Economic Theory Commons^™

Optimal Tilts, Malcom Baker, Terence C. Burnham, Ryan Taliaferro

ESI Working Papers

We examine the optimal weighting of four characteristic tilts in US equity markets over the period from 1968 through 2014. We define a “tilt” as a positive-Sharpe-ratio, characteristicbased portfolio strategy that requires relatively low annual turnover and a “trade” as a characteristic-based portfolio strategy that requires relatively high annual turnover and liquidity demands. Size is a tilt, because of its very low turnover; high frequency reversal is a trade. This dichotomy is necessary to make practical use of Fama-French style factor regressions. Unlike low-turnover tilts, a full history of transaction costs and an estimate of capacity is critical to determine …

Prediction In A Generalized Spatial Panel Data Model With Serial Correlation, Badi H. Baltagi, Long Liu

Center for Policy Research

This paper considers the generalized spatial panel data model with serial correlation proposed by Lee and Yu (2012) which encompasses a lot of the spatial panel data models considered in the literature, and derives the best linear unbiased predictor (BLUP) for that model. This in turn provides valuable BLUP for several spatial panel models as special cases.

Constrained Inefficiency And Optimal Taxation With Uninsurable Risks, Piero Gottardi, Atsushi Kajii, Tomoyuki Nakajima

Research Collection School Of Economics

When individuals' labor and capital income are subject to uninsurable idiosyncratic risks, should capital and labor be taxed, and if so how? In a two-period general equilibrium model with production, we derive a decomposition formula of the welfare effects of these taxes into insurance and distribution effects. This allows us to determine how the sign of the optimal taxes on capital and labor depend on the nature of the shocks and the degree of heterogeneity among consumers' income, as well as on the way in which the tax revenue is used to provide lump-sum transfers to consumers. When shocks affect …

Arousal And Economic Decision Making, Salar Jahedi, Cary Deck, Dan Ariely

ESI Working Papers

Previous experiments have found that subjecting participants to cognitive load leads to poorer decision making, consistent with dual-system models of behavior. Rather than taxing the cognitive system, this paper reports the results of an experiment that takes a complementary approach: arousing the emotional system. The results indicate that exposure to arousing visual stimuli as compared to neutral images has a negligible impact on performance in arithmetic tasks, impatience, risk taking in the domain of losses, and snack choice although we find that arousal modestly increases in risk-taking in the gains domain and increases susceptibility to anchoring effects. We find the …

Exploring Economic And Social Factors That Increase Economic And Well-Being Measurements Of Developing And Developed Countries, Kofi D. Boadu

Undergraduate Economic Review

The historical growth paths of developed and developing countries reveal the challenges that developing countries face in traveling the road from poverty to prosperity. Based on economic development literature, economic theory, and ordinary least squares (OLS) regression method, this research considers whether or not, and to what extent globalization characteristics, foreign direct investment levels (FDI), secondary school enrollment rates, information communication technology (ICT) as a percentage of trade imports, and happiness levels of 103 developing and developed countries, impact their GDP per capita levels. This paper will also take a look at alternative ways of viewing and measuring economic success.

Seller Beware: Supply And Demand Reduction And Price Manipulation In Multiple-Unit Uniform Price Auctions, Abel Winn, Michael Parente, David Porter

Economics Faculty Articles and Research

We experimentally compare under-revelation of supply and demand across alternative variations of ascending and descending two-sided price clock auctions. We find that buyers reduce demand more when the price is ascending but sellers’ behavior is consistent across clock directions. As a result, the clock price rule has empirical effects on efficiency even though it is theoretically neutral.

To Have Done With Forgiveness: Capitalism, Christianity, And The Politics Of Immanence, Timothy Snediker

Electronic Theses and Dissertations

This essay seeks to formulate a critical account of the genealogical link between capitalism and Christianity by interrogating the ontology and the processes of subjectivization which subtend these two apparently disparate social and political formations. To this end, I make use of the philosophical thought of Gilles Deleuze, in particular his readings of Spinoza, Foucault, Nietzsche, and Sacher-Masoch. The central themes of the essay--the identity of God and money, and the vicissitudes of the creditor-debtor relation--culminate in a theory of a theodicy of money, which deploys an apparatus of forgiveness in order to obscure and displace the stakes and …

