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Experiment evidence to date indicates that subjects follow a trigger strategy in finitely repeated games: they punish bad contractual performance by reducing future offers and the threat of punishment disciplines opportunistic breach. This behavior contradicts standard game theory predictions. We conduct a repeated prisoner's dilemma (PD) game experiment with university students in Ghana and the UK. The experiment is framed as an employment contract. Each period the employer makes a irrevocable wage offer to the worker who then chooses an effort level. UK subjects use a trigger strategy to discipline workers, in line with previous experiments: wage offers reward high effort and punish low effort in the past; this induces workers to choose high effort; and gains from trade are shared between workers and employers. We find no such evidence with Ghana subjects: employers seldom reduce wage offers after low effort and, if they do, workers respond by lowering effort; employer often reduce wages after high effort; and employers earn a zero payoff on average. Introducing competition or reputation does not significantly improve workers’ effort. We conclude that the use of trigger strategies in repeated labor transactions is not a universally shared heuristic.

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Journal of Economic Behavior & Organization
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Elwyn Davies
Marcel Fafchamps
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Pages 714-737
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This essay examines why England experienced a civil war every fifty years from the Norman Conquest up until the Glorious Revolution of 1688–1689, and was completely stable after that point. The reasons had to do with, first, the slow accumulation of law and respect for the law that had occurred by the seventeenth century, and second, with the emergence of a strong English state and sense of national identity by the end of the Tudor period. This suggests that normative factors are very important in creating stable settlements. Rational choice explanations for such outcomes assert that stalemated conflicts will lead parties to accept second- or third-best outcomes, but English history, as well as more recent experiences, suggests that stability requires normative change as well. 

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Francis Fukuyama
Graduate School of Business 655 Knight Way Stanford, CA 94305
(650) 721 1298
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Associate Professor of Political Economy, GSB
Associate Professor, by courtesy, of Economics and of Political Science
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Along with being a Senior Fellow at the Freeman Spogli Institute for International Studies, Saumitra Jha is an associate professor of political economy at the Stanford Graduate School of Business, and convenes the Stanford Conflict and Polarization Lab. 

Jha’s research has been published in leading journals in economics and political science, including Econometrica, the Quarterly Journal of Economics, the American Political Science Review and the Journal of Development Economics, and he serves on a number of editorial boards. His research on ethnic tolerance has been recognized with the Michael Wallerstein Award for best published article in Political Economy from the American Political Science Association in 2014 and his co-authored research on heroes with the Oliver Williamson Award for best paper by the Society for Institutional and Organizational Economics in 2020. Jha was honored to receive the Teacher of the Year Award, voted by the students of the Stanford MSx Program in 2020.

Saum holds a BA from Williams College, master’s degrees in economics and mathematics from the University of Cambridge, and a PhD in economics from Stanford University. Prior to rejoining Stanford as a faculty member, he was an Academy Scholar at Harvard University. He has been a fellow of the Niehaus Center for Globalization and Governance and the Center for the Study of Democratic Politics at Princeton University, and at the Center for Advanced Study in the Behavioral Sciences at Stanford. Jha has consulted on economic and political risk issues for the United Nations/WTO, the World Bank, government agencies, and for private firms.

 

Senior Fellow at the Freeman Spogli Institute for International Studies
Dan C. Chung Faculty Scholar at the Freeman Spogli Institute for International Studies
Senior Fellow at the Stanford Institute for Economic Policy Research
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"In Silicon Valley, where I live, the word “disruption” has an overwhelmingly positive valence: Thousands of smart, young people arrive here every year hoping to disrupt established ways of doing business — and become very rich in the process. For almost everyone else, however, disruption is a bad thing," writes CDDRL Mosbacher Director, Francis Fukuyama for New York Times. Read the article here.

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Appeared in Stanford Report, May 29, 2014

By Clifton B. Parker

The electoral eruption of anti-European Union populism is a reflection of structural flaws in that body but does not represent a fatal political blow, according to Stanford scholars.

