nep-pay New Economics Papers
on Payment Systems and Financial Technology
Issue of 2019‒05‒13
sixteen papers chosen by
Bernardo Bátiz-Lazo
Bangor University

  1. Relevant Stylized Facts About Bitcoin: Fluctuations, First Return Probability, and Natural Phenomena By C. R. da Cunha; R. da Silva
  2. Marketing Agencies and Collusive Bidding in Online Ad Auctions By Decarolis, Francesco; Goldmanis, Maris; Penta, Antonio
  3. Blockchain and Smart-contract: a pioneering Approach of inter-firms Relationships? The case of franchise networks By Richard Baron; Magali Chaudey
  4. Initial Crypto-asset Offerings (ICOs), tokenization and corporate governance By St\'ephane Bl\'emus; Dominique Guegan
  5. The mitigating role of regulation on the concentric patterns of broadband diffusion. The case of Finland By Jaume Benseny; Juuso T\"oyli; Heikki H\"amm\"ainen; Andr\'es Arcia-Moret
  6. Fractal Time Series Analysis of Social Network Activities By Lyudmyla Kirichenko; Vitalii Bulakh; Tamara Radivilova
  7. Cashless Stores and Cash Users By Shy, Oz
  8. On Money as a Medium of Exchange in Near-Cashless Credit Economies By Ricardo Lagos; Shengxing Zhang
  9. Sharing Guilt: How Better Access to Information May Backfire By Inderst, Roman
  10. A review of new technologies and data sources for measuring household finances: Implications for total survey error By Jäckle, Annette; Gaia, Alessandra; Lessof, Carli; Couper, Mick P.
  11. The knowledge economy in historical perspective By Hippe, Ralph Thomas Klaus; Fouquet, Roger
  12. Impact of Artificial Intelligence on Businesses: from Research, Innovation, Market Deployment to Future Shifts in Business Models By Neha Soni; Enakshi Khular Sharma; Narotam Singh; Amita Kapoor
  13. Computing a Data Dividend By Eric Bax
  14. The First Business Schools and the Corporate Elite in Spain (1958-2000) By Luis Chirosa; Juan A. Rubio-Mondéjar; Josean Garrués-Irurzun
  15. Efficient Partnership Formation In Networks By Francis Bloch; Bhaskar Dutta; Mihai Manea
  16. Taxing Identity: Theory and Evidence from Early Islam By Saleh, Mohamed; Tirole, Jean

  1. By: C. R. da Cunha; R. da Silva
    Abstract: Bitcoin is a digital financial asset that is devoid of a central authority. This makes it distinct from traditional financial assets in a number of ways. For instance, the total number of tokens is limited and it has not explicit use value. Nonetheless, little is know whether it obeys the same stylized facts found in traditional financial assets. Here we test bitcoin for a set of these stylized facts and conclude that it behaves statistically as most of other assets. For instance, it exhibits aggregational Gaussianity and fluctuation scaling. Moreover, we show by an analogy with natural occurring quakes that bitcoin obeys both the Omori and Gutenberg-Richter laws. Finally, we show that the global persistence, originally defined for spin systems, presents a power law behavior with exponent similar to that found in stock markets.
    Date: 2019–05
  2. By: Decarolis, Francesco; Goldmanis, Maris; Penta, Antonio
    Abstract: The transition of the advertising market from traditional media to the internet has induced a proliferation of marketing agencies specialized in bidding in the auctions that are used to sell ad space on the web. We analyze how collusive bidding can emerge from bid delegation to a common marketing agency and how this can undermine the revenues and allocative efficiency of both the Generalized Second Price auction (GSP, used by Google and Microsoft-Bing and Yahoo!) and the of VCG mechanism (used by Facebook). We find that, despite its well-known susceptibility to collusion, the VCG mechanism outperforms the GSP auction both in terms of revenues and efficiency.
    Keywords: Collusion; Digital Marketing Agencies; Facebook; Google; GSP; Internet Auctions; Online Advertising; VCG.
