quality disclosure under consumer loss aversion consumers experience a sense of loss when a product s quality does not match their expectations to alleviate consumer loss aversion cla firms can disclose information to reduce consumers uncer

the impact of mandatory disclosure laws on product choices an analysis of the salad dressing market abstract the nutrition labeling and education act nlea requires most food products to include a nutrition label prior to the nlea labeling was voluntary this study uses nutrition label information and supermarket scanner data pre and post nlea to examine the impact of moving from a voluntary to a mandatory labeling regime on consumer product choice the voluntary unraveling of information is shown to be an important market mechanism prior to the nlea all low fat salad dressings had a nutrition label while the majority of the higher fat dressings did not however there remained large variation in fat content among dressings that did not voluntarily label those with the highest fat levels experienced a significant decline in sales after they were required to disclose the results indicate that even in markets with credible low cost mechanisms to disclose mandatory labeling can have an impact on consumer behavior and health

information transmission cournot and bertrand equilibria we examine how incentives for two duopolists to honestly share information change depending upon the nature of competition cournot or bertrand and the nature of the information structure while in earlier papers uncertainty is about an unknown common demand intercept in the present paper uncertainty is about unknown private costs the different information structure reverses the incentives to share information while with unknown common demand sharing is a dominant strategy with bertrand competition and concealing is a dominant strategy with cournot competition with unknown private costs sharing is a dominant strategy with cournot competition and concealing is a dominant strategy with bertrand competition

reputation effects in the market of certifiers evidence from the audit industry i introduction asymmetric information between seller and buyer can impede mutually beneficial transactions one of the solutions to this problem is to recruit an independent third party a certifier who verifies unobserved product characteristics for the buyer the certifier s independence is at the heart of the tripartite arrangement this independence however can be compromised when sellers pay for the certification for instance in the market of auditors and credit rating agencies cra it is not the investor i e the buyer of the security who pays for the certifier s services but the company which is to be impartially rated or audited in this business model companies can naturally manipulate their ratings audits furthermore investors only have a limited power to weed out dishonest certifiers simply because companies instead of investors choose auditors and cra ultimately these problems can pervert the certifier s mission to serve the investing community dranove and jin 2010 not surprisingly this conflict of interest has often been cited as a cause for accounting scandals and more recently for inflated credit ratings e g bis cfgs 2008 the economist 2004 2006 auditors and cra alike refute the criticism of their business model arguing that the threat of losing their reputation is a sufficient disciplinary device e g the economist 2005 1 however this claim has not yet been empirically substantiated a successful mechanism of reputation has three components in the presence of conflicts of interest consider the audit market 2 first investors have to punish companies which chose low quality auditors there is evidence that capital markets severely penalize companies whose audit reports are of dubious quality e g chaney philipich and kirk 2002 gao 2003a krishnamurthy zhou and zhou 2006 pacini and hillison 2003 second this negative capital market reaction should feed into companies auditor choice i e companies should choose high quality auditors third auditors then should have the incentive to provide high quality audits the second stage of this mechanism has not been empirically validated yet in particular it has not been analyzed whether the adverse capital market reaction to low audit quality feeds into companies auditor choice and if it does how a positive effect of adverse quality signals on audit demand means that firms prefer to engage lenient auditors in order to receive favorable reports suggesting that conflicts of interest overwhelm reputation concerns and clearly fail the disciplinary mechanism a negative effect on the other hand indicates that while investors do not pay for audit services they can exert discipline on auditors indirectly by forcing public companies to choose high quality auditors a success of reputation in this paper i exploit the natural experiment of arthur andersen s collapse and test the effects of audit quality signals on companies auditor choice in discrete choice models the quality signals in this study are auditors industry specific financial restatement histories i e the proportion of clients in an industry which restated financial statements in the past i find that auditors restatement histories are a crucial driving force in the subsequent auditor choice of deserting andersen clients there are compelling reasons why auditors financial restatement histories should forcibly feed into a company s auditor choice restatements are material corrections of published financial statements which cannot be relied upon anymore and have to be reissued since the very role of the independent auditor is to ensure that financial statements are fairly presented in all material respects it appears natural to think that the auditor has not done his job properly if a financial statement has to be restated later indeed there is ample evidence that capital markets receive restatements badly

strategic information disclosure the case of multi attribute products with heterogeneous consumers we examine the incentives for firms to voluntarily disclose otherwise private information about quality attributes of differentiated products in particular we focus on the case of differentiated products with multiple attributes and consumers that are heterogeneous in their preferences over these attributes we show that there exist certain configurations of consumer preferences under which a firm producing a high quality product even with zero costs of disclosure may choose not to reveal the quality of its product this failure of firms to voluntarily disclose the quality of their products will arise when providing consumers with more information results in more elastic demands for these products which in turn triggers more intensive price competition and leads to lower prices and profits for all firms as a result the equilibrium in which disclosure is voluntary may diverge from that in which disclosure is mandatory

value of parsimonious nutritional information in a framed field experiment abstract this study investigates consumers beliefs about the tastiness and healthiness of 173 food items in a framed field experiment designed to mirror a grocery shopping environment using data collected from 129 food shoppers in grenoble france demand models are estimated to determine how product choice is affected by price taste and perceived healthiness and how choices change with the provision of objective health information unlike previous studies focusing on relatively complex nutrition labels we elicit and convey health information using simple nutritional indices meant to lower search and cognitive processing costs the results indicate that consumers are willing to pay for tastier foods and for healthier foods particularly if the consumers have objective information as opposed to perceived subjective information on nutrient content the estimates suggest that the value of the type of nutritional information provided in the experiment is 0 98 per day the figure refers to the daily welfare benefits that arise from being able to make a set of choices that better reflect people s preferences by receiving the nutrient index information on all 173 food items versus not having such information

imperfect choice or imperfect attention understanding strategic thinking in private information games to understand the thinking process in private information games we use mousetracking to record which payoffs subjects attend to the games have three information states and vary in strategic complexity subjects consistently deviate from nash equilibrium choices and often fail to look at payoffs which they need to in order to compute an equilibrium response choices and lookups are similar when stakes are higher when cluster analysis is used to group subjects according to lookup patterns and choices three clusters appear to correspond approximately to level 3 level 2 and level 1 thinking in level k models and a fourth cluster is consistent with inferential mistakes as for example in qre or cursed equilibrium theories deviations from nash play are associated with failure to look at the necessary payoffs the time durations of looking at key payoffs can predict choices to some extent at the individual level and at the trial by trial level

does decentralization contribute to efficiency evidence from oecd countries abstractthis article provides evidence on the relationship between fiscal decentralization and technical efficiency we begin the first stage of this study with a data envelopment analysis to obtain technical efficiency estimates for a sample of 23 oecd countries over the period 1992 2009 in a second stage we explore the effects of fiscal decentralization and other control variables on technical efficiency the results including all the control variables reveal a statistically significant negative relationship between fiscal decentralization of public expenditure and technical efficiency

