nep-pay New Economics Papers
on Payment Systems and Financial Technology
Issue of 2022‒08‒22
33 papers chosen by

  1. PayTech and the D(ata) N(etwork) A(ctivities) of BigTech Platforms By Jonathan Chiu; Thorsten Koeppl
  2. Circular economy and central bank digital currency By Ozili, Peterson K
  3. Fit-for-Purpose Payment System Interoperability: A Framework By Jorge Herrada; Angela N Lawson
  4. Automation, Inequality and the Future of Work By Syed Saddam Haider
  5. Women in Fintech: As Leaders and Users By Ms. Sumiko Ogawa; Purva Khera; Mahima Vasishth; Ms. Ratna Sahay
  6. Resisting Social Pressure in the Household Using Mobile Money: Experimental Evidence on Microenterprise Investment in Uganda By Emma Riley
  7. Mobile Money Adoption in Kenya: The Role of Mobile Money Agents By Johnen, Constantin; Musshoff, Oliver; Parlasca, Martin C.
  8. The Digital Economy and Productivity By David M. Byrne
  9. Tech Platforms and Market Power: What?s the Optimal Policy Response? By Lambert, Thomas
  10. Program Targeting with Machine Learning and Mobile Phone Data: Evidence from an Anti-Poverty Intervention in Afghanistan By Emily Aiken; Guadalupe Bedoya; Joshua Blumenstock; Aidan Coville
  11. Trading Volume and Liquidity Provision in Cryptocurrency Markets By Daniele Bianchi; Mykola Babiak; Alexander Dickerson
  12. Branded Websites and Marketplace Selling: Competing during COVID-19 By Oksana Loginova
  13. Should Governments Tax Digital Financial Services? A Research Agenda to Understand Sector-specific Taxes on DFS By Abounabhan, Mary; Munoz, Laura; Mascagni, Giulia; Prichard, Wilson; Santoro, Fabrizio
  14. The Effect of Digital Finance Use on Savings Amount: Evidence from Ghanaian Smallholder Farmers By Possner, Annkathrin; Rosero, Gabriel; Musshoff, Oliver
  15. Liquidity Risks in Lending Protocols (LPs): Evidence from Aave Protocol By Xiaotong Sun
  16. "Future Banking In Digital Transformation (DX) Dimension: A Literature Review " By Yessie Fransiska Lydiana
  17. MyDigitalTwin: Exploratory Research report By NATIVI Stefano; CRAGLIA Massimo; SCIULLO Luca
  18. "The Interconnection between Level of Income and Tendency of Malaysian Community towards Adoption of Islamic Digital Banking " By Muhammad Ridhwan Ab. Aziz
  19. The role of online marketplaces in protecting and empowering consumers: Country and business survey findings By OECD
  20. México | ¿Los SMS nudges promueven la salud financiera? By Guillermo Jr. Cárdenas Salgado; Juan José Li Ng; Héctor Ortega Rosas; Susana Ramos Villaseñor; Carlos Serrano; Elmer Solano Flores
  22. Young Borrowers' Usage of Cosigned Credit Cards and Long Run Outcomes By Hannah Case
  23. The value of data in digital-based business models: Measurement and economic policy implications By Carol Corrado; Jonathan Haskel; Massimiliano Iommi; Cecilia Jona-Lasinio
  24. Effect of Adopting Blockchain on the U.S Beef Industry Structure: A cost theory perspective By Mohammadi, Mati; Gray, Allan W.; Brewer, Brady E.
