Keynesian economics has devoted particular attention to out of full employment equilibrium phenomena, but the lack of an analytical framework for describing how economic agents interact and organize their production and consumption decisions has made it difficult to establish whether the economic system is self-adjusting at an out-of-full employment equilibrium. One of the purposes of Sraffa's book Production of Commodities by Means of Commodities was to understand the conditions that allow the system to reproduce itself. But how trade takes place remains an open question. For Sraffian economics, the lack of an analytical framework for describing how economic agents interact and organize their production and consumption decisions, has made it difficult to consider out-of-equilibrium behaviour. The present thesis is a first attempt to model Keynes's principle of effective demand with the aid of Sraffian schemes. The notion of effective demand requires the possibility for buyers and sellers to buy and sell thanks to the existence of newly generated or previously accumulated financial purchasing power. Stated differently, the very notion of out-of-equilibrium exchanges may require the emergence of new credit and debt relations. Sraffa's original production schemes have been enriched with algorithmic behavioural functions that describe agent decisions and exchanges of property rights. In the resulting algorithmic model of an economic system (with labour and goods market), decisions of production and consumption are made by a population of algorithmic rational agents (ARAs), divided between producers and workers. The ARAs are characterized by behavioural functions, specific trading rules, and are connected in a network. Exchanges are made by signing virtual contracts that involve the use of financial means. The creation of new financial means of exchange, credit and debt, is endogenous. Production is heterogeneous and conceived as a circular process. The fundamental conclusion is that this digital economic laboratory has generated virtual economies able to converge towards production prices, uniform wage rates but non-uniform profit rates with an unequal distribution. The virtual economies result to be stable and efficient from a technological point of view despite economic policy can improve the performance of the whole economy. The digital economic laboratory is a powerful instrument able to answer different research questions. It represents an answer to the need to develop models able to explore the complexity of out-of-equilibrium behaviour, grounded on bookkeeping principles and computable methods.

This thesis investigates the interdependence between migration and gender dynamics, with a focus on low- and middle-income countries. The first chapter concerns intra-household bargaining and migration decision-making: considering that the decision to migrate is likely to be made within the family, the bargaining powers of household members may shape the result of the decision-making process. Given that there is evidence of women’s altruistic behaviours towards their children, I investigate how women’s bargaining power affects the decisions about the individual migrations of their young offspring, who may benefit from the change in location. A collective model of migration decision-making and an empirical analysis regarding the context of Mexico are presented. This analysis sheds the light on how empowerment may be beneficial not only to women themselves but also to their children, and suggests that policies intending to improve women’s position within the household and the whole society should also acknowledge these positive spillover effects. The second chapter regards the uncertainty over health status and the gendered determinants of migration. While several studies show a relationship between migration and health, migration selection in terms of health conditions is relatively under-investigated, as regards the context of Sub-Saharan African countries. Using panel data from a survey on young women and men living in Malawi, I assess the impact of randomised HIV testing on long- and short-term migrations, and I find that becoming certain of being HIV-negative affects the probability of both types of movements, only for women. This impact evaluation indicates that HIV testing may have gender-specific unintended consequences, which should be considered. Finally, the third chapter evaluates the impact of a randomised intervention, aiming to promote child development through improvements in parenting skills, on the empowerment of women in Bangladesh. Results show that the programme increases women’s autonomy and reduces their exclusion from decision-making processes: these effects do not concern only child-related decisions – consistent with the type of training that women in the treatment group receive – but also decisions about the allocation of resources. The empowerment effect regards only women whose partner has never migrated before the baseline, thus suggesting the existence of a relationship between women’s decision-making power and men’s migration – as found in previous studies.

