Daniel Arce | University of Texas at Dallas (original) (raw)

articles by Daniel Arce

Public Choice, 2011

We conduct experiments to test the collective action dilemmas associated with defensive and proac... more We conduct experiments to test the collective action dilemmas associated with defensive and proactive counterterror strategies. Defensive policies are associated with creating public 'bads' (e.g., a commons) whereas proactive policies are akin to the voluntary provision of public goods. When combined, the inefficiency of collective action is exacerbated , resulting in a situation known as a Prisoner's Dilemma squared (PD 2). Deterministic versus probabilistic equivalent versions of the associated externalities are compared within a laboratory setting. Experimental results reveal that the collective action problem associated with counterterror strategies is deepened in uncertain environments, and is indeed a robust regularity that is not easily overcome; as individuals gain more experience, they become even more self-interested.

Papers by Daniel Arce

Brazilian Journal of Political Economy, 1995

Giving Voice to Values (GVV) is a rehearsal and case-based approach to business ethics education ... more Giving Voice to Values (GVV) is a rehearsal and case-based approach to business ethics education that is designed to develop moral competence and that emphasizes self-assessment, peer coaching and prescriptive ethics. It is built on the premise that many businesspeople want to act on their values but lack the know-how and experience for doing so. The focus is on action rather than developing ethical awareness or analytical constructs for determining what is right and the epistemology behind knowing that it is right, while acknowledging that existing and well-established approaches to these questions are also important. The GVV rubric for acting on one’s values is based upon the following three questions: (1) What’s at stake? (2) What are the reasons and rationalizations you are trying to counter? and (3) What levers can be used to influence those who disagree? Taken together, the answers to these questions constitute a script for constructing a persuasive argument for effecting values-based change and an action plan for implementation. This approach is based on the idea, supported by research and experience, that pre-scripting and “rehearsal” can encourage action. GVV is meant to be complementary to traditional approaches to business ethics that focus on the methodology of moral judgment. GVV cases are post-decision-making in that they begin with a presumed right answer and students are invited to engage in the “GVV Thought Experiment,” answering the questions: “What if you were going to act on this values-based position? How could you be effective?” This implies a shift in focus towards values-based action in ways that recognize the pressures of the business world. As a consequence of this shift, GVV addresses fundamental questions about what, to whom, and how business ethics is taught. The answers to these questions have led to widespread adoption of GVV in business schools, universities, corporations, and beyond.

Journal of Evolutionary Economics, Jan 30, 2015

Most, if not all, published theoretical models of capital structure decisions assume that all fir... more Most, if not all, published theoretical models of capital structure decisions assume that all firms follow the same capital structure decision process or strategy. We argue that such an assumption is inconsistent with extant evidence. Instead, we argue that there is heterogeneity in the decision processes and strategies that managers follow, and that they make adaptive adjustments to their strategies that are conditioned on the choices of other firms as well as their prior choices. Using data on U.S. corporate capital structures between 1965 and 2003, we find evidence that is consistent with our proposed alternative. Our characterization of the evolution of corporate capital structures emphasizes the roles of a firm's initial capital structure and its competitors' capital structure strategies.

Marketing Letters, Apr 18, 2023

Latin American Research Review, 1999

Global Crises, Global Solutions

Rationality and Society, 2018

Strategic monitoring occurs in myriad situations such as principal–agent relationships, law enfor... more Strategic monitoring occurs in myriad situations such as principal–agent relationships, law enforcement and treaty verification. Such situations are generally known as enforcement or inspection games, with the focus largely being on the (counterintuitive) properties of their associated mixed strategy Nash equilibrium. This article instead characterizes the cooperative resolution of the mixed motives of the players involved. It does so through an illustrative decomposition of the enforcement/inspection game into its cooperative and competitive constituent parts. The results are interpreted within an efficiency wage context and the distribution of the saved monitoring costs that cooperation engenders.

The American Economist, 2010

This paper contrasts four distinct versions of the Prisoner's Dilemma (the commons, public go... more This paper contrasts four distinct versions of the Prisoner's Dilemma (the commons, public goods, biological altruism, and biological selfishness) in terms of their ethical content for economic decision making. An argument is made for the restoration of Tucker's third player — as given in the original specification of the game — in order to judge whether a resolution is desirable in economic and business situations that reduce to the Prisoner's Dilemma. Finally, the use of tit-for-tat as a 'solution' to the Prisoner's Dilemma is compared with the practice of business ethics.