In the May 25 elections for the European Parliament, anti-immigration parties won 140 of the 751 seats, well short of control, but enough to rattle supporters of the EU, which has 28 member nations. In Britain, Denmark, France and Greece, the political fringe vote totals stunned the political establishments.

Stanford political scientist Francis Fukuyama said the rise of extremism and anti-elitism is not surprising in the wake of the 2008 economic downturn and subsequent high levels of unemployment throughout Europe. In one sense, the EU elites have themselves to blame, he said.

"The elites who designed the EU and the eurozone failed in a major way," he said. "There was a structural flaw in the design of the euro (monetary union absent fiscal union, and the method of disciplining countries once in the zone)," said Fukuyama, the Olivier Nomellini Senior Fellow at Stanford's Freeman Spogli Institute for International Studies and the Center for Democracy, Development and the Rule of Law, and Research Afflilate at The Europe Center.

Some have argued that the European Union should adopt a form of fiscal union because without one, decisions about taxes and spending remain at the national level.

As Fukuyama points out, this becomes a problem, as in the case of a debt-ridden Greece, which he believes should not have qualified for EU membership in the first place. In fact, he said, it would have been better for Greece itself to leave the euro at the outset of the 2008 crisis.

Still, Fukuyama said the big picture behind the recent election is clear – it was a confluence of issues and timing.

"It is a bit like an off-year election in the U.S., where activists are more likely to vote than ordinary citizens," he said.

Fukuyama believes the EU will survive this electoral crisis. "I think the EU will be resilient. It has weathered other rejections in the past. The costs of really exiting the EU are too high in the end, and the elites will adjust, having been given this message," he said.

Meanwhile, the populist parties in the different countries are not unified or intent on building coalitions with each other.

"Other than being anti-EU, most of them have little in common," Fukuyama said. "They differ with regard to specific positions on immigration, economic policy, and they respond to different social bases."

Ongoing anger

Dan Edelstein, a professor of French, said the largest factor for success by extremist candidates was "ongoing anger toward the austerity policy imposed by the EU," primarily by Germany.

Edelstein estimates that a large majority of French voters are still generally supportive of the EU. For the time being, the anti-EU faction does not have a majority, though they now have much more representation in the European Parliament.

Edelstein noted existing strains among the anti-EU parties – for example, the UK Independence Party in Britain has stated that it would not form an alliance with the National Front party in France.

Immigration remains a thorny issue for some Europeans, Edelstein said.

"'Immigration' in most European political debates, tends to be a synonym for 'Islam.' While there are some countries, such as Britain, that are primarily worried about the economic costs of immigration, in most continental European countries, the fears are cultural," he said.

As Edelstein put it, Muslims are perceived as a "demographic threat" to white or Christian Europe. However, he is optimistic in the long run.

"It seems a little early to be writing the obituary of the EU. Should economic conditions improve over the next few years, as they are predicted to, we will likely see this high-water mark of populist anger recede," said Edelstein.

Cécile Alduy, an associate professor of French, writes in the May 28 issue of The Nation about how the ultra-right-wing National Front came in first place in France's election.

"This outcome was also the logical conclusion of a string of political betrayals, scandals and mismanagement that were only compounded by the persistent economic and social morass that has plunged France into perpetual gloom," she wrote.

Historian J.P. Daughton said that like elsewhere in the world, immigration often becomes a contentious issue in Europe in times of economic difficulties.  

"High unemployment and painful austerity measures in many parts of Europe have led extremist parties to blame immigrants for taking jobs and sapping already limited social programs," he said.

Anti-immigration rhetoric plays particularly well in EU elections, Daughton said. "Extremist parties portray European integration as a threat not only to national sovereignty, but also to national identity.

Edelstein, Alduy and Daughton are all Faculty Affiliates of The Europe Center.

Wake-up call

Russell A. Berman, a professor of German studies and comparative literature, said many Europeans perceive the EU as "somehow impenetrable, far from the civic politics of the nation states."