  25. The influence of social interactions on innovative endeavors in online communities By Resch, Christian
  26. Sorting Versus Screening in Decentralized Markets With Adverse Selection By Sarah Auster; Piero Gottardi
  27. Fake News in Social Networks By Christoph Aymanns; Jakob Foerster; Co-Pierre Georg; Matthias Weber
  28. Conflicting fiduciary duties and fire sales of VC-backed start-ups By Bian, Bo; Li, Yingxiang; Nigro, Casimiro A.
  29. Optimal Strategic Mining Against Cryptographic Self-Selection in Proof-of-Stake By Matheus V. X. Ferreira; Ye Lin Sally Hahn; S. Matthew Weinberg; Catherine Yu
  30. Travailler pour Netflix : entre promesse aux auteurs et mise en cause des coopérations collectives By Samuel Zarka
  31. Brand bidding restraints revisited – What is the appropriate economic and legal framework for the antitrust analysis of vertical online search advertising restraints? By Elias Deutscher
  32. The role of local embeddedness of transnational migrant start-ups in the COVID-19 crises: Examples from the Berlin start-up ecosystem By Terstriep, Judith; David, Alexandra; Ruthemeier, Alexander; Elo, Maria
  33. Trust and contracts: Empirical evidence By D'Acunto, Francesco; Xie, Jin; Yao, Jiaquan

  1. By: Jonathan Chiu; Thorsten Koeppl
    Abstract: Why do BigTech platforms introduce payment services? Digital platforms often run business models where activities on the platform generate data that can be monetized off the platform. There is a trade-off between the value of such data and the privacy concerns of users, since platforms need to compensate users for their privacy loss by subsidizing activities. The nature of complementarities between data and payments determines whether and how payment services are provided. When data help to provide better payments (data-driven payments), platforms have too little incentive to adopt. When payments generate additional data (payments-driven data), platforms may adopt payments inefficiently.
    Keywords: Digital currencies and fintech; Payment clearing and settlement systems
    JEL: D8 E42 L1
    Date: 2022–08
  2. By: Ozili, Peterson K
    Abstract: The emergence of central bank digital currency (CBDC) provides an opportunity for central banks to make an important contribution to the transition to a circular economy. This paper examines the role of a central bank digital currency in the circular economy. Central banks can contribute to the transition to a circular economy in two ways: first, by making central bank digital currency accessible to circular businesses and other players in the circular economy sector; and second, by looking into how the design features of CBDC can support circular economy goals. On the role of CBDC in the circular economy, I argue that a central bank digital currency offers a better payment option for circular economy financial transactions; central bank digital currency can lead to greater financial inclusion for ‘unbanked’ informal workers in the circular economy; CBDC can create a gateway that allows a central bank to offer financial assistance to distressed circular businesses; using a central bank digital currency can reduce illicit activities in the circular economy; a central bank digital currency can be used to provide stimulus funding to support circular businesses during crises; and, a central bank digital currency can offer low transaction cost for circular economy financial transactions. The paper also shows the link between CBDC and the circular economy. It also offers a critical perspective on the link between CBDC and the circular economy.
    Keywords: circular economy, central bank digital currency, circular finance, linear economy, resources, sustainability, central bank, CBDC design, blockchain, sustainable development, payment system, innovation.
    JEL: E42 Q2 Q54 Q56
    Date: 2022
  3. By: Jorge Herrada; Angela N Lawson
    Abstract: Payment systems, and interoperation within and between them, are complicated, making analysis and dialogue among analysts, technologists, and members of the public challenging. Given the emergence of new payment mechanisms, like CBDC and private digital currency, these discussions are increasingly important to identify opportunities and challenges. This paper proposes a four-step framework and provides several tools policy analysts, technologists, and interested members of the public can use to interpret and discuss payment system interoperation. First, we provide an overview of payment system interoperation and why it is important. Next, we describe our four-step framework. Then, we apply the framework by describing the potential results of a hypothetical fit-for-purpose interoperation discussion where both a hypothetical central bank digital currency (CBDC) and stablecoins, a type of private digital currency, could co-exist in a payment system.
    Date: 2022–07–14
  4. By: Syed Saddam Haider (MPhil Scholar, PIDE)
    Abstract: After the industrial revolution, digital technology is something changing the course of the world order. The exponential growth of computing power, artificial intelligence (AI), robots, digitization, the Internet of Things (IoT), and blockchain technology in recent times has impacted every major sector of the economy and is revolutionizing the way we interact and operate businesses.
    Keywords: Automation, Future of Work,
    Date: 2021
  5. By: Ms. Sumiko Ogawa; Purva Khera; Mahima Vasishth; Ms. Ratna Sahay
    Abstract: While digital financial services have made access to finance easier, faster, and less costly, helping to broaden digital financial inclusion, its impact on gender gaps varies across countries. Moreover, women leaders in the fintech industry, although growing, remain scarce. This paper explores the interaction between ‘women’ and ‘fintech’ by examining: (i) the role of women leaders on firm-level performance in the fintech industry; and (ii) the determinants of gender gaps in the usage of digital services to better understand the cross-country differences. Results indicate that greater gender diversity in the executive board is associated with better performance of fintech firms.With regard to determinants of the gender gaps in the usage of digital financial services, we find that higher financial and digital literacy of women is associated with lower gender gaps in digital financial inclusion, and that socio-cultural factors also play a key role.
