Navigating ESG in the Artificial Intelligence Era: Evidence From AI Pilot Zones in China
Yujie Liu, Xinyi Shen
Abstract: Artificial intelligence is reshaping business models, but limited literature explores how ESG evolves in the AI era. This paper regards AI Pilot Zones in China as a quasi-natural experiment, and adopts the DID approach to investigate its impact on corporate ESG performance. Using the sample of Chinese A-share listed companies from 2016 to 2022, we find that the AI policy significantly enhances ESG performance. The AI policy improves ESG through promoting corporate AI applications, reducing information asymmetry, and easing financing constraints. Heterogeneity analyses indicate that the policy effects are more pronounced for firms in regions with high institutional quality, non-state-owned enterprises, and non-high-tech enterprises. Then, we provide evidence supporting the moderating roles of government AI focus and public attention. Finally, further analyses provide granular evidence of corporate environmental and social practices.
Land Use Policy and Racial Segregation
Ling Huang
Abstract: Land use policies, though seemingly race-neutral, can inadvertently contribute to racial segregation. Our study focuses on examining the impact of minimum lot size regulations on the likelihood of ethnic minorities integrating into a community, which reveals compelling evidence suggesting that black households exhibit a preference for smaller minimum lot sizes compared to white households. Specifically, our findings indicate that black households are willing to pay $934 to $2126 less annually for every additional acre of minimum lot size, accounting for approximately 3.36%–7.65% of the average house value, after controlling for various other factors influencing housing preferences. The result suggests that minimum lot size regulations can contribute to racial segregation not solely through income disparities but also voluntary choices made by different racial groups. With smaller minimum lot size requirements, communities can foster greater inclusivity and reduce the extent of racial segregation from housing policies.
Promise-Keeping Reputations in an Investment Game: An Experimental Investigation
Ninghua Du, Qun Zhao
Abstract: We design a controlled laboratory experiment to mitigate moral hazard problems in livestream shopping when sellers make promises to buyers. In our experiment, the promise-keeping reputation mechanism allows sellers to send promises to buyers while buyers can observe the sellers' historical promise-keeping records. Results demonstrate that bare promises under the mechanism significantly enhance trust and trustworthiness. Specifically, bare promises under the promise-keeping reputation mechanism can build trust quickly between buyers and sellers in the beginning; when sellers have a good reputation for promise-keeping, buyers will trust sellers more. When sellers' promise-keeping histories are not recorded, bare promises fail to enhance trust or trustworthiness, as buyers cannot distinguish between trustworthy sellers and opportunistic sellers.
Soft Power in Trade: Quantifying the Impact of Confucius Institutes on China's Exports
Renjing Chen, Wei Jin, Tangrui Yang
Abstract: This paper investigates the role of Confucius Institutes (CIs) as a form of China's cultural diplomacy and their impact on international trade, particularly exports. Using a gravity model, we analyze data from 1990 to 2019 across countries, finding that the presence of CIs significantly boosts China's exports. Robustness checks confirm this effect across various specifications, including imports and sector-level data. Mechanism analysis reveals that CIs enhance China's image, increasing trade by fostering positive perceptions abroad. The study further identifies pronounced trade effects in high-income nations, and regions with shorter cultural distance from China. Our findings suggest that cultural output via Confucius Institutes not only advances China's soft power but also serves as a strategic tool to promote trade globally, with differentiated goods benefiting the most.
Always Be Prepared: Lessons Learned From Risk-Coping Strategies of Thai Households in the Wake of Two Major Economic Crises
Aeggarchat Sirisankanan, Papar Kananurak
Abstract: This paper aimed to comparatively examine the function of three risk-coping strategies, namely savings, borrowings, and work-hour adjustments, during two major economic crises in Thailand. Using the Socioeconomic Survey (SES) collected by the National Statistical Office (NSO) in Thailand, we examined data from the 1998 financial crisis and the 2021 COVID-19 outbreak. The empirical methods were the two-step estimation method and the income decomposition technique, with an emphasis on correcting an endogeneity problem with an instrumental variable approach. The results showed that risk-coping strategies respond more strongly to income shocks during crisis periods than in noncrisis periods. Borrowing was the most important risk-coping strategy, followed by work-hour adjustments employed by Thai households to smooth their consumption against transitory income shocks caused by unemployment in crisis and noncrisis periods. On the contrary, we found that Thai households are less prudent.
Impact of Geography on Institutions in Agricultural and Nomadic Societies
Haiwen Zhou
Abstract: How geography affects the choice of institutions is studied in a theoretical model. In this model, nations are located around a circle. Rulers compete through choosing tax rates, the level of military spending, and the degree of formality of institutions. Geographic condition is captured by population density. It is shown that societies with higher population densities choose lower tax rates, establish more formal institutions, and give government officials lower levels of autonomies than those with lower population densities do. A higher level of external threats induces a ruler to choose a higher level of autonomy for officials. The model is illustrated by comparing institutions of agricultural and nomadic regimes in ancient China.
