Since the 1980s, governments in developing countries have been adopting laws and regulations intended to foster more attractive investment climates for foreign firms. Such adoptions have stirred a form of competition among LDC governments to create environments more conducive to foreign businesses. In fact, some economists have argued that governments may have gone too far in that MNEs could even receive better treatment than their domestic counterparts. In this paper, we examine this claim by focusing on a particular policy incentive for FDI– the Bilateral Investment Treaty (BIT). BITs are agreements between two governments that protect foreign investments in the partner country. We assess the effects of BITs on the value of comparable foreign and domestic investments. Our paper employs a more robust causal inference methodology than previous studies and overcomes empirical difficulties of small sample size and a small number of clusters of earlier work on the topic. We employ a large dataset on real investment in the international petroleum industry.
Substantial literature in public economics examines coordination in public goods games. We conduct an experiment to explore how varying patterns of thresholds affect the willingness of subjects to contribute to a public good. We exploit experimental variation in threshold patterns (decreasing, constant and increasing) across time to show that for nearly every threshold, it is more profitable to be in an increasing than in a decreasing threshold group type. Each period is identical, except for the possibility of having a different threshold, which is always stated before the players make their contributions. We find that while contributions are similar for the increasing and decreasing threshold group types when thresholds were low, a sizable gap opens up around the average threshold size. Our findings shed light on the role of past cooperative success and threshold patterns on subsequent willingness to cooperate.
In 2008 Medicare stopped reimbursing hospitals for treating eight avoidable hospital-acquired conditions. Using 2006-2010 Massachusetts data, we model the financial impact of this policy on six such conditions. Options to strengthen the incentives include further payment modifications for hospital-acquired conditions or expanding the hospital-acquired condition policy to exclude payment for consequences, additional procedures, and readmissions. We also examine the effect of the change in policy on hospital behavior, rate of physician errors and quality of care.