nep-net New Economics Papers
on Network Economics
Issue of 2011‒09‒22
five papers chosen by
Yi-Nung Yang
Chung Yuan Christian University

  1. Measuring the Social Performance of Microfinance in Europe By Fabrizio Botti; Marcella Corsi
  2. Endogenous Coalitions Formations Through Technology Transfers and Fair Prices By Fabrice Valognes, Université de Caen Basse-Normandie, CREM-CNRS UMR 6211; Hélène Ferrer, Université de Caen Basse-Normandie, CREM-CNRS UMR 6211; Guillermo Owen, Dept. of Mathematics, Naval Postgraduate School, Monterey, USA.
  3. Solution Concepts for Cooperative Games with Circular Communication Structure By Suzuki, T.; Talman, A.J.J.
  4. Two heads are less bubbly than one: Team decision-making in an experimental asset market By Cheung, Stephen L.; Palan, Stefan
  5. Do Contracts Help? A Team Formation Perspective By Norovsambuu Tumennasan

  1. By: Fabrizio Botti; Marcella Corsi
    Abstract: Microfinance promise to serve low-income or disadvantaged beneficiaries excluded from the formal banking sector in a financially sustainable way (thus to achieve the so called “double bottom line” of financial and social performance) built excitement around the development of a global industry. However, for a long time an anti-subsidy position embedded in the international key donor community have shown little concern of social performance data and information on beneficiaries profiles in terms of various dimension of social and financial exclusion. Until recently, most of the emphasis of microfinance advocates has been devoted to MFIs financial performance following the “win-win” proposition, according to which financial viability should be sufficient to show social impact, a view that is supported by a controversial evidence and is based on a selective understanding of conceptual facts. Nevertheless, several initiatives recently translated into the Social Performance Task Force (SPTF) attempt to explore social aspects of microfinance providing a new definition of social performance more focused on the whole process leading to a social impact. Aim of this paper is to measure European MFIs social performance according to a core set of common indicators developed by the SPTF but using data collected in 2010 by the European Microfinance Network (EMN) on a sample of 170 microfinance actors operating in 21 countries out of 27 European Union (EU) member countries, current EU candidate countries and countries belonging to the European Free Trade Area (EFTA). The reference framework followed in the current social performance analysis examines the whole process of translating MFIs mission into social impact and includes the analysis of three connected dimensions of the social performance process corresponding to different set of indicators: the intent of the MFI, the effectiveness of the internal system and activities in achieving its targets, MFI outputs and eventually its capacity to positively affect clients life and achieve social goals.
    Date: 2011–09
  2. By: Fabrice Valognes, Université de Caen Basse-Normandie, CREM-CNRS UMR 6211; Hélène Ferrer, Université de Caen Basse-Normandie, CREM-CNRS UMR 6211; Guillermo Owen, Dept. of Mathematics, Naval Postgraduate School, Monterey, USA.
    Abstract: We consider a situation in which members of an oligopoly have different technologies, which allow them to produce at different costs. Members may license their technology to other members. Using the Aumann-Drèze modification of the Shapley value, we compute fair prices for these licenses. We also study the problem of stability for these ``licensing coalitions.''
    Keywords: Cooperative Game Theory, Technology Transfers, Modified Shapley Value
    JEL: C71 L13 L24
    Date: 2011–04
  3. By: Suzuki, T.; Talman, A.J.J. (Tilburg University, Center for Economic Research)
    Abstract: We study transferable utility games with limited cooperation between the agents. The focus is on communication structures where the set of agents forms a circle, so that the possibilities of cooperation are represented by the connected sets of nodes of an undirected circular graph. Agents are able to cooperate in a coalition only if they can form a network in the graph. A single-valued solution which averages marginal contributions of each player is considered. We restrict the set of permutations, which induce marginal contributions to be averaged, to the ones in which every agent is connected to the agent that precedes this agent in the permutation. Staring at a given agent, there are two permutations which satisfy this restriction, one going clockwise and one going anticlockwise along the circle. For each such permutation a marginal vector is determined that gives every player his marginal contribution when joining the preceding agents. It turns out that the average of these marginal vectors coincides with the average tree solution. We also show that the same solution is obtained if we allow an agent to join if this agent is connected to some of the agents who is preceding him in the permutation, not necessarily being the last one. In this case the number of permutations and marginal vectors is much larger, because after the initial agent each time two agents can join instead of one, but the average of the corresponding marginal vectors is the same. We further give weak forms of convexity that are necessary and sufficient conditions for the core stability of all those marginal vectors and the solution. An axiomatization of the solution on the class of circular graph games is also given.
    Keywords: Cooperative game;graph structure;average tree solution;Myerson value;core stability;convexity.
    JEL: C71
    Date: 2011
  4. By: Cheung, Stephen L.; Palan, Stefan
    Abstract: In the world of mutual funds management, responsibility for investment decisions is increasingly entrusted to small teams instead of individuals. Yet the effect of team decision-making in a market environment has never been studied in a controlled experiment. In this paper, we investigate the effect of team decision-making in an asset market experiment that has long been known to reliably generate price bubbles and crashes in markets populated by individuals. We find that this tendency is substantially reduced when each decision-making unit is instead a team of two. This holds across a broad spectrum of measures of the severity of mispricing, both under a continuous double-auction institution and in a call market. The result is not driven by reduced turnover due to time required for deliberation by teams, and continues to hold even when subjects are experienced. Our result also holds not only when our teams treatments are compared to the ‘narrow' baseline provided by the corresponding individuals treatments, but also when compared more broadly to the results of the large body of previous research on markets of this kind.
    Keywords: asset market experiments; price bubbles; group decision-making
    Date: 2011–09
  5. By: Norovsambuu Tumennasan (School of Economics and Management, Aarhus University, Denmark)
    Abstract: Economists perceive moral hazard as an undesirable problem because it undermines efficiency. Carefully designed contracts can mitigate the moral hazard problem, but this assumes that a team is already formed. This paper demonstrates that these contracts are sometimes the reason why teams do not form. Formally, we study the team formation problem in which the agents’ efforts are not verifiable and the size of teams does not exceed quota r. We show that if the team members can make only balanced transfers, then moral hazard affects stability adversely. However, if the team members cannot make transfers, then moral hazard affects stability positively in a large class of games. For example, a stable team structure exists if teams produce public goods or if the quota is two. However, these existence results no longer hold if efforts are verifiable.
    Keywords: team formation, hedonic game, moral hazard, assortative partition
    JEL: C71 C78
    Date: 2011–09–12

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