. The examples are numerous, both possible expressions of approval and disapproval verbally and facially are many insults, social ostracism (see the sweet process of excommunication), humiliation (etc.) but also the applause the encouragement, smiles and other expressions of individual or collective enthusiasm with regard to the conduct of a person.

Initially I thought count by tens experimental studies devoted to this simple question, and it is clear that it is not so easy to find items which directly address this issue in the field of experimental economics or behavioral economics in this precise sense. Many studies exist on the impact of sanctions / reward material, also on the question of the impact of sanctions on symbolic contributions (including a paper known to one of my colleagues and co-authors, David and Masclet in Masclet al., 2003). However, feedback suggested - some level of disapproval of such non-material is always ex post, once the actual decisions of individuals made public for the whole group.

The only study to my knowledge on this subject is that of Perez-Lopez & deliberateness in 2010 in the Journal of Economic Psychology , the question raised by these authors is precisely my opinion the main outcome of the enigma of my sympathetic manager behavior gas station. How the presence of an approval or disapproval of a non-material can influence the choices?

To study this, the authors, after building a model of aversion to the disapprobation, compared three treatments based on a prisoner's dilemma game played once (one-shot game ") in order to test the theoretical model constructed initially. In this game , need I remind invented by Dresher and Flood in 1950, and contextualized by Tucker in 1952, two players must decide to cooperate or not cooperate (these terms are not used in the game instructions) The choice is simultaneous. If both cooperate, they each earn 180 points, and if both do not cooperate, they each earn 100 points. If one of them cooperates and the other not, one who earns 80 cooperates and who does not cooperate earns 260 points. The Nash equilibrium is obviously a mutual defection.

The first experimental treatment is a control treatment, participants are paired with two randomly and anonymously play the prisoner's dilemma. In the second treatment, made in particular to test their model aversion to disapprove, the subject must say this before choosing their strategy, what they think their opponent will think of their choice in all possible configurations of game, if they turn clear or approve each possible strategy. For example, assuming that the other cooperates, the fact that I cooperate myself should be overwhelmingly approved by my partner. This information will be the opponent, each player having access to this hypothetical judgment actions of the other by himself.

In the last treatment, players have the opportunity, once made their decision to send a message to their partner expensive ("Feedback"), this message saying that the choice made by the other was either good or bad or neither good nor bad. The treatment that interests me most is obviously the second treatment, based on the hope of being approved or disapproved by the partner.

The results are summarized briefly: the rate cooperation is higher in the treatment feedback (which is in line with the existing experimental studies on the impact of sanctions on non-material cooperation) than in the control treatment. Treatment "expectations" - expectations about what my opponent will think of my action - is intermediate, that is to say that the cooperation rate is slightly better than in the control treatment, although the difference is not statistically significant (on the graph below, the rate of participants who chose "cooperate" in terms of treatment, control treatment blue, orange treatment "expectations" and feedback processing in yellow).

Source: Lopez-Perez and deliberateness, 2010

Thus, only certain players are showers in disapproval, but clearly this is not the overwhelming majority of participants.

Finally, drivers of large area have been lucky to come across a manager who, fundamentally, is certainly not altruistic, but rather sensitive with respect to the other, motivated by a gesture approval of his peers, which admittedly is the case for many of us.

Painting Of A Man And A Woman

Threat of gasoline shortage? Do not panic (oil)! Discipline

NB: group of motorists desperate kindly asking alms oil)

The strike situation of employees in most major oil refineries, the strike resulting in a blockade of the outputs of refined fuels, augurs the possibility of a shortage of gasoline for most motorists who I am, the stations gradually being unable to renew their stocks.

As Dante wrote in Hell:

" Oh, she is nagging anxiety Driver's fuel shortage, looking for the grail diesel or unleaded, and ready to do battle with the CGT simplex homo, who in the early Frimat, and under the false pretext that he likes walking, finds nothing better than to march occasionally accompanied by thousands of similar (tens according to the prefecture of police) and to recover from his diabolical efforts , sleeping on fuel depots, but with one eye open, ready to pounce on the slightest scab ... "

[If someone comes to counting the number of commas in the preceding sentence, I sent him a caramel collect. Mostly I hope no one seriously believes that Dante wrote it, it's actually Victor Hugo in Les Miserables.]

