Economic Theory Commons^™

Optimal Taxation And Debt With Uninsurable Risks To Human Capital Accumulation, Piero Gottardi, Atsushi Kajii, Tomoyuki Nakajima

Research Collection School Of Economics

We consider an economy where individuals face uninsurable risks to their human capital accumulation and analyze the optimal level of linear taxes on capital and labor income together with the optimal path of government debt. We show that in the presence of such risks, it is beneficial to tax both labor and capital and to issue public debt. We also assess the quantitative importance of these findings, and show that the benefits of government debt and capital taxes both increase with the magnitude of idiosyncratic risks and the degree of relative risk aversion.

Calcaneal Quantitative Ultrasound Indicates Reduced Bone Status Among Physically Active Adult Forager-Horticulturalists, Jonathan Stieglitz, Felicia C. Madimenos, Hillard Kaplan, Michael Gurven

ESI Publications

Six months of exclusive breastfeeding (EBF) is considered optimal for infant health, though globally most infants begin complementary feeding (CF) earlier—including among populations that practice prolonged breastfeeding. Two frameworks for understanding patterns of early CF emerge in the literature. In the first, maternal and infant needs trade-off, as “maternal-centric” factors—related to time and energy demands, reproductive investment, cultural influences, and structural barriers— favor supplanting breastfeeding with earlier and increased CF. A second framework considers that “infant-centric” factors—related to infant energetic needs—favor CF before six months to supplement breastfeeding.

We apply these two frameworks in examining early CF among the Tsimane—a …

Dwelling In Time, Dwelling In Structures: Disintegration In World Politics, Jan Adam Nalaskowski

Graduate Program in International Studies Theses & Dissertations

This dissertation aims to propose a general theory of disintegration. This subject is not treated directly by some theoretical accounts and mistreated by others. European integration theories are fashioned to explain the greater integration process while game-theoretic approaches to withdrawals and secessions, even if treating disintegration directly, fail to include critically responsible factors. This dissertation offers a constructive criticism of both accounts. Since neither turning integration theories symmetrically around nor direct, game-theoretic assessment of disintegration help to provide sufficient explanation, it is suggested that the problem of symmetrical reversal and rational conduct must be revised.

Disintegration fails to follow the …

Cointegration Of Matched Home Purchases And Rental Price Indexes –Evidence From Singapore, Badi Baltagi, Jing Li

Center for Policy Research

This paper exploits the homogeneity feature of the Singapore private residential condominium market and constructs matched home purchase price and rental price series using the repeated sales method. These matched series allow us to conduct time series analysis to examine the long-term present value relationship in the housing market. Three key findings are obtained. First, we fail to establish a cointegrating relationship between the home purchase price and rental price based on nationally estimated indexes. Second, area-specific indexes demonstrate strong cross-correlations, invalidating the use of first generation panel unit root tests that ignore these cross-correlations. Third, Pesaran’s CIPS test indicates …

Tug-Of-War In The Laboratory, Cary Deck, Roman M. Sheremeta

ESI Working Papers

Tug-of-war is a multi-battle contest often used to describe extended interactions in economics, management, political science, and other disciplines. While there has been some theoretical work, there is scant empirical evidence regarding behavior in a tug-of-war game. To the best of our knowledge, this paper provides the first experimental study of the tug-of-war. The results show notable deviations of behavior from theory. In the first battle of the tug-of-war, subjects exert fewer resources, while in the follow-up battles, they exert more resources than predicted. Also, contrary to the theoretical prediction, resource expenditures tend to increase in the duration of the …

Can Simple Mechanism Design Results Be Used To Implement The Proportionality Standard In Discovery?, Jonah B. Gelbach

All Faculty Scholarship

I point out that the Coase theorem suggests there should not be wasteful discovery, in the sense that the value to the requester is less than the cost to the responder. I use a toy model to show that a sufficiently informed court could design a mechanism under which the Coasean prediction is borne out. I then suggest that the actual information available to courts is too little to effect this mechanism, and I consider alternatives. In discussing mechanisms intended to avoid wasteful discovery where courts have limited information, I emphasize the role of normative considerations.

