General Economics (econ.GN)

Abstract: As large language models (LLMs) like GPT become increasingly prevalent, it is essential that we assess their capabilities beyond language processing. This paper examines the economic rationality of GPT by instructing it to make budgetary decisions in four domains: risk, time, social, and food preferences. We measure economic rationality by assessing the consistency of GPT decisions with utility maximization in classic revealed preference theory. We find that GPT decisions are largely rational in each domain and demonstrate higher rationality scores than those of humans reported in the literature. We also find that the rationality scores are robust to the degree of randomness and demographic settings such as age and gender, but are sensitive to contexts based on the language frames of the choice situations. These results suggest the potential of LLMs to make good decisions and the need to further understand their capabilities, limitations, and underlying mechanisms.

Abstract: In this contribution, we investigate the role of ownership chains developed by multinational enterprises across different national borders. First, we document that parent companies control a majority (58%) of foreign subsidiaries through indirect control relationships involving at least two countries along an ownership chain. Therefore, we hypothesize that locations along ownership chains are driven by the existence of communication costs to transmit management decisions. In line with motivating evidence, we develop a theoretical model for competition on corporate control that considers the possibility that parent companies in the origin countries can delegate their monitoring activities in final subsidiaries to middlemen subsidiaries that are located in intermediate jurisdictions. Our model returns us a two-step empirical strategy with two gravity equations: i) a triangular gravity for establishing a middleman by the parent, conditional on final investments' locations; ii) a classical gravity for the location of final investments. First estimates confirm the predictions that ease of communication at the country level shapes the heterogeneous locations of subsidiaries along global ownership chains.

Abstract: This study examines the impact of Total Quality Management (TQM) practices on organizational outcomes. Results show a significant relationship between TQM practices such as top executive commitment, education and teaching, process control, and continuous progress, and how they can be leveraged to enhance performance outcomes.

Abstract: This study aimed to investigate how transformational leadership affects team processes, mediated by change in team members. A self-administered questionnaire was distributed to construction project team members in Abuja and Kaduna, and statistical analysis revealed a significant positive relationship between transformational leadership and team processes, transformational leadership and change in team members, changes in team members and team processes, and changes in team members mediating the relationship between transformational leadership and team processes. Future studies should consider cultural differences.