information disclosure policies evidence from the electricity industry i introduction developed nations environmental policies have evolved substantially in the past several decades early pollution control programs involved command and control approaches policies then frequently included pollution charges tradable permits and other market based instruments most recently a third wave of environmental policy has emerged that emphasizes information provision as an integral part of the risk mitigation strategy here government regulation is replaced or augmented by publicly provided information presumed to assist more cost effective private market and legal forces common examples include the toxics release inventory lead paint disclosures drinking water quality notices and eco labels the empirical effects of such programs however remain largely undetermined this paper examines the impact of a prominent mandatory disclosure program on the fuel mix percentages of large electric utility corporations the prominence of mandatory information policies is not restricted to environmental arenas for example developed countries equity markets generally require firm level financial information provision in many countries agricultural goods require country of origin and other health labels domestic colleges and universities are required by law to inform current and prospective students of crime statistics equity data and performance metrics even significant medical errors must now be disclosed to the community there are several potential advantages of information provision policies and theory suggests that disclosure programs may effectively achieve their goals healy and palepu 2001 provided a survey of the evidence in capital markets brouhle and khanna 2007 demonstrated that information provision can improve product quality in the environmental area kennedy laplante and maxwell 1994 arora and gangopadhyay 1995 maxwell lyon and hackett 2000 kirchhoff 2000 and khanna 2001 showed that the provision of information about pollution may correct a market failure improve performance and enhance welfare despite the literature s theoretical findings the empirical effects of disclosure programs remain inconclusive early studies of securities regulation found mixed results see stigler 1964 robbins and werner 1964 and benston 1973 a more recent literature suggested that disclosure programs in financial markets can achieve their desired effects la porta and lopez de silanes 2006 and greenstone oyer and vissing jorensen 2006 found that both market size and market returns were positively influenced by mandatory disclosure programs in product quality settings chipty and witte 1998 established that resource and referral agencies significantly influenced childcare prices but had no impact on the quality of care in contrast jin and leslie 2003 found that mandatory hygiene grade cards positively affected restaurant quality and health outcomes studies of environmental performance yielded similarly mixed results desvousges smith and rink 1992 found that information based programs influenced attitudes favorable to radon testing but testing itself only increased when mass media dissemination was coupled with community based implementation programs konar and cohen 1997 and khanna quimio and bojilova 1998 found that stock movements associated with toxics release inventory tri announcements led to increased abatement and reduced emissions however bui 2005 found that the declines in emissions after tri reporting events may have been attributable to regulation rather than investor pressure bennear and olmstead 2006 found that drinking water quality notices lowered violations for some systems but not others this paper is the first empirical economic study of the impacts of mandatory information provision in the electric utility industry the disclosure programs considered here differ significantly from the tri information programs examined previously

ceo compensation and bank efficiency an application of conditional nonparametric frontiers the paper investigates in a dynamic context the effect of chief executive officer ceo bonus and salary payments on banks technical efficiency levels our methodological framework incorporates the latest developments on the probabilistic approach of efficiency measurement as introduced by b din et al 2012 we apply time dependent conditional efficiency estimates to analyse a sample of 37 us banks for the period from 2003 to 2012 the empirical evidence reveals a non linear relationship between ceo bonus and salary payments and banks efficiency levels more specifically it is reported that salary and bonus payments affect differently banks technological change and technological catch up levels finally the empirical evidence suggests that higher salary and bonus payments are not always aligned with higher technical efficiency levels

statistical inference for aggregates of farrell type efficiencies in this study we merge results of two recent directions in efficiency analysis research aggregation and bootstrap applied as an example to one of the most popular point estimators of individual efficiency the data envelopment analysis dea estimator a natural context of the methodology developed here is a study of efficiency of a particular economic system e g an industry as a whole or a comparison of efficiencies of distinct groups within such a system e g regulated vs non regulated firms or private vs public firms our methodology is justified by the neoclassical economic theory and is supported by carefully adapted statistical methods copyright 2007 john wiley sons ltd

demographic change and policy responses implications for the global economy the fertility declines associated with the final phase of the global demographic transition have led to slower population growth and accelerated ageing in developed countries and in several advanced developing countries a global demographic and economic model is used to assess the implications of these changes for population sizes age gender distributions labour force growth and their implications for economic performance a baseline projection that incorporates declining fertility is compared with a hypothetical constant population growth scenario the results show that slower population growth and ageing reduces average saving rates in industrial regions yet global investment demand is also slowed and saving rates rise in developing regions so there is no net tightening of financial markets increased aged labour force participation considered one solution to the resulting rise in aged dependency in advanced regions is found to redistribute investment in favour of the industrialised regions and hence to accelerate their per capita income growth while conferring on the other regions compensatory terms of trade improvements the alternative of replacement migration is found to require inconceivably large population movements it also impairs real per capita growth in destination regions but by least in western europe where the terms of trade are improved by the immigration

the short run and long run effects of behavioral interventions experimental evidence from energy conservation we document three remarkable features of the opower program in which social comparison based home energy reports are repeatedly mailed to more than six million households nationwide first initial reports cause high frequency action and backsliding but these cycles attenuate over time second if reports are discontinued after two years effects are relatively persistent decaying at 10 20 percent per year third consumers are slow to habituate they continue to respond to repeated treatment even after two years we show that the previous conservative assumptions about post intervention persistence had dramatically understated cost effectiveness and illustrate how empirical estimates can optimize program design jel d12 d83 l94 q41

aggregation of economic growth rates and of its sources abstract in this paper we consider the question of measuring aggregate economic growth and its sources we derive a theoretically justified solution for aggregating across firms industries countries etc growth rates and their sources within the framework of solow s 1957 growth accounting method the resulting aggregation scheme turns out to be quite intuitive and in fact the one that is sometimes used in practice but with theoretical justification missing and so the main value of our work is that our formal derivations show under what conditions this scheme has economic theory justification we also provide a small empirical illustration of our method on the real data set and show how different the conclusions can be depending on the aggregation scheme used

new products quality changes and welfare measures computed from estimated demand systems this paper examines the construction of a price index based on an estimated demand system in principle the method examined can produce a price index that takes account of the introduction of new p

the effect of standardized information on firm survival and marketing strategies we argue that standardized information disclosure information using a common format and uniform metrics creates asymmetric opportunities for firms which affects their strategies and survival we test our predictions using a longitudinal quasi experimental field study involving the nutrition labeling and education act of 1990 nlea and we focus on firm market share within a category as a key asymmetry findings indicate that in general the nlea had no effect on firm responses however when accounting for firm differences we observe that the nlea led to 1 an increase in small share firm exits and 2 a greater increase in distribution for large share firms no concurrent increase in price by large share firms following the nlea was observed we conclude by discussing the implications of these effects for firm strategy the design of public policy and theories regarding the impact of information on markets

the economics of pensions this paper sets out the economic analytics of pensions after introductory discussion successive sections consider the effects of different pension arrangements on labour markets on national savings and growth and on the distribution of burdens and benefits these areas are controversial and politically highly salient while open about expressing our own views the main purpose of the paper is to set out the analytical process by which we reach them to enable readers to form their own conclusions 1 the backdrop this paper has a two fold purpose it sets out the economic analytics of pensions without discussion of empirical magnitudes and outside the context of any particular country with the intention of giving readers a systematic way of thinking about the topic the paper is also intended as a contribution to a continuing debate hence part of the discussion rebuts arguments that we regard as false or equivocal or true in some circumstances but not necessarily always specifically we argue that much analysis is incomplete and oversimplified focussing on one objective while ignoring others assuming an idealised economy with well informed agents and no distortions such as taxes and missing markets comparing one steady state with another when the underlying issue is a move from one steady state to a different one or ignoring distributional effects the opening section sets out some background matters the objectives of pension systems types of pension arrangement and the economics of pensions sections 2 3 and 4 discuss in turn pensions and labour markets mainly microeconomic finance and funding mainly macroeconomic and distributional issues