    Keywords: Firm Performance;Women Leaders; Digital Financial Inclusion; Financial Literacy; Digital Literacy
    Date: 2022–07–15
  6. By: Emma Riley
    Abstract: Intra-household sharing pressure has been shown to be a key constraint on female enterprise growth in developing countries. However, the growth of digital financial services offers a new way to reduce this sharing pressure. In this paper, I examine whether changing the form that a microfinance loan is disbursed in, from cash to directly onto a digital account, enables female microfinance borrowers to grow their businesses. Using a field experiment of 3,000 female borrowers in Uganda, I compare the disbursement of a loan as cash to the disbursement of a loan onto a mobile money account. After 8 months, women who received their microfinance loan on the mobile money account had 11% higher levels of business capital and 15% higher business profits compared to a control group who received their loan as cash. Total household income and consumption were also higher. Impacts were greatest for women who experienced pressure to share money with others in the household at baseline, suggesting that providing the loan in a digital account reduces sharing of the loan with others, to the benefit of both the woman's business and household. This indicates that widespread mobile money services can be utilised to counteract the negative impact of sharing pressure on the performance of female-owned enterprises.
    JEL: O12 O16 D13 D14 C93 J16
    Date: 2022–05–10
  7. By: Johnen, Constantin; Musshoff, Oliver; Parlasca, Martin C.
    Keywords: International Development, Productivity Analysis, Community/Rural/Urban Development
    Date: 2022–08
  8. By: David M. Byrne
    Abstract: After reviewing the state of digitalization---the use of digital information technology (IT) throughout the economy---we consider the slippery concept of a distinct digital economy and efforts to record it in national accounts. We then anchor the digital economy in a growth accounting framework, augmenting the conventional measure of the IT contribution to productivity---innovation in the production of IT capital plus labor-saving use of IT throughout the economy---with the contribution from the digital platforms that help users navigate the sprawling information landscape. We discuss the difficult measurement issues that thwart a full accounting of the scope and productivity of the digital economy remain. These include quantifying the intangible assets created by platforms and their users, measuring the consumption of intangible services provided by platforms---often provided for free---and identifying platforms within the existing statistical system, which does not treat their activity as a distinct industry.
    Keywords: Digital economy; Digitalization
    JEL: E31 E22 E01 L63
    Date: 2022–06–17
  9. By: Lambert, Thomas (Mercury Publication)
    Abstract: Specific Questions: What are the relative merits of antitrust versus direct regulation for addressing market power concerns on digital platforms. Relevance: As digital platforms like Facebook, Google, and Amazon have grown, policy makers have been considering regulatory options?beyond prevailing antitrust standards?for stemming the dominant platforms? market power. Timeliness: The House Judiciary Committee recently released a report calling for a number of ex ante rules to govern digital platforms. Other governmental agencies (e.g., the UK?s Competition and Markets Authority) and research organizations (e.g., the University of Chicago?s Stigler Center) have similar called for such an approach. Legislative proposals are likely on the horizon.
    Date: 2021–11–01
  10. By: Emily Aiken; Guadalupe Bedoya; Joshua Blumenstock; Aidan Coville
    Abstract: Can mobile phone data improve program targeting? By combining rich survey data from a "big push" anti-poverty program in Afghanistan with detailed mobile phone logs from program beneficiaries, we study the extent to which machine learning methods can accurately differentiate ultra-poor households eligible for program benefits from ineligible households. We show that machine learning methods leveraging mobile phone data can identify ultra-poor households nearly as accurately as survey-based measures of consumption and wealth; and that combining survey-based measures with mobile phone data produces classifications more accurate than those based on a single data source.
    Date: 2022–06
  11. By: Daniele Bianchi; Mykola Babiak; Alexander Dickerson
    Abstract: We provide empirical evidence within the context of cryptocurrency markets that the returns from liquidity provision, proxied by the returns of a short-term reversal strategy, are primarily concentrated in trading pairs with lower levels of market activity. Empirically, we focus on a moderately large cross section of cryptocurrency pairs traded against the U.S. Dollar from March 1, 2017 to March 1, 2022 on multiple centralised exchanges. Our findings suggest that expected returns from liquidity provision are amplified in smaller, more volatile, and less liquid cryptocurrency pairs, where fear of adverse selection might be higher. A panel regression analysis confirms that the interaction between lagged returns and trading volume contains significant predictive information about the dynamics of cryptocurrency returns. This is consistent with theories that highlight the roles of inventory risk and adverse selection for liquidity provision.