    JEL: C72 D44 L81
    Date: 2019–04–23
  3. By: Richard Baron (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon - UJM - Université Jean Monnet [Saint-Étienne] - Université de Lyon - CNRS - Centre National de la Recherche Scientifique); Magali Chaudey (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon - UJM - Université Jean Monnet [Saint-Étienne] - Université de Lyon - CNRS - Centre National de la Recherche Scientifique)
    Abstract: This paper is interested in the analysis of Blockchains and Smart-contracts applied to inter-firms relationships, in particular the franchise networks. After defining the Blockchain technology and the Smart-contract as a particular type of contract stored in blockchains, we question the theory of contracts and its conception(s) of transactions, information asymmetries, firm or inter-firm relations. To better understand the challenges of blockchain for franchise networks and identify opportunities for implementation in these networks, we present some relevant applications of this technology. We identify different ways where blockchain technology could improve the network management and therefore their performance: the supply-chain, the brand-name protection, security and transparency in the payment of fees and royalties, access to reliable information via an oracle.
    Keywords: Blockchain,Smart-Contract,Transaction cost,Network,Franchise
    Date: 2019–04–26
  4. By: St\'ephane Bl\'emus (UP1); Dominique Guegan (CES, UP1)
    Abstract: This paper discusses the potential impacts of the so-called `initial coin offerings', and of several developments based on distributed ledger technology (`DLT'), on corporate governance. While many academic papers focus mainly on the legal qualification of DLT and crypto-assets, and most notably in relation to the potential definition of the latter as securities/financial instruments, the authors analyze some of the use cases based on DLT technology and their potential for significant changes of the corporate governance analyses. This article studies the consequences due to the emergence of new kinds of firm stakeholders, i.e. the crypto-assets holders, on the governance of small and medium-sized enterprises (`SMEs') as well as of publicly traded companies. Since early 2016, a new way of raising funds has rapidly emerged as a major issue for FinTech founders and financial regulators. Frequently referred to as initial coin offerings, Initial Token Offerings (`ITO'), Token Generation Events (`TGE') or simply `token sales', we use in our paper the terminology Initial Crypto-asset Offerings (`ICO'), as it describes more effectively than `initial coin offerings' the vast diversity of assets that could be created and which goes far beyond the payment instrument issue.
    Date: 2019–03
  5. By: Jaume Benseny; Juuso T\"oyli; Heikki H\"amm\"ainen; Andr\'es Arcia-Moret
    Abstract: This article analyzes the role of Finnish regulation in achieving the broadband penetration goals defined by the National Regulatory Authority. It is well known that in the absence of regulatory mitigation the population density has a positive effect on broadband diffusion. Hence, we measure the effect of the population density on the determinants of broadband diffusion throughout the postal codes of Finland via Geographically Weighted Regression. We suggest that the main determinants of broadband diffusion and the population density follow a spatial pattern that is either concentric with a weak/medium/strong strength or non-concentric convex/concave. Based on 10 patterns, we argue that the Finnish spectrum policy encouraged Mobile Network Operators to satisfy ambitious Universal Service Obligations without the need for a Universal Service Fund. Spectrum auctions facilitated infrastructure-based competition via equitable spectrum allocation and coverage obligation delivery via low-fee licenses. However, state subsidies for fiber deployment did not attract investment from nationwide operators due to mobile preference. These subsidies encouraged demand-driven investment, leading to the emergence of fiber consumer cooperatives. To explain this emergence, we show that when population density decreases, the level of mobile service quality decreases and community commitment increases. Hence, we recommend regulators implementing market-driven strategies for 5G to stimulate local investment. For example, by allocating the 3.5 GHz and higher bands partly through local light licensing.
