Research Collaboration
ENTER provides a natural platform for international research collaboration. ENTER nodes have a long tradition of collaborating within the research networks sponsored by the European commission. Current collaborative research includes

Directed Technological Change and Resource Use
The Cost of Contract Renegotiation: Evidence from the Local Public Sector
Who is Rational? Socio-Demographics and Optimizing Behavior
Axiomatic methods in game theory
Global vs. Local Markets

Directed Technological Change and Resource Use
Jean-Pierre Amigues (University of Toulouse), Michel Moreaux (University of Toulouse), and Sjak Smulders (Tilburg Unieversity)

Recently, the classical analysis of the long term management of natural resource has been renewed by its reconsideration in the light of the so-called “new” theories of endogenous growth. In this literature, the technical progress is modelled as a “general” process, that is non dedicated to the improvement of the productivities of specific production factors. The objective of the research project is to examine the consequences of dedicated R&D policies over the use patterns of natural resources, either renewable or non renewable, which raise new issues in the sustainability debate. By dedicated technical progress we mean R&D efforts to improve the productivities of specific factors, especially natural resources, or alternatively to reduce pollution impacts resulting from the use of specific resources (fossil fuels for example). Introducing dedicated technical progress allows for an analysis of the R&D policy issues related to the patterns of use of the natural resources or of specific cumulative pollution issues in a dynamical and general equilibrium context. It allows also for a reconsideration of the classical models of intertemporal resource substitution patterns (in the Herfindhal spirit) by endogenously determining the dynamics of the production costs and the differential rents of different kinds of resources, either exhaustible or renewable. The research project is hence a combination of a theoretical reflection about R&D policies and environmental issues with a sustainability analysis of the growth of economies depending upon the use of frequently exhaustible and polluting natural resources.

The Cost of Contract Renegotiation: Evidence from the Local Public Sector
Philippe Gagnepain (Madrid), Marc Ivaldi (Toulouse), David Martimort (Toulouse)

We construct and estimate a structural principal/agent model of contract renegotiation in the French urban transport sector in a context where operators are privately informed on their innate costs (adverse selection) and can exert cost-reducing managerial effort (moral hazard). This model captures two important features of the industry. First, only two types of contracts are used in practice by local public authorities to regulate the service: cost-plus and fixed-price contracts with positive subsidies. Second, these subsidies increase over time. Such increasing subsidies are consistent with the theoretical hypothesis that principals cannot commit not to renegotiate and contracts are renegotiation-proof. We compare this situation to the hypothetical case with full commitment. The distribution of innate costs of operators is shifted upwards under this hypothetical scenario. The welfare gains of commitment are significant and accrue mostly to operators. Estimates of the weights that local governments give to the operator’s profit in their objective functions and of the social value of the cost-reducing managerial effort are obtained as by-products.

Who is Rational? Socio-Demographics and Optimizing Behavior
Syngjoo Choi (University College London), Shachar Kariv (University of California, Berkeley), and Wieland Müller (Tilburg University).

We implement the graphical representation of simple portfolio choice problems as developed in Choi et al. (2007) in the computer-based CentERpanel, a representative sample of the Dutch population, generating a rich dataset to study behavior under uncertainty at the level of the individual subject. We observe that the consistency in the individual decisions is overall high while there is a significant amount of heterogeneity with respect to the measures of the extent of GARP violations such as Afriat’s CCEI. To understand such heterogeneity, we correlate the experimental measures of GARP violations with observed socio-demographic information. The estimation results show clear evidence that many socio-demographic variables (such as gender, age, education, and income) relate significantly to the variations in the consistency measures.

Axiomatic methods in game theory
Mark Voorneweld (Stockholm School of Economics) with Peter Borm, Henk Norde, Herbert Hamers (Tilburg).

The goal of axiomatic approaches to game theory is to understand the foundations of different solution concepts or modes of behavior by characterizing them in terms of a number of --- hopefully intuitively appealing --- properties or axioms. Recent papers on this topic, in which I cooperated with colleagues from Tilburg University, provide axiomatizations of cautious behavior, minimal curb sets, and compensation schemes for museum passes.

Global vs. Local Markets
Georg Gebhardt (University of Ulm), Patrick Legros (ECARES, Université Libre de Bruxelles) and Konrad Stahl (University of Mannheim)

Within theoretical models, Patrick Legros and Konrad Stahl have investigated whether the evolution of global markets (such as internet markets) is complementary or substitutive to that of local markets. They now bring these theories to the data. With Georg Gebhardt, they develop a data set from different German sources that allows for testing the predictions generated from the theoretical models.