an econometric analysis of exploration and extraction of oil in the u k continental shelf this paper develops an econometric model for the analysis of exploration and production policies of price taking suppliers and derives theoretically consistent exploration and output equations for oil which explicitly take account of the oil discovery process and the intertemporal nature of exploration and production decision the model is then applied to an empirical analysis of oil exploration and extraction on the united kingdom continental shelf ukcs over the period 1978 1 1986 4 the analysis explicitly takes account of the available engineering information concerning the pressure dynamics of the petroleum reserves and the geological knowledge pertinent to the discovery process and presents formal statistical tests of the significance of these factors for the explanation of output and exploration in the north sea copyright 1990 by royal economic society

exploration economics in a regulated petroleum province the case of the norwegian continental shelf reserve replacement remains a key challenge for the international oil and gas companies as market oriented oil and gas provinces are maturing exploration activity is shifted towards the resource rich regulated regimes outside the oecd regulated oil and gas provinces remain under explored also in econometric terms in this paper we specify and estimate an econometric model of exploration and appraisal drilling for the highly regulated norwegian continental shelf ncs over the period 1965 to 2004 explanatory variables include the oil price cumulative discoveries and open exploration acreage estimated error correction models account explicitly for sluggishness and short term adjustments in exploration drilling we find robust long term oil price effects on exploration activity whereas the short term response is muted on the other hand the temporary influence on exploration drilling from licensing rounds for new exploration acreage is significant and so are the feedback effects from historical exploration success at the same time the longer term impact of these variables is more moderate

mutual fund performance an analysis of quarterly portfolio holdings this article employs the 1975 84 quarterly holdings of a sample of mutual funds to construct an estimate of their gross returns this sample which is not subject to survivorship bias is used in conjunction with a sample that contains the actual net returns of the mutual funds in addition to allowing the authors to estimate the bias in measured performance that is due to the survival requirement and to estimate total transaction costs the sample is used to test for the existence of abnormal performance the tests indicate that the risk adjusted gross returns of some funds were significantly positive copyright 1989 by the university of chicago

a bayesian model of voting in juries abstract we model voting in juries as a game of incomplete information allowing jurors to receive a continuum of signals we characterize the unique symmetric equilibrium of the game and give a condition under which no asymmetric equilibria exist under unanimity rule we offer a condition under which unanimity rule exhibits a bias toward convicting the innocent regardless of the size of the jury and give an example showing that this bias can be reversed we prove a jury theorem for our general model as the size of the jury increases the probability of a mistaken judgment goes to zero for every voting rule except unanimity rule for unanimity rule the probability of making a mistake is bounded strictly above zero if and only if there do not exist arbitrarily strong signals of innocence our results explain the asymptotic inefficiency of unanimity rule in finite models and establishes the possibility of asymptotic efficiency a property that could emerge only in a continuous model journal of economic literature classification numbers c72 d72

consensus building how to persuade a group many decisions in private and public organizations are made by groups the paper explores strategies that the sponsor of a proposal may employ to convince a qualified majority of group members to approve the proposal adopting a mechanism design approach to communication it emphasizes the need to distill information selectively to key members of the group and to engineer persuasion cascades in which members who are brought on board sway the opinion of others the paper unveils the factors such as the extent of congruence among group members and between them and the sponsor and the size and governance of the group that condition the sponsor s ability to maneuver and get his project approved

endogenous competence and a limit to the condorcet jury theorem the seminal contribution known as the condorcet jury theorem observes that under a specific set of conditions an increase in the size of a group tasked with making a binary decision guilty or innocent say leads to an improvement in the group s ability to make the correct choice an assumption that is not properly appreciated in the relevant literature is that the competency of the group members is assumed to be exogenous in numerous applications members of the group make investments to improve the accuracy of their decision making e g pre meeting efforts we consider the collective action problem that arises we show that if individual competence is endogenous then increases in the group size encourages free riding this trades off with the value of information aggregation thus the value of the larger group size is muted extensions illustrate that if committee members are allowed to exit not participate the equilibrium committee size is reduced additionally supermajority voting rules encourage investments and consequently individual competence

why democracies produce efficient results by applying the standard tools of microeconomic analysis i argue that democratic markets work as well as economic markets in particular i show that previous work has greatly exaggerated the existence of principal agent and informational problems in electoral markets and has drawn incorrect conclusions

is hotelling s rule relevant to domestic oil production a model of oil supply from known reserves is developed to incorporate geological and engineering principles in the oil field operator s decision problem oil production from existing wells within an oil field is isolated from the drilling of new wells the geo engineering

meaning and credibility in cheap talk games i define neologism proofness a refinement of perfect bayesian equilibrium in cheap talk games it applies when players have a preexisting common language so that an unexpected message s literal meaning is clear and only credibility restricts communication i show that certain implausible equilibria are not neologism proof in some games no equilibrium is journal of economic literature classification numbers d83 d82 c73