    Date: 2019–05
  6. By: Lyudmyla Kirichenko; Vitalii Bulakh; Tamara Radivilova
    Abstract: In the work, a comparative correlation and fractal analysis of time series of Bitcoin crypto currency rate and community activities in social networks associated with Bitcoin was conducted. A significant correlation between the Bitcoin rate and the community activities was detected. Time series fractal analysis indicated the presence of self-similar and multifractal properties. The results of researches showed that the series having a strong correlation dependence have a similar multifractal structure.
    Date: 2019–04
  7. By: Shy, Oz (Federal Reserve Bank of Atlanta)
    Abstract: The emergence of cashless stores has led several cities and states to ban such stores. This paper investigates this issue by characterizing consumers who pay cash for in-person purchases and consumers who do not have credit or debit cards. I construct a model of consumer payment choice and use data on payments to calibrate the burden imposed on consumers who do not have credit or debit cards from switching to cashless stores. The conclusion provides a discussion of alternatives to cash for in-person purchases that may be needed before all brick-and-mortar stores become cashless.
    Keywords: cashless stores; consumer payment choice; in-person purchases; alternatives to cash
    JEL: D9 E42
    Date: 2019–05–01
  8. By: Ricardo Lagos; Shengxing Zhang
    Abstract: We study the transmission of monetary policy in credit economies where money serves as a medium of exchange. We find that—in contrast to current conventional wisdom in policy-oriented research in monetary economics—the role of money in transactions can be a powerful conduit to asset prices and ultimately, aggregate consumption, investment, output, and welfare. Theoretically, we show that the cashless limit of the monetary equilibrium (as the cash-and-credit economy converges to a pure-credit economy) need not correspond to the equilibrium of the nonmonetary pure-credit economy. Quantitatively, we find that the magnitudes of the responses of prices and allocations to monetary policy in the monetary economy are sizeable—even in the cashless limit. Hence, as tools to assess the effects of monetary policy, monetary models without money are generically poor approximations—even to idealized highly developed credit economies that are able to accommodate a large volume of transactions with arbitrarily small aggregate real money balances.
    JEL: E31 E4 E41 E42 E43 E44 E5 E51 E52 E58
    Date: 2019–05
  9. By: Inderst, Roman
    Abstract: We study strategic communication between a customer and an advisor who is privately informed about the best suitable choice for the customer, but whose preferences are misaligned with the customer's preferences. The advisor sends a message to the customer who, in turn, can secure herself from bad advice by acquiring costly information on her own. We find that making the customer's information acquisition less costly, e.g., through consumer protection regulation or digital information aggregation and dissemination, leads to less prosocial behavior of the advisor. This can be explained by a model of shared guilt, which predicts a shift in causal attribution of guilt from the advisor to the customer if the latter could have avoided her ex post disappointment.
    Keywords: Advice; Guilt aversion; responsibility diffusion; shared guilt; Trust
    JEL: C91 D82 D83
    Date: 2019–05
  10. By: Jäckle, Annette; Gaia, Alessandra; Lessof, Carli; Couper, Mick P.
    Abstract: We review process generated data sources and new technologies that could be used to improve the measurement of household finances. For each of these we review what is known about (i) the content of what can be measured, (ii) examples of research for which these data have been used, (iii) whether the data have been used as free-standing data sources or linked to probability sample surveys, and (iv) the quality of the data regarding representativeness and measurement quality. The review is structured around an adapted version of the Total Survey Error framework and concludes with a discussion of implications for survey practice and research needs. Â
    Date: 2019–05–07
  11. By: Hippe, Ralph Thomas Klaus; Fouquet, Roger
    Abstract: The knowledge economy provides huge opportunities for economic growth and to become the cornerstone of future economic development by turning data into wisdom or human capital. Education, one aspect of the knowledge economy, exhibits a history divided into three stages: the apprenticeship era, the universal schooling era and the (future) life-long learning era. The spread of knowledge has accelerated owing to the different stages of knowledge production, in particular the printing press and now the internet
    JEL: N0
    Date: 2018–03–01
  12. By: Neha Soni; Enakshi Khular Sharma; Narotam Singh; Amita Kapoor
    Abstract: The fast pace of artificial intelligence (AI) and automation is propelling strategists to reshape their business models. This is fostering the integration of AI in the business processes but the consequences of this adoption are underexplored and need attention. This paper focuses on the overall impact of AI on businesses - from research, innovation, market deployment to future shifts in business models. To access this overall impact, we design a three-dimensional research model, based upon the Neo-Schumpeterian economics and its three forces viz. innovation, knowledge, and entrepreneurship. The first dimension deals with research and innovation in AI. In the second dimension, we explore the influence of AI on the global market and the strategic objectives of the businesses and finally, the third dimension examines how AI is shaping business contexts. Additionally, the paper explores AI implications on actors and its dark sides.