The thing is, day after day, the media never stop not knocking our message, namely that the risk of fuel shortage is real, although the Government reiterates that there is no need to panic, and that is precisely a panic that would trigger the shortage.

Well for now, things seem to happen nicely, most stations have not forfeited and there seems to be no rush among distributors. However, since I have the opportunity to use my car every day, I must confess that I look with a touch of anxiety in the situation where I source stations regularly, waiting for messages "Out of Gas "or tonnage (no pun intended) the number of motorists filling their tanks, a queue fed giving the signal for a panic trying to develop. Therefore, my imagination probably much too rich considering the company collapsing and ending up in a death struggle to obtain a jerry can of gasoline, as in the post-apocalyptic world of Mad Max.

This kind of situation, which grows each time a paralysis of the road haulage threat applies to both fuel and foods, and we all remember the strike of 1993 during which total our (con) citizens heaped pounds of pasta, sugar and other items to survive in case of nuclear attack.

These phenomena of panic potential related to risk of default on supply basic necessities always make me think furiously to the phenomena of bank runs, a phenomenon brilliantly described in the book Kindleberger in 2000 on the history of financial crises and theoretically modeled by including Diamond & Dybvig 1983. These panics are a typical example of self-fulfilling prophecy, since it is precisely because an agent anticipates that he will trigger panic by withdrawing their savings (we'll use it with this description of the revolution, with its usual brilliance, by the poet Eric Cantona ) ....

Traditionally, the phenomenon of bank runs is modeled as a coordination game in which two equilibria are possible, one where everyone panics and withdraws its funds in a given bank (and therefore the logical first come first serve basis, and all investors will not be served) and one in which no panic (so no one withdraws its funds or to withdraw the last of the game if the horizon is finite). Clearly, this is interesting, but it's a bit of a response Normand, "perhaps have ben is that yes panic, but perhaps have well qu'non "...

Experimental economics is then very useful in those situations where the theory gives predictions of multiple, in that it allows to discriminate potentially empirically strategies adopted by players and try to understand their rationale.
Several experimental studies have been done on these phenomena, one of Madiès (2006), published in the Journal of Business , and one of Schotter and Yorulmazer in 2008 in the J ournal of Financial Intermediation .

Madiès In the study, one of the experiments is as follows. Groups of 10 participants must decide simultaneously to 30 times (rounds) for the period of withdrawal of their savings. If they withdraw all in period 2, each earns 45 ECUs. If they withdraw all in period 1, only 3 will be served, the bank became illiquid beyond 3. All three earn 40 ECU and the 7 others who have not withdrawn in period 1 win 0, whatever the time of withdrawal. In this game there is a Nash equilibrium Pareto-dominant one in which all 10 participants withdraw in period 2, well being are of 450 ECUs. There is another Nash equilibrium risk-dominant implies a lack of coordination, ie a situation in which the 10 participants withdraw in period 1, and where consequently the gain is 3 * 40 = 120 ECUs, with only 3 participants will served.

The results are partially "reassuring, in that the total panic (that is to say, situations in which the group of 10 investors withdrew their funds in period 1) are quite rare and only happen in slightly less than 5% of cases. By cons, panics partial (situations where at least one investor withdraws its funds in period 1) are quite frequent and are observed in 70% cases on average. However, the occurrence of these partial panic very much depends obviously on the group dynamics on the "long" term: if a group meets a few cases of panic at the beginning of the session in the early rounds, the trend is decreasing rather to Over time, the panic is rarer. The reverse is true for groups that start immediately, with rates of panic rather high, reinforcing the contrary phenomenon over time. So the lack of coordination tends to worsen when it is initially quite large and rather to disappear when it is initially quite limited.

Experience & Schotter Yorulmazer is somewhat more complex, but also corresponds better to the intuition, since in some treatments, participants' decisions are not simultaneous but sequential: I watch my neighbor remove or not in period 1, so I decide to withdraw or not in period 2, etc.. It corresponds to the idea that one can occur spontaneously as a potential problem of oil panic: I am especially trying to go full if I observe that there is a queue important than if I observe that there is nobody. These authors therefore explore the impact of information that can be given to saving on the severity level of bank runs. An important point is that they are also considering the role of the average pay for deposits - the level of interest rates-in the onset and intensity of bank runs.

