Tom-Reiel Heggedal

Games and Economic Behavior 135 p. 60-73 Doi: https://doi.org/10.1016/j.geb.2022.05.008

We investigate the effects of wages and uncertainty on political corruption as measured by rent-taking. First, our laboratory data show that contrary to standard theory, rent-taking is not independent of, but decreases with wages in the absence of popularity shocks. Second, the orthodox view that rent-taking is greater in the presence of popularity shocks, given wages, is not necessarily true. Third, we find that in the presence of popularity or ideological shocks rent-taking is increasing in the variance of the shock for given wages, and is decreasing in wages for a given variance of the shock. While our third finding is in line with the directional predictions of the Nash equilibria, the deviation from Nash is large when the variance of the popularity shock is high and wages are low. We show that the deviations can be explained using a Quantal Response Equilibrium approach and taking risk-attitudes into account.

Journal of Public Administration Research and Theory (JPART) 31(3) p. 596-615 Doi: https://doi.org/10.1093/jopart/muaa053

Building on agency-theoretical perspectives of public bureaucracies, we argue that politician–bureaucrat preference alignment can have important implications for bureaucrats’ pay. We study such private gains to bureaucrats from their political alignment with elected politicians using detailed data on all 1,632 top administrators active in all Norwegian municipalities over a period of 25 years (1991–2015). Whereas existing studies generally rely on proxies for politician–bureaucrat political alignment, a rare feature of our data allows measuring it directly since 27% of top bureaucrats ran for political office. We focus explicitly on individuals at the very top of the administrative hierarchy and are able to separate the intensive margin (i.e., wage increases) from any additional effects at the extensive margin (i.e., new appointments). Using close elections for inference in a regression discontinuity analysis, we find that politician–bureaucrat alignment significantly increases top bureaucrats’ wage even in the Norwegian civil service system. This has important implications also from a theoretical perspective. Our results indeed go against predictions from models with policymotivated bureaucrats, but are consistent with politically aligned principal–agent matches being more productive.

British Journal of Political Science 51(3) p. 1348-1355 Doi: https://doi.org/10.1017/S0007123419000607

Support for environmental protection is generally perceived as driven by cohort or generational effects. We argue and empirically illustrate that such attitudes also fluctuate over the life cycle. Using rotating panels of the Norwegian Election Studies (1989-2013), our analysis is able to identify such life-cycle effects while controlling for cohort and period effects through a methodological innovation exploiting the first-derivative properties of the environmental concern function. Our main findings provide strong evidence of an inverted U-shape over the life cycle, which implies that substantial population aging in advanced economies may partially offset any generational shift towards a greater emphasis on protecting the environment.

Games and Economic Behavior 114 p. 146-168 Doi: https://doi.org/10.1016/j.geb.2019.01.006

Political parties commited to grab rents may run for election, and even win, if citizens are uninformed. But, how is the political equilibrium affected if citizens can mitigate this information problem through costly information search? We propose a political equilibrium theory with endogenous information search and turnout. We show that: (i) the political equilibrium generates political uncertainty characterized by a distribution of rent policies; (ii) the expectation of this rent distribution is inversely U-shaped in the information search cost; (iii) turnout is lower and rents are higher the more proportional is the electoral system.

At the Forefront, Looking Ahead: Research-Based Answers to Contemporary Uncertainties of Management p. 214-230 Doi: https://doi.org/10.18261/9788215031583-2018-14

Journal of Economic Behavior and Organization 150(June) p. 86-97 Doi: https://doi.org/10.1016/j.jebo.2018.03.019

We experimentally investigate the impact of strategic uncertainty and complementarity on leader and follower behavior using the model of Farrell and Saloner (1985). At the core of the model are endogenous timing, irreversible actions and private valuations. We find that strategic complementarity strongly determines follower behavior. Once a subject decides to abandon the status quo the probability that other players jump on the bandwagon increases sharply. However, there is a reluctance to lead when leading is a conditional best response. We explain this deviation from the neo-classical equilibrium by injecting some noise in the equilibrium concept. We also find that cheap talk improves efficiency.

Journal of Public Economics 152 p. 47-54 Doi: https://doi.org/10.1016/j.jpubeco.2017.05.006

Recent research explores the effect of financial and career incentives on public-sector hiring processes and subsequent performance. The reverse relation between performance and bureaucrats’ compensation and turnover has received only limited attention. Due to the distinct features of public-sector organizations, bureaucrats are traditionally argued to require either permanent positions and fixed wages, or low-powered performance incentives. This article studies how the performance of top civil servants in Norwegian local governments affects their compensation and turnover. We thereby build on a unique new dataset over the period 1991-2014. Our results indicate that better performing top civil servants obtain a higher compensation and are less likely to be replaced. Nonetheless, these incentives remain low-powered in line with agency theory prescriptions.

The Scandinavian Journal of Economics 120(4) p. 1100-1138 Doi: https://doi.org/10.1111/sjoe.12254

Should governments direct R&D from "dirty" into "clean" technologies? How im-portant is this compared to carbon pricing? We inquire into this, introducing twonovelties compared to recent literature. We introduce decreasing returns to R&D, andallow future carbon taxes to in‡uence current R&D decisions. Our results suggest thatgovernments should prioritize clean R&D. Dealing with major environmental problemsrequires R&D to shift to clean technology. However, with most researchers workingwith clean technology, both productivity spillovers and future risks of being replacedincrease. Consequently, the wedge between private and social value of an innovation islargest for clean technologies.

Journal of Economic Theory 169 p. 551-602 Doi: https://doi.org/10.1016/j.jet.2017.03.003

This paper proposes an explicit model of spillovers through labor flows in a framework with search frictions. Firms can choose to innovate or to imitate by hiring a worker from a firm that has already innovated. We show that if innovating firms can commit to long-term wage contracts with their workers, productivity spillovers are fully internalized. If firms cannot commit to long-term wage contracts, there is too little innovation and too much imitation in equilibrium. Our model is tractable and allows us to analyze welfare effects of various policies in the limited commitment case. We find that subsidizing innovation and taxing imitation improves welfare. Moreover, allowing innovating firms to charge different forms of fees or rent out workers to imitating firms may also improve welfare. By contrast, non-pecuniary measures that reduce the efficiency of the search process, always reduce welfare.

Magma forskning og viten 18(5) p. 65-77

Economics of Innovation and New Technology 24 p. 710-733 Doi: https://doi.org/10.1080/10438599.2014.983691

Journal of Economic Behavior and Organization 99(March) p. 168-177 Doi: https://doi.org/10.1016/j.jebo.2013.12.004

Emerging literature explores experimental platform selection games. These games con- verge rapidly on the superior platform under a wide range of conditions. We replicate the remarkable results of Hossain and Morgan (2009) in which such a game tips almost perfectly to the superior platform. Next, we show that platform coordination fails when seemingly innocent increases in out-of-equilibrium payo¤s are introduced. The in ated payo¤s keep the best reply structure unchanged and do not in uence players security levels. Our de- sign allows control for the explanatory force of risk dominance. We nd that equilibrium selection theory is unable to account for coordination failure while observed behavior is con- sistent with non-rational learning. Furthermore, and contrary to the literature, we nd that e¢ ciency su¤ers when an inferior platform is granted initial monopoly.

Resource and Energy Economics 33(4) p. 913-937 Doi: https://doi.org/10.1016/j.reseneeco.2010.12.002

The B.E. Journals in Economic Analysis & Policy 10(1)

Economic Modelling 26 p. 1075-1088

International Association for Energy Economics Newsletter