Foreign Direct Investments are the most complex form of internationalization. A large part of the recent international trade literature has focused on their determinants on the ground that they spur growth and have a positive impact on development. This thesis examines FDI along two different and understudied lines. The first line of research focuses on cultural factors promoting bilateral investments flows. In chapter 1 and chapter 3, I propose a novel definition of Cultural Proximity wich separates the effect of cultural similarity from the role of perceptions and cultural affiity. I am able to innovate with respect to the existing literature by capturing the effect of time varying and possibly asymmetric patterns in the reciprocal cultural appreciation between two countries. In Chapter 1 I explicitly deal with the potential asymmetry in bilateral cultural appreciation, and test for the emergence of non reciprocal cultural patterns in the analysis of bilateral Greenfield FDI. An example clarifies what I mean: consider South Korea and Latin America. The so called Korean Wave, consisting of soap operas and Korean pop music has become extremely popular in Latin America since the mid 2000s, despite of geographic and cultural distance in terms of language and ethnicity. Yet, there is no evidence of a symmetric rise in popularity of Latin American culture in South Korea. The underlying idea is that the "new" positive perception of Korea enhances bilateral (trade and) FDI. In Chapter 3 I highlight the heterogeneity of FDI and the non-linearities that could emerge in the relationship between cultural affnity and bilateral M&A. In the empirical exercise, I use an econometric model that allows me to disentangle the impact of the different level on M&A. The second line of research explores the role of migrants' flows on bilateral FDI. Borrowing the tools from social network analysis, in Chapter 2 I investigate whether and how the position of a country in the International Migration Network affects a country's bilateral investment flows beyond the direct role of its local emi(immi)-grant population. The empirical application is on Greenfield FDI.

Humans evolved over millennia into agents that invest heavily, both directly and indirectly, in their children. Part of the investment into children is represented by contributions to long-run public goods, including the educational system, the health-care system, major infrastructures and environmental protection. Moreover, the production of some of these public goods has wide-ranging externalities to local or global communities (think of vaccination programs, for example). This Doctoral Thesis is a collection of three essays on the topic of long-run, across-the-border public goods, from the vantage point of Experimental and Behavioral Economics. The first Chapter reviews the literature up to date, re-organizing previous works on Public Good games for the benefit of explaining why intergenerational and international public goods are different from standard ones. The second and third Chapters provide empirical evidence on matters such as heterogeneity linked to seniority and dynastic membership in the provision of public goods.

In the last forty years, a considerable amount of experimental research in both psychology and economics has reported various violations of the axioms of classical choice theory, but only recently has axiomatic theory started to take into account this empirical evidence. In particular, the recent evidence collected by the new approach of neuroeconomics and the rapid growth of new teorie have triggered a methodological debate about whether and how these sources of new empirical data and psychological insights should be used in economics (Caplin and Schotter, 2008). While some authors suggest to dismiss classical revealed preference analysis arguing that the presence of systematic biases between what people like and what people choose impair the possibility to reveal something by simply observing choices (K¨oszegi and Rabin, 2008), others remain skeptical about extending the classical model to include additional components that cannot be inferred from choice data (Gul and Pesendorfer, 2008). A third group of authors proposes to use the new evidence combined with standard choice–theoretic tools to build economic models that are both more realistic and choice–based (Caplin, 2008; Rubinstein and Salant, 2008). The present work is in this spirit: on one hand it builds on empirical evidence and psychological literature on salience, bandwagon and snob effects, and heuristic behaviour; on the other hand, it adopts a choice–theoretic approach to embed these phenomena into axiomatic models. The first chapter of the thesis covers the recent methodological debate concerning classical decision theory. It briefly points out how economic theory has developed a coherent and organic framework that links together choices, utility, and preference by means of important formal results, and how some of the implicit difficulties regarding the psychological aspects have been neglected. In particular, the chapter discusses the critical assumption that choices depend only on the set of available alternatives and presents the relevant psychological literature and experimental evidence about the effect of alleged irrelevant aspects on choices, i.e., ancillary conditions (Bernheim and Rangel, 2009, p. 55). The second chapter proposes an axiomatic model where choice behaviour of the decision maker is influenced by ancillary conditions. Specifically, the present thesis extends the concept of choices with frames proposed by Bernheim and Rangel (2008, 2009) and by Salant and Rubinstein (2008) according to which choices do not simply depend upon the set of available alternatives, but also upon additional components called frames. The present work defines the abstract concept of frame as a vector of indexes representing a psychological measure that agents attach to each alternative. Choices are then conditioned to the indexes attached to the alternatives. This chapter shows that, if the conditional choice behaviour satisfies two intuitively appealing properties—namely Monotonicity and Conditional IIA—, then the observable part of choice behaviour, i.e., the unconditional choices, can be interpreted as resulting from the maximisation of a preference relation. The chapter discusses also some welfare considerations regarding the choice model and proposes some interpretations of the indexes. The third chapter considers a narrower interpretation of the indexes—each index represents the number of people in a group that choose each alternative—and discusses the properties an extended choice function should satisfy in order to capture the behavioural implications of the “DoWhat The Majority Do†heuristic (Gigerenzer, 2004). This heuristic prescribes that, whenever the choice task is too difficult, the consequences of the alternatives are too complex to evaluate, or the subject is unsure about what to choose, he simply looks at what the majority of his peers does and then engages in the same behaviour. The chapter axiomatises the contents of the “Do What The Majority Do†heuristic by using the monotoni city axiom introduced in chapter 2 together with a maximality axiom, and then shows that an equilibrium is reached if choices satisfy maximality and monotonicity. The fourth chapter presents an experimental test of the two axioms proposed in the third chapter. The test of the axioms is performed using sets of lotteries and groups of 7 people. Participants are asked to choose repeatedly from the same set of lotteries and, after each choice, they are informed about the number of people choosing each of the alternatives. The reaction to changes in the indexes—i.e., to the choices of the members of the group—is thus recorded and the robustness of the axioms is tested. Even though the results support the idea that choices are affected by what the others members of the group do, there is mixed evidence regarding the empirical validity of the two axioms. While strong support in favour of monotonicity is found, there is no clear cut evidence in support of maximality.

