Economic Theory Commons^™

Moral Markets And The Problematic Proprietor: How Neoliberal Values Shape Lottery Debates In Nevada, Christopher Wetzel

Occasional Papers

All but seven states have legalized lotteries since New Hampshire ushered in the modern lottery era in 1964. Although casino gaming has been permitted since 1931, Nevada has rejected multiple legislative proposals amend the State Constitution and create a state-run lottery. This paper theorizes the lottery’s absence in Nevada, focusing in particular on the role of the state. Lotteries are distinct from other forms of gaming because states act simultaneously as the operation’s regulator and proprietor. In this case, Nevada’s lottery legalization debates over the last half century reflect the profound moral valence of markets. The state as a potential …

Is Greed Good? A Catholic Perspective On Modern Usury, William M. Woodyard, Chad G. Marzen

Brigham Young University Journal of Public Law

No abstract provided.

Inefficiency In The Shadow Of Unobservable Outside Options, Madhav S. Aney

Research Collection School Of Economics

This paper considers the problem of allocating an object between two players in an environment with one sided asymmetric information when their outside options depend on each other's type, causing the outside option of the uninformed player to be unobservable to her. Consequently efficient mechanisms under budget balance are not always available even when there is no uncertainty about which of the two players values the object more. A simple condition on the outside options turns out to be both necessary and sufficient to guarantee the first best. I also characterise the second best allocation under some conditions and show …

Random Dictatorship Domains, Shurojit Chatterji, Arunava Sen, Huaxia Zeng

Research Collection School Of Economics

A domain of preference orderings is a random dictatorship domain if every strategy- proof random social choice function satisfying unanimity defined on the domain, is a random dictatorship. Gibbard (1977) showed that the universal domain is a random dictatorship domain. We investigate the relationship between dictatorial and random dictatorship domains. We show that there exist dictatorial domains that are not random dictatorship domains. We provide stronger versions of the linked domain condition (introduced in Aswal et al. (2003)) that guarantee that a domain is a random dictatorship domain. A key step in these arguments that is of independent interest, is …

Nonlinear Cointegrating Regression Under Weak Identification, Xiaoxia Shi, Peter C. B. Phillips

Research Collection School Of Economics

An asymptotic theory is developed for a weakly identified cointegrating regression model in which the regressor is a nonlinear transformation of an integrated process. Weak identification arises from the presence of a loading coefficient for the nonlinear function that may be close to zero. In that case, standard nonlinear cointegrating limit theory does not provide good approximations to the finite-sample distributions of nonlinear least squares estimators, resulting in potentially misleading inference. A new local limit theory is developed that approximates the finite-sample distributions of the estimators uniformly well irrespective of the strength of the identification. An important technical component of …

Testing For Jumps In Noisy High Frequency Data, Yacine Ait-Sahalia, Jean Jacod, Jia Li

Research Collection School Of Economics

This paper proposes a robustification of the test statistic of Aït-Sahalia and Jacod (2009b) for the presence of market microstructure noise in high frequency data, based on the pre-averaging method of Jacod et al. (2010). We show that the robustified statistic restores the test's discriminating power between jumps and no jumps despite the presence of market microstructure noise in the data.

Fatty Acid Composition In The Mature Milk Of Bolivian Forager-Horticulturalists: Controlled Comparisons With A Us Sample, Melanie A. Martin, William D. Lassek, Steven J. C. Gaulin, Rhobert W. Evans, Sheela S. Geraghty, Barbara S. Davidson, Ardythe L. Morrow, Hillard Kaplan, Michael Gurven

ESI Publications

Breast milk fatty acid (FA) composition varies greatly among individual women, including in percentages of the long-chain polyunsaturated FAs (LCPUFA) 20:4n-6 (arachidonic acid, AA) and 22:6n-3 (docosahexaenoic acid, DHA), which are important for infant neurological development. It has been suggested that owing to wide variation in milk LCPUFA and low DHA in Western diets, standards of milk FA composition should be derived from populations consuming traditional diets. We collected breast milk samples from Tsimane women at varying lactational stages (6–82 weeks). The Tsimane are an indigenous, natural fertility, subsistence-level population living in Amazonia Bolivia. Tsimane samples were matched by lactational …

From The Womb To The Tomb: The Role Of Transfers In Shaping The Evolved Human Life History, Michael Gurven, Jonathan Stieglitz, Paul L. Hooper, Cristina Gomes, Hillard Kaplan

