Browsing by Author "Garcia, Filomena"
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- Endogenous heterogeneity in strategic models: symmetry-breaking via strategic substitutes and nonconcavitiesPublication . Amir, Rabah; Garcia, Filomena; Knauff, MalgorzataThis paper is an attempt to develop a unified approach to endogenous heterogeneity by constructing general class of two-player symmetric games that always possess only asymmetric pure-strategy Nash equilibria. These classes of games are characterized in some abstract sense by two general properties: payoff non-concavities and some form of strategic substitutability. We provide a detailed discussion of the relationship of this work with Matsuyama’s symmetry breaking framework and with business strategy literature. Our framework generalizes a number of models dealing with two-stage games, with long term investment decisions in the first stage and product market competition in the second stage. We present the main examples that motivate this study to illustrate the generality of our approach
- On Gale and Shapley 'College admissions and stability of marriage'Publication . Gabszewic, Jean J.; Garcia, Filomena; Pais, Joana; Resende, JoanaIn this note, we start to claim that established marriages can be heavily destabilized when the population of existing couples is enriched by the arrival of new candidates to marriage. Afterwards, we discuss briefly how stability concepts can be extended to account for entry and exit phenomena affecting the composition of the marriage market..
- R&D as a prisoner’s dilemma and R&D - avoiding cartelsPublication . Rabah, Amir; Garcia, Filomena; Ermes, Christine H.; Pais, JoanaDuopoly firms engaged in a standard two-stage game of R&D and Cournot competition are caught in a prisoner’s dilemma for their R&D decisions whenever spillover effects are low. This effect works to the advantage of consumers and society. This result provides an interesting perspective on the well-known wedge between private and social incentives for R&D. The prisoner’s dilemma is the key effect behind this wedge under low spillovers. The latter take over when sufficiently high, as is widely recognized. This mutually exclusive nature of the prisoner’s dilemma and significant spillovers also serves to explain the incentives to form R&D cartels.
- Study on the efficiency and effectiveness of public spending on tertiary education Third report (second draft)Publication . St. Aubyn, Miguel; Pina, Álvaro; Garcia, Filomena; Pais, JoanaPublic tertiary education systems in the EU Member States are studied by comparing used resources with education and research outputs and outcomes. Efficiency in public tertiary education systems across EU countries plus Japan and the US is assessed with semi-parametric methods and stochastic frontier analysis. A core group of efficient countries is identified. A good quality secondary system, output-based funding rules, institutions’ independent evaluation, and staff policy autonomy are positively related to efficiency. Moreover, evidence is provided that public spending on tertiary education is more effective in what concerns labour productivity growth and employability when it is coupled with efficiency. .
- The effects of official and unofficial information on tax compliancePublication . Garcia, Filomena; Opromolla, Luca David; Vezzulli, Andrea; Marques, RafaelThe administration of tax policy has shifted its focus from enforcement to complementary instruments aimed at creating a social norm of tax compliance. In this paper we provide an analysis of the effects of the dissemination of information regarding the past degree of tax evasion at the social level on the current individual tax compliance behavior. We build an experiment where, for given levels of audit probabilities, fines and tax rates, subjects have to declare their income after receiving either a communication of the offcial average tax evasion rate or a private message from a group of randomly matched peers about their tax behavior. We use the experimental data to estimate a dynamic econometric model of tax evasion. The econometric model extends the Allingham-Sandmo-Yitzhaki tax evasion model to include self-consistency and endogenous social interactions among taxpayers. We find four main results. First, tax compliance is very persistent. Second, the higher the offcial past tax evasion rate the higher the degree of persistence: evaders are more likely to evade again, and compliant individuals are more likely to comply again. Third, when all peers communicate to have evaded (complied) in the past, both evaders and compliant individuals are more likely to evade (comply). Fourth, while both treatments, and especially the unoffcial information treatment, are associated, in the context of our experiment, with a signicantly larger growth in evasion intensity, the aggregate effect depends on the characteristics of the population. In countries with inherently low levels of tax evasion, offcial information can have beneficial effects by consolidating the behavior of compliant individuals. However, in countries with inherently high levels of tax evasion, offcial information can have detrimental effects by intensifying the behavior of evaders. In both cases, the impact of offcial information is magnified in the presence of strong peer effects.