The result is also reassuring that to observe the withdrawal of other investors tend on average to minimize the occurrence of bank runs early in the game, compared as a simultaneous game in Madiès. Moreover, the higher the pay is high, and the occurrence of panic early in the game is limited.

All of these experiences reveals another interesting result: the suspension of the possibility of withdrawing from public authorities to stop the panic once they start to trip, but their effectiveness in preventing of these panics is quite limited. Moreover, insurance mechanisms, even if they involve a moral hazard problem on the part of investors, limit severity of bank runs and play a role in crime prevention.

What worries me to return to the oil panic is that the insurance system seems somewhat limited (strategic reserves of fuel in the state are limited in number of days of use, and c is the only "insurance" that I see). There remains the suspension of fuel supplies. That is to say that I can do to prepare myself to take a few days of forced rest home ...

Fetal Weight Percentile

States budget, reform of the Stability Pact and efficiency Sanctions

Last Monday, the finance ministers of the EU-27 have discussed the necessary reforms to the Stability Pact. One of the sticking points at that meeting was apparently how financial penalties should be determined for the member states that would let them slip deficit and public debt because of lax economic policies. I quote a recent article Point published here so that everything is clear:

" Devoted to the issue of automatic sanctions and the criterion of reduction of debt, the meeting was to reconcile the positions of Germany, who advocates a hard line, that of the majority of states, including France, eager to preserve leeway.
Some question the overly automatic sanctions and the criteria to be used for examining the evolution of the debt. Others are reluctant to the very principle of financial penalties levied on EU funds "

In particular, Minister of Economy and Finance, Christine Lagarde said this:" France has always supported a strong and credible economic governance. From there to provide a fully automated nature, a power that would be totally in the hands of experts, not . In contrast, the German finance minister, Wolfgang Schäuble, as ECB President Jean Claude Trichet spoke in favor of a hardening material, in particular the German minister who publicly campaigned for sanctions "quasi-automatic ". Specifically, Mr. Schäuble has also insisted on the "automatic" penalties put in place for a debt or deficit exaggerated the lifting of sanctions to obey a "qualified majority reversed", that is to say that the penalties apply unless a majority of state are opposed. I confess that, initially, the position of this gentleman seemed much more sensible than the French position, being persuaded that the opportunity to vote on a discretionary basis for sanctions would limit the effectiveness or even completely negate mere possibility that they may exist.

So, to summarize, some member states, including France, defending the levels of penalties determined on a discretionary by a show-off states, while other states, not least because Germany is one of them, argue in favor of sanctions or quasi-automatic machines that would not rely on a political voting states. We're a little debate in the regulatory policies vs. discretionary policies ("rules Rather Than discretion, Kydland & Prescott 1977), the ultimate effectiveness of the system of sanctions is probably related to its credibility. However, it is not at all to this aspect I want to discuss today, but rather, more basic, the effectiveness of sanctions endogenous sanctions or exogenous (automatic) on fiscal restraint States.

This kind of situation in which states negotiate institutional arrangements that will govern them in the future lends itself to speculation or evidence. Especially here, where what is at stake is the effectiveness of specific devices of sanctions resulting from lax fiscal policy on the part of a Member State. In this case, it would be interesting for representatives of EU states who are currently discussing these points, have the chance to have a small presentation on the main results of the literature Experimental effectiveness of sanctions on the cooperation of agents. I will not do it now because it would take me too far, but just give some information on the following question: is it preferable to have the efficacy of automatic sanctions that would therefore not be chosen endogenously by Member States or, conversely, is it better that the award of sanctions against a Member State relies on a political process of voting discretion on the part of all Member States This case is based on having?

I will make a assumption that I understand it may seem questionable (and I have a problem too), but is particularly suited: the fact that each Member State shall respect the rules of the Stability Pact is akin to a public good that benefit all Member States, even though it may be individually expensive for a given Member State. Clearly, each state would benefit from being able to play stowaways and not follow the rules (make the budget deficit when he needs it, this significantly beyond 3%), but collectively, the effect would catastrophic, the absence widespread fiscal discipline leading to major economic problems for the eurozone. Just like the fact that a State which has committed at the international level does not negotiate with potential terrorists do it may quietly, prompting the terrorists to expand their business, to use the canonical example of Kydland and Prescott.