ESI Publications

Humans are the longest living and slowest growing of all primates. Although most primates are social, humans are highly cooperative and social in ways that likely co-evolved with the slow human life history. In this paper we highlight the role of resource transfers and non-material assistance within and across generations in shaping low human mortality rates. The use of complex cooperative strategies to minimize risk is a necessary precursor for selecting further reductions in mortality rate in late adulthood. In conjunction with changes in the age-profile of production, the impacts of resource transfers and other forms of cooperation on reducing …

An End To End-To-End? A Review Essay Of Barbara Van Schewick’S Internet Architecture And Innovation, Adam Candeub

Federal Communications Law Journal

Amidst much controversy, the FCC released its landmark "network neutrality" order in December 2010. This regulation prohibits Internet service providers, such as Verizon or Comcast, from discriminating in favor of traffic or content that they own or with which they are affiliated. Professor Barbara van Schewick's recently published book, Internet Architecture and Innovation, could not be timelier. Employing a variety of economic and technical arguments, van Schewick defends the type of regulation the FCC passed as necessary to preserve the Internet's potential for innovation. My central critique of Internet Architecture is its deployment of economic theories on one side of …

The 1999 Repeal Of Glass-Steagall: The Effect On U.S. Commercial Banks, Ryan Michael Daddi

Renée Crown University Honors Thesis Projects - All

The Great Recession of 2008-2009 was one of the most devastating financial crises of our history. The extent with which the recession plagued our financial system and affected everyday citizens created an immediate search for answers as to what had happened. Many experts pointed at the 1999 repeal of the Banking Act of 1933 (commonly referred to as Glass-Steagall) as a possible cause of increased risk-taking in the financial system. After the Great Depression, Glass-Steagall was enacted to separate commercial banking from investment banking, the combination being seen as a cause for the worst financial crises in history.

With the …

Wage-Vacancy Contracts And Coordination Frictions, Nicolas L. Jacquet, Serene Tan

Research Collection School Of Economics

We consider a directed search model with risk-averse workers and risk-neutral entrepreneurs who can set up firms that post wage-vacancy contracts, i.e., contracts where firms can make payments to more than one applicant, and where the payments can be different for each applicant and be contingent on the number of applicants. We establish that the type of contracts the literature focuses on are not offered if firms can post wage-vacancy contracts. We show that there exists an equilibrium satisfying a Monotonic Expected Utility property which is efficient. Furthermore, we investigate the role of wage-vacancy contracts on welfare and competition.

State Juvenile Justice Spending Decisions: The Effects Of Federal Aid, Race, Politics, And Other Socioeconomic Factors, Willie B. Coleman Smith

UNLV Theses, Dissertations, Professional Papers, and Capstones

Historically, juvenile justice in the United States has been the responsibility of state governments with limited federal support. There is a notable gap in the empirical literature on factors that affect funding policies for state juvenile justice programs. In this dissertation research, I used two theoretical perspectives to examine determinants of juvenile justice spending: economic theory on intergovernmental aid and tenets of the Politics of Social Order Framework, developed by Stucky, Heimer, and Lang (2007) to investigate corrections spending. Two research questions were considered: 1) What impact does federal aid have on state spending on juvenile justice programs? and 2) …

The Financial Crisis Viewed From The Perspective Of The Social Cost Theory, L. Randall Wray

Social Cost Workshop

The talk examines the causes and consequences of the current global financial crisis. K.W. Kapp’s “social costs” theory is contrasted with the recently dominant “efficient markets” hypothesis to provide the context for analyzing the functioning of financial institutions. Rather than operating “efficiently,” the financial sector has been imposing huge costs on the economy—costs that no one can deny in the aftermath of the economy’s collapse. While orthodox approaches lead to the conclusion that money and finance should not matter much, the alternative tradition—from Veblen and Keynes to Galbraith and Minsky—provides the basis for developing an approach that puts money and …

The Social Cost Of Labor And Its Importance For Labor Economics, Robert E. Prasch

Social Cost Workshop

The starting point and core notion of neoclassical or mainstream economics is a reductionist vision of the exchange of commodities. Missing is the historical, social, and legal environments within which exchanges occur. A parallel and equally problematic notion is that labor exists as something of a “found object.” By contrast, the classical school of economists understood that laborers must earn a wage equal to or greater than “subsistence” if society was to be an ongoing enterprise. Laborers must be fed, sheltered, socialized, and educated before they arrive in the labor market. This, in a phrase, is the Social Cost of …

The Discourse On Social Costs: Heterodox Vs. Neoliberal Economics, Sebastian Berger

