Toward a theory of firms' training and development behavior under externality: A game theoretic analysis and experimental evidence.

Persistent Link:
http://hdl.handle.net/10150/185952
Title:
Toward a theory of firms' training and development behavior under externality: A game theoretic analysis and experimental evidence.
Author:
Li, Ya.
Issue Date:
1992
Publisher:
The University of Arizona.
Rights:
Copyright © is held by the author. Digital access to this material is made possible by the University Libraries, University of Arizona. Further transmission, reproduction or presentation (such as public display or performance) of protected items is prohibited except with permission of the author.
Abstract:
This dissertation presents a new approach to one of the classic problems in economics: firms' training and development (T&D hereafter) behavior under externality. Its objective is threefold. The first objective is to identify the conditions under which T&D externalities are present in the labor market; the second is to examine firms' strategic T&D behavior under T&D externality; the third is to provide a possible institutional remedy for the less than socially optimal level of firms' T&D investments that T&D externalities generate. The most important findings of this research are that the labor market in general cannot fully internalize T&D externalities in a world of imperfect information. In the presence of T&D externalities, firms' training investments are socially sub-optimal. In a dynamic game environment, one firm's T&D decision depends on the magnitude of T&D externalities, as well as on the level of training provided by the other firms. Under certain conditions, a firm may invest zero in T&D, pirating skilled workers from the other firm. One firm's T&D investment is inversely related to its own discount rate, but positively related to its competitors' discount rates. In addition, a T&D externality reduces firms' T&D incentive not only at the firm that generates the T&D externality, but also at the firm that receives the T&D externality. More importantly, it is shown that market structure per se affects firms' T&D investment behavior. The level of firms' T&D investments is inversely related to the competitiveness of the output market. In terms of social optimality of T&D, monopoly market organization is superior to perfect competition. The results are hence consistent with Schumpeter's (1943) dynamic efficiency arguments. Finally, it is shown that joint T&D programs can serve as a possible remedy to correct T&D externalities, and joint T&D programs, as impure public goods, can be provided efficiently on a voluntary basis under certain conditions. A game theoretic model of the public goods provision with positive Nash equilibria is presented and experimental evidence which supports the hypothesis is provided.
Type:
text; Dissertation-Reproduction (electronic)
Keywords:
Dissertations, Academic.; Economics.; Game theory.
Degree Name:
Ph.D.
Degree Level:
doctoral
Degree Program:
Economics; Graduate College
Degree Grantor:
University of Arizona
Committee Chair:
Oaxaca, Ronald

Full metadata record

DC FieldValue Language
dc.language.isoenen_US
dc.titleToward a theory of firms' training and development behavior under externality: A game theoretic analysis and experimental evidence.en_US
dc.creatorLi, Ya.en_US
dc.contributor.authorLi, Ya.en_US
dc.date.issued1992en_US
dc.publisherThe University of Arizona.en_US
dc.rightsCopyright © is held by the author. Digital access to this material is made possible by the University Libraries, University of Arizona. Further transmission, reproduction or presentation (such as public display or performance) of protected items is prohibited except with permission of the author.en_US
dc.description.abstractThis dissertation presents a new approach to one of the classic problems in economics: firms' training and development (T&D hereafter) behavior under externality. Its objective is threefold. The first objective is to identify the conditions under which T&D externalities are present in the labor market; the second is to examine firms' strategic T&D behavior under T&D externality; the third is to provide a possible institutional remedy for the less than socially optimal level of firms' T&D investments that T&D externalities generate. The most important findings of this research are that the labor market in general cannot fully internalize T&D externalities in a world of imperfect information. In the presence of T&D externalities, firms' training investments are socially sub-optimal. In a dynamic game environment, one firm's T&D decision depends on the magnitude of T&D externalities, as well as on the level of training provided by the other firms. Under certain conditions, a firm may invest zero in T&D, pirating skilled workers from the other firm. One firm's T&D investment is inversely related to its own discount rate, but positively related to its competitors' discount rates. In addition, a T&D externality reduces firms' T&D incentive not only at the firm that generates the T&D externality, but also at the firm that receives the T&D externality. More importantly, it is shown that market structure per se affects firms' T&D investment behavior. The level of firms' T&D investments is inversely related to the competitiveness of the output market. In terms of social optimality of T&D, monopoly market organization is superior to perfect competition. The results are hence consistent with Schumpeter's (1943) dynamic efficiency arguments. Finally, it is shown that joint T&D programs can serve as a possible remedy to correct T&D externalities, and joint T&D programs, as impure public goods, can be provided efficiently on a voluntary basis under certain conditions. A game theoretic model of the public goods provision with positive Nash equilibria is presented and experimental evidence which supports the hypothesis is provided.en_US
dc.typetexten_US
dc.typeDissertation-Reproduction (electronic)en_US
dc.subjectDissertations, Academic.en_US
dc.subjectEconomics.en_US
dc.subjectGame theory.en_US
thesis.degree.namePh.D.en_US
thesis.degree.leveldoctoralen_US
thesis.degree.disciplineEconomicsen_US
thesis.degree.disciplineGraduate Collegeen_US
thesis.degree.grantorUniversity of Arizonaen_US
dc.contributor.chairOaxaca, Ronalden_US
dc.contributor.committeememberSmith, Vernonen_US
dc.contributor.committeememberIsaac, Marken_US
dc.contributor.committeememberStratton, Leslieen_US
dc.contributor.committeememberHoffman, Elizabethen_US
dc.contributor.committeememberReynolds, Stanleyen_US
dc.identifier.proquest9303295en_US
dc.identifier.oclc713065218en_US
All Items in UA Campus Repository are protected by copyright, with all rights reserved, unless otherwise indicated.