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Articles 811 - 840 of 840

Full-Text Articles in Economics

Capital Structure And Product-Market Rivalry: How Do We Reconcile Theory And Evidence?, Dan Kovenock, Gordon Phillips Jan 1995

Capital Structure And Product-Market Rivalry: How Do We Reconcile Theory And Evidence?, Dan Kovenock, Gordon Phillips

Economics Faculty Articles and Research

This paper presents empirical evidence on the interaction of capital structure decisions and product market behavior. We examine when firms recapitalize and increase the proportion of debt in their capital structure. The evidence in this paper shows that firms with low productivity plants in highly concentrated industries are more likely to recapitalize and increase debt financing. This finding suggests that debt plays a role in highly concentrated industries where agency costs are not significantly reduced by product market competition. Following the empirical evidence we introduce the "strategic investment" effects of debt and argue that this effect, in conjunction with agency …

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Futures Contracting And Dividend Uncertainty In Experimental Asset Markets, David P. Porter, Vernon L. Smith Jan 1995

Futures Contracting And Dividend Uncertainty In Experimental Asset Markets, David P. Porter, Vernon L. Smith

Economics Faculty Articles and Research

Prices in experimental asset markets tend to bubble and then crash to dividend value at the end of the asset's useful life. Explanations for this phenomenon are (1) that participants cannot form reliable future price expectations or (2) dividend risk aversion. We report the results of experiments to test these hypotheses. In one experimental series, a futures market is introduced so that participants can obtain information on future share prices. In another series of experiments, the per-period dividend is known with certainty. The futures market treatment had little effect on the character of bubble. The certain dividend treatment had little …

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The Value Line Enigma Extended - An Examination Of The Performance Of Option Recommendations, Jack B. Broughton, Don M. Chance Oct 1993

The Value Line Enigma Extended - An Examination Of The Performance Of Option Recommendations, Jack B. Broughton, Don M. Chance

Business Faculty Articles and Research

We extend the research on the Value Line Enigma by examining the performance of call recommendations in Value Line Options. Galai's hedge decomposition procedure identifies the components of the calls' returns. Abnormal call returns were most pronounced immediately following the purchase, which is consistent with studies of Value Line's stock rankings. The largest and most significant abnormal performance was by calls assigned the highest rank written on stocks judged by Value Line to be correctly priced. Abnormal call return performance by joint call and stock ranks was consistent with the hypothesis that Value Line identifies underpriced call options.

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Rigging The Lobbying Process: An Application Of The All-Pay Auction, Michael R. Baye, Dan Kovenock, Casper G. De Vries Jan 1993

Rigging The Lobbying Process: An Application Of The All-Pay Auction, Michael R. Baye, Dan Kovenock, Casper G. De Vries

Economics Faculty Articles and Research

In a world where a politician can explicitly auction off a prize to the high bidder, the standard auction literature can be used to analyse political behavior. The justice system, however, precludes politicians from explicitly selling the prize to the highest bidder. Thus politicians cannot let it become public knowledge that they are in the business of selling political favors. An institution has emerged in political markets to overcome this constraint which are termed as lobbying. Lobbyists make implicit payments to the politician through campaign contributions. If these up-front payments were rebated to those failing to receive the prize, it …

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Price Expectations In Asset Markets With Futures Contracting, David P. Porter, Vernon L. Smith Dec 1992

Price Expectations In Asset Markets With Futures Contracting, David P. Porter, Vernon L. Smith

Economics Faculty Articles and Research

Can the introduction of a futures market assist investors in obtaining better price expectations and reduce price bubbles, and is the major determinant of the price bubble the uncertainty of the dividend structure and its effect on noise traders?

