Posts filed under ‘– Klein –’
Author Order
| Peter Klein |
Nicolai’s post on paper order got me thinking about author order, and how authorship ordering practices vary systematically across academic disciplines. In some scientific fields the lead author (or principal investigator) is listed first, while in others the lead author’s name comes last. In economics and business administration there isn’t a strong notion of “lead authorship,” and author names are usually listed alphabetically. There are, of course, prominent exceptions, such as Klein, Crawford, and Alchian (1978), Masten and Crocker (1985), and Hoskisson and Hitt (1994), to name just a few in organizational economics and strategy.
I’m curious to know how these practices evolved, and why they evolved differently in different disciplines. Surely some sociologists have written on this. (Academics tend to be narcissists, after all, and have shined the research spotlight on virtually every other aspect of their own profession!)
The social-science convention of usually-but-not-always-alphabetical ordering poses particular problems. How, for instance, do you communicate priority if the main author is first in the alphabet? Suppose my friends Mike Aarstol and Todd Zywicki get together. They can signal equal effort with “Aarstol and Zywicki” or give Todd the lead with “Zywicki and Aarstol.” But how do they give priority to Mike? “By Michael Aarstol, with special assistance from Todd Zywicki”?
Open-Source Cola
| Peter Klein |
This is what the Linux-heads are drinking these days instead of Coke or Pepsi. No joke. People can download the “source code,” modify it to their liking, and produce their own stuff, under the terms of the GNU General Public License. (Will somebody put the cocaine back in?)
I’ll bet this is Don Tapscott and Anthony Williams’s drink of choice!
Selling My Wife
| Peter Klein |
Alchian and Demsetz tell me I can fire my grocer. But can I sell my wife?
Here’s the context: Nicolai and I were discussing (via IM — we’re high-tech) my plans to attend an overseas conference. When he asked if I had checked with my wife before committing, I admitted that I hadn’t.
This led (naturally) to a discussion of original and derived judgment. I argued that while my wife has veto power over my travel plans (not to mention most other things), I am really in charge because I have given her this authority. In Foss-Foss-Klein terminology, her decision rights are delegated, or “derived,” while mine are primary, or “original.” (If you just fell off your chair, get back up and play along, just for the sake of argument.)
Nicolai reminded me that some of our colleagues think the original/derived distinction is a distinction without a difference. A de facto right is a right, whether we label it “original” or “derived.” I responded that there is a difference, namely that asset owners possess decision rights that non-owners do not. For example, the owner can sell the asset, while the hired worker, even if possessing a wide range of use rights, cannot. Moreover, the owner can choose — indeed must choose — which decision rights to delegate to subordinates. In general, no matter how “passive” the owner chooses to be, regarding day-to-day activities, the owner possess a kind of “ultimate” authority that cannot be delegated. (In the words of the great Canadian philosopher Geddy Lee, “If you choose not to decide, you still have made a choice.”) As evidence, note that the owner can take away all the subordinate’s decision rights by terminating the employment relationship — “selling” the subordinate, as it were.
We concluded that the original/derived judgment distinction can be applied to the family, but only if I have the right to sell my wife.
Reputations Die Hard
| Peter Klein |
This debunking of Pythagoras (via Lew Rockwell) reminded me of our recent attempt at Galileo revisionism. Apparently Pythagoras was a cult leader and political activist but not a serious mathematician or philosopher. He didn’t even discover the Pythagorean Theorem!
As debunker M. F. Burnyeat observes, “beloved historical traditions die hard.”
Other debunkings that might interest our readers: Murray Rothbard on Adam Smith, Richard Rumelt on the “Honda Effect,” Ronald Coase on Fisher Body, and Phil Rosenzweig on Peters and Waterman.
A Classroom Experiment in Organizational Economics
| Peter Klein |
I don’t do classroom experiments, but some of my colleagues find them effective. Here’s an experiment that might appeal to the O&M readership:
We present a simple classroom principal-agent experiment that can effectively be used as a teaching device to introduce important concepts of organizational economics and contracting. In a first part, students take the role of a principal and design a contract that consists of a fixed payment and an incentive component. In the second part, students take the role of agents and decide on an effort level. The experiment can be used to introduce students to the concepts of efficiency, incentive compatibility, outside options and participation constraints, the Coase theorem, and fairness and reciprocity in contracting.