signaling and election motivations in a voting model with common values and responsive candidates in this paper we focus on strategic voting behavior when both an election and a signaling motivation affect voters behavior we analyze a model of elections with two candidates competing on a one dimensional policy space voters are privately and imperfectly informed about a common shock affecting the electorate s preferences candidates are assumed to choose policy in response to information gleaned from election results and according to exogenous factors that may lead to polarization in candidates policy choices we analyze a subset of symmetric equilibria in which strategies are symmetric to candidates names and private signals css equilibria we show that signaling and election motivations pull voters to vote in different directions we provide conditions that show the relation between the amount of information aggregated in the election and the motivation that influences voting behavior the most finally we show that when candidates are responsive and polarized all css equilibria are inefficient in the limit

costly information acquisition is it better to toss a coin abstract this paper presents a strategic model of common value elections with endogenous information acquisition it proves that majoritarian elections can fail to aggregate information when voters have heterogeneous skills and provides necessary and sufficient conditions for information aggregation inefficiencies can be partially corrected by limiting participation to the most competent citizens a result which provides a rational foundation for epistocratic government

scale and skill in active management abstract we empirically analyze the nature of returns to scale in active mutual fund management we find strong evidence of decreasing returns at the industry level as the size of the active mutual fund industry increases a fund s ability to outperform passive benchmarks declines at the fund level all methods considered indicate decreasing returns though estimates that avoid econometric biases are insignificant we also find that the active management industry has become more skilled over time this upward trend in skill coincides with industry growth which precludes the skill improvement from boosting fund performance finally we find that performance deteriorates over a typical fund s lifetime this result can also be explained by industry level decreasing returns to scale

information processing and jury decisionmaking abstract we develop a model to explore the information processing function that jury deliberation and its analogues perform the central question we ask is how much better could a jury possibly perform if it optimally used the collective information available to it than if it decides cases by a simple majority vote before any deliberation or information sharing occurs it is shown how the answer depends on a number of considerations including the correlation among jurors observations the jurors assessments of the relative importance of type i and type ii errors compared with society s assessment of those errors and differences in jurors abilities

bargaining in legislatures bargaining in legislatures is conducted according to formal rules specifying who may make proposals and how they will be decided legislative outcomes depend on those rules and on the structure of the legislature although the social choice literature provides theories about voting equilibria it does not endogenize the formation of the agenda on which the voting is based and rarely takes into account the institutional structure found in legislatures in our theory members of the legislature act noncooperatively in choosing strategies to serve their own districts explicitly taking into account the strategies members adopt in response to the sequential nature of proposal making and voting the model permits the characterization of a legislative equilibrium reflecting the structure of the legislature and also allows consideration of the choice of elements of that structure in a context in which the standard institution free model of social choice theory yields no equilibrium

do giant oilfield discoveries fuel internal armed conflicts we use new data to examine the effects of giant oilfield discoveries around the world since 1946 on average these discoveries increase per capita oil production and oil exports by up to 50 percent but these giant oilfield discoveries also have a dark side they increase the incidence of internal armed conflict by about 5 8 percentage points this increased incidence of conflict due to giant oilfield discoveries is especially high for countries that had already experienced armed conflicts or coups in the decade prior to discovery

viewpoint decision making in committees this article reviews recent developments in the theory of committee decision making a committee consists of self interested members who make a public decision by aggregating imperfect information dispersed among them according to a pre specified decision rule we focus on costly information acquisition strategic information aggregation and rules and processes that enhance the quality of the committee decision seeming inefficiencies of the committee decision making process such as over cautiousness voting and delay emerge as partial remedies to these incentive problems cet article passe en revue certains developpements recents dans la theorie de la prise de decision en comite un comite est defini comme un groupe de membres qui ont des interets particuliers et qui prennent une decision publique en agregeant une information imparfaite et dispersee a travers le groupe selon une regle de decision pre etablie les auteurs portent leur attention sur l acquisition couteuse d information l agregation de l information strategique et les regles et procedures qui accroissent la qualite de la decision en comite ce qui apparait comme des inefficacites du processus de prise de decision en comite sur precaution votes delais s avere etre des remedes partiels aux problemes d incitation

false discoveries in volatility timing of mutual funds abstract this paper examines the volatility timing of us mutual funds by controlling the false discovery rate to find out how many funds are truly countercyclical procyclical timing funds empirical results show that given the whole universe of our sample funds the percentages of countercyclical and procyclical volatility timing funds are about equal we also find that while the standard approach which simply counts the number of significant positive negative timing coefficients does not incorporate false discoveries in volatility timing it provides quite accurate volatility timing results finally we find that the performance measures for an equally weighted portfolio of procyclical timing funds are greater than for an equally weighted portfolio of countercyclical timing funds in the in sample test consistent with our expectation that procyclical timers earn higher returns because they take on more risk however the countercyclical timing portfolio outperforms the procyclical timing portfolio in the out of sample test

resource prices and planning horizons abstract this paper shows that a seemingly simple assumption that agents use a rolling planning horizon can reconcile the puzzling long run price dynamics of exhaustible resources such as oil gas and metals a rolling horizon has the effect of removing the scarcity consideration of resource owners when stocks are large hence extraction will be non decreasing and resource prices non increasing for a long period of time and there will be no connection between the price growth and the interest rate in line with the trends of a majority of exhaustible resources in the last century a calibration of the model to the oil market yields a price which closely fits the gradually falling real oil price after wwii and the sharply increasing price after 1998 this suggests that while long run scarcity was not an important parameter on the oil market in the 20th century it has been important in shaping the oil price from around 1998 and onwards

