nep-ict New Economics Papers
on Information and Communication Technologies
Issue of 2013‒09‒24
six papers chosen by
Walter Frisch
University Vienna

  1. Voluntary Payments, Privacy and Social Pressure on the Internet: A Natural Field Experiment By Tobias Regner; Gerhard Riener
  2. Network Neutrality, Access to Content and Online Advertising By Anna D’Annunzio; Antonio Russo
  3. If Technology Has Arrived Everywhere, Why Has Income Diverged? By Comin, Diego; Mestieri, Martí
  4. The Incentive Effect of IT: Randomized Evidence from Credit Committees By Daniel Paravisini; Antoinette Schoar
  5. Construction of a database for a dynamic CGE model for South Africa By Louise Roos
  6. Networks, hackers, and nonprotected consumers By Bartholomae, Florian W.

  1. By: Tobias Regner (Max Planck Institute for Economics, Jena); Gerhard Riener (Duesseldorf Institute for Competition Economics (DICE))
    Abstract: The emergence of Pay-What-You-Want (PWYW) business models as a successful alternative to conventional uniform pricing brings up new questions related to the task of pricing. We investigate the eect of a reduction of privacy on consumers' purchase decisions (whether to buy, and if so how much to pay) in a natural experiment at an online music store with PWYW-like pricing. Our study extends the empirical evidence of the reduced anonymity eect, previously established for donation or public goods contexts, to a consumption environment. We nd that revealing the name of the customer led to slightly higher payments, while it drastically reduced the number of customers purchasing. Overall, the regime led to a revenue loss of 15%. The experiment suggests that even low levels of social pressure without face to face interaction on customers leads to a reduction of welfare.
    Keywords: Digital content, Voluntary Payments, PWYW, Public goods, Voluntary contributions, Social pressure, Internet, Privacy, Natural experiment
    JEL: D03 D49 H41 L82 L86 P14
    Date: 2013–09–09
  2. By: Anna D’Annunzio; Antonio Russo
    Abstract: We investigate possible effects of network neutrality regulation on the distribution of content in the Internet. We model a two-sided market, where consumers and advertisers interact through Content Providers (CPs), and CPs and consumers through Internet Service Providers (ISPs). Multiple impressions of an ad on a consumer are partially wasteful. Thus, equilibrium ad rates decrease with the number of CPs consumers can browse. Under network neutrality, CPs can connect to any ISP for free, while in the unregulated regime they have to pay a (non-discriminatory) access fee set by the ISP.We show that universal distribution of content is always an equilibrium with net neutrality regulation. Instead, in the unregulated regime, ISPs can use access fees to rule out universal distribution when it is not profitable, i.e. when repeated impressions of an ad rapidly lose value and consumers care for content availability to a small extent. We also find that the unregulated regime is never superior to net neutrality from a welfare point of view. Consumer and advertiser surplus are weakly higher under net neutrality. ISPs are unambiguously better off in the unregulated regime, while CPs are unambiguously worse off.
    Keywords: Network neutrality, two-sided markets, Internet, advertising, fragmentation
    JEL: L1 D43 L13 L51
    Date: 2013–07
  3. By: Comin, Diego; Mestieri, Martí
    Abstract: We study the lags with which new technologies are adopted across countries, and their long-run penetration rates once they are adopted. Using data from the last two centuries, we document two new facts: there has been convergence in adoption lags between rich and poor countries, while there has been divergence in penetration rates. Using a model of adoption and growth, we show that these changes in the pattern of technology diffusion account for 80% of the Great Income Divergence between rich and poor countries since 1820.
    Keywords: great divergence; technology diffusion; transitional dynamics
    JEL: E13 O14 O33 O41
    Date: 2013–05
  4. By: Daniel Paravisini; Antoinette Schoar
    Abstract: We distinguish the impact of information technology adoption on information processing costs and agency costs by conducting a randomized control trial with a bank that adopts a new credit-scoring tool. The availability of scores significantly increases credit committees' effort and output on difficult-to-evaluate loan applications. Output increases almost as much in a treatment where the committee receives no new information, but anticipates the score becoming available after it evaluates a application, which suggests that scores reduce incentive problems inside the credit committee. We also show that scores improve efficiency by decentralizing decision-making and equalizing marginal returns across loans.
    JEL: D23 G21 L23 O33
    Date: 2013–08
  5. By: Louise Roos
    Abstract: This paper describes the construction of database constructed for a dynamic CGE model for South Africa (hereafter SAGE). The starting point for creating a database for a CGE model are official data from an Input/output (IO) table, or from a Supply Use Table (SUT), or from a Social Accounting Matrix (SAM). Often the structure of the published data is not in the required format of a CGE database, and so a major task is to transform the official data into a form required by a CGE database. Four characteristics of the SAGE database are noted: 1. It contains information regarding the structure of the South African economy in the base year (2002). 2. It is the initial solution to the SAGE model. 3. It has the same basic structure as the ORANIG and MONASH databases. 4. The basic database is supplemented by additional data relating to dynamics. The database is organised in four parts. The first includes data on the coefficients that are computed from the input-output (IO) table. These coefficients represent the basic flows of commodities between users, commodity taxes paid by users, margin flows that facilitate the flow of commodities and valued added matrices. The second part of the SAGE database contains information on behavioural parameters. The elasticities influence the degree to which economic agents change their behaviour when relative prices change. The third part of the database contains information on government accounts, accounts with the rest of the world and industry-specific capital stocks and depreciation rates. The fourth part of this paper describes the tests undertaken to test for model validity. This paper is set out as follows: Section 1 describes the structure of the IO database. Section 2 reviews the official data sources used to create the IO database. Section 3 describes the steps taken to transform the official data into the correct format. Section 4 describes the elasticities and parameters adopted in for SAGE. Section 5 describes additional information regarding industry-specific capital stocks and government accounts. Section 6 describes various tests that were conducted to ensure that the database is balanced. The paper ends with a conclusion.
    Keywords: Computable general equilibrium (CGE), Database, Africa, Supply Use Tables
    JEL: C81 C68 O55
    Date: 2013–05
  6. By: Bartholomae, Florian W.
    Abstract: In this paper a network model is developed in which three players sequentially choose their strategies. In the first stage, a profit-maximizing network firm chooses the price and thus the size of the network. In the second stage the consumers decide whether to join in the network or not. In the last stage a hacker has the opportunity to hack the network and cause damage to the consumer. The success of hacking is based on the protection of the customers. Whereas in the first part of the paper this is given exogenously it is endogenized later on. In an extension, the utility of the hacker as well as the consumers includes psychological costs, thus allowing some further insights. Finally, policy implications are given implying better international cooperation of the law enforcement authorities. --
    Keywords: hacking,network size,cloud computing,nonprotected consumers
    JEL: D03 L1 L86 K4
    Date: 2013

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