Information, incentives, markets and policy
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[ACCESS RESTRICTED TO THE UNIVERSITY OF MISSOURI AT AUTHOR'S REQUEST.] Chapter One: How low might be the resource costliness of making signals credible? Using a job market as an example, I build a signaling model to determine the extent to which a transfer from an applicant might replace a resource cost as an equilibrium method of achieving signal credibility. As long as a firm's claim to be hiring for an open position is credible, and profitability of the hiring process per se is limited to an application fee, the firm has an incentive to use the properly calibrated fee to implement a separating equilibrium. Applicant risk aversion does not necessarily discourage a monopsonist potential employer from using an application fee, but a firm hiring in a competitive labor market with risk-averse applicants may prefer a pooling equilibrium, hiring all applicants at their average productivity. Partial extension to a model with third-party assistance (a headhunter or a job board) is possible. Chapter Two: How costly is it to keep civilians from danger in a war? Issues previously unrelated are exposed by a new model. A government in a possibly protracted war provides health insurance to conscripts and civilians, possibly different plans. Incentives to engage in healthy behaviors before knowing whether one will be conscripted, as a conscript, and as an unconscripted civilian, are analyzed in relation to aspects of the government's conduct of the war. Surprisingly, killing random civilians can be welfareimproving relative to policies that limit likely lethal actions to cases when civilians face no danger. This may demonstrate reasonable arguments against strategic bombing, which rather than forcing an enemy out of a war, may lead to them battling longer. Chapter Three: Software producers, and possibly a broader range of firms possessing intellectual property, may have an option to rely on a community of volunteers to produce products and variants of products that utilizing the firm's intellectual property, rather than pay employees to do so. A model focusing on the computer gaming industry illustrates this new range of distribution options. In the base model, a company with a developed "game 1" may [a] sell game 1 and allow mods (i.e., a community of volunteer gamers/programmers will develop game 2 based on game 1), [b] develop game 2 itself and sell 2 separately, or [c] develop game 2 itself and sell it as a DLC to game 1 (a special case of mixed bundling). Conditions for each to be the preferred option are explored. An extension to endogenize level of modularity, by considering both a game 2 and a game 3 as mods, is considered.
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