Issue 4

Volume 20 JOURNAL OF ECONOMICS & MANAGEMENT STRATEGY
Fall 2011

Managers and Wage Policies

Paulo Bastos and Natália P. Monteiro
Do individual top managers matter for wages and wage policies? Are there general differences in “style” among managers with respect to worker compensation? To shed light on these questions, we exploit a large panel dataset from Portugal that allows us to match workers, firms, and managers, and follow the movements of the latter across different firms over time.

Legitimacy of Control

Wendelin Schnedler and Radovan Vadovic
Control sometimes triggers negative responses. Although there is empirical evidence for such negative reactions and theories that can explain them, it remains to be examined when they occur.

Fatigue in Dynamic Tournaments

Dmitry Ryvkin
Employee overwork and fatigue are a concern of managers in many organizations, as they may increase health and safety risks and decrease productivity. The problem is especially severe in competitive environments, where compensation and promotions are awarded, explicitly or implicitly, on the basis of relative performance.

Reference Dependence and Market Competition

Jidong Zhou
This paper examines the implications of consumer reference dependence for market competition. If consumers take some product (e.g., the first product they consider) as the reference point when evaluating others and they exhibit loss aversion, then the more “prominent” firm whose product is taken as the reference point by more consumers will randomize between a high and a low price.

Intermediaries, Credibility and Incentives to Collude

Eloïc Peyrache and Lucía Quesada
A seller contracts and potentially colludes with a certification intermediary. We investigate the intermediary’s incentives to collude, her pricing strategy, and the extent to which buyers rely on the intermediary’s announcements.

Corporate Capital Budgeting Decisions and Information Sharing

Abigail S. Hornstein and Minyuan Zhao
Firms must overcome agency and information asymmetry problems to make efficient corporate capital budgeting decisions; this is particularly true for firms with multiple units dispersed across geographic locations. Internal communication and coordination may therefore be crucial in reducing information asymmetry and achieving efficient resource allocation.

Bids as a Vehicle of (Mis)Information: Collusion in English Auctions with Affiliated Values

Marco Pagnozzi
In an English auction, a bidder’s strategy depends on the prices at which his competitors drop out, because these convey information on the value of the object on sale. A ring of colluding bidders can strategically manipulate the information transmitted through its members’ bids, in order to mislead other bidders into bidding less aggressively and thus allow a designated bidder to bid more aggressively.

Plant Scale and Exchange-Rate-Induced Productivity Growth

Loretta Fung, Jen Baggs and Eugene Beaulieu
This paper examines the impact of exchange rate movements on firm-level productivity through changes in the scale of production. We employ plant-level data to examine whether, and in what direction, exchange rate movements affect the scale of production, and how these changes in scale influence productivity.