The most recent financial crisis highlighted several fragilities of financial markets. According to several observers, a relevant source of instability could be identified in the incentive schemes of the financial professionals. Yet, it is not clear whether the higher risk is due to the structure of the incentive scheme in itself or whether it emerges as strategic pricing by asset managers in order to deal with a more generalized market competition. In the light of the ongoing debate on the role of the incentive schemes in the financial industry, the main goal of this thesis is to emphasize that market interventions should be implemented by involving in the decision-making process both investors and managers and not only the latter. In this Doctoral thesis, to disentangle and control some possible effects deriving from the delegated portfolio management context, the experimental methodology is implemented. Managers and investors are allowed to interact: we investigate to what extent this interaction affect general results. In Chapter 1 of this Doctoral Thesis the context and the related literature will be provided with a focus on the ongoing debates and on the answers provided by the experimental literature. In Chapter 2 we manipulate the contract design by allowing investors under endowment legitimacy (or not) to decide the incentive scheme while managers have no bargaining power. In Chapter 3 instead, we investigate to what extent a market setting characterized by competition between managers and disclosure of others’ practices affect the market fees’ combination. Differently than in the experiment in Chapter 2, here both players are involved in the decision-making process: managers are asked to propose fees combinations while investors choose the fee combination they want to pay.

Individuals' concerns for others have been the focus of many experimental investigations since the first appearance of the dictator game, which pointed out that, when people have to allocate resources and determine their own and others' payoffs, they decide accordingly to some well-defined distributional preferences. These, depending on the decisional setting and on individuals, are able to generate discrepancies between decisions that only affect the decision maker and choices that have consequences on others' payoffs. Starting from these considerations, the three studies presented in this thesis have the aim to picture the state of the art in the literature related to decision making and responsibility for others. Specifically, Chapter 2 presents an overview of past contributions, providing an analysis of three different experimental literatures: dictator games, delegated decision making under risk, and leadership in cooperation; the last two are then experimentally investigated more in details in the following chapters. Specifically, Chapter 3 focuses on investment in risk protection when risk is borne either by the decision maker or by another individual. In addition to this, the analysis manipulates who is the subject providing the resources to buy risk protection. Laboratory observations are assessed against behavioral predictions obtained from a linear model for social preferences to test its predictive power in this domain. Chapter 4 drives the attention to the effect of leadership in a public good experiment. Leaders take part to a public good game, aware of the fact that every decision they make directly affects their followers, who can be either passive players or have the opportunity to send short messages to their leader. This experimental setting allows to observe how people decide for themselves and others when involved in strategic interaction.

