Toulouse School of Economics

Society's demands for individual and corporate social responsibility as alternative responses to market and distributive failures are becoming increasingly prominent. We draw on recent developments in the psychology and economics of prosocial behaviour to shed light on this trend and the underlying mix of motivations. We then link individual concerns to corporate social responsibility, contrasting three possible understandings of the term: firms' adoption of a more long‐term perspective, the delegated exercise of prosocial behaviour on behalf of stakeholders, and insider‐initiated corporate philanthropy. We discuss the benefits, costs and limits of socially responsible behaviour as a means to further societal goals.

oTree is an open-source and online software for implementing interactive experiments in the laboratory, online, the field or combinations thereof. oTree does not require installation of software on subjects’ devices; it can run on any device that has a web browser, be that a desktop computer, a tablet or a smartphone. Deployment can be internet-based without a shared local network, or local-network-based even without internet access. For coding, Python is used, a popular, open-source programming language. www.oTree.org provides the source code, a library of standard game templates and demo games which can be played by anyone.

Executive Overview The conventional wisdom concerning environmental protection is that it comes at an additional cost imposed on firms, which may erode their global competitiveness. However, during the last decade, this paradigm has been challenged by a number of analysts (e.g., Porter & van der Linde, 1995), who have argued basically that improving a company' environmental performance can lead to better economic or financial performance, and not necessarily to an increase in cost. The aim of this paper is to review empirical evidence of improvement in both environmental and economic or financial performance. We systematically analyze the mechanism involved in each of the following channels of potential revenue increase or cost reduction owing to better environmental practices: (a) better access to certain markets; (b) differentiating products; (c) selling pollution-control technology; (d) risk management and relations with external stakeholders; (e) cost of material, energy, and services; (f) cost of capital; and (g) cost of labor. In each case, we try to identify the circumstances most likely to lead to a “win-win” situation, i.e., better environmental and financial performance. We also provide a diagnostic of the type of firms most likely to reap such benefits.

Some twenty years ago, Harvard Business School economist and strategy professor Michael Porter challenged conventional wisdom about the impact of environmental regulation on business by declaring that well-designed regulation could actually enhance competitiveness. The traditional view of environmental regulation held by virtually all economists until that time was that requiring firms to reduce an externality like pollution necessarily restricted their options and thus by definition reduced their profits. After all, if profitable opportunities existed to reduce pollution, profit-maximizing firms would already be taking advantage of them. Over the past twenty years, much has been written about what has since become known simply as the Porter Hypothesis. Yet even today, we continue to find conflicting evidence concerning the Porter Hypothesis, alternative theories that might explain it, and oftentimes a misunderstanding of what the Porter Hypothesis does and does not say. This article examines the key theoretical foundations and empirical evidence concerning the Porter Hypothesis, discusses its implications for the design of environmental regulations, and outlines directions for future research on the relationship between environmental regulation, innovation, and competitiveness.

Autonomous vehicles (AVs) should reduce traffic accidents, but they will sometimes have to choose between two evils, such as running over pedestrians or sacrificing themselves and their passenger to save the pedestrians. Defining the algorithms that will help AVs make these moral decisions is a formidable challenge. We found that participants in six Amazon Mechanical Turk studies approved of utilitarian AVs (that is, AVs that sacrifice their passengers for the greater good) and would like others to buy them, but they would themselves prefer to ride in AVs that protect their passengers at all costs. The study participants disapprove of enforcing utilitarian regulations for AVs and would be less willing to buy such an AV. Accordingly, regulating for utilitarian algorithms may paradoxically increase casualties by postponing the adoption of a safer technology.

The article shows that time-consistent, imperfectly targeted support to distressed institutions makes private leverage choices strategic complements. When everyone engages in maturity mismatch, authorities have little choice but intervening, creating both current and deferred (sowing the seeds of the next crisis) social costs. In turn, it is profitable to adopt a risky balance sheet. These insights have important consequences, from banks choosing to correlate their risk exposures to the need for macro-prudential supervision. (JEL D82, E52, E58, G01, G21, G28)

Hundreds of genetic variants have been associated with Body Mass Index (BMI) through genome-wide association studies (GWAS) using observational cohorts. However, the genetic contribution to efficient weight loss in response to dietary intervention remains unknown. We perform a GWAS in two large low-caloric diet intervention cohorts of obese participants. Two loci close to NKX6.3/MIR486 and RBSG4 are identified in the Canadian discovery cohort (n = 1166) and replicated in the DiOGenes cohort (n = 789). Modulation of HGTX (NKX6.3 ortholog) levels in Drosophila melanogaster leads to significantly altered triglyceride levels. Additional tissue-specific experiments demonstrate an action through the oenocytes, fly hepatocyte-like cells that regulate lipid metabolism. Our results identify genetic variants associated with the efficacy of weight loss in obese subjects and identify a role for NKX6.3 in lipid metabolism, and thereby possibly weight control.