As a result, people resent regulations issued by an "intangible bureaucracy," and have come to believe that the European Parliament has not grappled with major issues such as mustering a coherent foreign policy voice, he said.

"The EU can be great on details but pretty weak on the big picture," said Berman, who is the Walter A. Haas Professor in the Humanities, Senior Fellow at the Hoover Institution, and Faculty Affiliate of The Europe Center. "It is this discrepancy that feeds the dissatisfaction."

Yet he points out that the extremist vote surged in only 14 nations of the EU – in the other 14, there was "negligible extremism," as he describes it.

"We're a long way from talking about a fatal blow, but the vote is indeed a wake-up call to the centrists that they have to make a better case for Europe," Berman said.

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Sadaf H. Minapara
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Prince Moulay Hicham Ben Abdallah, a consulting professor at the Center on Democracy, Development and the Rule of Law is leaving Stanford at the end of this academic year to pursue research in Islamic studies in the United Kingdom.

Ben Abdallah joined CDDRL – a center at the Freeman Spogli Institute for International Studies – as a visiting scholar in 2007, and then became a consulting professor. In 2010, Ben Abdallah worked with CDDRL Director Larry Diamond to launch one of the center’s principal research programs, the Program on Arab Reform and Democracy (ARD). Examining political and democratic reform in the Arab world, ARD is a multidisciplinary program that brings together policy-makers, academics and civil society members to advance policy-relevant research.

“We are very proud to have been able to engage Prince Moulay Hicham and provide him an intellectual home during this past formative period for the Program on Arab Reform and Democracy, and for his own scholarship and reflection. He has had a profound and enduring impact in helping to launch and shape a significant program of research on Arab politics and society at Stanford, and through that in stimulating the broader growth of Arab studies at Stanford,” said Diamond. “In giving so generously of his time, knowledge, and resources to our students, he has also supported and inspired many of them to make what I expect will be a lifelong commitment to study of and engagement with the Arab World. We wish him every success in this next phase of his intellectual journey.”

Written during his residence at CDDRL, Ben Abdallah's memoir entitled Journal d’un Prince Banni or the Diary of a Banished Prince debuted this spring. The autobiography shares his life story as a member of Morocco's royal family. The first cousin of Morocco's King Mohammed VI, Diary of a Banished Prince traces Ben Abdallah's evolution as a political activist against the historical backdrop of Morocco's authoritarian politics.

“At CDDRL, I found an intellectual community that was tightly knit, yet diverse enough to foster the cross-fertilization of ideas," said Ben Abdallah "Its cutting-edge research and classical scholarly debates provided an environment that broadened my expertise and offered opportunities to engage in real introspection.. All these elements were crucial in allowing me to write my book as well as explore new frontiers of research.”

Ben Abdallah has served on the FSI advisory board since November 2009, and has stepped down from that role this year.

Ben Abdallah will continue to stay engaged at Stanford through his role on the board of advisors for the American Middle Eastern Network for Dialogue at Stanford, a student group on campus. He will also stay involved with the ARD program as a principal advisor and supporter of the initiative.

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*Open only to Stanford students.* 

Speaker Bio: 

Zahera Harb is one of the six 2013-2014 FSI-Humanities Center International Visitors and will be in residence at Stanford in May 2014. She is Senior Lecturer in International Journalism at City University London. She received her M.A. and Ph.D. in journalism studies from Cardiff University (United Kingdom). As an expert on Arab media, she has published widely on journalism ethics, conflict and war reporting, political communication and representation of Muslims and Islam in western media. Her recent publications include Narrating Conflict in the Middle East: Discourse, Image and Communications Practices in Lebanon and Palestine (2013) and Channels of Resistance: Liberation Propaganda, Hezbollah and the Media (2011). Dr. Harb also has 11 years of experience as a journalist in Lebanon working for Lebanese and international media organizations.