See Simon Gaechter and Manfred Königstein’s paper “Design a Contract! A Simple Principal-Agent Problem as a Classroom Experiment,” available on SSRN.
Microfinance and Growth
| Peter Klein |
As excitement over the Yunnus Nobel fades, microfinance skeptics continue to emerge. The latest is Thomas Dichter, who writes in a new Cato paper:
Most people, poor or otherwise, are not entrepreneurs, so there is little reason to think that mass credit would in general lead to viable business start-ups. Today as in the past, business start-ups in the advanced countries depend predominantly on savings and informal sources of credit; past forms of microcredit never played a role in small business development, and much microcredit is actually used for consumption rather than investment. In the history of today’s rich countries, moreover, economic growth occurred first, then came credit for the masses. That credit was and is predominantly for consumption rather than investment.
The paper is “A Second Look at Microfinance: The Sequence of Growth and Credit in Economic History. And here is a rare specimin, an empirical paper on microcredit that uses actual microdata.
Milton Friedman: Patron Saint of Blogging?
| Peter Klein |
Left to the free market of ideas and instant reader feedback, good writing, quality and reliability in blogging secures a readership and reputation solely on merit. The analogy to “democracy” may be clichéd but the blogosphere is a prime example of Milton Friedman’s credo (“Capitalism and Freedom”) that minimal (or no) regulation and state licensing are best; they are too often a pretext to shut down competition not protect the populace. — Jens F. Laurson and George A. Pieler
I appreciate the sentiment, but am not sure why Friedman deserves the honor. I suspect most bloggers would take Hayek instead (1, 2). (This cynic offers a slightly different take.)
Call for Papers: Technological Change in Low- and Medium-Technology Industries
| Peter Klein |
Paul Robertson, author of many fine works with former O&M guest blogger Dick Langlois, is co-organizing a special issue of Research Policy on “Technological Change in Low- and Medium-Technology Industries.” Details below the fold (courtesy of EH.Net). (more…)
Risk, Uncertainty, and Baseball
| Peter Klein |
Frank Knight meets Abner Doubleday in this this item from the Hardball Times.
When we try to predict the outcome of a baseball season, whether as fans or pretend-general managers, there’s a whole lot of stuff we just don’t know. In fact, if you want certainty, we don’t know anything: any player in major league baseball could blow out his arm, crash into a teammate, or just plain lose the skills necessary to hit a slider.
Of course, most of those things won’t happen. When guessing the outcome of a team’s season, it’s a safe bet that somebody will get hurt, some players will underperform expectations, and others will overperform. One mark of a good general manager is identifying the situations in which those are most likely to happen, and then providing the best insurance he can.
Invoking the Knightian distinction between risk and uncertainty, baseball analyst Jeff Sackmann continues:
In a game of Strat-O-Matic, baseball is risky — you could calculate the likelihood of every event before you roll the dice. In real life, baseball is uncertain — no number of dice (or spreadsheet) is going to tell you Chris Snelling’s 2007 OPS. However, when it comes to the game on the field, there’s a continuum between risk and uncertainty, and that’s what I’m interested in. [Links added by PK for the benefit of our non-baseballophilic readers.]
Returning to Steve Postrel’s thoughts on the value added of management, one can perhaps conceive the problem in Knightian terms. In a world of probabilistic risk, “management” is, in principle, a simple problem of contract design. Nor would there be a reason for entrepreneurs to own assets. In a world of Knightian uncertainty, however, there is a role for managerial skill and for entrepreneurial judgment. Indeed, as Sackman notes, baseball “statheads don’t always agree with general managers” on personnel matters.
NB: If you think this is a rather silly example, you haven’t been keeping up with the literature. The academic analysis of sports is a rapidly growing field. Check out the Journal of Sports Economics, for example. Here is a short sportometric piece by yours truly.