the joint choice of retirement age and postretirement hours of work in this paper we develop and estimate the first complete and internally consistent model of the effect of social security on the labor supply of the aged we develop a simple life cycle model that captures the effect of social security on the joint choice of the date of retirement and hours of work immediately after retirement we show that in the presence of social security the budget constraint relating these choices is highly complex and nonlinear and we develop a maximum likelihood procedure for the model that yields consistent parameter estimates our procedure avoids the selectivity biases present in prior studies that have ignored the nonlinearity of the constraint or have examined only self selected subsamples that exclude nonretirees our results show that social security has a significant though relatively small effect on the age of retirement and postretirement hours of work and that the effect of social security grows with advancing age

social security and retirement an international comparison this article concerns the following items 1 decline in labour force participation 2 social security benefit accrual and the implicit tax on work 3 the importance of the early retirement age 4 the implicit tax on work and labour force participation etc

informative advertising with differentiated products in this paper we study the role of promotional expenditures by sellers in a model of product differentiation advertising conveys full and accurate information about the characteristics of products heterogeneous consumers who have no source of information other than advertisements seek to purchase the products that best fit their needs despite the roles played by advertising in improving the matching of products and consumers and in increasing the elasticity of demand faced by each firm we find that the market determined levels of advertising are excessive given the extent of diversity in the market we derive a promotional equilibrium based on a specific information transmission technology paying explicit attention to the structure of consumer information and its impact on firms demand curves this allows us to study the effects of changes in the advertising technology including an increased ability to target messages to specific groups of consumers on the equilibrium in the product market we find that decreased advertising costs may reduce profits by increasing the severity of price competition

implications of population ageing for economic growth the share of the population aged 60 and over is projected to increase in nearly every country in the world during the period 2005 50 population ageing will tend to lower both labour force participation and savings rates thereby raising concerns about a future slowing of economic growth our calculations suggest that oecd countries are likely to see modest but not catastrophic declines in the rate of economic growth however behavioural responses including greater female labour force participation and policy reforms including an increase in the legal age of retirement can mitigate the economic consequences of an older population in most non oecd countries declining fertility rates will cause labour force to population ratios to rise as the shrinking share of young people will more than offset the skewing of adults towards the older ages these factors suggest that

economic growth population theory and physiology the bearing of long term processes on the this lecture sketches a theory of the secular decline in morbidity and mortality that takes account of changes induced in physiological functioning since 1700 the synergism between technological and physiological improvements has produced a form of human evolution biological though not genetic rapid culturally transmitted and not necessarily stable which is still ongoing in both oecd and developing countries thermodynamic and physiological aspects of economic growth are defined and their impact on growth rates is assessed implications of this theory for population forecasting measurement of national income demand for leisure pension policies and demand for health care are considered excerpt

strategic information revelation we analyze the problem in which agents have non public information and are to play an asymmetric information game the agents may reveal some or all of their information to other agents prior to playing this game revelation is via exogenously specified certifiable statements the equilibria resulting from various revelation strategies are used to determine equilibrium revelation of information sufficient conditions are provided for complete revelation of all private information a number of examples are provided illustrating when revelation will or will not occur in commonly analyzed games many economic problems are characterized by the presence of both strategic behaviour on the part of individuals and by asymmetric information models encompassing both of these characteristics have been used successfully to examine questions in many fields usually using the concept of bayesian nash equilibrium as the solution concept typically the agents information is given exogenously and is fixed throughout the analysis modelling the information structure as static is appropriate for some problems but not for all in particular situations that are inherently dynamic most economic encounters allow for some interchange between the agents before the outcome is settled irrevocably in such circumstances it is possible that at least one or more of the agents possessing non public information may be able to reveal part or all of his information to one or all of the other agents in the economy during the course of their contact to the extent that such a communication is believed by the other agents the priors of the other agents will change and we will have what is in essence a new asymmetric information game new in

the influence of expert reviews on consumer demand for experience goods a case study of movie critics an inherent problem in measuring the influence of expert reviews on the demand for experience goods is that a correlation between good reviews and high demand may be spurious induced by an underlying correlation with unobservable quality signals using the timing of the reviews by two popular movie critics siskel and ebert relative to opening weekend box office revenue we apply a difference in differences approach to circumvent the problem of spurious correlation after purging the spurious correlation the measured influence effect is smaller though still detectable positive reviews have a particularly large influence on the demand for dramas and narrowly released movies

what the seller won t tell you persuasion and disclosure in markets imagine that you are considering an investment in a new public offering of a firm s shares the firm s officers make a presentation that includes an audited financial statement an earnings forecast reviewed by its prestigious investment bankers and an impressive demonstration of its new technology or suppose that you are buying a new furnace to replace an old one that is not working well the salesman displays a chart showing that the projected total life cycle cost of one particular model including capital costs and fuel usage over the projected lifetime of the furnace is lower than that of some competing models you have considered this paper reviews the theoretical arguments about how sellers disclose information in an attempt to encourage buyers and the potential role for regulation in encouraging efficient disclosure of information how well does a system of private reporting work when should we expect all the relevant information to be reported if testing and reporting by the seller are costly will too little testing and reporting be done or too much when some information is withheld what sort of information is withheld how do rational buyers respond to such withholding how are prices and welfare affected what role is there for laws and regulations to improve the functioning of markets we address these questions by studying the theory of persuasion games games in which one or more sellers provide verifiable information to buyers to influence the actions they take

the impact of mandatory trans fat labeling on product mix and consumer choice a longitudinal analysis of the u s market for margarine and spreads abstract the impact of changes in food labeling policy on food consumption depends on how market participants both firms and consumers react to the changes across all products in the market we investigate how both responded to the u s food and drug administration s 2006 rule mandating that the quantity of trans fat in food products be separately labeled on the mandatory nutrition facts panel across an entire differentiated product category using a longitudinal data set tracking both product offerings and consumer purchases in the market for margarine and spreads for over a decade we analyze how product mix and consumer purchase behaviors were influenced by the new regulatory requirement we find that the number of products bearing voluntary trans fat free labels increased after the labeling regulation was implemented however a large number of the newly introduced products exited the market within five years as a result the fda s 2006 rule had a stronger short run than long run effect on product offerings even after the introduction of additional trans fat free labeled products such products remained only a small percentage of margarine and spreads product offerings increasing from a pre regulation level of 2 3 of the market to a peak of 6 5 in 2007 before dropping to 3 1 by 2011 in addition to firm response we examine demand side reactions to the 2006 rule and find that consumers significantly increased their expenditures on trans fat free labeled products soon after the labeling changes were implemented increasing from about 1 2 of the market in 2001 to a peak of 5 9 in 2007 before returning to 1 8 in 2011 we further explore variations in responses across different demographic characteristics although long run effects are small the market for trans fat free labeled margarine and spreads settled into a new equilibrium with a somewhat higher level of products in the market than prior to the 2006 rule taking effect and a somewhat higher share of expenditures in the category overall our category wide analysis of both firm and consumer behavior indicates that the effects of the labeling policy change were smaller in the longer run in this market than would be indicated by an analysis of only new product introductions in response to the policy change