identifying structural models of committee decisions with heterogeneous tastes and ideological bias in practice members of a committee often make different recommendations despite a common goal and shared sources of information we study the nonparametric identification and estimation of a structural model where such discrepancies are rationalized by the members unobserved types which consist of ideological bias while weighing different sources of information and tastes for multiple objectives announced in the policy target we consider models with and without strategic incentives for members to make recommendations that conform to the final committee decision we show that pure strategy bayesian nash equilibria exist in both cases and that the variation in common information recorded in the data helps us to recover the distribution of private types from the members choices building on the identification result we estimate a structural model of interest rate decisions by the monetary policy committee mpc at the bank of england we find some evidence that the external committee members are les

organizational structure and the optimal design of policymaking panels evidence from consensus group commissions revenue forecasts in the american states increasing both the size and diversity of policymaking panels is widely thought to enhance the accuracy of collective policy decisions this study advances the theoretical conditions in which improving collective accuracy necessitates an efficient trade off between a panel s size and its level of organizational diversity this substitution effect between these organizational characteristics is empirically supported with data on official general fund revenue forecasts made by consensus group cg independent commissions in the american states evidence of an asymmetric substitution effect is also uncovered whereby increasing organizational diversity in large cg commissions produces revenue forecasts that reduce collective accuracy by slightly more than three times as much compared to decreasing such diversity in small cg commissions this study underscores the limits of organizational diversity as a mechanism for improving collective judgments when policymaking authority is diffuse among many panel members

information aggregation rationality and the condorcet jury theorem the condorcet jury theorem states that majorities are more likely than any single individual to select the better of two alternatives when there exists uncertainty about which of the two alternatives is in fact preferred most extant proofs of this theorem implicitly make the behavioral assumption that individuals vote sincerely in the collective decision making a seemingly innocuous assumption given that individuals are taken to possess a common preference for selecting the better alternative however in the model analyzed here we find that sincere behavior by all individuals is not rational even when individuals have such a common preference in particular sincere voting does not constitute a nash equilibrium a satisfactory rational choice foundation for the claim that majorities invariably do better than individuals therefore has yet to be derived

news shocks in open economies evidence from giant oil discoveries this article explores the effect of news shocks in open economies using worldwide giant oil and gas discoveries as a directly observable measure of news shocks about future output the delay between a discovery and production is on average four to six years we first analyze the effects of a discovery in a two sector small open economy model with a resource sector we then estimate the effects of giant oil and gas discoveries on a large panel of countries our empirical estimates are consistent with the predictions of the model after an oil or gas discovery the current account and saving rate decline for the first five years and then rise sharply during the ensuing years investment rises robustly soon after the news arrives whereas gdp does not increase until after five years employment rates fall slightly and remain low for a sustained period

minority voting rights can maximize majority welfare i use condorcet s information aggregation model to show that sometimes the best possible decision procedure for the majority allows the minority to enforce its favored outcome even when overruled by a majority special voting power gives the minority an incentive to participate meaningfully and more participation means more information is aggregated which makes the majority better off this result can be understood as a mathematical corroboration of lani guinier s arguments that voting procedures can be designed to encourage minority participation benefitting everyone

costly search and mutual fund flows this paper studies the flows of funds into and out of equity mutual funds consumers base their fund purchase decisions on prior performance information but do so asymmetrically investing disproportionately more in funds that performed very well the prior period search costs seem to be an important determinant of fund flows high performance appears to be most salient for funds that exert higher marketing effort as measured by higher fees flows are directly related to the size of the fund s complex as well as the current media attention received by the fund which lower consumers search costs

the relation between mean variance efficiency and arbitrage pricing the mean standard deviation diagram has proven to be a valuable tool for understanding equilibrium asset pricing theory first introduced by markowitz 1952 1959 and tobin 1958 the diagram helps students and researchers alike to develop intuition about the capital asset pricing model capm its properties are useful for analyzing the conditions under which the market portfolio is mean variance efficient and for linking the location of the market portfolio in the diagram with the validity of the capm in addition its simple geometry seems to be the critical inspiration for roll s 1977 argument that the capm cannot feasibly be tested because the market portfolio is unobservable and because of a mathematical equivalence between the individual return beta linearity relation and the market portfolio s mean variance efficiency p 129 recent research on equilibrium asset pricing both theoretical and empirical has tended to focus on multibeta pricing models especially the arbitrage pricing theory apt this paper will show that the simple intuition derived from the

voting behavior and information aggregation in elections with private information we analyze two candidate elections in which voters are uncertain about the realization of a state variable that affects the utility of all voters each voter has noisy private information about the state variable we show that the fraction of voters whose vote depends on their private information goes to zero as the size of the electorate goes to infinity nevertheless elections fully aggregate information in the sense that the chosen candidate would not change if all private information were common knowledge equilibrium voting behavior is to a large extent determined by the electoral rule i e if a candidate is required to get at least x percent of the vote in order to win the election then in equilibrium this candidate gets very close to x percent of the vote with probability close to one finally if the distribution from which preferences are drawn is uncertain then elections will generally not satisfy full information equivalence and the fraction of voters who take informative action does not converge to zero