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Rational Choice: The Contrast Between Economics And Psychology, Vernon L. Smith Jan 1991

Rational Choice: The Contrast Between Economics And Psychology, Vernon L. Smith

Economics Faculty Articles and Research

Rational Choice--the published record of a conference on economics and psychology--frames the issues as a contest between economic theory and the falsifying evidence from psychology. According to a third perspective, that of experimental economics, most standard theory provides a correct first approximation in predicting motivated behavior in laboratory experimental markets, but the theory is incomplete, particularly in articulating convergence processes in time and in ignoring decision cost. This view has roots in the work of Herbert Simon and Sidney Siegel, but it is not plainly represented in contemporary research in economic pyschology.

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Off-Floor Trading, Disintegration And The Bid-Ask Spread In Experimental Markets, Joseph Campbell, Shawn Lamaster, Vernon L. Smith, Mark Van Boening Jan 1991

Off-Floor Trading, Disintegration And The Bid-Ask Spread In Experimental Markets, Joseph Campbell, Shawn Lamaster, Vernon L. Smith, Mark Van Boening

Economics Faculty Articles and Research

This article uses experimental methods to establish that greater uncertainty in the environment increases the naturally emerging bid-ask spread in double-auction trading. The opportunity to trade off floor is then introduced. Off-floor trading is greater in the environment with a wider bid-ask spread, increases with block trading, and increases still more with increasing subject experience. Finally, we find that the preponderance of off-floor trades are inside the bid-ask spread, supporting the hypothesis that a motive for such trades is to split privately the gain represented by the bid-ask spread without revealing publicly a willingness to make price concessions.

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Financing The Postwar Housing Boom In Phoenix And Los Angeles, 1945-1960, Lynne Doti, Larry Schweikart Jan 1989

Financing The Postwar Housing Boom In Phoenix And Los Angeles, 1945-1960, Lynne Doti, Larry Schweikart

Economics Faculty Articles and Research

This article compares the real estate markets in Los Angeles, CA to Phoenix, AZ.

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Relative Price Changes And Exchange Rate Determination With Slow Price Adjustment: An Empirical Analysis, Clas Wihlborg, Madelyn Antoncic Jan 1986

Relative Price Changes And Exchange Rate Determination With Slow Price Adjustment: An Empirical Analysis, Clas Wihlborg, Madelyn Antoncic

Business Faculty Articles and Research

The general purpose of this paper is to analyze empirically sectoral price adjustment in the exchange rate adjustment process. Relative price changes may occur within a sector between countries, and within a country between sectors. Our main objective is to test the hypothesis that both kinds of relative price changes occur in the adjustment process to disturbances in money demand and supply. In particular, we expect that the relative prices among goods of different "tradedness"--ranging from perfectly traded to non-traded goods--are affected by such disturbances. Our second objective is to test empirically whether the nature of exchange rate adjustment is …

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Notes On The Effect Of Capital Gains Taxation On Non-Austrian Assets, Dan Kovenock, Michael Rothschild Jan 1985

Notes On The Effect Of Capital Gains Taxation On Non-Austrian Assets, Dan Kovenock, Michael Rothschild

Economics Faculty Books and Book Chapters

This paper is an attempt to assess the effect of capital gains taxation on non-Austrian assets, such as claims to profits of continuing enterprises. As compared to taxation on an accrual basis, the capital gains tax discourages sales of appreciated assets. This is the "lock-in" effect. Because assets subject to capital gains taxation are generally held a long time, conventional estimates suggest that the effective rate of capital gains taxation is low. We contend that conventional estimates could seriously underestimate the effective rate of capital gains taxation because they ignore uncertainty. We construct a model which allows us to calculate …

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In Search Of Predatory Pricing, R. Mark Isaac, Vernon L. Smith Jan 1985

In Search Of Predatory Pricing, R. Mark Isaac, Vernon L. Smith

Economics Faculty Articles and Research

Focuses on the reproduction of predatory pricing in laboratory environment. Definition on predatory pricing; Methods used to construct experimental design; Effect of predation on price increase and efficiency. Focuses on the reproduction of predatorypricing in laboratory environment. Definition on predatorypricing; Methods used to construct experimental design; Effect of predation on price increase and efficiency.