voluntary quality disclosure and market interaction marketers disclose quality information directly to potential consumers using a variety of communication channels this study investigates how competition may influence duopoly firms incentive to voluntarily reveal quality information we show that firms in competitive markets reveal less information than a monopoly firm in addition sequential disclosure leads to asymmetric equilibrium disclosure behavior the disclosure leader reveals unambiguously less information than in the simultaneous disclosure case whereas the follower ex ante reveals less more private information than that released by the leader or by the firms in the simultaneous case when the disclosure cost is sufficiently low high we also examine the equilibrium firm profits and social welfare we demonstrate that there may be a u shaped relationship between equilibrium monopoly profits or social welfare under both monopoly and duopoly and the disclosure cost moreover in comparison to the simultaneous disclosure case sequential disclosure can lead to increasingly softened competition improving both firm profitability and social welfare

planning and financial literacy how do women fare many older us households have done little or no planning for retirement and there is a substantial population that seems to undersave for retirement of particular concern is the relative position of older women who are more vulnerable to old age poverty due to their longer longevity this paper uses data from a special module we devised on planning and financial literacy in the 2004 health and retirement study it shows that women display much lower levels of financial literacy than the older population as a whole in addition women who are less financially literate are also less likely to plan for retirement and be successful planners these findings have important implications for policy and for programs aimed at fostering financial security at older ages

technological change technological catch up and capital deepening relative contributions to growth and convergence we decompose labor productivity growth into components attributable to 1 technological change shifts in the world production frontier 2 technological catch up movements toward or away from the frontier and 3 capital accumulation movement along the frontier the world production frontier is constructed using deterministic methods requiring no specification of functional form for the technology nor any assumption about market structure or the absence of market imperfections we analyze the evolution of the cross country distribution of labor productivity in terms of the tripartite decomposition finding that technological change is decidedly nonneutral and that both growth and bipolar international divergence are driven primarily by capital deepening jel o30 o47 d24

nutrition information in the supermarket lists of nutrition information posted in supermarkets were designed to reduce the information processing costs of comparing alternative foods in experiment 1 lists of vitamins and minerals increased nutrition knowledge but had no influence on actual purchases in experiment 2 a list of added sugar a negative component of food increased the market share of low sugar breakfast cereals at the expense of high sugar brands we conclude that effort reducing displays are a successful technique for increasing information use especially for the more highly valued negative nutrients

transparency in markets for experience goods experimental evidence we propose an experimental design to investigate the role of information disclosure in the market for an experience good the market is served by a duopoly of firms that choose both the quality and the price of their product consumers differ in their taste for quality and choose from which firm to buy we compare four different treatments in which we vary the degree to which consumers are informed about quality contrary to theoretical predictions firms do not differentiate quality under full information rather both tend to offer products of similar high quality entailing more intense price competition than predicted by theory under no information we observe a lemons outcome where quality is low at the same time firms manage to maintain prices substantially above marginal cost in two intermediate treatments quality is significantly higher than the no information level and there is evidence that prices become better predictors of quality taken together these findings suggest that information disclosure is a more effective tool to raise welfare and consumer surplus than theory would lead one to expect jel l15 c91 d82

multiple comparisons with the best with economic applications in this paper we discuss a statistical method called multiple comparisons with the best or mcb this paper is meant to introduce mcb to economists we discuss possible uses of mcb in economics the application that we treat in most detail is the construction of confidence intervals for inefficiency measures from stochastic frontier models with panel data we also consider an application to the analysis of labour market wage gaps copyright 2000 john wiley sons ltd

the effect of information on product quality evidence from restaurant hygiene grade cards this study examines the effect of an increase in product quality information to consumers on e rms choices of product quality in 1998 los angeles county introduced hygiene quality grade cards to be displayed in restaurant windows we show that the grade cards cause i restaurant health inspection scores to increase ii consumer demand to become sensitive to changes in restaurants hygiene quality and iii the number of foodborne illness hospitalizations to decrease we also provide evidence that this improvement in health outcomes is not fully explained by consumers substituting from poor hygiene restaurants to good hygiene restaurants these results imply that the grade cards cause restaurants to make hygiene quality improvements

pensions reforms workforce ageing and firm provided welfare this paper investigates the impact of an exogenous increase in the legal retirement age on the firms propensity to provide welfare services voluntarily to their employees to this purpose we explo

shrouded attributes consumer myopia and information suppression in competitive markets bayesian consumers infer that hidden add on prices e g the cost of ink for a printer are likely to be high prices if consumers are bayesian firms will not shroud information in equilibrium however shrouding may occur in an economy with some myopic or unaware consumers such shrouding creates an inefficiency which firms may have an incentive to eliminate by educating their competitors customers however if add ons have close substitutes a curse of debiasing arises and firms will not be able to profitably debias consumers by unshrouding add ons in equilibrium two kinds of exploitation coexist optimizing firms exploit myopic consumers through marketing schemes that shroud high priced add ons in turn sophisticated consumers exploit these marketing schemes it is not possible to profitably drive away the business of sophisticates it is also not possible to profitably lure either myopes or sophisticates to nonexploitative firms we show that informational shrouding flourishes even in highly competitive markets even in markets with costless advertising and even when the shrouding generates allocational inefficiencies

deregulation vertical unbundling and the performance of china s large coal fired power plants article i nfo in 2003 china s integrated electricity utility the state power corporation spc was unbundled and dism antled into five generation groups and two grid companies in an effort to increase competition and improve ef ficiency in this paper we study the impact of this deregulation reform on the operational efficiency for a balanced panel of 34 large power plants for the period 1997 2010 we find that on average these power plants have converged to the technological frontier over the sample period controlling for substantial heterogeneity in the technical profile we also find that the unbundling reform has boosted productivity of china s large thermal power plants however the presumably differential impacts of the reform on the previously spc managed power plants and the independent power producers in our sample are insignificant

labor market effects of demographic shifts and migration in oecd countries the labor force of each industrial country is being shaped by three forces ageing education and migration drawing on a new database for the oecd countries and a standard analytical framework this paper focuses on the relative and aggregate effects of these three forces on wages across different skill and age groups over 2000 to 2010 the variation in the age and educational structure of the labor force emerges as the dominant influence on wage changes the impact is uniform and egalitarian in almost all countries the changes in the age and skill structure favor the low skilled and hurt the highly skilled across age groups immigration plays a relatively minor role except in a handful of open countries like australia and canada where it accentuates the wage equalizing impact of ageing and education emigration is the only inegalitarian influence especially in ireland and a few eastern european countries which have seen significant outflows of high skilled labor to western european union countries