Although climate change is a global phenomenon affecting populations from countries at varying stages of development, a few of its consequences gain significantly more salience for less developed countries, specifically. I focus on the adverse effects of environmental degradation for two main reasons. On the one hand, it is my impression that the increased vulnerability of less developed countries to adverse environmental degradation needs more attention by scholars (Biermann and Moeller, 2019). On the other hand, climate change is of the most pressing problems of our time, for which we have little time to act (IPCC, 2018) and whose consequences weight on the shoulders of many future generations. In other terms, the environment is deteriorating fast, and not only this is occurring faster in developing countries than in industrialised ones, the former are also less capable to protect against it for institutional, technological, and financial reasons (Barbier, 2010; Blaikie, 2016). The asymmetry of environmental deterioration and of its effects is observable in many indicators. For instance, soil erosion is affecting ever larger areas, most of them in developing countries, whose institutions are not able or willing to intervene (Blaikie, 2016). Soil erosion mainly affects farmers and their productivity, but in developing countries they do not have the financial and technological means to defend themselves (Barbier, 2010; Blaikie, 2016), which induces some of them to resort to migration (when possible) (Blaikie 2016). Farmers trying to adapt to the erosion of soil may adopt coping strategies that endanger the sustainability of proximate water basins, fisheries (for instance, see Dejen et al., 2017) and of forestry (see Wondie, 2010). These practices ultimately undermine the sustainable extraction of natural resources and thus the long term productivity of the related activities. In these few introductory lines, I touched upon the issues I decided to investigate in this doctoral thesis: adaptation strategies and their possible negative side effects, inequality in the consequences of and in the means to face environmental degradation, and the long term effects of the latter on productivity. In my opinion, these are three very relevant pathways connecting environmental degradation to hindrances and obstacles to sustainable development of less developed countries. In the three chapters constituting the thesis, I investigate the economic dimensions of the problems above mentioned.

Since the end of the Cold War, post-conflict countries have attracted widespread economic assistance and policy advice from donor community to support their recoveries from war, to rebuild institutional capacities, and to restore their human and social capital. Yet, donor responses to post-conflict countries are uneven and some countries have received substantial amounts of assistance in the immediate aftermath of the conflict (e.g., Bosnia and Herzegovina, Kosovo, Afghanistan, and Iraq). In addition, the stark environment of the post-conflict countries poses challenges to both recipient and donor countries. This dissertation examines the role of aid in countries recovering from conflict by investigating the determinants and the time scale of post-conflict aid and its impact on outcomes of economic recovery. In so doing, this dissertation aims to enhance understanding of the role of foreign aid in post-conflict environments. It is timely in the context of reevaluation of aid effectiveness and increasing concerns about fragile states, whereby post-conflict countries are especially significant as they are less likely to meet MDGs; and yet, post-conflict countries attract aid from the same pool of donor funding, with other non-conflict countries. The analysis in this dissertation contributes to the ongoing debate on foreign aid effectiveness in three aspects. First, to trace temporal patterns of aid inflows and estimate their potential impact on recovery outcomes, I bring together both strands of aid literature: aid allocation and aid effectiveness. Second, under the same framework, I examine effectiveness issues through different recovery outcomes, such as economic growth, infant mortality, and good policy environment. Lastly, I combine cross-country and case study analysis. The findings of this analysis support the view that aid offsets negative effects of conflict on recipient societies. Although the effects of post-conflict aid on growth seem more ambiguous, in post-conflict settings, aid is more effective in saving lives, reconstructing physical and institutional infrastructure, and adopting good policies. These findings unravel the heterogeneous impact of post-conflict aid on different recovery outcomes and suggest the importance of generous aid flows during the early years after the conflict; better absorptive capacities of aid in later periods may not be attained if a country fails to build its institutions and reconstruct its social capital. Consequently, the time-sequencing of aid should be governed by multiple goals, if it is to attain an immediate peace dividend.

This thesis collects three independent essays. Two of them relate to experimental economics, and one to labor economics. The first essay explores through a laboratory experiment the relationship between cognitive costs and imitation dynamics. The second essay investigates in an experimental setting information aversion towards bad/good news about ones’ own condition, and tests the effect of the possibility of exerting effort, which may improve one’s own condition, on the willingness to acquire more detailed personal information. The third essay proposes an empirical application aiming at studying gender discrimination in a research context, and in particular whether the gender composition of evaluating commissions affects the hiring of women in research activities.