We present a dynamic extension of the classic static model of Bertrand price competition that allows competing duopolists to undertake cost-reducing investments in an attempt to “leapfrog” their rival to attain low-cost leadership – at least temporarily. We show that leapfrogging occurs in...

The quality of political candidates often depends on the current state of the world, for example because their personal characteristics are more valuable in some situations than in others. We explore the implications of state-dependent candidate quality in a model of electoral competition where...

Across 800 regions of the World, this research shows that people are more religious when living in regions that are more frequently razed by natural disasters. This is in line with psychological theory stressing that religious people tend to cope with adverse life events by seeking comfort in...

The Forward Search is an iterative algorithm concerned with detection of outliers and other unsuspected structures in data. This approach has been suggested, analysed and applied for regression models in the monograph Atkinson and Riani (2000). An asymptotic analysis of the Forward Search is...

We study a monopoly insurance model with endogenous information acquisition. Through a continuous effort choice, consumers can determine the precision of a privately observed signal that is informative about their accident risk. The equilibrium effort is, depending on parameter values, either...

It is well established that the shocks driving many key macro-economic and financial variables display time-varying volatility. In this paper we consider estimation and hypothesis testing on the coefficients of the co-integrating relations and the adjustment coefficients in vector...

Recent experimental studies suggest that risk aversion is negatively related to cognitive ability. In this paper we report evidence that this relation might be spurious.We recruit a large subject pool drawn from the general Danish population for our experiment. By presenting subjects with choice...

This article examines how the birth and the development of regional systems of innovation are connected with economic selection and points to implications for regional-level policies. The research questions are explored using an evolutionary model, which emphasises geographical spaces and...

What explains the persistence of unemployment? The literature on hysteresis, which is based on unit root testing in autoregressive models, consists of a vast number of univariate studies, i.e. that analyze unemployment series in isolation, but few multivariate analyses that focus on the sources...

We show that societies with a history of irrigation-based agriculture have been less likely to adopt democracy than societies with a history of rain fed agriculture. Rather than actual irrigation, the empirical analysis is based on how much irrigation potentially can increase yields. Irrigation...