the failure and promise of mandated consumer mortgage disclosures evidence from qualitative interviews and a controlled experiment with mortgage borrowers policy responses to record rates of mortgage delinquency default and foreclosure will likely affect the cost and availability of consumer credit for decades to come although the current crisis began over two years ago one consumer policy change that surely passes a cost benefit test has yet to be adopted consumers still do not receive one clear disclosure document that conveys the key costs and risks of their mortgages the results of this study based on quantitative testing in a controlled randomized experiment with more than 800 mortgage borrowers and in depth qualitative interviews with several dozen additional borrowers suggests that federally mandated consumer mortgage disclosures failed resulting in many borrowers who did not understand the costs and risks of their loans likely contributing to the mortgage crisis an overhaul of consumer mortgage disclosures culminating in a single disclosure document designed using a combination of qualitative and quantitative consumer research could substantially improve consumer understanding of their mortgage choices the failure of mandated disclosures to convey mortgage terms to borrowers was not due to cognitive limitations or irrationality of consumers nor to an irreducible complexity of new mortgage instruments but to poorly designed disclosures disclosure documents failed to include key loan information and the information disclosed was often confusing and sometimes misleading problems with mandated disclosures were evident across a range of consumers and loan types prime and subprime borrowers were similarly confused confusion the failure and promise of mandated consumer mortgage disclosures evidence from qualitative interviews and a controlled experiment with mortgage borrowers

longevity and life cycle savings we add health and longevity to a standard model of life cycle saving and show that under plausible assumptions increases in life expectancy lead to higher savings rates at every age even when retirement is endogenous in a stationary population these higher savings rates are offset by increased old age dependency but during the disequilibrium phase when longevity is rising the effect on aggregate savings rates can be substantial we find empirical support for this effect using a cross country panel of national savings rates

age structure and the current account we adjust current account surpluses and deficits of 57 countries in the period 2005 2009 for differences in the age structure of their populations and find that these differences can account for a significant part of the variation in the data among the large countries we find that the adjustment increases the surpluses of germany and japan while the surpluses of china singapore hong kong korea thailand indonesia and malaysia are significantly diminished

genetically modified food labeling the impacts of message and messenger on consumer perceptions of labels and products abstract we analyze responses to a survey designed to elicit consumer reaction to various approaches to labeling genetically modified gm foods consumers were shown sample labels that differed with respect to claims concerning the presence and potential effects of gm ingredients and the agency that certified these claims a sample of 1898 us consumers rated 3681 labels with regard to the credibility and adequacy of the information content with regard to perceived health and environmental impacts of the product and with regard to purchase intent simple claims that a product contains gm ingredients are viewed as most credible while simple claims of no gm content are viewed as most adequate label claims certified by the us food and drug administration fda are in general viewed as most credible and adequate and products with fda certified claims are perceived to have fewer long term health problems several practical policy implications of the results are discussed including how different label messages may impact consumer reactions in markets involving gm products

quality disclosure and competition we analyze costly quality disclosure with horizontally differentiated products under duopoly and a cartel and characterize the effect of competition on disclosure and welfare we show that expected disclosure is higher under a cartel than under duopoly and the welfare comparison depends on the level of disclosure cost when the disclosure cost is low welfare is higher under a cartel than duopoly but when the disclosure cost is high welfare is higher under duopoly in either market structure disclosure is excessive in terms of total surplus but insufficient in terms of consumer surplus

effects of carbon reduction labels evidence from scanner data we investigate the effects of carbon reduction labels using a detailed scanner data set using a difference in differences estimation strategy we find that having a carbon label has no impact on detergent prices or demand we also investigate possible heterogeneous effects of carbon labels using the synthetic control method we find no evidence to indicate that the prices for the counterfactual detergents without the label would have been any different from the prices of the carbon labeled detergents we investigate the reasons for these results and conclude that the specific design of the carbon label is responsible for its lack of success jel d12 d83 l15 q54

third degree price discrimination in oligopoly all out competition and strategic commitment price discrimination by imperfectly competitive firms may intensify competition leading to lower prices for all consumers the tradeoff of consumer groups welfare that is characteristic of monopolistic discrimination need not arise this escalation of competition may make firms worse off and as a result firms may wish to avoid the discriminatory outcome under conditions similar to those in which unambiguous price and welfare effects may arise unilateral commitments not to price discriminate including the adoption of everyday low pricing or no haggle policies may raise firm profits by softening price competition

a test of nutritional quality signaling in food markets prior to implementation of mandatory labeling in may 1994 new nutrition labeling regulations went into effect in the united states requiring mandatory disclosure of information on the nutritional content of foods this article uses grossman s model of totally effective quality signaling to evaluate whether markets were effective in information provision prior to the new regulation if markets were effective in providing information to consumers on the nutritional quality of foods the new regulation would be unnecessary the results of the logistic model where the probability of voluntary information disclosure is linked to the nutritional quality of food products and their prices indicate that private quality signaling was not reliably at work in food markets prior to implementation of the mandatory nutrition labeling regulation copyright 2000 oxford university press

school quality and returns to education of u s immigrants using the u s labor market as a common point of reference this article investigates the influence of source country school quality on the returns to education of immigrants based on 1980 and 1990 census data we first estimate country of origin specific returns to education results reveal that immigrants from japan and northern europe receive high returns and immigrants from central america receive low returns next we examine the relationship between school quality measures and these returns holding per capita gdp and other factors constant immigrants from countries with lower pupil teacher ratios and greater expenditures per pupil earn higher returns to education

measuring the welfare effects of nutrition information cost benefit analysis justifies regulations altering the amount of health related information presented to consumers the current method of benefit analysis the cost of avoided illness is limited it assumes the benefits of health related information are adequately represented by changes in illnesses the manuscript develops a benefit estimation method to measure the welfare impacts of providing nutrient information nutrient labeling significantly affects purchase behaviour but may not lead to increased consumption of health foods nutrient labeling may increase welfare without any change in health risk thus the cost of avoided illness approach can underestimate the social benefits of providing nutrient information copyright 2001 oxford university press

asymmetric information adverse selection and online disclosure the case of ebay motors since the pioneering work of akerlof 1970 economists have been aware of the adverse selection problem that information asymmetries can create in used goods markets the remarkable growth in online auctions of used goods where buyers generally purchase sight unseen therefore poses a puzzle i argue that given a means for credible information disclosure sellers will voluntarily disclose their private information to buyers through online media this limits information asymmetries and adverse selection to test this theory i examine the role of information in a large online used car market ebay motors i nd that sellers selectively disclose information that information asymmetries are reduced by these disclosures and that online media such as photos text and graphics provide a rich environment for information disclosure

testing for efficiency catching up we used advances in data envelopment analysis dea techniques to examine efficiency scores and investigate the issue of convergence and divergence in a cross country analysis specifically we used bootstrapping techniques to examine a data set of 52 developed and developing countries we found that when using the standard dea model some of the results were not robust further we broke the sample into groups to examine club convergence we found that efficiency scores were significantly different between groups and that there was some evidence of convergence of efficiency scores within each group