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Price Determination In A Competitive Industry With Costly Information And A Production Lag, Reuven Glick, Clas Wihlborg Jan 1985

Price Determination In A Competitive Industry With Costly Information And A Production Lag, Reuven Glick, Clas Wihlborg

Business Faculty Articles and Research

We analyze the role of information for price and output adjustment when competitive firms with rational expectations cannot directly distinguish between industrywide and firm-specific cost disturbances. Firms may become informed about industrywide cost conditions by acquiring information at a cost. The sensitivity of price and output to cost disturbances decreases as more firms choose to purchase information. The equilibrium industry share of informed firms increases as the cost of information falls and total cost variability increases. The equilibrium share of informed firms is largest when there is a comparable degree of variability in both industrywide and firm-specific costs.

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Cyclical Double-Auction Markets With And Without Speculators, Arlington W. Williams, Vernon L. Smith Jan 1984

Cyclical Double-Auction Markets With And Without Speculators, Arlington W. Williams, Vernon L. Smith

Economics Faculty Articles and Research

This study reports the results of 18 computerized 'double-auction' market experiments characterized by cycling excess demand. Two such market designs are studied: one with stationary supply and cycling demand, the other with cycling supply and demand. Data from a series of control experiments under conditions of intertemporal isolation (autarky) are compared with data from experiments where the two cyclical market phases are linked by a subset of agents (speculators). Allowing intertemporal speculation is found to be a significant treatment variable in both market designs; however, price convergence patterns are not robust with respect to the design change.

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Natural Monopoly And The Contestable Markets Hypothesis: Some Preliminary Results From Laboratory Experiments, Don R. Coursey, R. Mark Isaac, Vernon L. Smith Jan 1984

Natural Monopoly And The Contestable Markets Hypothesis: Some Preliminary Results From Laboratory Experiments, Don R. Coursey, R. Mark Isaac, Vernon L. Smith

Economics Faculty Articles and Research

The concept of natural monopoly is one of the most familiar in economics. Many supposed natural monopolies are the object of widespread state, local, and federal regulation. It was in addressing issues of public utility regulation that Demsetz laid the foundation for an alternative scenario for decreasing cost markets. Demsetz's article promoted a debate over whether a formal auction system might provide a practical approach to monopoly control. This literature is rich in examining the practical difficulties of implementing such an institution. The important characteristic of the contestable markets hypothesis, as we interpret it, is that at least two firms …

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Ocs Leasing And Auctions: Incentives And The Performance Of Alternative Bidding Institutions, James W. Cox, R. Mark Isaac, Vernon L. Smith Jan 1983

Ocs Leasing And Auctions: Incentives And The Performance Of Alternative Bidding Institutions, James W. Cox, R. Mark Isaac, Vernon L. Smith

Economics Faculty Articles and Research

In Watt v. Energy Action Educational Foundation, the Supreme Court rebutted a challenge to the federal government's mix of "nontraditional" outer continental shelflease-auction mechanisms authorized under the 1978 OCS Amendments. The issues of this case addressed here include: the economic intent of the congressional language; incentive properties of various of the authorized auction processes; methodological shortcomings inherent in the implicit congressional directive for field experimentation; and, the usefulness of laboratory experimental economics in answering relevant auction-policy questions. The discussion of experimental economics includes evidence already gained from laboratory experiments relating to hypotheses about auction-market performance

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Capital Gains Taxation In An Economy With An ‘Austrian Sector’, Dan Kovenock, Michael Rothschild Jan 1983

Capital Gains Taxation In An Economy With An ‘Austrian Sector’, Dan Kovenock, Michael Rothschild

Economics Faculty Articles and Research

This paper examines the effects of a proportional capital gains in an economy with an Austrian sector (with wine and trees) and an ordinary sector. We analyze the effect of capital gains taxation (on both an accrual and a realization basis) on the efficiency with which resources are used within the Austrian sector. Since time is the only input which can be varied in the Austrian sector, this amounts to looking at the effect of capital gains taxation on the harvesting time or selling time of assets. Accrual taxation decreases the selling time of Austrian assets. Realization taxation decreases the …

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Banking In Orange County: Early Years, Lynne Doti Jan 1980

Banking In Orange County: Early Years, Lynne Doti

Economics Faculty Articles and Research

This article explores the beginnings of banking in Orange County.