Akratic Homo Economicus: Does The Neoclassical Economic Theory "Rational Agent" Assumption Accurately Depict Human Nature?, Marina Logachev

Electronic Theses and Dissertations

Neoclassical economic theory has long been scrutinized for its failure to be congruent with reality, often lacking generality and tractability due to, what many critics argue to be, unrealistic assumptions. One of the theory's core suppositions is a representative "rational agent" or homo economicus, whose self-interest and optimal choices, which are in state of equilibrium and efficiency are rooted in utility maximization of his well-being. Even though neoclassical economics claims to accurately depict human nature, from its very inception it has failed to incorporate human psychology and sociology into its foundations. As the behavioral and biological research became more …

Rethinking The "Marginal Revolution" In The History Of Economic Thought: A Brief Examination Of The Marginal Utility Theory Before And In The 1870s, Ding Ning

Electronic Theses and Dissertations

The "Marginal Revolution," a well-known event in the history of economic thought, challenged the mainstream classical political economy and introduced new methods to economic study. The "Marginal Revolution" marked the rise of the Marginal Utility School and pushed the formulation of neoclassical economics. Because marginal utility is the core concept of the "Marginal Revolution," this thesis studies the origin of marginal utility theory by examining figures such as Bernoulli, Bentham, Dupuit, and Goseen, and the utility theory with its related topics of Jevons, Menger and Walras in the 1870s. This thesis considers the significance of the "Marginal Revolution," with particular …

Creating Rhetorical Subjectivities: Negotiating The Precarity Of The Homo Oeconomicus In The Neoliberal Workplace, Leslie Lynne Rossman

Electronic Theses and Dissertations

The ubiquitous impact of the neoliberal economy on our everyday life leads to questions of rhetorical significance. This project strives to incorporate service labor experience as a source as well as an effect of rhetoric thereby embodying materialist notions of the body at the site of production. I explore neoliberal discourses through the phenomena of outsourcing and offshoring by interviewing service industry employees that have experienced job uncertainty within a Fortune 500 corporation. By studying narratives, this project explores how the material effects of rhetoric are able to determine discourses of power relating to production. Thus, this study questions the …

Public Choice Lessons From The Wizarding World Of Harry Potter, Marta Podemska-Mikluch, Darwyyn Deyo, David Mitchell

Faculty Publications

J. K. Rowling’s series of books about the underage wizard Harry Potter is an effective tool for introducing students to the key concepts of public choice. By keeping political figures at the forefront of the story, Rowling encourages students to recognize the different incentives individuals face in markets versus politics. To illuminate the pedagogical potential of the series and to ease its adoption, we discuss a set of examples that best illustrate the key concepts of public choice. We also share a classroom exercise showcasing how the series can be used to promote active learning.

Regional Economic Development―A Survey Of Theories In The Past Two Centuries (1800-2000), Xiaohong Quan

Faculty Publications

The purpose of this paper is to survey the evolution of theories in the field of regional economic development in the past two centuries (1800-2000) before the new millennium. Theories from the ‘spacial’ dimension and from the ‘economic’ dimension are understood as the classical foundation of the field. Important theories are identified and discussed for regional economic development. Specifically, the topics examined here first center around the mechanisms behind regional economic growth, answering questions such as why growth happens in certain regions, why growth can shift to other places, and what factors or environments can foster growth in certain regions. …

Coffee In China: Market Trend And Consumer Demand, Jesse W. Mattingly

Theses and Dissertations--Agricultural Economics

Although it remains a tea consuming nation, both production and consumption of coffee in China has been increasing at double-digit rates and is not expected to slow down (International Coffee Organization (ICO), 2015). With investments and upward trends in production and rapid increases in consumption of coffee in China it is important for producers and retailers of the bean¹ in China to understand the new Chinese coffee consumer. Using survey data from Wuhan, China we help understand the Chinese coffee consumer by explaining their consumption using standard OLS regression. Results show that whether or not consumers make/brew their own …

The Financial Power Of The Powerless: Socio-Economic Status And Interest Rates Under Weak Rule Of Law, Timur Kuran, Jared Rubin

ESI Publications

In advanced economies interest rates vary inversely with the borrower's socio-economic status, which itself depends inversely on default risk. These relationships depend on the impartiality of the law. Where the law is markedly biased in favour of certain groups, the latter will pay a surcharge for capital. Legal power, as measured by privileges before the law, thus undermines financial power, the capacity to borrow cheaply. Developing this argument, this paper also tests it through judicial records from Ottoman Istanbul, 1602-1799. Three privileged Ottoman groups—men, Muslims, and titled elites—all paid relatively high interest rates conditional on various loan characteristics.