- The effects of official and unofficial information on tax compliancePublication . Garcia, Filomena; Opromolla, Luca David; Vezzulli, Andrea; Marques, RafaelThe administration of tax policy has shifted its focus from enforcement to complementary instruments aimed at creating a social norm of tax compliance. In this paper we provide an analysis of the effects of the dissemination of information regarding the past degree of tax evasion at the social level on the current individual tax compliance behavior. We build an experiment where, for given levels of audit probabilities, fines and tax rates, subjects have to declare their income after receiving either a communication of the official average tax evasion rate or a private message from a group of randomly matched peers about their tax behavior. We use the experimental data to estimate a dynamic econometric model of tax evasion. The econometric model extends the Allingham – Sandmo - Yitzhaki tax evasion model to include self-consistency and endogenous social interactions among taxpayers. We find four main results. First, tax compliance is very persistent. Second, the higher the official past tax evasion rate the higher the degree of persistence: evaders are more likely to evade again, and compliant individuals are more likely to comply again. Third, when all peers communicate to have evaded (complied) in the past, both evaders and compliant individuals are more likely to evade (comply). Fourth, while both treatments,and especially the unofficial information treatment, are associated, in the context of our experiment, with a significantly larger growth in evasion intensity, the aggregate effect.
- The effects of official and unofficial information on tax compliancePublication . Garcia, Filomena; Opromolla, Luca David; Vezzulli, Andrea; Marques, RafaelThe administration of tax policy has shifted its focus from enforcement to complementary instruments aimed at creating a social norm of tax compliance. In this paper we provide an analysis of the effects of the dissemination of information regarding the past degree of tax evasion at the social level on the current individual tax compliance behavior. We build an experiment where, for given levels of audit probabilities, fines and tax rates, subjects have to declare their income after receiving either a communication of the official average tax evasion rate or a private message from a group of randomly matched peers about their tax behavior. We use the experimental data to estimate a dynamic econometric model of tax evasion. The econometric model extends the Allingham – Sandmo - Yitzhaki tax evasion model to include self-consistency and endogenous social interactions among taxpayers. We find four main results. First, tax compliance is very persistent. Second, the higher the official past tax evasion rate the higher the degree of persistence: evaders are more likely to evade again, and compliant individuals are more likely to comply again. Third, when all peers communicate to have evaded (complied) in the past, both evaders and compliant individuals are more likely to evade (comply). Fourth, while both treatments,and especially the unofficial information treatment, are associated, in the context of our experiment, with a significantly larger growth in evasion intensity, the aggregate effect
- The effects of official and unofficial information on tax compliancePublication . Garcia, Filomena; Opromolla, Luca David; Vezzulli, Andrea; Marques, RafaelThe administration of tax policy has shifted its focus from enforcement to complementary instruments aimed at creating a social norm of tax compliance. In this paper we provide an analysis of the effects of the dissemination of information regarding the past degree of tax evasion at the social level on the current individual tax compliance behavior. We build an experiment where, for given levels of audit probabilities, fines and tax rates, subjects have to declare their income after receiving either a communication of the official average tax evasion rate or a private message from a group of randomly matched peers about their tax behavior. We use the experimental data to estimate a dynamic econometric model of tax evasion. The econometric model extends the Allingham Sandmo Yitzhaki tax evasion model to include self-consistency and endogenous social interactions among taxpayers. We _find four main results. First, tax compliance is very persistent. Second, the higher the offcial past tax evasion rate the higher the degree of persistence: evaders are more likely to evade again, and compliant individuals are more likely to comply again. Third, when all peers communicate to have evaded (complied) in the past, both evaders and compliant individuals are more likely to evade (comply). Fourth, while both treatments, and especially the unofficial information treatment, are associated, in the context of our experiment, with a significantly larger growth in evasion intensity, the aggregate effect depends on the characteristics of the population. In countries with inherently low levels of tax evasion, official information can have beneficial effects by consolidating the behavior of compliant individuals. However, in countries with inherently high levels of tax evasion, official information can have detrimental effects by intensifying the behavior of evaders. In both cases, the impact of official information is magnified in the presence of strong peer effects.
- A theory of government bailouts in a heterogeneous banking systemPublication . Garcia, Filomena; Panetti, EttoreHow should a government bailout a heterogeneous banking system subject to systemic self-fulfilling runs? To answer this question, we develop a theory of banking with multiple groups of depositors of different size and wealth, where systemic self-fulfilling runs emerge as a consequence of a global game, and a government uses a public good to bailout banks through liquidity injections. In this framework, we characterize the endogenous probability of a systemic self-fulfilling run, and the conditions under which a full bailout cannot be part of the equilibrium. The optimal bailout strategy should target those banks whose bailout has the largest marginal impact on the probability of a systemic self-fulfilling run, and whose depositors are at the lower end of the wealth distribution.