Jaffe and Palmer (1997) present three distinct variants of the so‐called Porter Hypothesis. The “weak” version of the hypothesis posits that environmental regulation will stimulate environmental innovations. The “narrow” version of the hypothesis asserts that flexible environmental policy regimes give firms greater incentive to innovate than prescriptive regulations, such as technology‐based standards. Finally, the “strong” version posits that properly designed regulation may induce cost‐saving innovation that more than compensates for the cost of compliance. In this paper, we test the significance of these different variants of the Porter Hypothesis using data on the four main elements of the hypothesised causality chain (environmental policy, research and development, environmental performance, and commercial performance). The analysis draws upon a database that includes observations from approximately 4,200 facilities in seven OECD countries. In general, we find strong support for the “weak” version, qualified support for the “narrow” version, but no support for the “strong” version.

We show that the joint behavior of stock prices and TFP favors a view of business cycles driven largely by a shock that does not affect productivity in the short run – and therefore does not look like a standard technology shock – but affects productivity with substantial delay – and therefore does not look like a monetary shock. One structural interpretation for this shock is that it represents news about future technological opportunities which is first captured in stock prices. This shock causes a boom in consumption, investment, and hours worked that precedes productivity growth by a few years, and explains about 50 percent of business cycle fluctuations.

In this paper, we provide a perspective into the main ideas and findings emerging from the growing literature on motivated beliefs and reasoning. This perspective emphasizes that beliefs often fulfill important psychological and functional needs of the individual. Economically relevant examples include confidence in ones' abilities, moral self-esteem, hope and anxiety reduction, social identity, political ideology, and religious faith. People thus hold certain beliefs in part because they attach value to them, as a result of some (usually implicit) tradeoff between accuracy and desirability. In a sense, we propose to treat beliefs as regular economic goods and assets—which people consume, invest in, reap returns from, and produce, using the informational inputs they receive or have access to. Such beliefs will be resistant to many forms of evidence, with individuals displaying non-Bayesian behaviors such as not wanting to know, wishful thinking, and reality denial.

We analyze platforms in two-sided markets with network externalities, using the specific context of a payment card association. We study the cooperative determination of the interchange fee by member banks. The interchange fee is the ``access charge'' paid by the merchants' banks (the acquirers) to cardholders' banks (the issuers). We develop a framework in which banks and merchants may have market power and consumers and merchants decide rationally on whether to buy or accept a payment card. After drawing the welfare implications of a cooperative determination of the interchange fee, we describe in detail the factors affecting merchant resistance, compare cooperative and for-profit business models, and make a first cut in the analysis of system competition.

Height is a highly heritable, classic polygenic trait with approximately 700 common associated variants identified through genome-wide association studies so far. Here, we report 83 height-associated coding variants with lower minor-allele frequencies (in the range of 0.1–4.8%) and effects of up to 2 centimetres per allele (such as those in IHH, STC2, AR and CRISPLD2), greater than ten times the average effect of common variants. In functional follow-up studies, rare height-increasing alleles of STC2 (giving an increase of 1–2 centimetres per allele) compromised proteolytic inhibition of PAPP-A and increased cleavage of IGFBP-4 in vitro, resulting in higher bioavailability of insulin-like growth factors. These 83 height-associated variants overlap genes that are mutated in monogenic growth disorders and highlight new biological candidates (such as ADAMTS3, IL11RA and NOX4) and pathways (such as proteoglycan and glycosaminoglycan synthesis) involved in growth. Our results demonstrate that sufficiently large sample sizes can uncover rare and low-frequency variants of moderate-to-large effect associated with polygenic human phenotypes, and that these variants implicate relevant genes and pathways. Data from over 700,000 individuals reveal the identity of 83 sequence variants that affect human height, implicating new candidate genes and pathways as being involved in growth. As a highly heritable polygenic trait, human height has provided a model for the genetic analysis of complex traits. So far about 700 common genetic variants have been linked to height through genome-wide association studies, but the role of low-frequency and rare variants has not been systematically explored. Guillaume Lettre, Joel Hirschhorn and colleagues in the GIANT Consortium now report their analysis of coding regions in the genomes of 711,418 individuals. They identify 120 loci newly associated with height, including 32 rare and 51 low-frequency coding variants. They highlight 83 candidate genes with low-frequency height-associated variants and implicate biological pathways with known roles in growth disorders as well as new candidates. Their analyses provide insights into the genomic architecture of human height.