Social Cost Workshop

This presentation analyzes the discourse on social costs, focusing on how neoliberal economists in the 1950s and 1960s embarked on the successful project to marginalize the heterodox view that social controls of the economy are a good thing because markets otherwise cause too many social damages. The paper mainly looks at the intellectual project of the institutional economists John M. Clark and K. William Kapp. Both collaborated in the 1940s in crafting the institutional theory of social costs as a critique of the neoclassical theory of costs and externalities (Arthur C. Pigou), as well as the rising post WWII neoliberalism …

Capitalism And The Science Of History: Appleby, Marx, And Postmodernism, Patrick D. Anderson

Grand Valley Journal of History

Joyce Appleby has written an extensive amount on the origins and development of capitalism, but her work is influenced by her belief that history is a science with at least some objectivity. She rejects Marxism as a relic of past historians with naïve beliefs about finding the laws of nature, but she also rejects postmodern criticisms of history because they undermine any chance for objectivity. Appleby believes the historian can be objective even if politics necessarily colors his or her work. For Appleby, her support of capitalism leads her to make policy recommendations with her historiography, recommendations that change with …

What Determines Public Pension Investment Risk-Taking Policy, Nancy Mohan, Ting Zhang

Economics and Finance Faculty Publications

State public pension plans, mostly defined benefit plans, cover pension benefits for 12.8 million active public employees and 5.9 million retirees and other annuitants. However, by the end of 2009, public pension plans had accumulated a total funding deficit of $697 billion (measured by the difference between actuarial pension assets and liabilities). On average, public pension funds cover 75 percent of their liabilities, but individual state results vary greatly.

The 2008 stock market crash strongly affected pension asset value in that equity allocation on average accounted for 56 percent of invested assets. The average 2009 pension asset beta of 0.63 …

Halos, Alibis And Community Development: A Cross National Comparison Of How Governments Spend Revenue From Gambling, Lynn Gidluck

Occasional Papers

This paper provides a cross-national comparison of how governments around the world distribute revenues from state-directed gambling and how these choices have been justified by proponents and vilified by critics. Case studies where governments have popularized gambling expansion by “earmarking” revenues for particular good causes and where the state has collaborated with the voluntary sector to deliver programs from this revenue stream are examined. Lessons learned from challenges of various approaches are considered.

(Review) A Short History Of Ethics And Economics: The Greeks, Spencer J. Pack

Economics Faculty Publications

No abstract provided.

Infidelity, Jealousy, And Wife Abuse Among Tsimane Forager-Farmers: Testing Evolutionary Hypotheses Of Marital Conflict, Jonathan Stieglitz, Michael Gurven, Hillard Kaplan, Jeffrey Winking

ESI Publications

What causes marital conflict, and which marital conflicts are more likely to result in men’s violence against their wives? It has long been argued that men’s jealousy over women’s infidelity is the strongest impetus to men’s lethal and non-lethal violence against female partners. Less is known about the extent to which women’s jealousy over men’s infidelity precipitates men’s violence against female partners. Husbands are more likely than wives to commit infidelity, and men and women report a similar frequency and intensity of jealous emotions during recalls of potential infidelity. If men are likely to use time and resources for pursuit …

Returns From Self-Employment: Using Human Capital Theory To Compare U.S. Natives And Immigrants, Nikola Popovic

Undergraduate Economic Review

The focus of this paper is to examine the economic returns from self-employment when comparing natives and immigrants. I hypothesize that returns from self-employment will increase with age and education, and that immigrants from China, India, and the Philippines will have higher returns while immigrants from Mexico will have lower returns than natives. I also hypothesize that immigrants with high levels of education will earn more than natives with the same amount of education. The OLS regressions show that human capital variables explain the differences in self-employed income between natives and immigrants, as the literature suggests.

A Critique Of The Neoclassical And A Revision Of The Keynesian Theories Of Employment, Yang Liu

Electronic Theses and Dissertations

The neoclassical theory of employment fails to apply to modern capitalism since it claims that unemployment is necessary all voluntary. Its problems are pointed out by Keynes. But, if we look at Keynes’s system, we find that an essential explanation about why modern capitalism suffers from weak demand is not provided. To answer this question an alternative consumption theory is needed. Levine’s consumption theory well explains the condition of under-consumption. Furthermore, a deep problem of capitalism reveals itself: the production format and the distribution pattern of capitalism result in a huge income discrepancy between the working-class and the capitalist-class and …

Managing A Duopolistic Water Market With Confirmed Proposals. An Experiment, Aurora García-Gallego, Nikolaos Georgantzís, Roberto Hérnan-Gonzalez, Praveen Kujal