Chip and Dan Heath on NPR
| Peter Klein |
The Made to Stick guys were interviewed on today’s NPR’s Morning Edition.
In other book news, check out this USA Today review of Phil Rosenzweig’s excellent The Halo Effect, which we blogged about earlier.
What Did the Legal Realists Believe, Really?
| Peter Klein |
I posted a while back on Karl Llewellyn and legal realism, its recent revival, and what this all means for the O&M crowd. Brian Tamanaha says that the legal realists were not, contrary to popular belief, “proto- or early-day Crits (members of Critical Legal Studies) who exposed the rampant indeterminacy of law and insisted that judging is inevitably infused with and shaped by the subjective views of judges.” Rather, Tamanaha maintains, the Realists favored a common-sense, empirically grounded approach over the overly formal and deductive method preferred by their contemporaries.
Llewellyn’s point was that the Realists were indeed critical of mechanistic accounts of judicial decision-making — as deductive and exclusively rule-focused — but they did not commit the opposite error of suggesting that judging is purely subjective and not legally constrained. Rather, the Realists brought attention to other stabilizing aspects of the craft of law and judicial decision-making besides just the legal rules. While they denied that law was certain to the extent that formalism portrayed, they agreed that there was a great deal of certainty and predictability in law (though not attributable to the legal rules alone). They also argued that in some cases policy decisions were called for and should be done openly by judges, although they recognized that many cases were routine and determined by the legal rules.
Thanks to Orin Kerr for the pointer.
European Entrepreneurship
| Peter Klein |
Europe’s economic problem, writes Nobel Laureate Ned Phelps in last week’s Wall Street Journal, is its lack of dynamism — “how fertile the country is in coming up with innovative ideas having prospects of profitability, how adept it is at identifying and nourishing the ideas with the best prospects, and how prepared it is in evaluating and trying out the new products and methods that are launched onto the market.”
Europe, Phelps argues, lacks the economic culture and economic institutions to encourage dynamism. Europe’s economic institutions “typically exhibit a Balkanized/segmented financial sector favoring insiders, myriad impediments and penalties placed before outsider entrepreneurs, a consumer sector not venturesome about new products or short of the needed education, union voting (not just advice) in management decisions, and state interventionism.”
Man, how simplistic and comical can you get?
The Dark Side of Charisma
| Peter Klein |
Entrepreneurship has been described as charismatic leadership or charistmatic authority. But what exactly is charisma?
The WSJ’s Saturday edition reviews Philip Rieff’s posthumously published Charisma: The Gift of Grace, and How It Has Been Taken Away from Us. Rieff, the distinguished cultural sociologist who taught at Brandeis, Berkeley, Harvard, and Penn, began the book in the late 1960s but went on to other projects, completing it just before his death earlier this year. Reviewer Adam Wolfson describes the book as a jeremiad against popular culture, much like Allan Bloom’s Closing of the American Mind. (more…)
Nerd Alert, Part II
| Peter Klein |
Though we often tease our colleagues in the MathEcon tribe, we hope to make O&M a comfortable place for them. Henceforth, we proudly announce, for you math geeks out there, that our server now knows how to process 
While management working papers are almost always written in Word,
or the definition of Bayesian Nash equilibrium,
then O&M is the blog for you!
The Vertical Dis-Integration of Organized Crime
| Peter Klein |
It’s said to be happening in manufacturing, services, and even higher education; why not organized crime? The Financial Times reports that Japanese gangs are relying increasingly on part-time mobsters. According to Japanese police statistics part-timers now make up 51 percent of total gang membership, up from 33 percent in 1991.
One explanation: the Dilbert-style bureaucracy of the established gangs:
Part-time gang members may also be opting out of the hierarchical world that full-time membership entails. Onerous duties include making cash payments to the oyabun, a young hoodlum’s father-figure boss, and keeping long hours, for instance by preserving a henchman’s precious parking space.
Similarly, in regular business, many young Japanese prefer bouncing between part-time jobs to joining a rule-bound company. Like yakuza gangs, Japanese businesses tend to be hierarchical, with strict dress codes, mind-numbing duties and compulsory overtime.