    Date: 2019–05
  13. By: Eric Bax
    Abstract: Quality data is a fundamental contributor to success in statistics and machine learning. If a statistical assessment or machine learning leads to decisions that create value, data contributors may want a share of that value. This paper presents methods to assess the value of individual data samples, and of sets of samples, to apportion value among different data contributors. We use Shapley values for individual samples and Owen values for combined samples, and show that these values can be computed in polynomial time in spite of their definitions having numbers of terms that are exponential in the number of samples.
    Date: 2019–05
  14. By: Luis Chirosa (Universidad de Granada, Spain); Juan A. Rubio-Mondéjar (Universidad Pablo de Olavide, Spain); Josean Garrués-Irurzun (Universidad de Granada, Spain)
    Abstract: Literature has highlighted the key role of business schools in spreading US management in Europe after the Second World War, but has not found how to quantify its impact on the economy. With such purpose, this article examines the relations between the two main Spanish private business schools, IESE and ESADE, and the national corporate elite. By combining an institutional approach and social networks analysis, it shows the incidence of business schools on the board of directors of the largest Spanish corporations during the second half of the 20th century, and explains their role as centers for elite reproduction.
    Keywords: Business Schools,Business Elite, Managerial Capitalism, Corporate Network, Interlocking Directorates
    JEL: N14 O12 L1 M5
    Date: 2019–03
  15. By: Francis Bloch (Department of Economics, Ashoka University); Bhaskar Dutta (Department of Economics, Ashoka University); Mihai Manea (Department of Economics, Ashoka University)
    Abstract: We analyze the formation of partnerships in social networks. Players need favors at random times and ask their neighbors in the network to form exclusive long-term partnerships that guarantee reciprocal favor exchange. Refusing to provide a favor results in the automatic removal of the underlying link. Players agree to provide the first favor in a partnership only if they otherwise face the risk of eventual isolation. In equilibrium, players essential for realizing every maximum matching can avoid this risk and enjoy higher payoffs than inessential players.Although the search for partners is decentralized and reflects local partnership opportunities, the strength of essential players drives efficient partnership formation in every network. Equilibrium behavior is determined by the classification of nodes in the Gallai-Edmonds decomposition of the underlying network.
    Keywords: networks, efficiency, decentralized markets, partnerships, favor exchange, maximum matchings, Gallai-Edmonds decomposition, under-demanded.
    Date: 2019–02
  16. By: Saleh, Mohamed; Tirole, Jean
    Abstract: A ruler who does not identify with a social group, whether on religious, ethnic, cultural or socioeconomic grounds, is confronted with a trade-off between taking advantage of the out-group population's eagerness to maintain its identity and inducing it to ``comply'' (conversion, quit, exodus or any other way of accommodating the ruler's own identity). This paper first analyzes the ruler's optimal mix of discriminatory and non-discriminatory taxation, both in a static and an evolving environment. The paper then uses novel data sources to test the theory in the context of Egypt's conversion to Islam between 641 and 1200. The evidence is broadly consistent with the theoretical predictions.
    Keywords: identity taxation; Islam; Laffer Curve; Legitimacy; Poll tax
    JEL: D82 H2 N45 Z12
    Date: 2019–04

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