    Keywords: liquidity provision; short-term reversal; trading volume; empirical asset pricing; adverse selection;
    JEL: G12 G17 E44 C58
    Date: 2022–06
  12. By: Oksana Loginova (Department of Economics, University of Missouri)
    Abstract: I consider a market for differentiated products with an online marketplace (the platform) and two types of firms. Marketplace firms sell through the platform. Branded firms sell to consumers directly and, if they choose, through the platform. When a branded firm joins the platform, the firm expands its reach beyond its branded website/physical store(s) to consumers who visit the platform for all their purchases. The drawback is that the firm has to pay a referral fee for all sales on the platform, some of which are from its loyal consumers who would otherwise have purchased from the firm directly. I investigate the role of the firm composition in determining the equilibrium outcome. Interestingly, a higher fraction of branded firms translates into more firms on the platform and intense price competition. In the midst of the COVID-19 pandemic, consumers who used to shop at physical stores turn to the platform. I show that if they do (do not) consider other products, more (fewer) branded firms will join the platform in equilibrium.
    Keywords: price competition, online marketplace platform, brands, consumer shopping behavior, COVID-19
    JEL: C72 D43 L11 L13 M31
    Date: 2022–01–21
  13. By: Abounabhan, Mary; Munoz, Laura; Mascagni, Giulia; Prichard, Wilson; Santoro, Fabrizio
    Abstract: Low-income countries are facing strong pressure to bring in more revenue at home. With digital financial services (DFS) rapidly expanding across Africa and other low-income countries a growing number are therefore considering new taxes on DFS. In light of the heated debate over DFS taxes, this paper explores the rationale for these taxes and their likely impacts in order to help governments and other stakeholders arrive at policies that best meet their competing needs.
    Keywords: Governance,
    Date: 2022
  14. By: Possner, Annkathrin; Rosero, Gabriel; Musshoff, Oliver
    Keywords: Community/Rural/Urban Development, International Development, Agricultural Finance
    Date: 2022–08
  15. By: Xiaotong Sun
    Abstract: Decentralized Finance (DeFi) can replicate most traditional financial activities. Among various DeFi, Lending Protocols (LPs) resemble banks, allowing users to borrow and lend cryptocurrencies. By analysing stablecoin loans in Aave protocol, we find a small group of users with dual roles, i.e., borrowers and depositors, and these users account for significant loans and deposits. Therefore, potential liquidity risks can occur if these users collectively withdraw deposits and initiate loans, and potential liquidity risks can affect both loan-specific factors and status of Aave protocol. Surprisingly, liquidity risks in Aave are related to other LPs, implying illiquidity is infectious in DeFi.
    Date: 2022–06
  16. By: Yessie Fransiska Lydiana (School of Business and Management ITB, Indonesia Author-2-Name: Aurik Gustomo Author-2-Workplace-Name: School of Business and Management ITB, Indonesia Author-3-Name: Yuni Ros Bangun Author-3-Workplace-Name: School of Business and Management ITB, Indonesia Author-4-Name: Author-4-Workplace-Name: Author-5-Name: Author-5-Workplace-Name: Author-6-Name: Author-6-Workplace-Name: Author-7-Name: Author-7-Workplace-Name: Author-8-Name: Author-8-Workplace-Name:)
    Abstract: " Objective - Customer changes in behaviour during the COVID-19 pandemic prompted banks to swiftly adopt digital transformation systems. Banks work towards a digitalisation of the industry by employing information technology in the financial sector. Methodology – The digital transformation brings opportunities as well as challenges. This study aims to enrich the study of DX, specifically in banking, by profiling future banking from the viewpoint of digital transformation. This study used the review method by consulting 21 articles that were complied with inclusion criteria. Findings – The findings showed that digital transformation has affected banking in some aspects, including the development of facility and equipment, application design, services and products, security and privacy protection, big data, policy and regulations, innovations, consumer satisfaction, as well as stock returns. Novelty – Based on this literature research, a future agenda can be prepared, including the drivers for future banking, the workforce profile for future banking, as well as the organization design for future banking. Type of Paper - Review"
    Keywords: Future Banking; Digital Transformation; Open Banking; Banking Transformation
    JEL: F65 G15 G21
    Date: 2022–07–30
  17. By: NATIVI Stefano (European Commission - JRC); CRAGLIA Massimo (European Commission - JRC); SCIULLO Luca
    Abstract: In 2020, the European Commission’s Joint Research Centre (JRC) funded, through its Exploratory Research programme, the project “MyDigitalTwin –Trusted Personal Digital Twins in a Transformed Society”. Personal Digital Twins are the digital representation of natural people and are already widely used in industry to include, for example, behavioural models of individual customers of online services. Other well-known applications areas are in the medical (personal medicine) and automotive domains. MyDigitalTwin (MyDT) aimed to explore how to utilize, supervise, and control the rapidly growing generation of personal data via PDTs, and the role of PDTs in understanding com-plex/fast societal dynamics. Notably, this investigative study explored the challenges related to ethics and privacy, and the opportunities to move the existing PDT frameworks from a Business-to-Customer (B2C) to a Government-to-Citizen (G2C) context. Generally, PDTs are generated by those organizations that own and control the necessary in-formation (and authorizations) to replicate a person in the digital world. Today, several enterprises make fruitful use of the Digital Twin interaction paradigm and PDTs by developing data-intensive techniques. The concept of Digital Twins has demonstrated, at least in industry and marketing so far, its ability to drastically simplify information collection and sharing, making it instantly available to all relevant and authorized stakeholders.