 

This event is co-sponsored by the Sohaib and Sara Abbasi Program in Islamic Studies, CDDRL Program on Arab Reform and Democracy, the Mediterranean Studies Forum, Stanford Humanities Center, Arab Studies Table, Stanford Language Center. 

Building 30, Room 102

Zahera Harb Senior Lecturer in International Journalism Speaker City University London
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Abstract:

We design an original laboratory experiment to investigate whether redistributive actions hinder the formation of Pareto-improving groups. We test, in an anonymous setting with no feedback, whether people choose to destroy or steal the endowment of others and whether they choose to give to others, when granted the option. We then test whether subjects join a group that increases their endowment but exposes them to redistribution. We conduct the experiment in three very different settings with a priori different norms of pro-social behavior: a university town in the UK, the largest slum in Nairobi, Kenya and rural Uganda. We find a lot of commonality but also large differences between sites. UK subjects behave in a more selfish and strategic way -- giving less, stealing more. Kenyan and Ugandan subjects behave in a more altruistic and less strategic manner. However, pro-social norms are not always predictive of joining behavior. African subjects are less likely to join a group when destruction or stealing is permitted. It is as if they are less trusting even though they are more trustworthy. These findings contradict the view that African underdevelopment is due to a failure of generalized morality. 

 

Speaker Bio:

Marcel Fafchamps is senior fellow at the Freeman Spogli Institute for International Studies and member of the Center on Democracy, Development and the Rule of Law. Before joining FSI, he served as Professor of Development Economics at Oxford University and as Deputy Director of the Center for the Study of African Economies. Before that he taught at Stanford University. He also worked for the International Labour Organization in Africa. His research focuses on market institutions and social networks, writ large. Fafchamps holds a PhD from UC Berkeley and degrees in Law and in Economics from the Catholic University of Louvain.

 

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Satre Family Senior Fellow at the Freeman Spogli Institute for International Studies
Professor, by courtesy, of Economics
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Marcel Fafchamps is the Satre Family senior fellow at the Freeman Spogli Institute for International Studies (FSI) and a member of the Center on Democracy, Development and the Rule of Law. Fafchamps is a professor (by courtesy) for the Department of Economics at Stanford University. His research interest includes economic development, market institutions, social networks, and behavioral economics -- with a special focus on Africa and South Asia.

Prior to joining FSI, from 1999-2013, Fafchamps served as professor of development economics for the Department of Economics at Oxford University. He also served as deputy director and then co-director of the Center for the Study of African Economies. From 1989 to 1996 Fafchamps was an assistant professor with the Food Research Institute at Stanford University. Following the closure of the Institute, he taught for two years for the Department of Economics. For the 1998-1999 academic year, Fafchamps was on sabbatical leave at the research department of the World Bank. Before pursuing his PhD in 1986, Fafchamps was based in Addis Ababa, Ethiopia for five years during his employment with the International Labour Organization, a United Nations agency overlooking issues of employment, income distribution, and vocational training in Africa.

He has authored two books, Market Institutions in Sub-Saharan Africa: Theory and Evidence, published by MIT Press in 2004 and Rural Poverty, Risk, and Development, published in 2003 by Elgar Press and has published numerous articles in academic journals.

Fafchamps serves as the editor-in-chief of Economic Development and Cultural Change. Previously he had served as chief editor of the Journal of African Economies from 2000 until 2013, associate editor for the Economic Journal, the Journal of Development Economics, Economic Development and Cultural Change, the American Journal of Agricultural Economics, and the Revue d'Economie du Développement.

He is a research associate of the National Bureau of Economic Research, an affiliated professor with J-PAL, a senior fellow with the Bureau for Research and Economic Analysis of Development, a research fellow with IZA, Germany, and with the Center for Economic and Policy Research, UK, and an affiliate with the University of California’s Center for Effective Global Action.

Fafchamps has degrees in Law and in Economics from the Université Catholique de Louvain. He holds a PhD in Agricultural and Resource Economics from the University of California Berkeley. 

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