Views on bailout

...by Stiglitz, Rogoff (1, 2), DeLong, and Zingales.

Call for papers

Two professors from my group, Nick Argyres and Todd Zenger, together with Teppo Felin of BYU and Nicolai Foss of Copenhagen Business School are going to co-edit a special issue of Organization Science (now ranks as the 4th most influential management journal according to JCR, even made it to the 3rd a year ago), on Organizational Economics and Organizational Capabilities: From Opposition and Complementarity to Real Integration. I am very exicted about this ongoing trend and just in the PhD seminar last week, we and Todd discussed this paper by Nick and him, "Capabilities, Transaction Costs, and Firm Boundaries: A Dynamic Perspective and Integration", which is exactly an integration of Transaction Cost View and Capability based View of the firm. I highly recommend this paper to those of you who are passionate about organizational economics, business strategy and their ongoing blending, although I am still not so convinced on part of the illustration of the Disney case. Here is the abstract:

A large literature has developed in recent years that attempts to compare transaction cost and capabilities explanations of firms' vertical boundaries. Much of this literature has treated comparative capabilities (buyers' vs. potential suppliers') as determinants that are independent of transaction costs, based on the idea that capabilities theories of the firm are distinct from the transaction cost theory of the firm. We argue that this approach is mistaken. We contend that capabilities and transaction cost determinants interact with each other dynamically, and that the two theories of the firm cannot be conceptually distinguished. We then seek to articulate an integrated perspective that incorporates both capabilities and transaction cost logic. Our argument carries implications for theories of the firm, and for empirical research aimed at testing those theories.

As to the special issue, papers can be both theoretical and empirical, and must be submitted between Oct. 1 and Oct. 30, 2009.

Hat tip to Nicolai Foss.

Please...Nobel for organizational economics!

...claimed by Peter Klein, co-blogger of Organizations and Markets.

"Coase, of course, whose 1937 paper is foundational to the field, has already won, as have Akerlof, Spence, Stiglitz, Mirrlees, Vickrey, Hayek, and others whose work has greatly informed the study of organizations. But, for a prize recognizing organizational economics per se, whom would you pick? Williamson, Holmström, Milgrom, Roberts, Hart, Tirole, Aghion? Perhaps Alchian, Demsetz, or Jensen. Maybe a personnel economist (Lazear) or someone in corporate finance or accounting (Bill Schwert, Stewart Myers, René Stulz, Raghuram Rajan, Cliff Smith, Milton Harris, Artur Raviv)? Or an entrepreneurship Nobel for, say, Baumol and Kirzner isn’t out of the question, but seems unlikely. "

Here is my view last year. What do you think?

Problems run deeper??

Martin Feldstein comments on the recent financial crisis and how the economy would suffer.

Ig Nobel 2008

The "18th First Annual Ig Nobel Prize Ceremony" was held on 2 October 2008 at Harvard University. The winners of this year are:

Archaeology: Astolfo Gomes de Mello Araujo and Jose Carlos Marcelino, for showing that armadillos can mix up the contents of an archaeological site.

Biology: Marie-Christine Cadiergues, Christel Joubert, and Michel Franc, for discovering that fleas that live on dogs jump higher than fleas that live on cats.

Chemistry: Sheree Umpierre, Joseph Hill, and Deborah Anderson, for discovering that Coca-Cola is an effective spermicide, and C.Y. Hong, C.C. Shieh, P. Wu, and B.N. Chiang for proving it is not.

Cognitive science: Toshiyuki Nakagaki, Hiroyasu Yamada, Ryo Kobayashi, Atsushi Tero, Akio Ishiguro, and Ágota Tóth, for discovering that slime molds can solve puzzles.

Economics: Geoffrey Miller, Joshua Tyber, and Brent Jordan, for discovering that exotic dancers earn more when at peak fertility.

Literature: David Sims, for his study "You Bastard: A Narrative Exploration of the Experience of Indignation within Organizations". (Also see here.)

Medicine: Dan Ariely for demonstrating that expensive counterfeit drugs are more effective than inexpensive counterfeit drugs. (Also see here.)

Nutrition: Massimiliano Zampini and Charles Spence, for demonstrating that food tastes better when it sounds more appealing.

Peace: The Swiss Federal Ethics Committee on Non-Human Biotechnology and the citizens of Switzerland, for adopting the legal principle that plants have dignity.

Physics: Dorian Raymer and Douglas Smith, for proving that heaps of string or hair will inevitably tangle.

Here is an overview.

Time Paradox

Philip Zimbardo, a renowned psychologist at Stanford describes how our individual perception of time shapes the choices we make.