Increasingly, algorithms are supplanting human decision-makers in pricing goods and services. To analyze the possible consequences, we study experimentally the behavior of algorithms powered by Artificial Intelligence (Q-learning) in a workhorse oligopoly model of repeated price competition. We find that the algorithms consistently learn to charge supracompetitive prices, without communicating with one another. The high prices are sustained by collusive strategies with a finite phase of punishment followed by a gradual return to cooperation. This finding is robust to asymmetries in cost or demand, changes in the number of players, and various forms of uncertainty. (JEL D21, D43, D83, L12, L13)

National audience

Motivated by empirical evidence I uncover on the dynamics of French firms' exports, I offer a novel theory of trade frictions. Firms export only into markets where they have a contact. They search directly for new trading partners, but also use their existing network of contacts to search remotely for new partners. I characterize the dynamic formation of an international network of exporters in this model. Structurally, I estimate this model on French data and confirm its predictions regarding the distribution of the number of foreign markets accessed by exporters and the geographic distribution of exports. (JEL D85, F11, F14, L24)

This Consensus Statement summarizes recommendations for clinical diagnosis, investigation and management of patients with Silver-Russell syndrome (SRS), an imprinting disorder that causes prenatal and postnatal growth retardation. Considerable overlap exists between the care of individuals born small for gestational age and those with SRS. However, many specific management issues exist and evidence from controlled trials remains limited. SRS is primarily a clinical diagnosis; however, molecular testing enables confirmation of the clinical diagnosis and defines the subtype. A 'normal' result from a molecular test does not exclude the diagnosis of SRS. The management of children with SRS requires an experienced, multidisciplinary approach. Specific issues include growth failure, severe feeding difficulties, gastrointestinal problems, hypoglycaemia, body asymmetry, scoliosis, motor and speech delay and psychosocial challenges. An early emphasis on adequate nutritional status is important, with awareness that rapid postnatal weight gain might lead to subsequent increased risk of metabolic disorders. The benefits of treating patients with SRS with growth hormone include improved body composition, motor development and appetite, reduced risk of hypoglycaemia and increased height. Clinicians should be aware of possible premature adrenarche, fairly early and rapid central puberty and insulin resistance. Treatment with gonadotropin-releasing hormone analogues can delay progression of central puberty and preserve adult height potential. Long-term follow up is essential to determine the natural history and optimal management in adulthood.

With China’s significant role on pollution emissions and related health damage, deep and up-to-date understanding of China’s air pollution policies is of worldwide relevance. Based on scientific evidence for the evolution of air pollution and the institutional background of environmental governance in China, we examine the development of air pollution control policies from the 1980s and onwards. We show that: (1) The early policies, until 2005, were ineffective at reducing emissions; (2) During 2006–2012, new instruments which interact with political incentives were introduced in the 11th Five-Year Plan, and the national goal of reducing total sulfur dioxide (SO2) emissions by 10% was achieved. However, regional compound air pollution problems dominated by fine particulate matter (PM2.5) and ground level ozone (O3) emerged and worsened; (3) After the winter-long PM2.5 episode in eastern China in 2013, air pollution control policies have been experiencing significant changes on multiple fronts. In this work we analyze the different policy changes, the drivers of changes and key factors influencing the effectiveness of policies in these three stages. Lessons derived from the policy evolution have implications for future studies, as well as further reforming the management scheme towards air quality and health risk oriented directions.

In this paper, we investigate the use of interactive effect or linear factor models in regional policy evaluation. We contrast treatment effect estimates obtained using Bai (2009) with those obtained using difference in differences and synthetic controls (Abadie and coauthors). We show that difference in differences are generically biased, and we derive support conditions for synthetic controls. We construct Monte Carlo experiments to compare these estimation methods in small samples. As an empirical illustration, we provide an evaluation of the impact on local unemployment of an enterprise zone policy implemented in France in the 1990s.

The United States and others should consider adopting a different approach to estimating costs and benefits in light of uncertainty.

Continuing its long history of influential scientific publishing, Philosophical Transactions A publishes high quality theme issues on topics of current importance and general interest within the physical, mathematical and engineering sciences, guest-edited by leading authorities and comprising new research, reviews and opinions from prominent researchers.