the architecture of economic systems hierarchies and polyarchies the authors present new ways of looking at economic organizations andsystems individuals judgments entail errors they sometimes reject good projects and accept bad projects the architecture of an economicsystem specifying how the decision making units are organized togetherwithin a system who gathers what information and who communicates what with whom affects its performance both because it influences thenature of errors that individuals make within the system and becauseit has a critical effect on the aggregation of individuals errors theperformance of two polar architectures decentralized polyarchical versus centralized hierarchical decision making authorities are analyzed and compared copyright 1986 by american economic association

time varying fund manager skill we propose a new definition of skill as general cognitive ability to pick stocks or time the market we find evidence for stock picking in booms and market timing in recessions moreover the same fund managers that pick stocks well in expansions also time the market well in recessions these fund managers significantly outperform other funds and passive benchmarks our results suggest a new measure of managerial ability that weighs a fund s market timing more in recessions and stock picking more in booms the measure displays more persistence than either market timing or stock picking alone and predicts fund performance

misplaced childhood when recession children grow up as central bankers abstract we examine how much an early i e childhood experience of recession influences the behavior of central bankers we develop a model of decision making by a committee whose leader and members exhibit recession aversion due to their personal experience the model reveals that recession aversion could lead to a reluctance of the policymaker to increase policy rates in a panel multinomial logit model for nine major central banks analyzed over the period 1999 2015 we find that growing up in a recession influences monetary policy making central bankers early personal experiences of recessions shape their policy reactions increasing the willingness to cut policy rates with policy relevant magnitudes the results are robust to alternative behavioral hypotheses accounting for a number of control variables or sample variation

a model of expertise we study a model in which perfectly informed experts offer advice to a decision maker whose actions affect the welfare of all experts are biased and thus may wish to pull the decision maker in different directions and to different degrees when the decision maker consults only a single expert the expert withholds substantial information from the decision maker we ask whether this situation is improved by having the decision maker sequentially consult two experts we first show that there is no perfect bayesian equilibrium in which full revelation occurs when both experts are biased in the same direction it is never beneficial to consult both in contrast when experts are biased in opposite directions it is always beneficial to consult both indeed in this case full revelation may be induced in an extended debate by introducing the possibility of rebuttal

strategic delay in bargaining with two sided uncertainty the role of strategic delay is analyzed in an infinite horizon alternating offer model of bargaining a buyer and seller are engaged in the trade of a single object both bargainers have private information about their own preferences and are impatient in that delaying agreement is costly an equilibrium is constructed in which the bargainers signal the strength of their bargaining positions by delaying prior to making an offer a bargainer expecting large gains from trade is more impatient than one expecting small gains and hence makes concessions earlier on trade occurs whever gains from trade exist but due to the private information only after costly delay panmunjom korea upi the american general and the north korean general glared at each other across the table and the only sound was the wind howling across the barren hills outside their hut maj gen james b knapp negotiator for the united nations command unc was waiting for maj gen ri choonsun of the democratic people s republic of north korea to propose a recess they sat there arms folded for 42 hours not a word finally gen ri got up walked out and drove away evening bulletin philadelphia 11 april 1969

a conversational war of attrition we explore costly deliberation by two differentially informed and possibly biased jurors a hawk lones and a dove moritz alternately insist on a verdict until one concedes debate assumes one of two genres depending on bias a juror say lones is intransigent if he wishes to prevail and reach a conviction for any type of moritz next to concede in contrast lones is ambivalent if he wants the strongest conceding types of moritz to push for acquittal both jurors are ambivalent with small bias or high delay costs as lones grows more hawkish he argues more forcefully for convictions mitigating wrongful acquittals if dovish moritz is intransigent then he softens strategic substitutes leading to more wrongful convictions ambivalent debate is new and yields a novel dynamic benefit of increased polarization for if moritz is ambivalent then he toughens strategic complements and so surprisingly a more hawkish lones leads to fewer wrongful acquittals and convictions so more polarized but balanced debate can improve communication unlike in static cheap talk we also show that patient and not too biased jurors vote against their posteriors near the end of the debate optimally playing devil s advocate we shed light on the adversarial legal system peremptory challenges and cloture rules

on the form of transfers to special interests an important question in political economy concerns the form of transfers to special interests the chicago view is that political competition leads politicians to make such transfers efficiently the virginia position is that lack of information on the part of voters leads politicians to favor inefficient sneaky methods of redistribution this paper analyzes the form of transfers in a model of political competition in which politicians have incentives to make transfers to special interests it shows that when voters have imperfect information about both the effects of policy and the predispositions of politicians inefficient methods of redistribution may be employed