    Keywords: digital twins, data spaces, personal digital twins
    Date: 2022–06
  18. By: Muhammad Ridhwan Ab. Aziz (Faculty of Economics and Muamalat, Universiti Sains Islam Malaysia (USIM), Malaysia Author-2-Name: Muhammad Zakirol Izat Mustafar Author-2-Workplace-Name: Faculty of Economics and Muamalat, Universiti Sains Islam Malaysia (USIM), Malaysia Author-3-Name: Author-3-Workplace-Name: Author-4-Name: Author-4-Workplace-Name: Author-5-Name: Author-5-Workplace-Name: Author-6-Name: Author-6-Workplace-Name: Author-7-Name: Author-7-Workplace-Name: Author-8-Name: Author-8-Workplace-Name:)
    Abstract: " Objective - This study is aimed to investigate the interconnection between the average income level and the tendency of the Malaysian community toward the adoption of Islamic digital banking. Methodology – This study used a quantitative survey questionnaire with 100 valid respondents. The data were collected within 3 months and the SPSS software was applied in this study to analyse the data using descriptive analysis. Cronbach's alpha tests were used to determine the reliability of multiple questions based on the Likert scale questionnaires in this study. Findings – The general finding of this study shows that the group with lower income levels is more responsive to the adoption of Islamic digital banking compared to the higher income group. It indicates that this group believed that Islamic digital banking can be beneficial to the community socially and economically in terms of perceived usefulness, perceived ease of use, and transaction cost. Novelty – The emergence of this study is to contribute the literature and reference related to Islamic digital banking for the interest of researchers, practitioners, and consumers in developing further research and the adoption of this platform in the future. Type of Paper - Empirical"
    Keywords: Digital Banking, Islamic Digital Banking, Income, Interconnection.
    JEL: G21 G24
    Date: 2022–07–30
  19. By: OECD
    Abstract: Online marketplaces matching third-party sellers with consumers are now key e-commerce channels globally. Despite their popularity and the benefits they bring to consumers, they do present a number of risks, for example when their third-party sellers engage in misleading marketing and fraud, or supply unsafe products. This report summarises results from a 2021 OECD survey of 28 countries and 15 platform businesses examining the role of online marketplaces in enhancing consumer protection. The report highlights a range of encouraging initiatives by many participating countries and online marketplaces to better protect consumers, often taken in co-operation with one another, but also identifies several key areas where more action is needed.
    Date: 2022–07–22
  20. By: Guillermo Jr. Cárdenas Salgado; Juan José Li Ng; Héctor Ortega Rosas; Susana Ramos Villaseñor; Carlos Serrano; Elmer Solano Flores
    Abstract: We presented the results of a Randomized Control Test (RCT) to people who received nudges through SMS in order to promote financial health variables. The target population was about 95,000 people in two age groups: 27 to 38 and 39 to 56 years old. We presented the results of a Randomized Control Test (RCT) to people who received nudges through SMS in order to promote financial health variables. The target population was about 95,000 people in two age groups: 27 to 38 and 39 to 56 years old.
    Keywords: Nudges, Empujones del comportamiento, Behavioral economics, Economía del comportamiento, savings, ahorro, Digital banking, Banca digital, Financial health, Salud financiera, Mexico, México, Banks, Banca, Digital Trends, Tendencias Digitales, Financial Inclusion, Inclusión Financiera, Digital Economy, Economía Digital, Sustainable Development, Desarrollo Sostenible, Working Papers, Documento de Trabajo
    JEL: D14 D91 G21 O16
    Date: 2022–08
  21. By: Geneviève Winninger Lemarquis (IAE Paris - Sorbonne Business School); Maria Mercanti Guerin (IAE Paris - Sorbonne Business School)
    Date: 2022–06–21
  22. By: Hannah Case
    Abstract: In the United States, access to credit is an important channel for smoothing consumption and building wealth. However, establishing and building a credit history can take time. Parents may be able to help their children build credit early and ensure good credit behavior, such as paying on time, by being a cosigner on a credit card.