Assorted Notes, Book Launch, Anwar Shaikh Phd

Archives of Anwar Shaikh

This collection includes:

• Shaikh, A. (2016, February 12). Capitalism: Competition, conflict, crises (Book launch flyer). The New School for Social Research (23-2_Assor... p. 2).
• Shaikh, A. (2013, November 3). Ch 4: production and costs (Unpublished manuscript outline) (23-2_Assor... p. 3).
• Shaikh, A. (2016, April 14). Classical macrodynamics (Unpublished manuscript notes) (23-2_Assor... p. 6).
• Shaikh, A. (2016, March 15). Develop of equity (Unpublished manuscript notes) (23-2_Assor... p. 7).

Informational Efficiency And The Reaction To Terrorism: A Financial Perspective, Nicholas Roland

Honors Undergraduate Theses

The purpose of this study is to measure the message terror organizations hope to convey using the financial markets as a proxy of measurement to determine patterns within the marketplace and the effects on the terrorists’ ability to deliver a desired message due to the increased use of digital devices and access to instantaneous news, seen over the past decade. Using death count, geographic location, and event type, this study identified 109 attacks between 1985 and 2015 to be analyzed against 5 market indices and 5 securities. Measuring the effects within a 10-day sample window from the time of the …

Does Context Information Affect Perceptions Of The Intrinsic Value Of Visual Art?, Kelsey Ferguson

Inquiry: The University of Arkansas Undergraduate Research Journal

This study is an application of cultural economic value theory within the context of visual art. Current literature supports an incompatibility between objective, empirical economic research and the subjectivity of artistic expression. While variables affecting the intrinsic value of art are difficult to identify and measure, this study quantified the effect of context information on university students’ perceptions of visual art. For this study, 118 randomly assigned University of Arkansas students viewed four identical works of art and answered identical questions designed to measure perceptions of intrinsic value. Despite a hypothesis that context would positively affect participants’ reports, when significant …

The Effect Of Nba Free Agency On Player Utility, Austin Erikson

Electronic Theses and Dissertations

Observably, free agents in the National Basketball Association often make misguided decisions during the free agency period. These decisions may have a direct effect on a player’s performance and salary, affecting their overall utility. Research exists confirming that moving through free agency leads to an effect on player performance, but no study has explored the effect of changing teams through free agency on a player’s salary. As a significant number of players enter this market every year, research on this area is crucially important. The null hypothesis for performance is: H0: moving to a different team through free agency leads …

Assorted Math Notes, Anwar Shaikh Phd

Archives of Anwar Shaikh

This collection includes:

• Strong normalization test.mcdx by Anwar Shaikh, PhD. (Unpublished work) (24-33_Asso... p. 2).
• Shaikh, A. (2016). RE: strong normalization (Unpublished manuscript) (24-33_Asso... p. 4).
• Brody, A. (1997). The second eigenvalue of the Leontief matrix. Economic Systems Research, 9(3), 253–258. Carfax Publishing Company (24-33_Asso... p. 15).
• dos Santos, P. (2015). I method (Unpublished manuscript) (24-33_Asso... p. 24).
• Shaikh, A. (2015). Eigenvalue paths and limiting function (Unpublished manuscript) (24-33_Asso... p. 26).
• Bidard, C., & Schatteman, T. (2001). The spectrum of random matrices. Economic Systems Research, 13(3), 289–298. Taylor & Francis (24-33_Asso... p. 27).
• Sun, G.-Z. (2008). …

The Effects Of The One-Child Policy On Household Financial Decisions, Sylvia M. Xu

Honors Theses

The Chinese One-Child Policy, enacted in 1979, was an attempt to decrease the population growth rate following a period of massive social and political confusion and uncertainty. While the policy was beneficial to curbing the population growth in China, it also introduced unintentional consequences, including sex imbalance, and other demographic differences. The goal of this paper is to examine the economic behavior and financial decisions of son-families and daughter-families across different provinces and regions of China, which have varying levels of sex imbalance, as a result of a cultural preference for sons. These financial decisions include the household saving rate, …