restrictions on price advertising in this paper the effects of advertising restrictions in an industry producing an undifferentiated product are analyzed when the product is undifferentiated advertising conveys information about price the standard intuition suggests that such prohibitions will raise buyer search costs making demand less elastic this raises price and profits in an industry advertising restrictions provide an indirect means of coordinating pricing strategies in this framework here we consider the cost side of the same argument the efficiency of firms in an industry is allowed to vary and information about costs is private in this environment efficient firms are hurt by advertising restrictions since lower advertised prices constitute their most effective competitive weapon we show that when the number of buyers and sellers is finite there is a nonzero probability that advertising restrictions will reduce every firm s price this occurs when all firms are more efficient than their competitors expect them to be f

quality disclosure and certification theory and practice this essay reviews the theoretical and empirical literature on quality disclosure and certification after comparing quality disclosure with other quality assurance mechanisms and describing a brief history of quality disclosure we address two sets of theoretical issues first why don t sellers voluntarily disclose through a process of unraveling and given the lack of unraveling is it desirable to mandate seller disclosure second when we rely on certifiers to act as the intermediary of quality disclosure do certifiers necessarily report unbiased and accurate information we further review empirical evidence on these issues with a particular focus on healthcare education and finance the empirical review covers quality measurement the effect of third party disclosure on consumer choice and seller behavior as well as the economics of certifiers jel d18 k32 l15 m31

information cost and consumer choices of healthy foods this article examines whether or not a reduction in consumer search cost for nutritional information increases the probability that heterogeneous consumers will choose healthier food products empirical results from the ready to eat breakfast cereal rtec market confirm the conceptual analysis that lowering information cost via simplified nutritional labeling increases the healthfulness of consumer choices the healthfulness attribute weighs 28 44 more heavily in consumers decision making with simpler labeling systems on average introducing front of package labeling increased the probability of a consumer choosing a healthy rtec by 3 49 and reduced the probability of choosing an unhealthy rtec by 3 81 calories sugar saturated fat and sodium consumption decrease by 0 31 2 63 6 94 and 1 97 respectively fiber intake increases by 3 24 further results show that less educated and smaller households with less frequent purchases benefit the most from a reduction in information cost overall this article shows the potentially positive role that voluntary more convenient labeling could play in improving market and public health outcomes

on the economics of labels how their introduction affects the functioning of markets and the welfare of all participants are labels good or bad for consumers and firms the answer may seem straightforward since labels improve information yet economic theory reveals situations where their introduction reduces the welfare of at least some market participants this essay reviews the theoretical literature on labels in order to identify and explain the main reasons that may cause labeling to produce undesirable side effects in contrast to earlier reviews that either concentrate on narrow topics or treat the subject in a more or less informal way we bring together the main results from all the relevant topics by presenting and discussing the assumptions and model building techniques that underpin them the advantage of this approach is that it identifies the origin of the differences between results thus allowing the synthesis of results that sometimes appear even to be contradictory we focus on quality labels and examine the impact of labeling on market structure the side effects of costly certification issues related to the label s trustworthiness the rationale for mandatory vs voluntary labeling the level at which the label s standard is set according to the agency that selects it the political economy of labels that is pro or anti label lobbying lobbying to affect the label s standard and lobbying in favor or against the label s mandatory imposition these topics cover a wide range of applications including genetically modified organism gmos organic produce geographic indicators controlled origin eco labels etc we conclude by identifying topics that require further research

what makes you grab low carb beers what makes people choose low carbohydrate high protein food low carb food which is good for health but usually tastes bad using panel data on us beer consumption in which each consumption occasion is uniquely associated with various companion based consumption contexts and exposure levels to diet information we analyse the variations in consumers preferences for low carb food the results show that there exist considerable gender differences in the preference variation under peer pressure first single females behave in a way they dislike drinking low carb beer in front of friends spouses and significant others second male both married and single and married females pretend to choose low carb beer when accompanied by spouses or significant others finally the elasticity of demand for healthy food with respect to news articles about low carb diets is positive yet with substantial differences in the degree of elasticity across demographic groups

school quality and information disclosure evidence from the housing market i introduction tiebout s 1956 theory tying residential sorting patterns to the provision of local public goods provided the foundation for a large and growing literature assessing the relationship between school quality and housing markets many of these studies have used housing prices to directly estimate the monetary value of improvements in student test scores to parents and homeowners few have focused on the role of information in mediating relationships between buyers sellers schools and housing values 1 fewer still have examined the behavior of home sellers and their role in the provision of information on school quality this article takes a step toward filling these gaps in the literature building on the unraveling theory of information disclosure in the industrial organization literature grossman 1981 milgrom 1981 we first investigate the behavior of home sellers in revealing information about local schools we ask whether and how school quality affects the likelihood that a seller will reveal the identity of a property s assigned school in an online real estate listing empirical tests of unraveling are rare as the true quality of a product is typically unobserved the housing market provides a novel context to test this theory if sellers selectively reveal information on schools then information on its own controlling for school quality may have an impact on sales prices if the cost to buyers of obtaining information on school quality is sufficiently high we explore these issues empirically both in a period where the costs of gathering information are relatively high years 2001 and 2002 and in a period where these costs are presumably much lower years 2006 and 2007 between these two periods the mandates of the 2001 no child left behind nclb act coupled with the growth of the internet undoubtedly reduced the cost of information gathering for potential buyers and perhaps also lowered the costs of disclosure for sellers drawing on multiple listing service mls data of residential sales in fairfax county virginia the largest suburb of washington dc our results confirm that sellers of units located in high quality school assignment zones are on average more likely to disclose the school s identity in an online listing an increase of just ten points in an elementary school s passage rate on statewide tests increases the likelihood of information disclosure by a sizeable 5 percentage points in the 2001 2002 period a finding that is robust to a variety of alternative specifications and controls including the addition of real estate agent fixed effects predictably selective disclosure appears to be present but weaker in the 2006 2007 period when the cost of gathering information on school quality was likely lower a ten point increase in test scores yields a 2 to 4 percentage point increase in the likelihood of disclosure our findings of moderate selective disclosure in the latter period hold even when we apply a school boundary discontinuity design and are robust to alternate measures of school quality including measures of adequate yearly progress under nclb in both periods we observe more selective disclosure for single family homes and those with three or more bedrooms presumably families with children than for smaller units we also find more selective disclosure in neighborhoods with high concentrations of young children our results support the findings of several previous studies bayer ferreira and mcmillan 2007 figlio and lucas 2000 confirming that school quality is more important in housing transactions involving families with children than for those without we also investigate the extent to which information disclosure is capitalized in housing prices using school fixed effects to control for school quality we find that information disclosure does not have an independent effect on a home s price

school quality and residential property values evidence from vancouver rezoning abstract this study utilizes changes in the catchment areas of public schools in vancouver british columbia to measure the residential price capitalization of school quality specifications that employ repeat sales methods to control for time invariant neighborhood effects and disaggregated price indexes to capture time varying neighborhood price appreciation reveal significant effects of secondary school performance on residential prices however when we add controls for long run price trends in rezoned areas only prices of residences likely to be purchased by high income families appear to have been affected by changes in school quality induced by rezoning

human capital and convergence a production frontier approach using nonparametric production frontier methods we decompose labor productivity growth into components attributable to technological change shifts in the world production frontier technological catch up movements toward or away from the frontier and physical and human capital accumulation movements along the frontier we find that 1 technological change is decidedly nonneutral 2 productivity growth is driven primarily by physical and human capital accumulation 3 the increased international dispersion of productivity is explained primarily by physical capital accumulation and 4 international polarization the shift from a unimodal to a bimodal distribution is brought about primarily by efficiency changes technological catch up

