is approval voting an unmitigated evil a response to brams fishburn and merrill brams fishburn and merrill 1988 contend that the indeterminacy of approval voting av introduced in our paper 1988 is not a vice but a surpassing virtue of av they do not compare the negative versus the positive features of av so their assertion remains a conjecture our response emphasizes the need to determine the costs of av and to evaluate them against any merits moreover by correcting and answering bfm s comments the argument against av becomes much stronger this is because we show that av s region of indeterminacy is quite large it includes most profiles some of the consequences of this instability are that the av outcome can negate the voter s true wishes that the av outcome can be volatile even to minor fluctuations of voter s decisions and that av is one of the most susceptible systems to manipulation by small groups of voters for example small maverick groups could determine the av outcome under specific circumstances av may be appropriate to identify these situations we propose the more accurate name of the unsophisticated voter system

transport taxes with multiple trip purposes a congestible urban transport system is considered in which cars and buses are used for commuting and non commuting trips commuting is a strict complement to taxable labour supply the optimal tax structure for raising a given amount of government revenue is examined for the cases where differentiation of transport tolls between trip purposes is and is not possible an application to belgian urban environments shows that optimal toll differentiation produces significant efficiency improvements without differentiation reforming transport taxes generates substantial gains only when the labour tax can be reduced

the dynamics of urban traffic congestion and the price of parking we consider commuting in a congested urban area while an efficient time varying toll may eliminate queuing a toll may not be politically feasible we study the benefit of a substitute a parking fee at the workplace an optimal time varying parking fee is charged at zero rate when there is queuing and eliminates queuing when the rate is non zero within certain limits inability to charge some drivers for parking does not reduce the potential welfare gain drivers who cannot be charged travel when there is queuing in some cases interaction between morning and evening commutes can be exploited to remove queuing completely

commuting transport tax reform and the labour market employer paid parking and the relative efficiency of revenue recycling instruments in this paper the welfare effects of a budget neutral increase in taxes on car commuters are studied in a model that takes into account the presence of employer paid parking at the workplace it is found that the presence of employer paid parking substantially increases the welfare effect of such a tax reform independent of the use of the revenues congestion taxes not only correct congestion externalities they also reduce the inefficiency caused by employer paid parking moreover different congestion effects of alternative recycling instruments and the presence of employer paid parking jointly imply that recycling the tax revenues via higher public transport subsidies may yield much more favourable welfare effects than previously believed it can easily outperform recycling the tax revenues via lower labour taxes finally cashing out parking costs to public transport users is found to generate substantial positive welfare effects numerical analysis confirms the theory

approval voting borda winners and condorcet winners evidence from seven elections we analyze 10 three candidate elections and mock elections conducted under approval voting av using a method developed by falmagne and regenwetter 1996 that allows us to construct a distribution of rank orders from subset choice data the elections were held by the institute of management science the mathematical association of america several professional organizations in britain and the institute of electrical and electronics engineers seven of the 10 elections satisfy the conditions under which the falmagne regenwetter method is suitable for these elections we recreate possible underlying preferences of the electorate on the basis of these distributions of preferences we find strong evidence that av would have selected condorcet winners when they exist and would have always selected the borda winner thus we find that av is not just simple to use but also gives rise to outcomes that well reflect voter preferences our results also have an important implication for the general study of social choice processes they suggest that transitive majority orderings may be expected in real world settings more often then the formal social choice literature suggests in six out of seven data sets we find social welfare orders only one data set generates cycles anywhere in the solution space

the vulnerability of point voting schemes to preference variation and strategic manipulation this essay measures and analyzes for a special class of point voting schemes the borda method plurality rule and the unrestricted point voting scheme sensitivity to preference variation a simple change in the socially winning alternative resulting from alteration of a single voter s preferences and vulnerability to individual strategic manipulation a change in the winning alternative that benefits the voter whose preferences are altered assuming that society n voters with linear preference orders on a finite set of m alternatives satisfies the impartial culture assumption that is each randomly selected voter is equally likely to hold any one of the randomly picked possible preference orders on the alternatives we demonstrate

president perot or fundamentals of voting theory illustrated with the 1992 election different voting systems can lead to different election outcomeseven when voter preferences are held constant using the 1992 election as anexample it is shown how the outcome of every positional votesystem can be found similarly every possible cumulative andapproval vote outcome is shown multiple vote systems likeapproval and cumulative voting have disturbing properties usingthe 1992 election as illustration it is shown how a candidate whowins under every positional vote system who wins every pairwisevote i e is the condorcet winner and who has the most firstplace and least last place votes may nevertheless lose underapproval or cumulative voting similarly it is shown how acandidate who loses under every positional system who loses everypairwise vote i e is the condorcet loser and who has the leastfirst place and most last place votes may nevertheless win underapproval or cumulative voting