2008 Thomson Prediction in Nobel Prize in Economics

Thomson Scientific predicts the 2008 Nobel Prize this year. In economics, three groups of preeminent scholars seem to win the titile this year. They are:

Group 1
LARS P. HANSEN, Homer J. Livingston Distinguished Service Professor, Department of Economics, University of Chicago, Chicago, IL USA
and
THOMAS J. SARGENT, William R. Berkley Professor of Economics and Business, Department of Economics, New York University, New York, NY, USA; and Senior Fellow, Hoover Institution, Stanford, CA USA
and
CHRISTOPHER A. SIMS , Harold B. Helms Professor of Economics and Banking, Department of Economics, Princeton Univeristy, Princeton, NJ USA
"for their contributions to dynamic econometric models"

Group 2
MARTIN S. FELDSTEIN, George F. Baker Professor of Economics, Department of Economics, Harvard University, Cambridge, MA USA; President Emeritus, National Bureau of Economic Research, Cambridge, MA USA
"for his research on public economics, including taxation, social security, health economics and many other topics"

Group 3
ARMEN A. ALCHIAN, Emeritus Professor, Department of Economics, University of California Los Angeles, Los Angeles, CA USA
and
HAROLD DEMSETZ, Arthur Andersen UCLA Alumni Emeritus Professor of Business Economics, Department of Economics, University of California Los Angeles, Los Angeles, CA USA
"for their publications on property rights and their contributions to the theory of the firm"

There are many other nominees who have very high academic citations and are still in the running for the Nobel title. They are ROBERT J. BARRO; EUGENE F. FAMA AND KENNETH R. FRENCH; PAUL MICHEAL ROMER; RICHARD H. THALER; JAGDISH N. BHAGWATI AND AVINASH K. DIXIT AND PAUL KRUGMAN; DALE W. JORGENSON; OLIVER D. HART AND BENGT R. HOLMSTROM AND OLIVER E. WILLIAMSON; ELHANAN HELPMAN AND GENE M. GROSSMAN; JEAN TIROLE; ROBERT B. WILSON AND PAUL R. MILGROM.

Let's see!

Still on GM and Fisher???

Organizations and Markets just has another post (see the first one here) on yet another round of debate over the acquisition of Fisher Body by General Motors. It's a classic case, particularly in the analysis of vertical integration when parties face high asset specificity.

The new issue of Industrial and Corporate Change has two more papers, “Lawyers Asleep at the Wheel? The GM–Fisher Body Contract” by Victor Goldberg and “The Enforceability of the GM–Fisher Body Contract: Comment on Goldberg” by Ben Klein. Apparently, the debate will still go on.

I think this case and the idea of asset specificity have already become a standard in Transaction Cost Economics and even in the recent advancement of Incomplete Contract Framework. When I ask him to make some comments on these recent debates, Harvard Prof. Oliver Hart just replied, "I wish that we could get beyond this case! Relationship specific investments have got to be an important factor in determining the costs and benefits of vertical integration, even though there may be many others!"

Map of Scientific Paradigms

See here. (Transaction cost, firm size, innovation etc. are somewhere in the 9 o'clock area.)

This map "was constructed by sorting roughly 800,000 scientific papers into 776 different scientific paradigms (shown as red and blue circular nodes) based on how often the papers were cited together by authors of other papers. Links (curved lines) were made between the paradigms that shared common members, then treated as rubber bands, holding similar paradigms closer to one another when a physical simulation forced them all apart: thus the layout derives directly from the data. Larger paradigms have more papers. Labels list common words unique to each paradigm"

Time to dump Word??

Microsoft Word is pervasively used to write ordinary documents and academic papers, because it is easy to operate and you will see what you will get. But if you are going to deal with much more sophisticated mathematical equations, LaTex may become a better choice. But with LaTex, you cannot simply get what you see (maybe sometimes if you want to insert, say, a table, it would be difficult for you to define the specific attributes of the table unless you become very experienced).

What if we combine the merits of Word and LaTex? Then here comes Lyx (also see here). Most of the time, the quasiconcavity of preference relations will hold.

So is it the time to dump Word??

Hat tip to a friend of mine.

A little bit diverting...but interesting posts

From NewScientist:

1. Why preschool is more than just child's play?
2. Do we need help making sensible decisions?
3. Eight facts about Cold; and
4. Are happy kids dumb kids?

Shiller on housing and bubbles

Robert Shiller of Yale University had a conversation with Econtalk host Russ Roberts, in which he argues that the current housing and related financial market problems are much due to speculative fervor in the past (here for audio). He also had an interview with Princeton University Press, talking about his new book, The Subprime Solution (see here and here).

What's new in econometrics?

See the 2007 Summer Institute mini-course organized by NBER and all the related video files.

Nobel Symposium on Foundations of Organization

Stockholm School of Economics hosted the Nobel Symposium on Foundations of Organization on August 28 and 29. Many prominent figures in economics, business administration and sociology have taken part in this symposium. Papers, slides and discussions can be found on this page. Interestingly, MIT prof. Robert Gibbons presented a SEVENTY-EIGHT page long paper on Economic Theories of Internal Organization, in which he tries to present an integrated framework on the internal structures and processes of an organization by combining insights from economics, sociology, politics and business strategy. Although it's huge, it is worth a read!

Update (Dec. 16, 2009): the former links to this program were broken, and now they are all fixed. Thanks to James Yen for the pointer!

For fun...

A friend told me today that there are lots of jokes on Prof. Sergiu Hart's homepage.