income inequality capitalism and ethno linguistic fractionalization we examine the relationship between capitalism and income inequality for a large sample of countries using an adjusted economic freedom index as proxy for capitalism our results suggest that there is no robust relationship between economic freedom and gini coefficients based on gross income subsequently we analyze the relationship between income redistribution and ethno linguistic fractionalization we find that the impact of ethno linguistic fractionalization on income redistribution is conditional on the level of economic freedom countries that have a high degree of fractionalization redistribute income less while capitalist countries that have a low degree of fractionalization redistribute income more

composite forecasting approach application for next day electricity price forecasting abstract accurate forecasting of electricity prices can provide significant benefits to energy suppliers when allocating their assets and to energy consumers for defining an optimal portfolio there are numerous methods that efficiently support the forecasting of time series such as electricity prices which have high volatility however the performance of these approaches varies depending on data sets and operational conditions in this work the concept of composite forecasting is presented and implemented in a retrospective study in real industrial forecasting conditions to show the potential of forecast performance improvement and comparable high consistency of a forecast performance across different day peak and day base electricity price data sets for different seasons as individual methods support vector regression artificial neural networks and ridge regression are implemented the forecast performances of these methods are evaluated and compared with their forecast combination using different error measures the results show that composite forecasting processes with inverse root mean squared error combination approach can generate on average a more accurate and robust forecast than using an individual methods or other combination schemas

uncertainty avoidance and the preference for innovation championing roles this paper examines the preferences of 4405 individuals in forty three organizations from sixty eight different countries for four innovation championing roles the organizational maverick the network facilitator the transformational leader and the organizational buffer the study shows that the cultural value of uncertainty acceptance is significantly associated with preferences for these four championing roles it suggests that uncertainty accepting societies may be more innovative than uncertainty avoiding societies because of the greater legitimacy of those roles

modeling and forecasting electricity prices with input output hidden markov models in competitive electricity markets in addition to the uncertainty of exogenous variables such as energy demand water inflows and availability of generation units and fuel costs participants are faced with the uncertainty of their competitors behavior the analysis of electricity price time series reflects a switching nature related to discrete changes in competitors strategies which can be represented by a set of dynamic models sequenced together by a markov chain an input output hidden markov model iohmm is proposed for analyzing and forecasting electricity spot prices the model provides both good predictions in terms of accuracy as well as dynamic information about the market in this way different market states are identified and characterized by their more relevant explanatory variables moreover a conditional probability transition matrix governs the probabilities of remaining in the same state or changing to another whenever a new market session is opened the model has been successfully applied to real clearing prices in the spanish electricity market