green taxes can we protect the environment and improve the tax system at the same time on a cursory inspection public economics appears to provide a straightforward and compelling answer of yes to the question posed in the title to this paper as economists have long argued appropriately designed taxes can in principle at least efficiently restrain levels of polluting activities and in addition such taxes will generate revenues so that we can reduce rates on other forms of taxation that distort the functioning of the economy green taxes in short promise a double dividend they can both reduce excessive levels of pollution and increase the efficiency of the overall tax system at least so several economists have argued recently 17 20 but is this really so with the growing recognition of the enormous revenue potential of certain environmental taxes especially carbon taxes to address the problem of global warming public economists have returned to this question with a new round of research efforts directed both to understanding the properties of pollution taxes as revenue sources and to estimating their revenue potential and the magnitude of their effects on the economy and the newly emerging literature is producing some quite astonishing and very troubling findings in this paper i want to review this work and explore its implications when viewed in relation to some other research it appears to suggest that most forms of regulatory activity at least those that increase the costs of the regulated activities may have hitherto unappreciated costs of a stunning magnitude what many of us would have taken to be second order side effects of environmental and other regulatory policies can be of a magnitude that compromises to a significant extent their welfare enhancing properties having reviewed this body of work i wish also to explore some issues in the political economy of green taxes it is helpful to begin by briefly putting the issue in historical perspective

the pricing and optimal strategies of callable warrants in this paper we introduce a valuation model of callable warrants under a setting of the optimal stopping problem between the holder investor and the issuer firm a warrant is the right to purchase new shares at a predetermined price when the new stocks are issued the value of the stock is diluted we consider the model taking the dilution into account after identifying optimal policies for the issuer and the investor we explore the analytical properties of the optimal exercise and call boundaries for the holder and the issuer respectively furthermore the value of such a callable warrant and the optimal critical prices are examined numerically using the binomial method

the analytic valuation of american options no analytic solutions exists for the valuation of american options written on futures contracts and foreign currencies for which early exercise may be optimal this article formulates the american option valuation problem in economically and mathematically meaningful ways this enables us to derive valuation formulas for american options the properties associated with the optimal exercise boundary are examined and a numerical technique to implement the valuation formulas is presented article published by oxford university press on behalf of the society for financial studies in its journal the review of financial studies

a dictionary for voting paradoxes abstract a sonnenschein mantel debreu kind of characterization is found for positional voting procedures namely for n 2 candidates once the voting procedures and a profile are specified the rankings of all possible subsets of candidates are uniquely determined by varying over all profiles one obtains a dictionary of all possible coordinated election outcomes this is done for all positional voting procedures as with excess demand functions anything can happen voting paradoxes can be very complicated only borda s method avoids many paradoxes use of this dictionary is illustrated by significantly extending several well known paradoxes and by obtaining new results about runoff and agenda elections strategic behavior etc

the problem of strategic behavior under approval voting approval voting is being promoted as the election reform of the 20th century brams 1980 p 105 and indeed if voters preferences are dichotomous approval voting has some remarkable qualities it is uniquely strategy proof a candidate wins if and only if he is a condorcet winner and voters have simple strategies that are at once sincere and sophisticated however all of these results depend on the existence of dichotomous preferences a contrived and empirically unlikely assumption here i show that these virtues of approval voting are replaced by some rather undesirable features under more plausible assumptions more fundamentally rather than promoting honest behavior as is sometimes implied the existence of multiple sincere strategies almost begs voters to behave strategically i also examine sophisticated approval voting and show that in the general case it need not pick a condorcet alternative ironically there is a condition under which condorcet winners may always be picked but for this to occur voters sometimes have to vote for candidates of whom they disapprove

the paradox of grading systems we distinguish between i voting systems in which voters can rank candidates and ii those in which they can grade candidates using two or more grades in approval voting voters can assign two grades only approve 1 or not approve 0 to candidates while two grades rule out a discrepancy between the average grade winners who receive the highest average grade and the superior grade winners who receive more superior grades in pairwise comparisons akin to condorcet winners more than two grades allow it we call this discrepancy between the two kinds of winners the paradox of grading systems which we illustrate with several examples and whose probability we estimate for sincere and strategic voters through a monte carlo simulation we discuss the tradeoff between i allowing more than two grades but risking the paradox and ii precluding the paradox but restricting voters to two grades