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Banking In California: Some Evidence On Structure, 1878-1905, Lynne Doti Jan 1978

Banking In California: Some Evidence On Structure, 1878-1905, Lynne Doti

Economics Faculty Articles and Research

Doti’s thesis explains the contribution of state banks to nineteenth century financial history in the United States.

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The Principle Of Unanimity And Voluntary Consent In Social Choice, Vernon L. Smith Jan 1977

The Principle Of Unanimity And Voluntary Consent In Social Choice, Vernon L. Smith

Economics Faculty Articles and Research

A discrete version of the author's incentive-compatible Auction Mechanism for public goods is applied to the problem of social choice (voting) among distinct mutually exclusive alternatives. This Auction Election is a bidding mechanism characterized by (1) unanimity, (2) provision for the voluntary compensation of voters harmed by a winning proposition, and (3) incentives for 'reasonable' bidding by excluding members of a collective from maximal increase in benefit if they fail to agree on the proposition with largest surplus. Four of five experiments with six voters, bidding privacy, monetary rewards, and cyclical majority rule structure choose the best of three propositions.

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The Primitive Hunter Culture, Pleistocene Extinction, And The Rise Of Agriculture, Vernon L. Smith Jan 1975

The Primitive Hunter Culture, Pleistocene Extinction, And The Rise Of Agriculture, Vernon L. Smith

Economics Faculty Articles and Research

The hypothesis that megafauna extinction some 10,000 years ago was due to "overkill" by Paleolithic hunters is examined using an economic model of a replenishable resource. The large herding animals that became extinct, such as mammoth, bison, camel, and mastodon, presented low hunting cost and high kill value. The absence of appropriation provided incentives for the wastage killing evident in some kill sites, while the slow growth, long lives, and long maturation of large animals increased their vulnerability to extinction. Free-access hunting is compared with socially optimal hunting and used to interpret the development of conservationist ethics, and controls, in …

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Review Of "Essays In The Theory Of Risk Bearing", Vernon L. Smith Jan 1974

Review Of "Essays In The Theory Of Risk Bearing", Vernon L. Smith

Economics Faculty Articles and Research

Vernon Smith reviews "Essays in the Theory of Risk Bearing" by Kenneth J. Arrow.

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On Models Of Commercial Fishing: The Traditional Literature Needs No Defenders, Vernon L. Smith Jan 1972

On Models Of Commercial Fishing: The Traditional Literature Needs No Defenders, Vernon L. Smith

Economics Faculty Articles and Research

Examines the models of commercial fishing. Representation of the variable K as a measure of crowding externality in the cost function; Change of the degree of fishing pressure without changing the variable K; Modification of the output of firms by varying the inputs.

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Taxes And Share Valuation In Competitive Markets, Vernon L. Smith Jan 1969

Taxes And Share Valuation In Competitive Markets, Vernon L. Smith

Economics Faculty Articles and Research

This paper extends the fundamental theorem of share (or capital) valuation under conditions of certainty and purely competitive markets, to allow for the distinction between capital gains and income in the taxation of personal income. The objective is to develop the theorem for the tax case in a form general enough to allow for corporations both currently and not currently paying a dividend. However, the general derivation is sufficiently tedious to warrant a presentation which begins with less general cases. Accordingly, we will first develop the share valuation equation for a continuous discount version of the taxless case for corporations …

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On Models Of Commercial Fishing, Vernon L. Smith Jan 1969