Southern Economic Journal, 2017

The debate between agency and stewardship theorists on the nature of managerial objectives in its... more The debate between agency and stewardship theorists on the nature of managerial objectives in itself implies that a principal may be uninformed about managers objectives. This article introduces a model of adverse selection in managerial types where classically opportunistic agents are contrasted with stewards who exhibit intrinsic preferences for the organizations success and experience betrayal (crowding out) when they are incentivized as if they were agents. The analysis characterizes stewardship inefficiencies not previously identified by stewardship theorists. This inefficiency is minimized via a menu of contracts that emphasizes the fixed component of pay for stewards. Moreover, steward-run firms are more successful than agent-run firms.

The Journal of Economic Education, 2016

In his interesting article, Professor Parkin contrasts forgone physical quantities with forgone v... more In his interesting article, Professor Parkin contrasts forgone physical quantities with forgone values as measures of the opportunity cost of basic economic decisions. The impetus for his study stems from an experiment conducted by Ferraro and Taylor (2005), in which professional economists could not reach a consensus over four alternatives presented as the opportunity cost of attending an Eric Clapton concert. As F. Scott Fitzgerald (1936) put it in “The Crack-Up,” “the test of a first-rate intelligence is the ability to hold two opposite and opposing ideas in the mind at the same time, and still retain the ability to function” (p. 41). In this way, Potter and Sanders (2012) contended that every answer option provided by Ferraro and Taylor (2005) is economically defensible, depending upon opportunity cost accounting methodologies. In my mind, what matters is whether the decision makers involved are making applesto-apples comparisons in terms of the data available used to measure what is being chosen and what is being forgone. Potter and Sanders called this “operational standardization.” Professor Parkin offers several examples in which the physical quantity of what is being chosen and what is being forgone is a better operational standard. In this comment, I show how values are the natural operational standard for measuring opportunity costs when it comes to (a) shadow prices and (b) deriving economic profit. Hence, both values and quantities have their place as measures of opportunity cost. Moreover, I argue that the real issue is that textbooks should have an expanded set of examples of opportunity cost, many more than they currently have.

Defence and Peace Economics

Games, Apr 1, 2022

This article is an open access article distributed under the terms and conditions of the Creative... more This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY

Journal of Business Ethics Education, 2011

Public Choice, 2011

We conduct experiments to test the collective action dilemmas associated with defensive and proac... more We conduct experiments to test the collective action dilemmas associated with defensive and proactive counterterror strategies. Defensive policies are associated with creating public 'bads' (e.g., a commons) whereas proactive policies are akin to the voluntary provision of public goods. When combined, the inefficiency of collective action is exacerbated , resulting in a situation known as a Prisoner's Dilemma squared (PD 2). Deterministic versus probabilistic equivalent versions of the associated externalities are compared within a laboratory setting. Experimental results reveal that the collective action problem associated with counterterror strategies is deepened in uncertain environments, and is indeed a robust regularity that is not easily overcome; as individuals gain more experience, they become even more self-interested.

Brazilian Journal of Political Economy, 1995

Giving Voice to Values (GVV) is a rehearsal and case-based approach to business ethics education ... more Giving Voice to Values (GVV) is a rehearsal and case-based approach to business ethics education that is designed to develop moral competence and that emphasizes self-assessment, peer coaching and prescriptive ethics. It is built on the premise that many businesspeople want to act on their values but lack the know-how and experience for doing so. The focus is on action rather than developing ethical awareness or analytical constructs for determining what is right and the epistemology behind knowing that it is right, while acknowledging that existing and well-established approaches to these questions are also important. The GVV rubric for acting on one’s values is based upon the following three questions: (1) What’s at stake? (2) What are the reasons and rationalizations you are trying to counter? and (3) What levers can be used to influence those who disagree? Taken together, the answers to these questions constitute a script for constructing a persuasive argument for effecting values-based change and an action plan for implementation. This approach is based on the idea, supported by research and experience, that pre-scripting and “rehearsal” can encourage action. GVV is meant to be complementary to traditional approaches to business ethics that focus on the methodology of moral judgment. GVV cases are post-decision-making in that they begin with a presumed right answer and students are invited to engage in the “GVV Thought Experiment,” answering the questions: “What if you were going to act on this values-based position? How could you be effective?” This implies a shift in focus towards values-based action in ways that recognize the pressures of the business world. As a consequence of this shift, GVV addresses fundamental questions about what, to whom, and how business ethics is taught. The answers to these questions have led to widespread adoption of GVV in business schools, universities, corporations, and beyond.