    Date: 2022–07–14
  23. By: Carol Corrado; Jonathan Haskel; Massimiliano Iommi; Cecilia Jona-Lasinio
    Abstract: A defining aspect of the digital age is data and its business use. Data have become an important input for firms (e.g., to train artificial intelligence algorithms) but data use is neither accounted for in macroeconomic statistics nor part of business contracts for goods and services provided to customers.This paper puts data and data investments in a framework amenable to measurement and policy analysis aimed at sharpening our understanding of the modern economies. Data is conceptualized as an intangible asset: a storable, nonrival (yet excludable) factor input that is only partially captured in existing macroeconomic and financial statistics. We provide experimental estimates of data investment designed to encompass data and data intelligence for six major European countries (France, Germany, Italy, Spain, and the United Kingdom) and we found an average value of 5 to 6.5 percent of market sector gross value added in 2010-2018 (Corrado et al, 2022). We also develop a simulation exercise to test the potential growth contribution of data capital, and we find that even limited diffusion of data capital could raise labor productivity growth as much as ½ percentage point per year, but outcomes are highly dependent on factors influenced by policy settings.
    Keywords: data, innovation, intangible capital, productivity growth
    JEL: E22 O47 E01
    Date: 2022–08–08
  24. By: Mohammadi, Mati; Gray, Allan W.; Brewer, Brady E.
    Keywords: Marketing, Food Consumption/Nutrition/Food Safety, Agribusiness
    Date: 2022–08
  25. By: Resch, Christian
    Abstract: Online communities offer great potential for sourcing future innovations. While organizations search for inspiration and innovations outside their organizational boundaries to stay competitive, individuals innovate to solve their own needs and subsequently freely reveal these innovations. Online communities constitute a virtual space for individuals to share ideas, socially interact, collaborate, and build on others’ ideas. In this dissertation, I investigate how these social interactions influence the generation of ideas and the ongoing idea development in online communities. The three studies of this dissertation use two unique large datasets that allowed the investigation of social interactions and their contents. In doing so, topic modeling and social network analysis techniques build the methodical foundation to measure latent content representations of the information that is exchanged in online communities. Regarding the generation of new ideas, this dissertation includes two empirical studies that focus on the content that individuals access through their social peers. The first study reveals that the combination of redundant and non-redundant information favors idea newness. In particular, brokers accessing diverse social information benefit from redundant content for generating new ideas. In contrast, non-redundant contents have detrimental effects on brokers’ social non- redundancy regarding brokers’ idea newness. The second study takes a time-dependent view on social interactions and finds that a temporal separation between inspiration and focus on specific contents leads to more innovative outcomes of individuals engaging and innovating in online communities. By focusing on the ongoing collaborative idea development process in online communities, the third study investigates how social influences shape the trajectory ideas take after they got initially shared. The findings of the third study show that social impact theory helps explain how social influences affect the development directions of ideas in online communities. By taking different perspectives on innovative endeavors in online communities, this dissertation contributes to the literature on online communities, social networks, and user innovation. Specifically, this dissertation emphasizes the importance of social interactions for innovations and this relationships’ dependence on the actual content, timing, and social impact of social interactions.
    Date: 2022
  26. By: Sarah Auster; Piero Gottardi
    Abstract: We study the role of traders' meeting capacities in decentralized markets with adverse selection. Uninformed customers choose trading mechanisms in order to find a provider for a service. Providers are privately informed about their quality and aim to match with one of the customers. We consider a rich set of meeting technologies and characterize the properties of the equilibrium allocations for each of them. In equilibrium, different provider types can be separated either via sorting---they self-select into different submarkets---or screening within the trading mechanism, or a combination of the two. We show that, as the meeting technology improves, the equilibrium features more screening and less sorting. Interestingly, this reduces both the average quality of trade as well as the total level of trade in the economy. The trading losses are, however, compensated by savings in entry costs, so that welfare increases.
    Keywords: Competitive Search, Adverse Selection, Market Segmentation
    JEL: C78 D44 D83
    Date: 2022–08
  27. By: Christoph Aymanns (London School of Economics & Political Science (LSE) - London School of Economics; University of St. Gallen - School of Finance); Jakob Foerster (University of Oxford); Co-Pierre Georg (University of Cape Town; Deutsche Bundesbank); Matthias Weber (University of St. Gallen - School of Finance; Swiss Finance Institute)
    Abstract: We propose multi-agent reinforcement learning as a new method for modeling fake news in social networks. This method allows us to model human behavior in social networks both in unaccustomed populations and in populations that have adapted to the presence of fake news. In particular the latter is challenging for existing methods. We find that a fake-news attack is more effective if it targets highly connected people and people with weaker private information. Attacks are more effective when the disinformation is spread across several agents than when the disinformation is concentrated with more intensity on fewer agents. Furthermore, fake news spread less well in balanced networks than in clustered networks. We test a part of these findings in a human-subject experiment. The experimental evidence provides support for the predictions from the model. This suggests that our model is suitable to analyze the spread of fake news in social networks.