Would these mob Bosses pass Bob Sutton’s test?
Responding to such pressures, the gangs have learned to outsource (presumably “non-core”) tasks to contract workers. Says one Japanese lawyer familiar with underworld issues: “These guys are the best entrepreneurs in the country, certainly the most responsive to change in business conditions.” (HT: PSD Blog)
Call for Papers: Law and Economic Development
| Peter Klein |
The Global Economic History Network is sponsoring a conference at Utrecht University, 21-23 September 2007, on “Law and Economic Development: a Historical Perspective. Abstracts are due 31 March 2007. From the call for papers:
This conference aims to bring a truly global and multi-disciplinaryperspective to the relationship between law and long-term economic growth. We focus on formal legal rules, procedures and institutions in the wide context of legal traditions and their relationship with contract enforcement and property rights. We aim to broaden the scope of our discussion with a global perspective that includes both Western and important non-Western legal traditions such as the Chinese, Islamic or Hindu that have been largely neglected in the”legal origin” debate.
The legal origin debate, if you’re not familiar with this literature, began with the influential paper by La Porta, Lopez-de-Silanes, Shleifer, and Vishny, “Law and Finance” (JPE, 1998). LLSV argued for a strong correlation between a nation’s financial-market development and the origin of its legal system. (English common-law countries fare the best, while countries with a legal system based on — you guessed it — French civil law are the worst.) This paper, and a series of follow-up studies by the same authors, established a new strand of literature on economic development using large, cross-country panel datasets containing various measures of legal, poltical, social, and cultural institutions.
Critics argue that financial-market development and overall economic performance are driven not by legal origin but by politics, culture, and geography, among other factors, and that LLSV oversimplify the causal relationships between institutions and growth. (The chapter by Thorsten Beck and Ross Levine in the Handbook of New Institutional Economics — which also contains a very nice chapter on the make-or-buy decision, by the way — provides a useful overview and critique of this literature.)
Life Among the Econ
| Peter Klein |
A colleague and I were just discussing Axel Leijonhufvud’s delightful ethnographic satire, “Life Among the Econ” (Western Economic Journal 11, no. 3, September 1973: 327-37). (Can’t find it on JSTOR; here is a scanned PDF version with a few minor errors.) Though slightly dated, Leijonhufvud’s essay remains a treasure trove of wit and wisdom on economics and economists. Here are a few passages dealing with issues recently debated at O&M: (more…)
The Weatherhead School’s Tumor
| Peter Klein |
Case Western Reserve University’s Peter B. Lewis Building, the Frank Gehry-designed home of the Weatherhead School of Management, recently made critic James Howard Kunstler’s Eyesore of the Month list. “If your dog had a tumor like this,” writes Kunstler, “the vets would just shake their heads and put him to sleep.” (HT: Max Goss)
New Entrepreneurship Society and Journal
| Peter Klein |
Here is the webpage for the Southern Entrepreneurship Journal, to be published by the newly formed Southern Academy of Entrepreneurship. From the mission statement:
Our dream is to offer an eclectic, cross-disciplinary entrepreneurship research experience. We do not care what your field may be. Our only concerns are (a) do you have something interesting to say about the theory or practice of entrepreneurship, and (b) do you have any evidence that supports you? We also want to be open minded about evidence. The Journal will be open to a range of evidence, including case studies, qualitative research broadly defined, as well as statistical analyses.
Thanks to Ed Lopez for the pointer.
Intellectual Property: Who Needs It?
| Peter Klein |
Michele Boldrin and David K. Levine provide a succinct overview of the economic argument against strong IP in the January 2007 issue of the Freeman. In “Open-Source Software: Who Needs Intellectual Property?” Boldrin and Levine argue that open-source developers benefit primarily not from writing code, but from selling complementary services such as support, and that these incentives, not altruism, are responsible for the substantial innovations coming out of the open-source community. They conclude:
[T]he market for software is not unique. Innovation and competition unprotected by patent and copyright have gone hand in hand in other industries, from financial securities to fashion. The message of open-source software is a message for all industries: IP not needed for innovation here.
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