Wealth Inequality And Financial Development: Revisiting The Symmetry Breaking Mechanism, Haiping Zhang

Research Collection School Of Economics

No abstract provided.

Agreeing To Agree And Dutch Books, Yi-Chun Chen, Ehud Lehrer, Jiangtao Li, Dov Samet, Eran Shmaya

Research Collection School Of Economics

We say that agreeing to agree is possible for an event E if there exist posterior beliefs of the agents with a common prior such that it is common knowledge that the agents' posteriors for E coincide. We propose a notion called Dutch book which is a profile of interim contracts between an outsider and the agents based on the occurrence of E, such that the outsider makes positive profit in all states. We show that in a finite state space, when the agents cannot tell whether Eoccurred or not, agreeing to agree is possible for E if and only …

Building A Better Model: Variable Selection To Predict Poverty In Pakistan And Sri Lanka, Marium Afzal, Jonathan Hersh, David Newhouse

Economics Faculty Articles and Research

Numerous studies have developed models to predict poverty, but surprisingly few have rigorously examined different approaches to developing prediction models. This paper applies out of sample validation techniques to household data from Pakistan and Sri Lanka, to compare the accuracy of regional poverty predictions from models derived using manual selection, stepwise regression, and Lasso-based procedures. It also examines how much incorporating publically available satellite data into the model improves its accuracy. The five main findings are that: 1) Lasso tends to outperform both discretionary and stepwise models in Pakistan, where the set of potential predictors is large. 2) Lasso and …

How Does The Stock Market Value The Renewable Energy Sector: A Public Announcement Analysis And Test Of The Efficient Market Hypothesis, Jack Crampton

Journal of Environmental and Resource Economics at Colby

This study analyzes the market reaction to public announcements in the stock market. The efficient market hypothesis is put to test and similar studies are reexamined in the context of the renewable energy sector. Through fixed effects models, we can assess the validity to the efficient market hypothesis and assess how the market values the clean energy sector.

Lecciones De Economía Para No Economistas, Sergio A. Berumen

Sergio A. Berumen

Este libro estudia la totalidad de los contenidos de los cursos de Introducción a la Economía y de los primeros cursos de Microeconomía y Macroeconomía de los grados y las licenciaturas en Ciencias Sociales.

Constructos Teóricos En Economía Común Informática, Rodrigo Lopez-Pablos

Lopez-Pablos, Rodrigo

Repasando elementos de economía comunitaria, solidaría y de la información, se construyen abstracciones teóricas fundamentales en una proto-explicación del rol de la información y el tiempo en la explicación del hecho económico digital y convencional. Infoagregadamente, se sitúa a la emisión informacional como expresión ontológica micro y macroinformática individual y colectiva del ser: el aseguramiento de la infodiversidad civilizatoria generacional; luego, se argumenta sobre la falacia filosófica computacional cognoscitiva detrás de una presunción teórica conceptual equivocada en el estudio y aplicación de lógicas artificiales: su potencial real para la generación de conocimiento híbrido y la creación de conocimiento sin precedentes …

Economic Forecasting, Impact Analysis And Regional Planning With A Focus On The Illawarra, Ashkan Masouman

Ashkan Masouman

Purpose – This thesis investigates the Illawarra economy and presents three approaches to conducting policy impact analysis and economic forecasting. The primary focus of the policy analysis and economic forecasting is measuring the changes that occur in regional output, income and employment as a result of different policies and economic activities. This thesis analyses the structural shifts and economic transitions that have taken place in the regional economy over the past two decades to determine the direction of the economy and analyse impacts of different policies and economic activities on the regional economy. Methodology – There are five methodologies extended …

Economic Wealth And Social Welfare: A Longitudinal Analysis Of Transnational Well-Being, Kelly Brooke Martin

