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Title: Essays on innovation and mutual insurance
Author: Wirtz, Julia Katharina
ISNI:       0000 0004 5356 159X
Awarding Body: University of Warwick
Current Institution: University of Warwick
Date of Award: 2014
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This thesis is composed of three chapters. While chapter 1 stands on it’s own, chapters 2 and 3 are related in topic and grew out of two parts of a single paper. Hence, even though they constitute largely independent treatments of separate questions they have a unique introduction and conclusion. Chapter 1 considers a dynamic tournament setting where feedback gives agents the possibility to learn about the productivity of a technology they are using. If the technology proves unsatisfactory, they have the possibility of switching to a different one. However, it is shown that full feedback does not lead to the efficient technology choice in a tournament setting. Risk neutral agents will behave as risk averse in some cases and risk loving in others. It is shown that the inefficiency can be ameliorated by giving the later period more weight for the allocation of the tournament prize. In a setting with effort. feedback will induce the agents to exert higher effort in the presence of learning. Finally, the efficient technology choice can be achieved using partial feedback. Chapters 2 and 3 investigate the phenomenon of kindness towards strangers. Seemingly altruistic behaviour can follow from purely selfish motives if agents face risk. In a repeated dictator game setting, a charitable equilibrium can be sustained if dictators have a positive probability to change roles, even with anonymous transactions. This also holds if behaviour cannot be monitored perfectly. The main driving factor for charitable behaviour is the desire to sustain the social norm of kindness, from which the charitable agent herself might benefit in the future. This can be interpreted as an informal insurance arrangement in the absence of enforceable contracts. Furthermore, we examine how cooperation is complicated by inequality, in terms of heterogeneous risk exposure. We study how more persistent differences in risk make cooperation increasingly hard to achieve. Moreover, heterogeneity can lead to a fragmentation of society, where cooperation is only possible within subgroups, leading to losses in welfare. The model allows for interesting interpretations of social divisions in societies of varying heterogeneity.
Supervisor: Not available Sponsor: Economic and Social Research Council (Great Britain) ; Department of Economics, University of Warwick
Qualification Name: Thesis (Ph.D.) Qualification Level: Doctoral
EThOS ID:  DOI: Not available
Keywords: HB Economic Theory