how do oil producers respond to giant oil field discoveries abstract the classical hotelling model predicts that the optimal extraction level rises immediately after an unexpected resource discovery whereas in reality there are substantial adjustment costs in petroleum production and an average lag of several years between a discovery and the start of production using a large panel of country level production data and a difference in differences identification approach i show that domestic production levels respond before a newly found oil field comes on line and that this increase is driven by non opec producers consistent with different responses of opec and non opec drilling activity offshore fields and exceptionally large super or mega giant fields are also more likely to raise country level production given that domestic petroleum consumption rises by less in response to a discovery at least part of the increase in production seems to go into net oil exports

optimal consumption of a nonrenewable resource with stochastic discoveries and a random environment we present a general model for the optimal consumption of a nonrenewable resource under two kinds of uncertainties one source of uncertainty is in the resource discovery process and the other is in the economic environment that affects resource supply and demand conditions such as exhaustion and development of a substitute the problem is formulated as one of optimally controlling a storage process with markov additive discoveries the optimal value of the resource stock is characterized as the solution of a functional equation and the existence of an optimal consumption policy is established it is shown that in a given environment the optimal consumption rate is increasing and the resource price is decreasing in the level of proven reserves a counterexample is provided to show that better environments may in fact mean higher prices and lower consumption rates finally a variety of examples is given to illustrate the scope and applicability of the general model

testing the efficiency of extraction from a stock resource the theoretical conditions for efficient extraction from a known stock resource by a competitive mining firm are reviewed these conditions are tested using proprietary data from a mining firm output price data and coefficient estimates from a translog cost system are used to compute the in situ value of the resource and the stock effect changes in the in situ value over time are then statistically compared with the expected price path the results reject the hypothesis that the data are consistent with the theoretical model and the maintained hypotheses variations of the basic model that incorporate a time varying discount rate an alternative expected price series and a constraint on the rate of output are also tested and rejected 46 references 10 tables

deliberation preference uncertainty and voting rules a deliberative committee is a group of at least two individuals who first debate about what alternative to choose prior to these same individuals voting to determine the choice we argue first that uncertainty about individuals private preferences is necessary for full information sharing and second demonstrate in a very general setting that the condition under which unanimity can support full information revelation in debate amounts to it being common knowledge that all committee members invariably share identical preferences over the alternatives it follows that if ever there exists an equilibrium with fully revealing debate under unanimity rule there exists an equilibrium with fully revealing debate under any voting rule moreover the converse is not true of majority rule if there is uncertainty about individuals preferences

of tournaments and temptations an analysis of managerial incentives in the mutual fund industry we test the hypothesis that when their compensation is linked to relative performance managers of investment portfolios likely to end up as losers will manipulate fund risk differently than those managing portfolios likely to be winners an empirical investigation of the performance of 334 growth oriented mutual funds during 1976 to 1991 demonstrates that mid year losers tend to increase fund volatility in the latter part of an annual assessment period to a greater extent than mid year winners furthermore we show that this effect became stronger as industry growth and investor awareness of fund performance increased over time

veto based delegation in a principal agent model with hidden information and no monetary transfers i establish the veto power principle any incentive compatible outcome can be implemented through veto based delegation with an endogenously chosen default decision this result demonstrates the exact nature of commitment powers required by the principal 1 to design the default outcome and 2 to ensure that she has almost no formal control over the agent s decisions

learning and strategic pricing we consider the situation where a single consumer buys a stream of goods from different sellers over time the true value of each seller s product to the buyer is initially unknown additional information can be gained only by experimentation for exogeneously given prices the buyer s problem is a multi armed bandit problem the innovation in this paper is to endogenize the cost of experimentation to the consumer by allowing for price competition between the sellers the role of prices is then to allocate intertemporally the costs and benefits of learning between buyers and sellers we examine how strategic aspects of the oligopoly model interact with the learning process all markov perfect equilibria mpe are efficient we identify an equilibrium which besides its unique robustness properties has a strikingly simple seemingly myopic pricing rule prices below marginal cost emerge naturally to sustain experimentation intertemporal exchange of the gains of learning is necessary to support efficient experimentation we analyze the asymptotic behavior of the equilibria

strategic disclosure of feasible options abstract the paper illustrates how people who need to make a joint decision may have an incentive to withhold information regarding the existence of pareto improving options the resulting level of inefficiency varies with the way compromises are reached when the parties have to choose among multiple options various reasonable compromise rules can be ranked unequivocally and a rule resulting in a minimal level of inefficiency is identified qualitative results extend to sequential disclosure enforcing a hard deadline for disclosure may be welfare improving in some circumstances

voting in large committees with disesteem payoffs a state of the art model abstract we consider a committee of experts that decides to approve or reject an innovation on behalf of society in addition to a payoff linked to the correctness of the committee s decision each expert receives disesteem payoffs if he she votes in favor of an ill fated innovation or votes against an innovation that proves to be beneficial we find that the predictions of the model are sensitive to the signal technology in the standard condorcet framework experts signals are i i d conditional on the state of the world implying that the state of the world is approximated with arbitrary precision by a sufficiently large number of signals under this assumption any combination of disesteem payoffs leads to acceptance with too high a probability however if this assumption is relaxed depending on the relative size of the disesteem payoffs the committee may accept or reject the innovation with too high a probability