    Date: 2022–07
  28. By: Bian, Bo; Li, Yingxiang; Nigro, Casimiro A.
    Abstract: This paper studies the interactions between corporate law and VC exits by acquisitions, an increasingly common source of VC-related litigation. We find that transactions by VC funds under liquidity pressure are characterized by (i) a substantially lower sale price; (ii) a greater probability of industry outsiders as acquirers; (iii) a positive abnormal return for acquirers. These features indicate the existence of fire sales, which satisfy VCs' liquidation preferences but hurt common shareholders, leaving board members with conflicting fiduciary duties and litigation risks. Exploiting an important court ruling that establishes the board's fiduciary duties to common shareholders as a priority, we find that after the ruling maturing VCs become less likely to exit by fire sales and they distribute cash to their investors less timely. However, VCs experience more difficult fundraising ex-ante, highlighting the potential cost of a common-favoring regime. Overall the evidence has important implications for optimal fiduciary duty design in VC-backed start-ups.
    Keywords: Acquisitions,Corporate Governance,Fiduciary Duties,Fire Sales,Liquidation Preferences,Trados,Venture Capital
    JEL: G24 G33 G34 K20 K22 K40 M13
    Date: 2022
  29. By: Matheus V. X. Ferreira; Ye Lin Sally Hahn; S. Matthew Weinberg; Catherine Yu
    Abstract: Cryptographic Self-Selection is a subroutine used to select a leader for modern proof-of-stake consensus protocols, such as Algorand. In cryptographic self-selection, each round $r$ has a seed $Q_r$. In round $r$, each account owner is asked to digitally sign $Q_r$, hash their digital signature to produce a credential, and then broadcast this credential to the entire network. A publicly-known function scores each credential in a manner so that the distribution of the lowest scoring credential is identical to the distribution of stake owned by each account. The user who broadcasts the lowest-scoring credential is the leader for round $r$, and their credential becomes the seed $Q_{r+1}$. Such protocols leave open the possibility of a selfish-mining style attack: a user who owns multiple accounts that each produce low-scoring credentials in round $r$ can selectively choose which ones to broadcast in order to influence the seed for round $r+1$. Indeed, the user can pre-compute their credentials for round $r+1$ for each potential seed, and broadcast only the credential (among those with a low enough score to be the leader) that produces the most favorable seed. We consider an adversary who wishes to maximize the expected fraction of rounds in which an account they own is the leader. We show such an adversary always benefits from deviating from the intended protocol, regardless of the fraction of the stake controlled. We characterize the optimal strategy; first by proving the existence of optimal positive recurrent strategies whenever the adversary owns last than $38\%$ of the stake. Then, we provide a Markov Decision Process formulation to compute the optimal strategy.
    Date: 2022–07
  30. By: Samuel Zarka (CEET - Centre d'études de l'emploi et du travail - CNAM - Conservatoire National des Arts et Métiers [CNAM] - HESAM - HESAM Université - M.E.N.E.S.R. - Ministère de l'Education nationale, de l’Enseignement supérieur et de la Recherche - Ministère du Travail, de l'Emploi et de la Santé, LISE - Laboratoire interdisciplinaire pour la sociologie économique - CNAM - Conservatoire National des Arts et Métiers [CNAM] - HESAM - HESAM Université - CNRS - Centre National de la Recherche Scientifique, CMH - Centre Maurice Halbwachs - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique)
    Abstract: The production of fiction for streaming platforms, of which Netflix is emblematic, was presented in France as a promise: that of supporting ambitious projects, led by showrunners and mobilizing teams over long periods. In this issue of Connaissance de l'emploi, a qualitative interview survey of technicians in the sector reveals a redefinition of the relationships between the stakeholders in production, which is shaking up the established professional references. The possible ways of working are therefore distributed between two poles, ranging from a very controlled support to original projects to the hardening of a relationship between principal and service provider. The very effectiveness of collective work cooperations is questioned.