Tyran and Feld in 2006 led an experiment whose teachings are, if any, interest seems to me there. Their experiment, published in Scandinavian Journal of Economics , based a gambling problem contribution to a public good with penalties. The design of the experiment is however quite different from what is usually done on this issue. Indeed, many experimental studies on the effectiveness of sanctions in social dilemmas, and I helped myself, rely on endogenous penalties determined by individual participants who observe the level of contribution to public good of others. The canonical article on this kind of two-stage game, a contribution of sanctions and the following is the article by Fehr & Gaechter, 2000.
In their study, the situation is reversed. Participants first choose the terms of sanctions and then contribute. This experimental situation more or less corresponds to the current situation of the European Union, currently employed to decide the modalities of future penalties that would apply to Member States lacks fiscal discipline. It is therefore particularly interesting to note the results.
Penalties for insufficient contributions may be in some treatments, exogenous (that is to say, determined by the experimenter), and in others are endogenously chosen by a vote of the participants belonging to a group. In this case, the game is played in two stages: first the participants vote for the type of sanction they themselves attribute (no penalty, sanction or penalty moderately severe) and then, once the system of sanctions collective set, playing a game of classic contribution to public good (each member of a group of 3 has 20 tokens and must decide to allocate this endowment between a private account, and earns 1 point per token and a public account , and earns 0.5 points per token, but also reported 0.5 percentage point to the other two team members). Once the contributions chosen by each participant, the sanctions are applied. If the contribution to public good is equal to 20 (the whole allocation), there is no penalty. Otherwise, the penalty applies and takes two forms depending on the treatment, punishment and moderate to severe punishment. The penalty is to remove moderate gains 4 points in the participants did not contribute fully to the public good, and severe punishment is to deprive him fourteen points. For example, a participant who contributes 0 to the public good will in the case of treating "severe punishment", and assuming that the other two participants belonging to his group contribute fully, a gain of 20 +0.5 (40) -14 = 26 points.
From a theoretical perspective, the balance of such a game is the balance of free riding (all participants contribute zero to the public good) in case there is no sanction in the case where the penalty is moderate. In cases where the penalty is severe, the Nash equilibrium is an equilibrium has contrast in which the three participants contribute their entire endowment to the public good.
The main results are as follows. The chart below shows the average levels of contribution in percent (100% corresponding to a contribution of 20 tokens, which the Pareto optimal if everyone contributes here), this level of punishment for each:

source: Feld and Tyran, 2006

As Not surprisingly, the level of contribution increases with the level of sanction. But in fact, if sanctions are imposed exogenously (without a vote by the subjects), only severe punishment is efficient for the public good is produced at most. The penalty is moderate for its relatively inefficient, the level of contribution to public good is not significantly different level from a situation in which there is no penalty.
The results are quite different in the case of endogenous penalties, as shown in the following graph:

source: Feld and Tyran, 2006

The level of contribution is this time significantly even in the case of mild sanctions, equal to about 65% of the maximum possible, against only about 20% in the absence of sanctions. In the case of severe sanctions, it has no fundamental difference between contributions under this level of penalty to be voted by the participants or attached externally by the experimenter.
I will not say that every day, but it is clear, given these few results, I am compelled to agree with Christine Lagarde (arrghhh ...) It is better for sanctions policy as determined by the states Member of automatic sanctions, particularly if the level of sanctions is relatively moderate (one speaks of 0.2% of GDP). If sanctions are very strong, what seems to be the preferred option by Germany, then the procedure for determining sanctions is not very important. That it is a discretionary voting to decide to implement sanctions once observed behavior, or that one has an automatic sanction when a state member crosses the red line, sanctions will be effective to encourage States to contribute more to the public good.
However, I must emphasize that, as sanctions are costly, experimental literature emphasizes Detrimental effects of sanctions: the earnings of players can ultimately be lower if it is awarded on too strongly, and this may undermine the effectiveness economy. Besides, I already explained that such mechanisms can cause crowding intrinsic motivation of agents, extrinsic motivations (fear of the stick), replacing the intrinsic motivations (available natural agents to cooperate).
The sanction mechanism is handled with care and it is more than necessary to weigh the advantages and disadvantages.

PS: the picture that illustrates this post is taken from Gotlib, Topic in Brac, Volume 4 "Slowburn gag" with all my admiration and respect.