an empirical examination of quality certification in a lemons market i introduction researchers have long understood that a variety of mechanisms may be used to overcome problems of adverse selection stigler 1961 224 notes that s ome forms of economic organization may be explicable chiefly as devices for eliminating uncertainties in quality and akerlof 1970 cites independent groups such as the consumers union and united laboratories that test and certify the quality of goods there is however little empirical evidence that illustrates the effectiveness of such mechanisms in this article we examine the effect certification has on a market characterized by adverse selection using data from the market for young thoroughbreds we compare the performance of sales where auction houses provide certification services with sales where certification is absent the thoroughbred racehorse market consists of two distinct types of public auctions certified and noncertified sales in a certified sale auction houses physically inspect the horses nominated to their sales selling only the horses they conclude are from the upper end of the quality distribution in noncertified sales auction houses sell all horses nominated to a sale our empirical strategy is to perform tests that indicate whether adverse selection affects market outcomes in either certified or noncertified sales a finding that adverse selection is present in noncertified sales but absent in certified sales is consistent with the hypothesis that certification alleviates problems of adverse selection we adopt three approaches to test for the presence of adverse selection 1 the first approach is in the spirit of chiappori and salanie 2000 who examine the relationship between unobservable factors from participation and performance equations we model adverse selection as a case of sample selection bias and examine the correlation between errors in participation and price equations 2 to accomplish this we use a unique data set that allows us to estimate how breeder decisions to sell or retain horses affect market prices the data set consists of a 10 random sample of all thoroughbreds born in 1993 and includes both horses retained by their breeders who own a horse at the time of its birth and horses that breeders chose to sell our second test follows genesove 1993 and chezum and wimmer 1997 by examining the relationship between seller characteristics and price theoretically when observable seller characteristics are correlated with seller incentives to select goods adversely prices should reflect these differences chezum and wimmer observe that some breeders sell all of their horses whereas others retain a portion to race they find that market prices are inversely related to the extent of a breeder s involvement in racing concluding that adverse selection affects market outcomes we extend this work in two respects first we isolate the effect seller characteristics have on price through the decision to sell or retain a horse second we compare the effect seller characteristics have on observed prices in certified and noncertified sales our last test follows bond 1982 who attempts to identify adverse selection in the market for used trucks by comparing the repair records of trucks that were sold with the records of trucks retained by their original owners because the horses in our sample had not begun their racing careers at the time they were sold we use data on racetrack earnings as an ex post measure of quality and compare the quality of horses sold in noncertified sales with certified horses and horses retained by their breeders the results from each approach are consistent with certification alleviating problems of adverse selection we find that holding observable attributes constant horses that would receive unusually high market prices in noncertified sales are even more valuable in other options and are less likely to be sold in a noncertified sale

selection in the market for slaves new orleans 1830 1860 greenwald and glasspiegel argue that adverse selection depressed the market prices of slaves causing current researchers to overestimate the rate of return from slavery in this paper we test for the presence of adverse selection by comparing the prices of local slaves with the prices of slaves sold from estate sales we find no difference in the prices of these slaves from which we conclude that there was no significant adverse selection in the market instead we propose an alternative explanation for the observed pattern of slave prices based on the costs of shipping slaves to the new orleans market

prices and qualities in markets with costly information this paper extends the seminal work of akerlof and salop and stiglitz in two directions i the sellers can select both the selling prices and quality levels of their good and ii the buyers can acquire price quality information about individual sellers at a cost we observe multiple price quality combinations in equilibrium which depend upon the distribution of information costs of consumers and upon whether quality or price or both are costly observable welfare comparisons of equilibrium are considered we show that welfare will be greater when price advertising is permitted

the misuse of net present value in energy efficiency standards abstract consumers are often blamed for not making necessary investments in energy efficient durables despite that these investments have positive net present value npv several papers have argued that when investments have option like characteristics e g irreversibility uncertainty flexible timing and lumpiness the aphorism invest if the net present value of investing exceeds zero isn t the best advice yet curiously the department of energy doe in the united states proposes new regulations mandating higher energy efficiency standards for consumer durables on the basis of non negative npv over an investment s lifetime in this paper we provide a step by step deconstruction of doe s npv methodology and show that doe s method purges volatility volatility persistence and nonstationarity that are otherwise present in energy prices as a result doe s projections of future energy prices are artificially smooth and statistically biased casting serious doubt on the reliability of the magnitude of energy savings from energy efficient durables

economic insights from internet auctions this paper surveys recent studies of internet auctions four main areas of research are summarized first we survey several studies that document and attempt to explain the frequently observed sniping or last second bidding behavior in these auctions second we summarize several methods proposed to quantify the distortions caused by asymmetric information in these markets most notably due to the winner s curse third we explore research about the role of reputation mechanisms installed to help combat these distortions finally we discuss what internet auctions have to teach us about auction design

