Now showing 1 - 10 of 12
  • Publication
    Political campaign spending limits
    (University College Dublin. School of Economics, 2010-10) ;
    Political campaign spending ceilings are purported to limit the incumbent's ability to exploit his fundraising advantage. If the challenger does not have superior campaign effectiveness, in contrast to conventional wisdom, we show that the incumbent always benefits from a limit as long as he has an initial voter disposition advantage, however small and regardless of the candidates’ relative fundraising ability. If the challenger has higher campaign spending effectiveness, the effect of limits may be non-monotonic. If the incumbent enjoys a mild initial voter disposition advantage, a moderate limit benefits the challenger. Further restricting the limit favours the incumbent. Stricter limits may lead to the unintended consequence of increased expected spending.
  • Publication
    Student incentives and diversity in college admissions
    (University College Dublin. School of Economics, 2009-09) ;
    This paper examines student incentives when faced with a college admissions policy which pursues student body diversity. The effect of a diversify-conscious admissions policy critically depends on the design of the policy. If the admissions policy fails to incentivize students from a disadvantaged socioeconomic background it may lead to a deterioration in the intergroup score gap while failing to improve student body diversity in equilibrium.
  • Publication
    Consumption externalities, coordination and advertising
    (Centre for Economic Policy Research, 2001-06)
    The aim of this Paper is to demonstrate that advertising can have an important function in markets with consumption externalities, apart from its persuasive and informative roles. We show that advertising may function as a device to coordinate consumer expectations of the purchasing decisions of other consumers in markets with consumption externalities. The implications of advertising as a coordinating device are examined in the pricing and advertising decisions of firms interacting strategically. While, at times, the one period advertising expense can exceed the one period monopoly profit, in equilibrium consumers will pay a premium for the more heavily advertised brand.
  • Publication
    Politician preferences and caps on political lobbying
    (University College Dublin. School Of Economics, 2006-11) ;
    This paper extends Che and Gale (1998) by allowing the incumbent politician to have a preference for the policy position of one of the lobbyists. The effect of a contribution cap is analyzed where two lobbyists contest for a political prize. The cap always helps the lobbyist whose policy position is preferred by the politician no matter whether it is the high-valuation or the low-valuation contestant. In contrast to Che and Gale, once the cap is binding a more restrictive cap always reduces expected aggregate contributions. However, the politician might support the legislation of a barely binding cap. When politician policy preferences perfectly reflect the will of the people, a more restrictive cap is always welfare increasing. When lobbyist’s valuations completely internalize all social costs and benefits, a cap is welfare improving if and only if the politician favors the high-value policy. Even a barely binding cap can have significant welfare consequences.
  • Publication
    All-pay contests with constraints
    (University College Dublin. School of Economics, 2012-02) ;
    This paper provides simple closed form formulae for players’ expected payoffs in a broad class of all-pay contests where players may have constraints on their actions.
  • Publication
    Social learning in continuous time : when are informational cascades more likely to be inefficient?
    (University College Dublin. School Of Economics, 2006-11) ;
    In an observational learning environment rational agents may mimic the actions of the predecessors even when their own signal suggests the opposite. In case early movers’ signals happen to be incorrect society may settle on a common inefficient action, resulting in an inefficient informational cascade. This paper models observational learning in continuous time with endogenous timing of moves. This permits the analysis of comparative statics results. The effect of an increase in signal quality on the likelihood of an inefficient cascade is shown to be nonmonotonic. If agents do not have strong priors, an increase in signal quality may lead to a higher probability of inefficient herding. The analysis also suggests that markets with quick response to investment decisions, such as financial markets, may be more prone to inefficient collapses.
  • Publication
    Incumbent-quality advantage and counterfactual electoral stagnation in the U.S. Senate
    (University College Dublin. School of Economics, 2012-05) ; ;
    This paper presents a simple statistical exercise to provide a benchmark for the degree of electoral stagnation without direct officeholder benefits or challenger scare-off effects. Here electoral stagnation arises solely due to incumbent-quality advantage where the higher quality candidate wins the election. The simulation is calibrated using the observed drop-out rates in the U.S. Senate. From 1946 to 2010, the observed incumbent reelection rate is 81.7 percent; the benchmark with incumbent-quality advantage alone is able to generate a reelection rate of 78.2 percent. In the sub-sample from 1946 to 1978, the reelection rate from the simulation is almost identical to the observed. The rates diverge in the second part of the sub-sample from 1980 to 2010, possibly indicating an increase in electoral stagnation due to incumbency advantage arising for reasons other than incumbent-quality advantage.
  • Publication
    Coordination in markets with consumption externalities : the role of advertising and product quality
    (Centre for Economic Policy Research, 2005-07)
    This paper studies advertising in vertically differentiated product markets with positive consumption externalities. In markets with consumption externalities, the value of the product to the consumer depends on the purchasing decisions of other consumers. In such markets, we show that firms will engage in advertising competition in order to convince consumers of their popularity only as long as they produce goods of similar quality. The firm with the lower quality product will have a greater incentive to advertise. If it is not the brand to provide the greater consumption externality it will have very low market share due to its low intrinsic quality. Hence, in equilibrium, the lower quality product will often be more popular. This provides an additional explanation for the empirical observation that in some markets high quality is associated with lower levels of advertising.
  • Publication
    Comment on : Electoral Contests, incumbency advantages, and campaign finance
    (University College Dublin. School of Economics, 2009-09) ;
    This paper completes Meirowitz (2008) by analyzing the effect of a cap on political campaign spending in an environment where voters have initial preferences over political candidates. The policy implications are starkly different from the previously analyzed case where voters are indifferent between candidates in the absence of campaign spending. We find that a spending cap always favors the a priori popular candidate. This result holds irrespective of whether it is the incumbent or the challenger who is able to more effectively generate and spend contributions.
  • Publication
    Cost of delay, deadlines and endogenous price leadership
    (Centre for Economic Policy Research, 2001-11)
    This Paper analyses endogenous price leadership in a duopolistic market with differentiated products and symmetrically informed firms. We study the effects of deadlines and discounting in a standard endogenous leadership model. We show that there will be occasional changes in the identity of the price leader with any cost of delay or discounting, however small. By analyzing the incentives that induce a firm to take up the leader position we derive positive predictions about which firm will lead most price changes.