Swollen Breasts And Cramping

games in class, Vernon Smith and I

NB: Vernon Smith incredulously watching the market equilibrium during a class game

Each year we are doing here in the good old Faculty of Economics, a course of re-entry during which first year students of economics and AES (Economic and Social Administration) are introduced methods and learning issues of the economy. There are now three years, we proposed that all students pass through our laboratory experimental economics, the LABEX to enter teaching economics in a gentle and fun through participation in a game computer market. It is not nothing, because in two weeks, about 600 students participate in these sessions, the duration of the meeting of two hours. However, all those who have taught know just how challenging it is to expose the main basics of microeconomics to a beginning student. So, there are two categories of teachers. Those who think we should do it seriously and it's sometimes a little difficult because you have to constantly juggle between abstraction and empirical, giving concrete examples regularly. It is a difficult path, and it is not sure students eventually convinced and enlightened. There is another way, easier, those who satirize the unrealistic nature of assumptions relating to the functioning of a market of perfect competition and conclude that the probability of reaching equilibrium in this market is dependent on the intervention of a higher power that is not of this world.
I caricature a bit to do a bit of provocation, because it can also be convinced that this ignores the perfectly competitive market is a pure hoax. When I started my studies in economics, about twenty years ago, it Instead, the second philosophy was adopted.

[I was blown ear that some university teachers perpetrating this kind of talk, but hey, rumors ...]

I really think the games in class, whoever they are, help break the deadlock teaching (I do not want to put on a scientific or ideological, this post talks about a simple problem which is that of learning but fun nonetheless rigorous by students). The huge interest from my point of view of the games in class is that it reverses the order which is traditionally courses, especially in economics. It first outlines the main principles and applications are given. It is no coincidence that the lessons are structured in lectures and tutorials, sessions in which we apply the theory presented in the course. With the economy through learning games, you start at the opposite of a fun and empirically by exposing students in a specific situation in which everyone has to make decisions, then ex post analysis results (which is a real challenge because the teacher does not really know what he will ultimately leave the game) and finally the teacher tries to disentangle the facts adduced in the game with theoretical considerations. In short, the procedure is exactly contrary to the traditional way of teaching, at least in economics. Better to quote directly Vernon Smith about this:

"In the Autumn semester, 1955, I Taught Principles of Economics, and found it a challenge to Convey Basic Microeconomic Theory to Student. Why / How Could Any Approximate market has competitive equilibrium? I resolved That On The First Day Of THE FOLLOWING semester class, i would try running a market experiment That Would Give The Students Opportunity to experience year year actual market, and Opportunity to me the one observed in Which I Knew, goal THEY DID not Know What Were The Alleged driving conditions of supply and demand'm his market ".

In fact, Smith said he himself was skeptical about the chances he had initially obtain a competitive market equilibrium, and he was taken aback by the results, the shock melting the principles of its personal scientific revolution.

game market made a first-year license is directly inspired by the double auction game invented by Vernon Smith in the 50s. Although this game is extremely experienced, I 'll drive, do you give the recipe in case you want to decorate your long evenings with friends to a game of a genre a bit special (this game may well be done on paper, but the completion times are then much more long). At the beginning of the meeting, we explain to twenty participants (in reality, they are usually about thirty, but some play to two per machine, which poses no real problem) they will be divided into ten vendors and ten buyers who buy or sell the same goods in a market. To do this, the market will open for a certain period (say average 2 minutes), during which time they can buy or sell 0, 1 or 2 properties. Quotations of each agent are displayed in real time on the screen of each participant and posted transactions actually carried out (the price at which each unit has been bought and sold is displayed in a window). For example, a seller computer interface looks like this (application developed by ZTree, a free software originally developed by Urs Fischbacher University of Zurich):

All buyers and sellers obtain private information, namely the experimental values of redemption (which are actually available to pay or net surplus of assets purchased since the experimenter pays the buyer the difference between the redemption value and the price paid by the purchaser for a given unit) and production costs. All buyers are different from each other, as well as sellers. For example, the values for buyers are in our application:

The strength of the game is that buyers and sellers do not know the characteristics of other participants. The only information that is common to all of the purchase price offered by buyers and the price offered for sale by vendors. Therefore, on paper, it seems highly unlikely that these participants are rapidly mixed to coordinate on the market equilibrium theory. The theoretical prediction for the market equilibrium is easy to do since it is the experimenter (teacher) who sets out in exogenous preferences of buyers and sellers of production technologies. The balance is provided which can be characterized for instance, in the first phase of the game played by students, for quantities of 18 units exchanged for an equilibrium price between 5 and $ 6 experimental:

The game involves after 7 periods of market, a demand shock (the new economic situation prevailing during 6 periods), and finally a supply shock.
The results are spectacular, like those of Smith and those whenever this game is done, even if small variations curious can occur from one group to another. The range of theoretical equilibrium price is given in red on the chart below and the average price in blue, for a particular group of students:

The price equilibrium adjusts the shock whenever the teacher has generated in the market. It should be noted that this game is done under special conditions, without any kind of monetary incentive and, although we tell students not to talk and discuss them in what can sometimes look like from the outside to a big fair. Despite this, after the game, as they are presented with the results, most students I think are amazed by the level of coordination they have not managed to work together without being particularly special or looking maximum profit.

All games in class does not give the results of this type, it is sometimes enough to have infinitesimal changes in the rules of the game to get radically different results and that challenge question the theory. A point is important for anyone wishing to play games in class: the results are usually quite close to those obtained in the sessions of experimental economics, except in the case of games revolving around the individual decision at risk. In this category, it is important not to stay in the hypothetical consequences of the choices of students at the games. Personally, I pay them in candy based on points earned during the game!
In any case, this teaching approach has completely changed the way I taught and gave me a new motivation. I believe that in Overall, the students are extremely satisfied with this method.
Moral: make games in class, had paid ca, ca ca pay and pay ...

Condolence Quotes For Great Man

Leonardo Da Vinci or the anti-Adam Smith

(NB: Leonardo da Vinci - right on the photo in a memorable game with Adam Smith to the left - in which he tried to explain the principle of division of labor)

Staying in Tuscany recently, I am concerned, like many people in the same situation, to the exceptional history of Florence in particular during Renaissance and, more specifically to the artist who symbolizes perhaps the most this time, the intellectual influence of Florence and the concept of humanism, namely Leonardo di ser Piero da Vinci (Vinci is a small village in Tuscany where comes the great artist, at least this post you will learn if you do not know, drive).

Everything has been said, and probably a lot of stupid things too, on what was protean genius Leonardo and I'm not gonna do a biography, the reader, this is not my purpose, others being hagiographers probably much more knowledgeable than me. But the guy has always fascinated since childhood, if only for his exceptional talent for drawing, being a bit sensitive to this art, but because it brought together two characteristics that seem almost unattainable, that of being a brilliant artist but also be a scientist complete. All this is well known, but do not be impatient reader, I come to regard this central ticket.

Leonardo had almost all the qualities and talents all, but if there is no doubt one that it was probably lacking is the ability to complete the works he began, that in almost every area that approached. Anecdotally, Michelangelo, jealous to death of his elder, had also publicly mocked his inability to complete the monumental equestrian statue of Francesco Forza company in 1492 and never finished, while he had managed to complete his monumental David. Besides, if the artist had an unquestionable reputation, he had also, at least in Florence, the reputation of never finish what he undertook.

In fact, this inability to finish was not the product of any laziness - The man was a workaholic - or exacerbated dilettantism, but because it seemed to make everything himself, beyond the technical knowledge of his time, in every stage of a project it was implementing. Should he make a mural, it was just as interested in the composition and preliminary studies that support it, such as a wall. If the wall seemed deficient, he studied at length the ways to solve problems, while interested in different chemical or physical processes which diverted length the main object. Many projects were undertaken as unfinished. Leonardo is still the absolute figure of Engineering course - painter, sculptor, musician, architect, engineer, designer, anatomist, (al) chemist, do not throw more! especially when we know he was self-taught -. But, and this is the gist of my post, it remains the perfect symbol of humanism, there is a real paradox in that we still dream of what might have been complete if had agreed to specialize, particularly in the purely artistic (where its contribution to I think the painting is the least doubt). Indeed, this difficulty to specialize in certain tasks, dramatically reducing what is left today of his work.