how do oil producers respond to oil demand shocks abstract this paper analyzes the response of international oil producers to demand induced changes in the price of crude oil during 1975 2011 focusing on potential differences between opec and non opec countries the goal is to derive consistent estimates of the short run price elasticity of crude oil supply at the country level i find that oil producers hardly respond to demand shocks within the same month and that the corresponding impact price elasticities of supply are statistically indistinguishable from zero while there is little evidence of differences in the dynamic responses to a typical flow demand shock on average over the sample period opec members seem to curtail production in response to a speculative demand shock whereas non opec production expands significantly flow and speculative demand shocks account for a nontrivial fraction of the total variability in country level crude oil supply

conflicts and common interests in committees committees improve decisions by pooling members independent information but promote manipulation obfuscation and exaggeration of private information when members have conflicting preferences committee decision procedures transform continuous data into ordered ranks through voting this coarsens the transmission of information but controls strategic manipulations and allows some degree of information sharing each member becomes more cautious in casting the crucial vote than when he alone makes the decision based on own information increased quality of one member s information results in his casting the crucial vote more often committees make better decisions for members than does delegation

on committees of experts a committee makes a decision on a project on behalf of the public members of the committee agree on the a priori value of the project and hold additional private information about its consequences they are experts who care about the value of the project and about being considered well informed before voting on the project members can exchange their private information simultaneously we show that reputational concerns make the a priori unconventional decision more attractive and lead committees to show a united front these results hold irrespective of whether information can be manipulated or not also reputational concerns induce members to manipulate information and vote strategically if their preferences differ considerably from those of the member casting the decisive vote our last result is that the optimal voting rule balances the quality of information exchange and the alignment of interests of the decisive voter with those of the public

committee design with endogenous information this paper is concerned with the arrangements for collective decision making in a world where agents must be motivated to acquire information the analysis identifies some basic forces shaping the design of panels of decision makers referees managers jurors etc in situations where decision makers are useful only in so far as they expend some effort to gain information about the alternatives at hand these situations are common one being the refereeing process where an editor requires the opinions of a number of experts who must read the paper acquire information in order to give an opinion as to publication analogously in committees which screen applicants to a programme the committee members must gain information about the applicant s qualifications and likelihood of success in order to evaluate whether to admit him her finally in trial juries it is important that jurors pay attention to the evidence in order to make an informed judgement 1 we focus on environments where information is a public good in the sense that the social benefits of one decision maker acquiring information exceed the private benefits a good mechanism in this environment must not only aggregate information efficiently but also induce the decision makers to acquire information we analyse the design of voting mechanisms our problem is to choose two parameters which determine both the incentive to acquire information and the efficiency with which information is aggregated the first parameter is the size of the decision making unit the number of committee members the second is the plurality required to overturn the status quo the voting rule our main result is this a voting rule that requires a large plurality in the extreme unanimity to upset the status quo can be optimal only if the information available to each committee member is sufficiently accurate when individual information is noisy the drawback

crime versus justice is there a trade off abstract when society is divided into two groups with different actual or perceived crime rates maintaining a low crime rate minimizing the total number of innocent individuals convicted of a crime and keeping the probability of wrongly convicting an innocent individual equal across groups are incompatible social goals this paper fully develops these trade offs an empirical application of the model finds that these trade offs may be substantial specifically we estimate that innocent black americans would be roughly eight times more likely to be wrongly convicted of murder than innocent white americans if society placed no value on equality when it comes to convictions however we estimate that eliminating inequality entirely could cost up to 1 900 lives annually because of a rise in the murder rate estimates reveal similar findings for gender inequality in highlighting this serious dilemma this paper suggests a need for awareness of costs of crime reduction policies

would rational voters acquire costly information abstract we analyze an election in which voters are uncertain about which of two alternatives is better for them voters can acquire some costly information about the alternatives in agreement with downs s rational ignorance hypothesis individual investment in political information declines to zero as the number of voters increases however if the marginal cost of information is near zero for nearly irrelevant information there is a sequence of equilibria such that the election outcome is likely to correspond to the interests of the majority for arbitrarily large numbers of voters thus rationally ignorant voters are consistent with a well informed electorate

the economics of clear advice and extreme options i study a principal agent model in which the agent collects information and then chooses a verifiable action i show that the principal can find it desirable to constrain the agent s action set even though there is no disagreement about the ranking of actions ex post the elimination or penalization of intermediate actions which are optimal when information is poor improves incentives for information collection i characterize optimal action sets when the agent is infinitely risk averse with respect to income shocks and optimal incentive schemes when the agent is risk neutral copyright 2005 wiley blackwell

learning and signalling by advisor selection in this paper we consider a model where a policy maker uses advice in order to 1 obtain information about the consequences of an innovation information motive and 2 to support political legitimacy of her decision persuasion motive we conduct our analysis in the context of a cheap talk game with three players 1 a policy maker 2 the median voter in parliament or of the electorate and 3 an advisor the advisor has private information about the consequences of policy communication between an advisor and a recipient improves as their preferences are closer aligned if the preferences of the policy maker and the median voter are different the policy maker faces a trade off on the one hand she wants to gain information to judge whether the innovation is worthwhile on the other hand she needs to convince the median voter whether the innovation is desirable