Doctoral Dissertations

Macro changes in the financial arena have prompted ongoing research focused on global economic trends. As America emerges from an era of stagnant wages, rising unemployment, and growing class stratification it is necessary to explore differences in cross-national socioeconomic behavior to address the changing needs of our country. Many studies attempt to describe statistical correlations between economic wealth and social well-being domestically and abroad by utilizing methodological perspectives that do not account for longitudinal change. To address the gap in existing research, this study seeks to measure variations in econometric indicators between the U.S. and Nordic countries to further explicate …

Adam Smith: Homo Socialis, Yes; Social Preferences, No; Reciprocity Was To Be Explained, Vernon L. Smith

Economics Faculty Articles and Research

I argue that the authors accept too casually the neo-classical framework of thought that was incapable of predicting choices in 2-person and other experimental games in the 1980s and 1990ss. The ex post hoc hypothesis that social preference can describe homo socialis reduces inevitably to a rescue of neo-classical economics in which Max-U (own payoff, other payoff) substitutes mechanically for Max-U (own payoff) in our personal groupings. This static procedure unnecessarily and inappropriately robs human conduct of its sociality as a process relationship. The model I articulate was masterfully developed by Adam Smith, which back-predicts the results of these earlier …

Does Market Integration Buffer Risk, Erode Traditional Sharing Practices And Increase Inequality? A Test Among Bolivian Forager-Farmers, Michael Gurven, Adrian V. Jaeggi, Christopher Von Rueden, Paul L. Hooper, Hillard Kaplan

ESI Publications

Sharing and exchange are common practices for minimizing food insecurity in rural populations. The advent of markets and monetization in egalitarian indigenous populations presents an alternative means of managing risk, with the potential impact of eroding traditional networks. We test whether market involvement buffers several types of risk and reduces traditional sharing behavior among Tsimane Amerindians of the Bolivian Amazon. Results vary based on type of market integration and scale of analysis (household vs. village), consistent with the notion that local culture and ecology shape risk management strategies. Greater wealth and income were unassociated with the reliance on others for …

Private Value Determinations And The Potential Effect On The Future Of Research And Development, Amy L. Landers

Amy L. Landers

Although the promise of an emerging patent market is thought to provide future benefits to invention, innovation, and the public, this essay examines the possibility that the aggregate influence of this activity could instead destabilize patent values in a manner that mirrors the "bubble" phenomenon that occurred in certain markets in the past. To the extent that this occurs, this would destabilize the patent system and might have negative consequences for the future of investment in research, development and innovation.

Mutual Fund Performance In A Nonsymmetrical World: A Case For The Upside Deviation, Ladd Kochman, Ravija Badarinathi

Ladd Kochman

A mathematical case is made for the upside deviation. When a portfolio's UD is divided by the market's UD, the resulting ratio facilitates another test of positive or negative skewness. However, a grater contribution of the prospective measure is that were DDp/DDm monitors a portfolio's control of downside deviations, UDp/UDm reflects the leverage from upside deviations.

Portfolio Evaluation, Downside Risk And An Anomaly, Ladd Kochman

Ladd Kochman

Owing to the developments in portfolio theory in the 1960s, the evaluation of portfolio performance has evolved from a return-only mentality to a process that makes risk no less important than return. Earliest efforts to combine the two dimensions into a single (or composite) measure belong to Treynor (1965) and Sharpe (1966), who suggested dividing a portfolio's return in excess of the risk-free rate by the portfolio's bets and standard deviation, respectively. When Fama (1972) recommended that portfolios pay premiums that capture both market and diversification risk, he was implicitly asking whether Jensen's (1968) use of beta sufficiently measures the …

Football Betting And The Neglected-Firm Effect: A Note, Ladd Kochman, David Waples

Ladd Kochman

To the extent that betting is analogous to investing, it seems fair to think that the football-betting market could provide a legitimate test of the neglected-firm effect. In the context of football-betting, neglect as a predictor variable appears to possess no special qualities. Even as the basis for a contrarian rule (that is, betting on teams that are least-neglected), the condition of being overlooked generated a W/B ratio (52.30 percent) that was unable to hurdle the 52.38-percent breakeven rate. Clearly, from a neglected-teams perspective, the football-betting market is efficient. A broader conclusion might be that the neglected-firm effect has little …