Journal of Evolutionary Economics, Jan 30, 2015

Most, if not all, published theoretical models of capital structure decisions assume that all fir... more Most, if not all, published theoretical models of capital structure decisions assume that all firms follow the same capital structure decision process or strategy. We argue that such an assumption is inconsistent with extant evidence. Instead, we argue that there is heterogeneity in the decision processes and strategies that managers follow, and that they make adaptive adjustments to their strategies that are conditioned on the choices of other firms as well as their prior choices. Using data on U.S. corporate capital structures between 1965 and 2003, we find evidence that is consistent with our proposed alternative. Our characterization of the evolution of corporate capital structures emphasizes the roles of a firm's initial capital structure and its competitors' capital structure strategies.

Marketing Letters, Apr 18, 2023

Latin American Research Review, 1999

Global Crises, Global Solutions

Rationality and Society, 2018

Strategic monitoring occurs in myriad situations such as principal–agent relationships, law enfor... more Strategic monitoring occurs in myriad situations such as principal–agent relationships, law enforcement and treaty verification. Such situations are generally known as enforcement or inspection games, with the focus largely being on the (counterintuitive) properties of their associated mixed strategy Nash equilibrium. This article instead characterizes the cooperative resolution of the mixed motives of the players involved. It does so through an illustrative decomposition of the enforcement/inspection game into its cooperative and competitive constituent parts. The results are interpreted within an efficiency wage context and the distribution of the saved monitoring costs that cooperation engenders.

The American Economist, 2010

This paper contrasts four distinct versions of the Prisoner's Dilemma (the commons, public go... more This paper contrasts four distinct versions of the Prisoner's Dilemma (the commons, public goods, biological altruism, and biological selfishness) in terms of their ethical content for economic decision making. An argument is made for the restoration of Tucker's third player — as given in the original specification of the game — in order to judge whether a resolution is desirable in economic and business situations that reduce to the Prisoner's Dilemma. Finally, the use of tit-for-tat as a 'solution' to the Prisoner's Dilemma is compared with the practice of business ethics.

Southern Economic Journal, 2017

The debate between agency and stewardship theorists on the nature of managerial objectives in its... more The debate between agency and stewardship theorists on the nature of managerial objectives in itself implies that a principal may be uninformed about managers objectives. This article introduces a model of adverse selection in managerial types where classically opportunistic agents are contrasted with stewards who exhibit intrinsic preferences for the organizations success and experience betrayal (crowding out) when they are incentivized as if they were agents. The analysis characterizes stewardship inefficiencies not previously identified by stewardship theorists. This inefficiency is minimized via a menu of contracts that emphasizes the fixed component of pay for stewards. Moreover, steward-run firms are more successful than agent-run firms.

The Journal of Economic Education, 2016

In his interesting article, Professor Parkin contrasts forgone physical quantities with forgone v... more In his interesting article, Professor Parkin contrasts forgone physical quantities with forgone values as measures of the opportunity cost of basic economic decisions. The impetus for his study stems from an experiment conducted by Ferraro and Taylor (2005), in which professional economists could not reach a consensus over four alternatives presented as the opportunity cost of attending an Eric Clapton concert. As F. Scott Fitzgerald (1936) put it in “The Crack-Up,” “the test of a first-rate intelligence is the ability to hold two opposite and opposing ideas in the mind at the same time, and still retain the ability to function” (p. 41). In this way, Potter and Sanders (2012) contended that every answer option provided by Ferraro and Taylor (2005) is economically defensible, depending upon opportunity cost accounting methodologies. In my mind, what matters is whether the decision makers involved are making applesto-apples comparisons in terms of the data available used to measure what is being chosen and what is being forgone. Potter and Sanders called this “operational standardization.” Professor Parkin offers several examples in which the physical quantity of what is being chosen and what is being forgone is a better operational standard. In this comment, I show how values are the natural operational standard for measuring opportunity costs when it comes to (a) shadow prices and (b) deriving economic profit. Hence, both values and quantities have their place as measures of opportunity cost. Moreover, I argue that the real issue is that textbooks should have an expanded set of examples of opportunity cost, many more than they currently have.

Defence and Peace Economics

Games, Apr 1, 2022

This article is an open access article distributed under the terms and conditions of the Creative... more This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY

Journal of Business Ethics Education, 2011

DESCRIPTION We experimentally assess the ethics of the U.S. government’s indirect bailout of the ... more DESCRIPTION We experimentally assess the ethics of the U.S. government’s indirect bailout of the bank counterparties of American International Group (AIG) during the 2008 financial crisis. When the indirect bailout is jointly compared with a counterfactual where the government directly bails out the banks, subjects judge the indirect bailout to be far more unethical. On the other hand, when the two scenarios are judged separately, subjects consider a direct bailout of banks to be more unethical. This suggests that ethical judgments of indirect versus direct action exhibit a type of preference reversal that is dependent upon whether the evaluation mode is joint or separate. The ethical and policy implications of this preference reversal are discussed.