the burden of proof in a game of persuasion abstract an arbitrator faces the task of deciding the level of compensation to be received by a plaintiff from a defendant the arbitrator must rely on the verifiable submissions of the two interested parties because the information of the interested parties is not verifiable the unravelling argument has no force nevertheless a class of equilibria of this game gives rise to a particularly simple decision rule for the arbitrator which appeals to a probability distribution over the payoff relevant state space alone the uncertainty concerning the precision of the disputants information enter as parameters in this distribution this parametrization yields an answer to how the arbitrator s decision rule should be modified as the information of the disputants changes journal of economic literature classification numbers d78 d82 l51

more oil less democracy evidence from worldwide crude oil discoveries this article exploits variations in the timing and size of oil discoveries to identify the impact of oil wealth on democracy i find that discovering 100 billion barrels of oil approximately the initial endowment of iraq pushes a country s democracy level almost 20 percentage points below trend after three decades the estimated effect is larger for oilfields with higher quality oil and lower exploration and extraction costs however the estimates become less precise when oil abundance is measured by oil discovery per capita suggesting politicians may care about the level instead of the per capita value of oil wealth

the effect of holdings data frequency on conclusions about mutual fund behavior abstract a number of articles in financial economics have used quarterly or semi annual mutual fund holdings data to test hypotheses about investment manager behavior this article reexamines four well known hypotheses in finance to determine whether the results of prior tests of these hypotheses remain valid when higher frequency monthly holdings data are employed the areas examined are momentum trading tax motivated trading window dressing and tournament behavior we find that the use of monthly holdings data rather than quarterly holdings data or in the case of tournament behavior holdings data rather than monthly return data change and in some cases reverse previous results this occurs because monthly holdings data capture a large number of trades missed by quarterly data 18 5 of the trades and permit a more precise estimation of the timing of trades

a theory of conservatism a free rider problem arises when a group choice between two alternatives has to be made on the basis of privately collected evidence leading to insufficient effort in gathering evidence and an ex ante welfare loss for the group to alleviate the free rider problem the group can commit to a conservative rule whereby the decision is made against the alternative favored by the group s preference or prior when evidence supports it but is not preponderant optimal conservatism increases private incentives to gather evidence and improves the quality of the group decision my result explains why sometimes groups appear overly cautious toward favored alternatives

opec and other commodity cartels a comparison abstract the economic literature provides specific characteristics for cartels although the theory of international cartels is not well developed in the literature and every cartel is unique some of these characteristics exist in each cartel this study investigates the existence of these characteristics in six known commodity cartels including opec in addition it compares the oil companies cartel the seven sisters to opec and summarizes the findings of opec econometric models developed in the literature in the last 25 years and concludes that the results do not support cartel or competitive models for opec although other cartels are more successful than opec many books and articles in economics use opec as a cartel example neither statistical tests nor theory support the popular use of opec as a cartel example indeed this article concludes that opec is composed of saudi arabia the dominant world producer plus several distinct sub groups and that separate models are required to explain the behavior of each assigning the power of some opec members to opec has caused confusion about its behavior recent opec success is attributed to political natural and technical capacity limitations in the oil fields that prevented countries from cheating on their quota in other words opec adherence to the quota except for saudi arabia is anything but voluntary

a theory of competition among pressure groups for political influence this paper presents a theory of competition among pressure groups for political influence political equilibrium depends on the efficiency of each group in producing pressure the effect of additional pressure on their influence the number of persons in different groups and the deadweight cost of taxes and subsidies an increase in deadweight costs discourages pressure by subsidized groups and encourages pressure by taxpayers this analysis unifies the view that governments correct market failures with the view that they favor the politically powerful both are produced by the competition for political favors

optimal pricing use and exploration of uncertain natural resource stocks abstract units of natural resources to be called mines are assumed distributed over an unexplored territory according to a poisson process in space at any moment total reserves and unexplored land are given society can determine the rate of consumption and the rate of exploration reserves are drawn down by consumption and increased by discoveries made during exploration the amount of unexplored land is decreased by exploration at any moment the payoff of society is a concave function of consumption less a linear function of exploration with future payoffs discounted optimal policies are considered and in particular it is shown for a large amount of unexplored land the shadow prices of reserves and of unexplored land move in random cycles but show only a slight upward tread thereby casting some light on the failure of mineral prices to rise at the market rate of interest

oil prices without opec a walk on the supply side abstract the rapid increases of oil prices during the 1970s are commonly regarded as prima facie evidence of monopoly power this paper applies the theory of exhaustible resources to estimate the equilibrium oil prices also known as efficiency prices which would have prevailed in the absence of monopoly profits the theory incorporates an extraction cost function wherein cost is a rising function of the cumulative amount of oil extracted the model is used to simulate efficiency price paths under a variety of assumptions about extraction costs and real interest rates which are representative of perceptions at various times in recent history these simulations show that the price increases of 1974 and 1979 1980 can be explained as a response to supply side changes espicially changes in the perceived cost of the backstop technology and the fall in real interest rates in the mid and late 1970s thus while efficiency prices were high in the 1970s relative to extraction costs it is plausible that average monopoly profits were negligible this situation appears to have changed in the early 1980s due to the return of real interest rates to their historic levels in early 1982 even spot prices already below official prices were substantially above the estimated efficiency or competitive price level on the other hand efficiency prices remain far above extraction costs thus even if the price setting power of opec were eroded by competition the real price of oil would not fall below the level established in 1974