On Models Of Commercial Fishing, Vernon L. Smith

Economics Faculty Articles and Research

Commercial fishing is characterized by three key economic and technological features that are relevant to the formulation of an economic theory of fish production. 1. A fishery resource, although conceivably exhaustible, is replenishable; that is, it is subject to laws of natural growth which define an environmental biotechnological constraint on the activities of the fishing industry. 2. The resource and the activity of production from it form a stock-flow relationship. The new growth in the population fish mass depends upon the harvest rate relative to natural recruitment to the stock. If the harvest rate exceeds the recruitment rate, the stock …

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Optimal Insurance Coverage, Vernon L. Smith Jan 1968

Optimal Insurance Coverage, Vernon L. Smith

Economics Faculty Articles and Research

There is limited treatment of the optimal protection of assets against casualty or liability loss. The problem of optimal insurance coverage is formally similar to the problem of optimal inventory stockage under uncertainty. If casualty or liability loss (demand) is less than the insurance coverage (inventory level), excessive insurance cost (inventory holding cost) is incurred. If casualty or liability loss (demand) is greater than the insurance coverage (inventory level), one must absorb the cost of the unrecoverable loss (sales loss). These two components of loss must be balanced in determining optimal insurance (inventory) levels.

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Experimental Studies Of Discrimination Versus Competition In Sealed Bid Auction Markets, Vernon L. Smith Jan 1967

Experimental Studies Of Discrimination Versus Competition In Sealed Bid Auction Markets, Vernon L. Smith

Economics Faculty Articles and Research

In this study, attention focuses on the behavior of a class of auction markets where formal organization requires the individual competing bidders to submit one or more written "sealed bids" specifying the quantity and price at which they are committed to buy (or sell) units of the item being traded.

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Bidding Theory And The Treasury Bill Auction: Does Price Discrimination Increase Bill Prices?, Vernon L. Smith Jan 1966

Bidding Theory And The Treasury Bill Auction: Does Price Discrimination Increase Bill Prices?, Vernon L. Smith

Economics Faculty Articles and Research

This paper is not directed to the question of whether the Treasury should or should not practice in the public sector what the Clayton Act prohibits in the private sector. The paper is concerned exclusively with the theoretical question of whether the Treasury would necessarily receive higher prices by employing price discrimination than it could get by selling the issues at a single price. From a theory of bidding under uncertainty, which seems to apply naturally to the Treasury auction, it will be shown that buyers may be expected to enter lower bids under price discrimination than they would for …

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Experimental Auction Markets And The Walrasian Hypothesis, Vernon L. Smith Jan 1965

Experimental Auction Markets And The Walrasian Hypothesis, Vernon L. Smith

Economics Faculty Articles and Research

This study reports on a block of experimental market sessions designed primarily to provide (1) the severest test yet attempted of the equilibrating forces operating in competitive auction markets and (2) a more rigorously controlled test of the Walrasian hypothesis. Some data are also supplied which show the effect of cash payoffs on the equilibrating behavior of such markets; in particular, the effect of full cash payoffs to all successful trading subjects as against payoffs to a subset of such subjects chosen at random.

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An Experimental Study Of Competitive Market Behavior, Vernon L. Smith Jan 1962

An Experimental Study Of Competitive Market Behavior, Vernon L. Smith

Economics Faculty Articles and Research

Recent years have witnessed a growing interest in experimental games such as management decision-making games and games designed to simulate oligopolistic market phenomena. This article reports on a series of experimental games designed to study some of the hypotheses of neoclassical competitive market theory.

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An Economic Analysis Of Contributions Under The Income Tax Laws, Floyd E. Gillis, Vernon L. Smith Jan 1958

An Economic Analysis Of Contributions Under The Income Tax Laws, Floyd E. Gillis, Vernon L. Smith

Economics Faculty Articles and Research

In this note classical tools are used to examine the treatment of "gifts in kind" under the federal income-tax laws as they were but a few years ago, as they are today, and as they should be, given the objective that the law appears to be trying to achieve. It will be demonstrated that, under certain conditions, firms today can maximize profit after taxes by producing some output to be given to acceptable charities.

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