can information costs affect consumer choice nutritional labels in a supermarket experiment this paper investigates whether information costs under currently regulated nutritional labeling prevent consumers from making healthier food choices we implement five nutritional shelf label treatments in a market level experiment these labels reduce information costs by highlighting and summarizing information available on the nutritional facts panel following a difference in differences and synthetic control method approach we analyze weekly store level scanner data for microwave popcorn purchases from treatment and control stores our results suggest that consumer purchases are affected by information costs implemented low calorie and no trans fat labels increase sales in contrast implemented low fat labels decrease sales suggesting that consumer response is also influenced by consumers taste perceptions a combination of these claims into one label treatment increases information costs and does not affect sales significantly

strategic disclosure of meaningful information to rival i study a model of strategic disclosure of a private signal to a rival in the presence of a payoff externality in the model two agents forecast the unknown true state of a future period specifically the quality of the signal is also private information hence which quality of signal is revealed for which incentive is the main question of interest i show that even when disclosure is costly the revealing equilibrium where an agent voluntarily reveals his signal can exist and it should be a monotone equilibrium asymmetry between the penalty for an incorrect forecast and the reward for a correct forecast is a necessary condition for the existence of this revealing equilibrium if the penalty is larger than the reward the unique revealing equilibrium is a separating equilibrium where only the low quality signal is disclosed in order to induce the rival s imitation on the other hand if the reward is much larger than the penalty the unique revealing equilibrium is a pooling equilibrium where the signal is always revealed in order to induce the rival s deviation if the reward is not much larger than the penalty no revealing equilibrium is robust to a costly disclosure jel d81 d82

an economy of scales a selective review of obesity s economic causes consequences and solutions this paper reviews the economic research on obesity covering topics such as the measurement of and trends in obesity the economic causes of obesity e g the monetary price and time cost of food food assistance programs income education macroeconomic conditions and peer effects and the economic consequences of obesity e g lower wages a lower probability of employment and higher medical care costs it also examines the extent to which obesity imposes negative externalities and economic interventions that could potentially internalize such externalities such as food taxes subsidies for school based physical activity programs and financial rewards for weight loss it discusses other economic rationales for government intervention with respect to obesity such as imperfect information time inconsistent preferences and irrational behavior it concludes by proposing a research agenda for the field overall the evidence suggests that there is no single dominant economic cause of obesity a wide variety of factors may contribute a modest amount to the risk there is consistent evidence regarding the economic consequences of obesity which are lower wages and higher medical care costs that impose negative externalities through health insurance studies of economic approaches to preventing obesity such as menu labeling taxes on energy dense foods and financial rewards for weight loss find only modest effects on weight and thus a range of policies may be necessary to have a substantial effect on the prevalence of obesity

how important is human capital for development evidence from immigrant earnings this paper offers new evidence on the sources of cross country income differences it exploits the idea that observing immigrant workers from different countries in the same labor market provides an opportunity to estimate their human capital endowments these estimates suggest that human and physical capital account for only a fraction of cross country income differences for countries below 40 of the us output per worker less than half of the output gap relative to the us is attributed to human and physical capital

information shocks and the dynamics of the housing market in this paper we analyze housing market reactions to the release of previously unpublished information on school quality using high quality housing data which precisely bracket the timing of the information shock we investigate housing price dynamics within school catchment areas we find a robust short term housing market reaction to the publication of school quality indicators suggesting that this information was new to the households and that households are willing to pay for better schools the publication effect does not seem to be permanent as prices revert to pre publication levels after two to three months

information and advertising the case of fat consumption in the united states the role of information in markets has become a mainstay of the economics literature theoretical work has focused on the market effects of asymmetric information and costly search incentives for voluntary disclosure contracting and other market and policy solutions to information issues see michael katz 1989 and joseph stiglitz 1989 for recent reviews and on how consumers ability to use information could affect market outcomes as in the recent work on information cascades e g sushil bikhchandani et al 1992 the empirical literature testing informational theories is more limited in large part because the key variable of interest information is so difficult to measure most of the literature relies on indirect tests usually based on regulatory differences as in the study of state restrictions on advertising for eyeglasses lee benham 1972 or on new information or public education campaigns typified by the studies of smoking see w kip viscusi 1992 for a recent summary other studies examine cross sectional differences in behavior in an effort to assess whether human capital or other individual or household differences are important in explaining responses to evolving information this paper follows these traditions specifically this study examines changes in fat and saturated fat consumption in the united states as information spread connecting these lipids to heart disease and cancer risks 1 the study examines changes in consumption during two regulatory regimes the years 1977 1985 when government and general information sources continued their efforts to educate the public about the links between fats and disease risks and when producers were free to label these characteristics on food packages and in advertising and the years 1985 1990 when the regulatory ban was lifted that prohibited producers from explaining the reasons why consumers should be interested in the content of foods this controversial regulatory change allowed the use of so called health claims in labeling and advertising subject to the normal deception rules for all advertising and labeling claims 2 comparison of these two periods allows us to provide evidence on whether and how consumers reacted to the general flow of information prior to 1985 and whether advertising appears to have added information to the market or as many critics believe provided deceptive or sufficiently incomplete information to undermine public education efforts

relative sources of european regional productivity convergence a bootstrap frontier approach enflo k and hjertstrand p relative sources of european regional productivity convergence a bootstrap frontier approach regional studies this paper addresses the issue of western european regional productivity growth and convergence by means of data envelopment analysis dea decomposing labour productivity into efficiency change technical change and capital accumulation the decomposition shows that most regions have fallen behind the production frontier in efficiency and that capital accumulation has had a diverging effect on the labour productivity distribution using bootstrapping methods the paper also accounts for the inherent bias and the stochastic elements in the efficiency estimation it is found that the relative ranking of the efficiency scores remains stable after the bias correction even after controlling for spatially correlated measurement errors and that the dea successfully identifies the regions on the production frontier as significantly more efficient than other regions enfl

producer and consumer responses to green housing labels we find green labels increase residential property values by an average of 5 this premium varies by label stringency and across market segments builders respond to the stringency of labels by strategically incorporating green features to achieve higher ratings this strategy seems reasonable as there is no market premium for green features that lead to scores between label rating cutoff values these results raise important questions as to how green label policies should be designed in order to foster the supply of green features gradations of green attributes are influential particularly for highly rated homes the most stringent labels have the greatest role at the high price end of the market jel q20 q40 r31

unintended nutrition consequences firm responses to the nutrition labeling and education act this paper investigates how firms responded to standardized nutrition labels on food products required by the nutrition labeling and education act nlea using a longitudinal quasi experimental design we test our predictions using two large scale samples that span 30 product categories results indicate that the nlea reduced brand nutritional quality relative to a control group of products not regulated by the nlea at the same time among regulated products brand taste increased although this reduction in nutrition represents an unintended consequence of regulation there were a set of category firm and brand conditions under which the nlea produced a positive effect on brand nutritional quality we find that firms were more likely to improve brand nutrition when firm risk or firm power is low lower risk occurs when the firm is introducing a new brand rather than changing an existing brand and weaker power in a category is reflected by lower market share in a category furthermore firms competing in low health categories e g potato chips or small portion categories e g peanut butter improved nutrition more than firms competing in high health categories e g bread or large portion categories e g frozen dinners recommendations for firm strategy and the design of consumer information policy are examined in light of these surprising firm responses

