TY - JOUR AB - Models on network formation have often been extended to include the potential of network disruption in recent years. Whereas the theoretical research on network formation under the threat of disruption has thus gained prominence, hardly any experimental research exists so far. In this paper, we therefore experimentally study the emergence of networks including the aspect of a known external threat by relating theoretical predictions by Dzuibiński and Goyal (2013) to actual observed behaviour. We deal with the question if subjects in the role of a strategic Designer are able to form safe networks for least costs while facing a strategic Adversary who is going to attack their networks. Varying the costs for protecting nodes, we designed and tested two treatments with different predictions for the equilibrium network and investigated whether one of the least cost equilibrium networks was more likely to be reached. Furthermore, the influence of the subjects’ farsightedness on their decision-making process was elicited and analysed. We find that while subjects are able to build safe networks in both treatments, equilibrium networks are only built in one of the two treatments. In the other treatment, predominantly safe networks are built but they are not for least costs. Additionally, we find that farsightedness –as measured in our experiment– has no influence on whether subjects are able to build safe or least cost equilibrium networks. Two robustness settings with a reduced external threat or more liberties to modify the initial networks qualitatively confirm our results. Overall, in this experiment observed behaviour is only partially in line with the theoretical predictions by Dzuibiński and Goyal (2013). AU - Endres, Angelika Elfriede AU - Recker, Sonja AU - Mir Djawadi, Behnud AU - Hoyer, Britta ID - 80 JF - Journal of Economic Behavior and Organization TI - Network Formation and Disruption - An Experiment: Are equilibrium networks too complex? VL - 157 ER - TY - JOUR AU - Fritz, Marlon AU - Gries, Thomas AU - Feng, Yuanhua ID - 9920 JF - Economics Letters SN - 0165-1765 TI - Secular stagnation? Is there statistical evidence of an unprecedented, systematic decline in growth? VL - 181 ER - TY - JOUR AU - Gries, Thomas AU - Fritz, Marlon AU - Yuanhua, Feng ID - 6734 IS - 1 JF - Oxford Bulletin of Economics and Statistics TI - Growth Trends and Systematic Patterns of Boom and Busts –Testing 200 Years of Business Cycle Dynamics VL - 81 ER - TY - JOUR AU - Gries, Thomas ID - 10090 JF - The American Economist SN - 0569-4345 TI - A New Theory of Demand-Restricted Growth: The Basic Idea ER - TY - JOUR AU - Bünnings, Christian AU - Schmitz, Hendrik AU - Tauchmann, Harald AU - Ziebarth, Nicolas R. ID - 15075 IS - 2 JF - Journal of Risk and Insurance SN - 0022-4367 TI - The Role of Prices Relative to Supplemental Benefits and Service Quality in Health Plan Choice VL - 86 ER - TY - JOUR AU - Gries, Thomas AU - Redlin, Margarete ID - 2727 IS - 3 JF - Defence and Peace Economics SN - 1024-2694 TI - Pirates – The Young and the Jobless: The Effect of Youth Bulges and Youth Labor Market Integration on Maritime Piracy VL - 30 ER - TY - JOUR AU - Gries, Thomas AU - Grundmann, Rainer ID - 2814 IS - 3 JF - Journal of International Development TI - Fertility and Modernization: The Role of Urbanization in Developing Countries VL - 30 ER - TY - JOUR AB - In our model two divisions negotiate over type-dependent contracts to determine an intrafirm transfer price for an intermediate product. Since the upstream division's (seller's) costs and downstream division's (buyer's) revenues are supposed to be private information, we formally consider cooperative bargaining problems under incomplete information. This means that the two divisions consider allocations of expected utility generated by mechanisms that satisfy (interim) individual rationality, incentive compatibility and/or ex post efficiency. Assuming two possible types for buyer and seller each, we first establish that the bargaining problem is regular, regardless whether or not incentive and/or efficiency constraints are imposed. This allows us to apply the generalized Nash bargaining solution to determine fair transfer payments and transfer quantities. In particular, the generalized Nash bargaining solution tries to balance divisional profits, while incentive constraints are still in place. In that sense a fair profit division is generated. Furthermore, by means of illustrative examples we derive general properties of this solution for the transfer pricing problem and compare the model developed here with the models existing in the literature. We demonstrate that there is a tradeoff between ex post efficiency and fairness. AU - Haake, Claus-Jochen AU - Recker, Sonja ID - 4564 IS - 6 JF - Group Decision and Negotiation TI - The Generalized Nash Bargaining Solution for Transfer Price Negotiations under Incomplete Information VL - 27 ER - TY - JOUR AU - Hoyer, Britta AU - Rosenkranz, Stephanie ID - 4982 IS - 4 JF - Games TI - Determinants of Equilibrium Selection in Network Formation - An Experiment VL - 9 ER - TY - JOUR AB - In Internet transactions, customers and service providers often interact once and anonymously. To prevent deceptive behavior a reputation system is particularly important to reduce information asymmetries about the quality of the offered product or service. In this study we examine the effectiveness of a reputation system to reduce information asymmetries when customers may make mistakes in judging the provided service quality. In our model, a service provider makes strategic quality choices and short-lived customers are asked to evaluate the observed quality by providing ratings to a reputation system. The customer is not able to always evaluate the service quality correctly and possibly submits an erroneous rating according to a predefined probability. Considering reputation profiles of the last three sales, within the theoretical model we derive that the service provider’s dichotomous quality decisions are independent of the reputation profile and depend only on the probabilities of receiving positive and negative ratings when providing low or high quality. Thus, a service provider optimally either maintains a good reputation or completely refrains from any reputation building process. However, when mapping our theoretical model to an experimental design we find that a significant share of subjects in the role of the service provider deviates from optimal behavior and chooses actions which are conditional on the current reputation profile. With respect to these individual quality choices we see that subjects use milking strategies which means that they exploit a good reputation. In particular, if the sales price is high, low quality is delivered until the price drops below a certain threshold, and then high quality is chosen until the price increases again. AU - Mir Djawadi, Behnud AU - Fahr, Rene AU - Haake, Claus-Jochen AU - Recker, Sonja ID - 5330 IS - 11 JF - PLoS ONE TI - Maintaining vs. Milking Good Reputation when Customer Feedback is Inaccurate VL - 13 ER -