The spirit and work of Leonardo indeed radically opposed to the principle of division of labor and specialization originally put forward by Adam Smith and Ricardo, this principle is to increase opportunities for exchange One source of capitalist development and our material wealth.

Friedrich Engels had also noted that too, in the Dialectic Nature , speaking more generally of the great geniuses of the Renaissance:

"The heroes of That Time sept yet in thrall to The Division of Labor, The effects of restricting Which, With icts production of one-sidedness, weekends so Often In Their Successors record. "

This question is one that we all posed at one time or another. We usually some talents or interests outside the professional field, where most of the time, we do. Apart from any playfulness, our interest to exercise those talents for utility or otherwise to exercise fully the advantage comparison we have in a domain? The concept of opportunity cost is there to show us that, in fact, it is desirable that we exercise in the area where we have the greatest comparative advantage. So Leonardo would have to stick to painting and use the greatest engineers and architects of his time by delegating to complete the projects it was implementing in the areas where its comparative advantage was smaller than in painting . Any undergraduate student of economics knows and understands this.

Leonardo's case is obviously to be set apart as we speak probably the genius of geniuses, but what about people more "normal" like you and me? Can we stay long in the "error" - magnificent in the case of Leonardo, not to understand the benefits of specialization in an exchange?

The question is therefore whether economic agents spontaneously discover the virtues of specialization and exchange as they were developed by Adam Smith and David Ricardo. That's pretty much about the subject of the experiment performed by S. Crockett, V. Smith and Bart Wilson, whose results were published in the Economic Journal in 2009. I'll try to summarize the main results and give an intuition of experience which is actually quite complex.

In their experiment, participants have preferences exogenous consumption possibilities (there are two consumer goods) and characteristics in terms of production technology (they can produce both consumer goods). There are two types of subjects, subjects having a similar type of preferences and production technologies differ from those of the other group, all subjects belonging to the same virtual village. Subjects unfamiliar not the distribution of types or preferences / technologies from other subjects. By cons if they know their preferences, their allocation of time, they do not always know their production technology (depending on treatments). Basically, participants in each period of play, first a choice of production and consumption choices. They can remain in autarky, or try to make exchanges with other participants, knowing that one of interest of this experiment is precisely that they must discover themselves it is possible to exchange and thus have interest to specialize. In other words, the institutional framework implemented in the laboratory is very flexible and does not push them towards the exchange and specialization. Why not inform the subjects that can be exchanged? They remind quoting Adam Smith himself: "As It Is The Power of Exchanging Which Gives Used To The division of labor, so The extents of this division in proportion Will Always Be To The Extent of That Power .."

Clearly, the process of exchange and division of labor, the two reinforcing processes must be discovered and validated by officers during a learning process in which everyone finds their interest. To implement this process of discovery, during the experiment, subjects can therefore communicate in a completely free, so that each seeking its own interest ultimately lead the community to its maximum efficiency (gain obtained with specialization and exchange is three times the gain that can get involved in autarky).

An example of the type of communication performed by the subjects, just for fun:

source: Crockett, Smith and Wilson 2009, p.1183

Experimental treatments consist mainly of varying the number of participants within a group and the level of information about its own production technology.

As always the results raise questions: in all processing, there is at least a few participants who remain in autarky and that never discovered (or refuse to learn) the virtues of trade and specialization. There are also participants who discover their comparative advantage and immediately implement it. Moreover, when participants exchange, especially in large groups, exchanges are not bilateral but multilateral.

But back to our discussion of specialization. Knowing that the Pareto optimum corresponds to 100% of participants who engaged in the production of both goods in which each has a comparative advantage (which they must eventually discover they do not know their production technology) The number of specialists (the subjects that affect at least 90% of their time staffing the business with a comparative advantage) is a general belief in time, during periods of repetition (There are forty) but varies greatly among treatments. On average it is 50%, but tends to be significantly lower when group size is large and production technologies are initially unknown when the group size is small and the primary technologies known by the participants.

The moral of all this is that it is not obvious to participate in the exchange and specialization, although it seems consistent with his interest and that people know it. As noted ultimately Crockett et al, 2009, experience proves that the exchange is a phenomenon before social whole and which has even more likely to occur and consolidation that we are in bilateral relations. So if Leonardo did not specialize, it may be that the granting of trust sparingly to his contemporaries, and he certainly had a fairly negative view of human nature ...