do voluntary biotechnology labels matter to the consumer evidence from the fluid milk market this article examines the effects on the demand of voluntary labeling for the use of genetically modified growth hormone for retail fluid milk using supermarket scanner data retail fluid milk tracks one of the first biotechnology products approved is fairly standardized and ubiquitous and allows for cross sectional differentiation between labeled and unlabeled products and between conventional and organic brands the results indicate that voluntary labeling increases the demand for recombinant bovine growth hormone free milk in addition the estimated effects of labeling appear to have increased over time innovations through biotechnology enable agricultural producers to reduce production costs and or enhance product quality for many livestock and crop commodities at the same time however these innovations may affect the demand for the products that utilize those commodities many individuals for example are concerned about potential risks to human health although by no means all consumers have such concerns burton metcalfe and smith heiman just and zilberman the use of the recombinant bovine growth hormone rbgh in milk production has been a particular concern for some consumers as approximately one third of the united states dairy herd about 3 million dairy cows currently receive rbgh supplements monsanto product labeling particularly with respect to the provision of health and environmental information is increasingly being used to provide information about product characteristics such as biotechnology content that

productivity growth technical progress and efficiency change in industrialized countries this paper analyzes productivity growth in 17 oecd countries over the period 1979 1988 a nonparametric programming method activity analysis is used to compute malmquist productivity indexes these are decomposed into two component measures namely technical change and efficiency change we find that u s productivity growth is slightly higher than average all of which is due to technical change japan s productivity growth is the highest in the sample with almost half due to efficiency change jel c43 d24 in this paper we apply recently developed

a model of labeling with horizontal differentiation and cost variability we study optimal disclosure of variety by a multiproduct firm with random costs the prices for labeled varieties are increasing functions of the cost differential and do not reveal which variety is cheaper to produce nondisclosure is most common under moderate uncertainty about costs and not too much idiosyncrasy in valuations and quality asymmetry mandatory disclosure decreases expected welfare when cost variability is large and quality asymmetry is small the cheaper variety tends to be oversupplied undersupplied when disclosure is voluntary mandatory competition among multiproduct firms that source inputs in the same upstream market may not lead to more disclosure

on hotelling s competition with non uniform customer distributions abstract hotelling s competition in a two stage location price game is examined with increasing densities of consumers towards the centre it is shown that there is a range of rather even distributions for which firms locate at opposite ends of the market as the distribution becomes more concentrated duopolists will tend to move inside the market

what labelling policy for consumer choice the case of genetically modified food in canada and europe faced with divergent opinions among consumers on the use of genetically modified gm foods canada has adopted a voluntary labelling approach for non gm foods whereas the european union has a mandatory labelling policy for gm foods interestingly both labelling systems have resulted in very little if any additional consumer choice using an analytical model we show that the coexistence of gm and non gm products at the retail level depends on the labelling policy consumer perceptions and the type of product although voluntary labelling tends to favour the use of gm products it is more likely to provide consumer choice confrontes a des opinions publiques divergentes sur l usage des aliments genetiquement modifies gm le canada a adopte une politique d etiquetage volontaire pour les aliments non gm alors que l union europeenne a mis en place une politique d etiquetage obligatoire des aliments gm curieusement ces deux systemes d etiquetage n ont pas reellement permis de faciliter le choix des consommateurs a l aide d un modele analytique nous demontrons que la coexistence des produits gm et non gm au niveau du commerce de detail depend de la politique d etiquetage de la perception des consommateurs et du type de produit bien que l etiquetage volontaire ait tendance a favoriser l usage des produits gm cette approche est plus a meme de faciliter le choix du consommateur que l etiquetage obligatoire

aging and health financing in the u s a general equilibrium analysis abstract we quantify the effects of population aging on the u s healthcare system our analysis is based on a stochastic general equilibrium overlapping generations model of endogenous health accumulation calibrated to match pre 2010 u s data we find that population aging not only leads to large increases in medical spending but also a large shift in the relative size of private vs public insurance without the affordable care act aca aging by itself leads to a 40 increase in health expenditures by 2060 and a 9 6 increase in gdp which is mainly driven by the increase of the fraction of older higher risk individuals in the economy as well as behavioral responses to aging and the subsequent expansion of the healthcare sector aging increases the premium in group based health insurance ghi markets and enrollment in ghi decreases while the individual based health insurance ihi market medicaid and medicare expand significantly the size of medicare will almost double by 2060 as the elderly dependency ratio increases additional funds equivalent to roughly 2 7 of gdp are required to finance medicare and medicaid the introduction of the aca increases the fraction of insured workers to almost 100 by 2060 compared to 82 without the aca this increase is driven by the stabilization of ghi markets and the further expansions of medicaid and the ihi market the aca mitigates the increase of healthcare costs by reducing the number of the uninsured who pay the highest market price for healthcare services overall the aca adds to the fiscal cost of population aging mainly via the medicaid expansion our findings demonstrate the importance of accounting for behavioral responses structural changes in the healthcare sector and general equilibrium adjustments when assessing the economy wide effects of aging

secrecy two sided bias and the value of evidence abstract we provide necessary and sufficient conditions on players preferences for a verifiable message game to possess a separating equilibrium and or a pooling equilibrium as well as sufficient conditions for every equilibrium of such a game to be pooling we also characterize all nonseparating equilibria and use this property to show that less information might be conveyed in any equilibrium of a verifiable message game than in some equilibrium of the cheap talk game with the same parameters

returns to investment in education a global update the author updates compilations of rate of return estimates to investment in education published since 1985 and discusses methodological issues surrounding those estimates some key patterns among the three main levels of education primary education continues to exhibit the highest social profitability in all world regions private returns are considerably higher than social returns because of the public subsidization of education the degree of public subsidy increases with the level of education which is regressive social and private returns at all levels generally decline by the level of a country s per capita income overall the returns to female education are higher than those to male education but at individual levels of education the pattern is more mixed the returns to the academic secondary school track are higher than the vocational track since unit cost of vocational education is much higher and the returns for those who work in the private competitive sector of the economy are higher than in the public noncompetitive sector and the returns in the self employment unregulated sector of the economy are higher than in the dependent employment sector controversies in the literature are discussed in the light of the new evidence the undisputable and universal positive correlation between education and earnings can be interpreted in many ways the causation issue on whether education really affects earnings can be answered only with experimental data generated by randomly exposing different people to various amounts of education given the fact that moral and pragmatic considerations prevent the generation of such pure data researchers have to make do with indirect inferences or natural experiments some have been attempted the author looks at the research on overeducation or surplus schooling the conclusions reinforce earlier patterns they confirm that primary education continues to be the number one investment priority in developing countries they also show that educating females is marginally more profitable than educating males that the academic secondary school curriculum is a better investment than the technical vocational tract and that the returns to education obey the same rules as investment in conventional capital that is they decline as investment is expanded