effects of carbon taxes in an economy with prior tax distortions an intertemporal general equilibrium analysis abstract this paper analyzes the costs of carbon taxes in a model that recognizes interactions between this tax and pre existing taxes first we examine the extent to which costs of a u s carbon tax are reduced when its revenues finance cuts in income taxes such use of revenues significantly reduces but does not eliminate the overall policy costs the positive overall costs reflect the carbon tax s focus on intermediate inputs and its relatively narrow base in comparison with income taxes we also examine the sensitivity of the carbon tax s costs to the level of pre existing taxes for any given use of revenues welfare costs rise significantly with pre existing tax rates indicating that models disregarding pre existing taxes may substantially understate the costs of new environmental tax initiatives

the problem of indeterminacy in approval multiple and truncated voting systems it is well known that a plurality election need not reflect the true sentiments of the electorate some of the proposed reform procedures such as approval and cumulative voting share the characteristics that there are several ways to tally each voter s preferences voting systems that permit truncated ballots share this feature it is shown that the election results for any such procedure can be highly indeterminate all possible election results can occur with the same choice of sincere voters this conclusion of indeterminacy holds even when measures of voters sentiments such as the existence of a condorcet winner or even much stronger measures indicate there is considerable agreement among the voters then multiple systems are compared with all standard tallying procedures for instance a corollary asserts it is probable for the plurality voting method to elect the condorcet winner while approval voting has an indeterminate outcome

susceptibility to manipulation all positional voting procedures can be manipulated so it is natural to question whether some of these systems are more susceptible to being manipulated than others in this essay this susceptibility factor is measured for strategic action involving small groups it is shown that the system least susceptible to micro manipulations for n 3 candidates is the borda count bc the optimal choice changes with n but the analysis shows that the bc always fares fairly well on the other hand the plurality and anti plurality vote as well as multiple voting systems such as approval voting and cumulative voting always fare quite poorly with respect to susceptibility finally it is shown why it is possible to justify any voting method by choosing an appropriate measure of susceptibility and imposing the appropriate assumptions on the profiles of voters this statement emphasizes the importance of the basic assumptions of neutrality used throughout this essay

a temporal and spatial equilibrium analysis of commuter parking abstract this paper examines the effects of parking availability on morning rush hour congestion and assesses the relative efficiency of road tolls and parking fees without pricing drivers occupy parking in order of increasing distance from the cbd a time varying toll can prevent queueing but does not affect the order in which parking spots are taken optimal location dependent parking fees may be superior they do not eliminate queueing but induce drivers to park in order of decreasing distance from the cbd thereby concentrating arrival times closer to work start times competitively set parking fees do nothing to reduce queueing and are relatively inefficient

pollution taxes and revenue recycling abstract discussions of environmental policy and the tax system have emphasized the value of pollution tax revenues which can be used to reduce other tax distortions in the economy however by raising private marginal production costs environmental taxes also tend to reduce gdp and exacerbate the welfare costs of conventional taxes for environmental taxes in consumption goods industries the net welfare change from these two effects is negative unless this good is a relatively weak substitute for leisure an estimate for the optimal pollution tax with full revenue recycling is 63 to 78 of marginal environmental damages

running to keep in the same place consumer choice as a game of status if individuals care about their status defined as their rank in the distribution of consumption of one positional good then the consumer s problem is strategic as her utility depends on the consumption choices of others in the symmetric nash equilibrium each individual spends an inefficiently high amount on the status good using techniques from auction theory we analyze the effects of exogenous changes in the distribution of income in a richer society almost all individuals spend more on conspicuous consumption and individual utility is lower at each income level in a more equal society the poor are worse off

economists views about parameters values and policies survey results in labor and public economics specialists in labor economics and public economics at 40 leading research universities provided opinions of policy proposals quantitative best estimates and 95 percent confidence intervals for economic parameters and answers to values questions regarding income redistribution efficiency versus equity and individual versus social responsibility their positions on policy are more closely related to their values than to their estimates of relevant economic parameters average best estimates of the economic parameters agree well with the relevant literature but individual best estimates are usually widely dispersed the individual 95 percent confidence intervals are much narrower than the substantial cross respondent variation in estimates would warrant