Economics Faculty Articles and Research

We report results from experimental water markets in which owners of two different sources of water supply water to households and farmers. The final water quality consumed by each type of consumer is determined through mixing of qualities from two different resources. We compare the standard duopolistic market structure with an alternative market clearing mechanism inspired by games with confirmed strategies (which have been shown to yield collusive outcomes). As in the static case, complex dynamic markets operating under a confirmed proposals protocol yield less efficient outcomes because coordination among independent suppliers has the usual effects of restricting output and …

The Effects Of Political Institutions On Public Budgeting, Andrew Burnos

Political Science Theses and Capstones

Economics around the globe has been a growing issue of late due to the current economic crisis. This study focuses on political institutional factors that influence spending in a particular country. The variables used in this study include Gross Domestic Product (GDP), Tax Revenue as Percent of GDP, and current account balance to name a few. This research looks at the relationship between proportional representation compared to majoritarian systems as well as presidential compared to parliamentary systems and how these relate to public budgeting. This research updates the analysis of Persson and Tabellini in their book The Economic Effects of …

A Comparison Of Cardinal Tournaments And Piece Rate Contracts With Liquidity Constrained Agents, Kosmas Marinakis, Theofanis Tsoulouhas

Research Collection School Of Economics

Acelebrated result in the theory of tournaments is that relative performance evaluation (tournaments) is a superior compensation method to absolute performance evaluation (piece rate contracts) when the agents are risk-averse, the principal is risk-neutral or less risk-averse than the agents and production is subject to common shocks that are large relative to the idiosyncratic shocks. This is because tournaments get closer to the first best by filtering common uncertainty. This paper shows that, surprisingly, tournaments are superior even when agents are liquidity constrained so that transfers to them cannot fall short of a predetermined level. The rationale is that, by …

Economic Shocks, Trade And International Relations, Jack Barnes Thompson

Undergraduate Economic Review

In an interdependent world, trade has unavoidable game aspects. A model with two agents is used to determine the impact of trade and a military alliance between two major world players, North America and China, and an external non-actor, South Korea. The objective of this study is to investigate the impact of cooperative actions and outcomes by the two agents on a two-track policy for South Korea. We also study a variant to the game by considering a change in international relations. Welfare implications are also observed.

Upjohn Institute Policy Paper: Public Pension Crisis And Investment Risk Taking: Underfunding, Fiscal Constraints, Public Accounting, And Policy Implications, Nancy Mohan, Ting Zhang

Economics and Finance Faculty Publications

Public pension funds that cover retirement benefits for almost 20 million active or retired employees have been significantly underfunded. An important, though largely overlooked, issue related to pension underfunding is the excessive investment risk levels assumed by public plans. Our analysis suggests government accounting standards strongly affect public fund investment risk, as higher return assumptions (used to discount pension liabilities) are associated with higher investment risk.

Public funds undertake more risk if they are underfunded and have lower investment returns in previous years, consistent with the risk transfer hypothesis. Furthermore, pension funds in states facing fiscal constraints allocate more assets …

The Gettysburg Economic Review, Volume 6, Spring 2012

Gettysburg Economic Review

No abstract provided.

Political Legitimacy And Technology Adoption, Metin M. Coşgel, Thomas J. Miceli, Jared Rubin

Economics Faculty Articles and Research

A fundamental question of economic and technological history is why some civilizations adopted new and important technologies and others did not. In this paper, we analyze the effect that new technologies have on agents that legitimize rulers. We construct a simple political economy model which suggests that rulers may not accept a productivity-enhancing technology when it negatively affects an agent’s ability to provide the ruler legitimacy. However, when other sources of legitimacy emerge, the ruler will accept the technology as long as the new legitimizing source is not negatively affected. We use this insight to help explain the initial blocking …

Age Effects And Heuristics In Decision Making, Tibor Besedeš, Cary Deck, Sudipta Sarangi, Mikhael Shor

Economics Faculty Articles and Research

Using controlled experiments, we examine how individuals make choices when faced with multiple options. Choice tasks are designed to mimic the selection of health insurance, prescription drug, or retirement savings plans. In our experiment, available options can be objectively ranked, allowing us to examine optimal decision making. First, the probability of a person selecting the optimal option declines as the number of options increases, with the decline being more pronounced for older subjects. Second, heuristics differ by age, with older subjects relying more on suboptimal decision rules. In a heuristics validation experiment, older subjects make worse decisions than younger subjects.