    Abstract: La production de fiction pour les plateformes de streaming, dont Netflix est emblématique, s'est présentée en France comme une promesse : celle de soutenir des projets ambitieux, portés par des showrunners et mobilisant des équipes sur des durées longues. Dans ce numéro de Connaissance de l'emploi, une enquête qualitative par entretiens, menée auprès de techniciens du secteur, fait plutôt apparaître une redéfinition des relations entre les parties prenantes de la production, qui bouscule les repères professionnels établis. Les modalités de travail possibles se distribuent dès lors entre deux pôles, allant d'un soutien très encadré à des projets originaux au durcissement d'une relation entre donneur d'ordre et prestataire. L'efficacité même des coopérations collectives de travail s'en trouve interrogée.
    Keywords: netflix,plateforms,showrunner,labor laws,droit du travail,conventions de travail,Netflix
    Date: 2022
  31. By: Elias Deutscher (Centre for Competition Policy and School of Law, University of East Anglia)
    Abstract: This paper explores the law and economics of brand bidding restraints. By means of this novel type of restraints, brand owners restrict how their licensed retailers use their brand names and trademarks as keywords in paid search advertising. The paper tests and critically reflects on the restrictive approach European competition watchdogs have recently adopted towards brand bidding restraints. It contends that this harsh antitrust treatment of brand bidding restraints is not sufficiently grounded in the economic analysis of vertical restraints. In proposing a comprehensive framework for the legal and economic analysis of brand bidding restraints, the paper makes three principal contributions. First, it asserts that brand bidding restraints can have a number of procompetitive effects by internalising advertising-related externalities, addressing free-riding on display and traditional advertising and facilitating fixed cost recovery through price discrimination. Second, the paper considers different ways through which brand bidding restraints may harm competition and consumer welfare when they disproportionately affect infra-marginal consumers, prevent meaningful intra- and inter-brand comparisons or result in price discrimination on the basis of search costs rather than brand preferences. Moreover, brand bidding restraints are of particular concern when adopted in the context of dual distribution systems where vertically integrated brand owners have an incentive to raise their retailers’ costs to prevent them from cannibalising their own sales channel. Third, the paper explores various legal filters to disentangle and balance the anti- and procompetitive effects of brand bidding restraints. In this respect, the paper makes a number of policy recommendations for the future antitrust analysis of brand bidding restraints. These proposals could also inform the ongoing revision of the Vertical Block Exemption Regulation and Vertical Guidelines in the EU and in the UK.
    Keywords: Antitrust, online advertising, restraints
    Date: 2022–07–08
  32. By: Terstriep, Judith; David, Alexandra; Ruthemeier, Alexander; Elo, Maria
    Abstract: The COVID-19 pandemic has led to a changing environment for transnational migrant start-ups. These changes have posed many challenges concerning altering strategic behaviour and approaches to driving business. We explored transnational migrant start-ups' embeddedness in translocal entrepreneurial ecosystems by analysing data from 14 semi-structured interviews with start-ups from Berlin's knowledgeintensive business services sector. We argue that the success of transnational migrant start-ups during crises is largely dependent on embeddedness in the local entrepreneurial ecosystem. Thus, we expect entrepreneurs to utilise local networks, infrastructures and interactions to help them cope with the challenges at hand and to pave the way for translocal business activities. Our results indicate that structural embedding in local entrepreneurial ecosystems and a sense of belonging, especially during the business formation phase, play a vital role for transnational migrant start-ups.
    Keywords: migrant entrepreneurship,migrant start-ups transnationalism,translocal embeddedness,COVID-19,crisis,entrepreneurial ecosystem
    JEL: F63 O12 L26
    Date: 2022
  33. By: D'Acunto, Francesco; Xie, Jin; Yao, Jiaquan
    Abstract: Trust between parties should drive contract design: if parties were suspicious about each others' reaction to unplanned events, they might agree to pay higher costs of negotiation ex ante to complete contracts. Using a unique sample of U.S. consulting contracts and a negative shock to trust between shareholders/managers (principals) and consultants (agents) staggered across space and over time, we find that lower trust increases contract completeness. Not only the complexity but also the verifiable states of the world covered by contracts increase after trust drops. The results hold for several novel text-analysis-based measures of contract completeness and do not arise in falsification tests. At the clause level, we find that non-compete agreements, confidentiality, indemnification, and termination rules are the most likely clauses added to contracts after a negative shock to trust and these additions are not driven by new boilerplate contract templates. These clauses are those whose presence should be sensitive to the mutual trust between principals and agents.
    Keywords: Empirical Contract Theory,Incomplete Contracts,Cultural Economics,Beliefs and Choice,Personnel Economics,Organizational Economics,FinTech andTextual Analysis,Consulting,Management,Non-Compete Agreements,Big Five,Fraud,Accounting,Disclosure
    JEL: D86 D91 J33 L14 Z10
    Date: 2022

General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.