employer paid parking mode choice and suburbanization abstract this paper constructs a theoretical model that facilitates analysis of the effects of employer paid parking on mode choice road investment and suburbanization the model simplifies urban space by dividing it into two zones islands center and suburbs which are connected by a congested road and a public transit line each road commuter requires an allotment of cbd land for parking and because the central zone s area is fixed parking land reduces the amount available for central residences and cbd production the model characterizes optimal resource allocation from the perspective of a social planner the planning solution can be decentralized which requires employee rather than employer paid parking congestion tolls and a tax subsidy to offset the road capacity deficit surplus the analysis then considers the effect of switching to employer paid parking with the burden of parking costs shifting from road users to employers thus reducing the wage for all workers this switch inefficiently increases road usage and capacity investment while spurring an inefficient increase in suburbanization

optimal environmental taxation in the presence of other taxes general equilibrium analyses this paper examines the optimal setting of environmental taxes in economies where other distortionary taxes are present we employ analytical and numerical models to explore the degree to which in a second best economy optimal environmental tax rates differ from the rates implied by the pigovian principle according to which the optimal tax rate equals the marginal environmental damages both models indicate contrary to what several analysts have suggested that the optimal tax rate on emissions of a given pollutant is generally less than the rate supported by the pigovian principle moreover the optimal rate is lower the larger are the distortions posed by ordinary taxes numerical results indicate that previous studies may have seriously overstated the size of the optimal carbon tax by disregarding pre existing taxes this abstract was borrowed from another version of this item

a dynamic programming approach to price installment options installment options are bermudan style options where the holder periodically decides whether to exercise or not and then to keep the option alive or not by paying the installment we develop a dynamic programming procedure to price installment options we study in particular the geometric brownian motion case and derive some theoretical properties of the io contract within this framework we also characterize the range of installments within which the installment option is not redundant with the european contract numerical experiments show the method yields monotonically converging prices and satisfactory trade offs between accuracy and computational time our approach is finally applied to installment warrants which are actively traded on the australian stock exchange numerical investigation shows the various capital dilution effects resulting from different installment warrant designs

transport tax reform commuting and endogenous values of time abstract we consider a model of urban transport with two trip purposes commuting assumed perfectly complementary to labour supply and noncommuting to analyse the effects of transport tax reform on the value of time and marginal external congestion costs higher commuting taxes plausibly reduce time values but higher noncommuting transport prices will typically raise the value of time the intuition for this latter finding is that the reduction in congestion that follows from the tax increase itself raises net wages per hour of work inclusive of commuting time empirical illustrations with belgian data show a potentially large effect of transport tax reform on time values in quite a few of the tax reforms studied traffic levels are reduced but the increase in time values implies that marginal external congestion costs actually increase

evaluationwise strategy proofness abstract we consider manipulation of collective decision making rules in a framework where voters not only rank candidates but also evaluate them as acceptable or unacceptable in this richer informational setting we adopt a new notion of strategy proofness called evaluationwise strategy proofness where incentives of manipulation exist if and only if a voter can replace an outcome which he finds unacceptable with an acceptable one evaluationwise strategy proofness is weaker than strategy proofness however we establish the prevalence of a logical incompatibility between evaluationwise strategy proofness anonymity and efficiency on the other hand we show possibility results when either anonymity or efficiency is weakened

revenue recycling and the welfare effects of road pricing the authors explore the interaction between taxes on work related traffic congestion and preexisting distortionary taxes in the labor market a congestion tax raises the overall costs of commuting to work and discourages labor force participation at the margin when revenues are returned in lump sum transfers the resulting efficiency loss in the labor market can be larger that the pigouvian efficiency gains from internalizing the congestion externality by contrast if congestion tax revenues are used to reduce labor taxes the net impact on the labor supply is positive and the efficiency gain in the labor market can raise the overall welfare gains of the congestion tax by as much as 100 percent recycling congestion tax revenues in public transit subsidies produces a positive but smaller impact on the labor supply in short the authors results indicate that the presence of preexisting tax distortions and the form of revenue recycling can crucially affect the size and possibly even the sign of the welfare effect of road pricing schemes the efficiency gains from recycling congestion tax revenues in other tax reductions can amount to several times the pigouvian welfare gains from congestion reduction

the responsiveness of approval voting comments on saari and van newenhizen saari and van newenhizen 1987 misinterpret their findings about the indeterminacy of voting systems far from being a vice indeterminacy is a virtue in allowing voters to be more responsive to and robbing them of the incentive to misrepresent their preferences the responsiveness of approval voting in particular means that the cardinal utilities that voters have for candidates can be reflected in voters strategy choices which ultimately translate into better social choices empirical data from a recent election support these claims showing among other things that the borda system a determinate voting system favored by saari and van newenhizen is highly vulnerable to manipulation by strategic voters