hotelling under pressure we show that oil production from existing wells in texas does not respond to oil prices while drilling activity and costs respond strongly to explain these facts we reformulate hotelling s class

the swing voter s curse the authors analyze two candidate elections in which some voters are uncertain about the realization of a state variable that affects the utility of all voters they demonstrate the existence of a swing voter s curse less informed indifferent voters strictly prefer to abstain rather than vote for either candidate even when voting is costless the swing voter s curse leads to the equilibrium result that a substantial fraction of the electorate will abstain even though all abstainers strictly prefer voting for one candidate over voting for another copyright 1996 by american economic association

performance measurement with selectivity market and volatility timing the performance of portfolio managers depends on market timing volatility timing and security selection we develop holdings based performance measures that adjust for risk using stochastic discount factors display all three components in a consistent framework and avoid strong assumptions about managers behavior previous models leave out some of the components of performance and correcting for this we deliver better measures of selectivity sorting stocks held by funds on selectivity produces a quintile spread in four factor alphas greater than 2 5 per year before costs and more than 1 7 greater than found using the daniel grinblatt titman and wermers 1997 measure

oil at risk political violence and accelerated carbon extraction in the middle east and north africa abstract what effect does the threat of expropriation have on resource extraction much of the economic literature suggests that uncertainty reduces investment but the theory of risk induced extraction suggests the opposite in this paper we test this theory in the context of political violence which poses a real threat of state destabilization and violent expropriation of property rights facing this uncertainty we find that oil producers in the middle east and north africa increase oil production in response to political violence this finding has important negative consequences for the world in terms of climate change and demonstrates a previously untested mechanism through which exhaustible resource supply is flooding the market

meetings with costly participation we study a collective decision making process in which people interested in an issue may participate at a cost in a meeting and the resulting decision is a compromise among the participants preferences we show that the equilibrium number of participants is small and their positions are extreme and when the compromise is the median the outcome is likely to be random the model and its equilibria are consistent with evidence on the procedures and outcomes of us regulatory hearings jel d7 h0 l5

relying on the information of interested parties we investigate the conventional wisdom that competition among interested parties attempting to influence a decisionmaker by providing verifiable information elicits all relevant information we find that if the decisionmaker is strategically sophisticated and well informed about the relevant variables and about the preferences of the interested party or parties competition may be unnecessary to achieve this result if the decisionmaker is unsophisticated or not well informed competition is not generally sufficient if the interested parties interests are sufficiently opposed however or if the decisionmaker is seeking to advance the parties welfare then competition can reduce or even eliminate the decisionmaker s need for prior knowledge about the relevant variables and for strategic sophistication in other settings only the combination of competition among information providers and a sophisticated skepticism is sufficient to allow effective decisionmaking

the oil reserves production relationship abstract this paper considers the relationship between the extraction rates and remaining reserves of oil a simple exhaustible resources model suggests a linear extraction rule with slope terms common to all extractors when discount rates are homogeneous differences in pricing behavior and costs determine the intercept panel data from the world oil industry exhibit a robust and stable extraction reserves relationship across countries and through time common slopes characterize extraction over large ranges of reserves although there is a concave relationship across non opec members and a significantly lower estimated slope within opec countries these findings may be explained by risk aversion differences in discount rates and measurement error in the reserves data

electoral competition with informed and uninformed voters i present a model of electoral competition in which candidates raise campaign contributions by choosing policies that benefit interest groups and then expend those contributions to influence voters who are uninformed about the policies informed voters however vote based on those policies so candidates face a trade off between choosing a policy to generate funds to attract the uninformed vote and choosing a policy to attract the informed vote electoral equilibria are characterized for two categories of policies particularistic and collective in the case of particularistic policies the equilibrium policies of the candidates are separated if the proportion of uninformed voters is sufficiently high and the degree of separation is an increasing function of that proportion the model is extended to include the public financing of elections and incumbency advantages for the case of collective policies the candidates locate at the median of the ideal points of the informed voters and contributions are zero

the self perpetuation of biased beliefs to overcome strong prior beliefs strong evidence to the contrary is needed if a person is predisposed to choosing a certain action the advice from an advisor who sets a low threshold for recommending the alternative action is not of much use the preference for like minded advisors who supply coarse information implies that the advice a person receives is likely to reinforce his existing priors this effect can lead to polarisation of opinion and the emergence of self serving beliefs the learning process is prolonged and the induced short run bias can become perpetual if information is costly

public policies pressure groups and dead weight costs abstract this paper presents a model of competition among special interest groups for political influence each active group exerts pressure to affect its taxes and subsidies where activities of different groups are related by the equality between total tax collections and total tax subsidies the dead weight costs and benefits of taxes and subsidies play a major role in our model an increase in the dead weight cost of taxation encourages pressure by taxpayers while an increase in the dead weight costs of subsidies discourages pressure by recipients various applications of the analysis are discussed