comparing the robustness of trading systems to higher order uncertainty this paper compares the performance of a decentralized market with that of a dealership market when traders have differential information trade occurs as a result of equilibrium actions in a bayesian game where uncertainty is captured by a finite state space and information is represented by partitions on this space in the benchmark case of trade with common knowledge of endowments the two mechanisms deliver virtually identical outcomes however with differential information the dealership market has strictly higher trading volume and yields an efficient posttrade allocation in most states in contrast the decentralized market suffers from suboptimal trading volume the reason for this poor performance is the vulnerability of the decentralized market to higher order uncertainty concerning the fundamentals of the market traders may know that mutually beneficial trade is feasible and perhaps know that they know and yet a failure of common knowledge that this is so precludes efficient trade the dealership market is robust to this type of uncertainty

which dimensions of culture matter for long run growth we present empirical evidence that among a variety of cultural dimensions the individualism collectivism dimension based on hofstede s 2001 data is the most important and robustly significant effect of culture on long run growth other dimensions that have a significant effect albeit less robust are generally strongly correlated with individualism and convey similar information we found no significant or robust effect on growth from cultural dimensions that are independent from the individualism collectivism cleavage

day ahead price forecasting of electricity markets by mutual information technique and cascaded neuro evolutionary algorithm in a competitive electricity market price forecasts are important for market participants however electricity price is a complex signal due to its nonlinearity nonstationarity and time variant behavior in spite of much research in this area more accurate and robust price forecast methods are still required in this paper a combination of a feature selection technique and cascaded neuro evolutionary algorithm cnea is proposed for this purpose the feature selection method is an improved version of the mutual information mi technique the cnea is composed of cascaded forecasters where each forecaster consists of a neural network nn and an evolutionary algorithm ea an iterative search procedure is also incorporated in our solution strategy to fine tune the adjustable parameters of both the mi technique and cnea the price forecast accuracy of the proposed method is evaluated by means of real data from the pennsylvania new jersey maryland pjm and spanish electricity markets the method is also compared with some of the most recent price forecast techniques

chicken and egg competition among intermediation service providers we analyze a model of imperfect price competition between intermediation service providers we insist on features that are relevant for informational intermediation via the internet the presence of indirect network externalities the possibility of using the nonexclusive services of several intermediaries and the widespread practice of price discrimination based on users identity and on usage efficient market structures emerge in equilibrium as well as some specific form of inefficient structures intermediaries have incentives to propose non exclusive services as this moderates competition and allows them to exert market power we analyze in detail the pricing and business strategies followed by intermediation services providers copyright 2003 by the rand corporation

dividing online and offline a case study every new method of trade offers an opportunity for economic agents to compare its costs and benefits relative to the status quo such comparison motivates sorting across market segments and reshapes the whole marketplace the internet provides an excellent example it introduces substantial search cost savings over brick and mortar retail stores but imposes new obstacles for sellers to convey quality using sports card trading as a case study we provide empirical evidence on 1 the sorting of product quality between the online and offline segments 2 the changes for retail outlets after the internet came into place and 3 how supporting industries such as professional grading and card manufacturing adapted to take advantage of the new market copyright 2007 wiley blackwell

are individualistic societies less equal evidence from the parasite stress theory of values it is widely believed that individualistic societies which emphasize personal freedom award social status for accomplishment and favor minimal government intervention are more prone to higher levels of income inequality compared to more collectivist societies which value conformity loyalty and tradition and favor more interventionist policies the results in this paper however challenge this conventional view drawing on a rich literature in biology and evolutionary psychology we test the provocative parasite stress theory of values which suggests a possible link between the historical prevalence of infectious diseases the cultural dimension of individualism collectivism and differences in income inequality across countries specifically in a two stage least squares analysis we use the historical prevalence of infectious diseases as an instrument for individualistic values which in the next stage predict the level of income inequality measured by the net gini coefficient from the standardized world income inequality database swiid our findings suggest that societies with more individualistic values have significantly lower net income inequality the results are robust even after controlling for a number of confounding factors such as economic development legal origins religion human capital other cultural values economic institutions and geographical controls

a hybrid model for day ahead price forecasting this paper presents a hybrid time series and adaptive wavelet neural network awnn model for the day ahead electricity market clearing price forecast instead of using price series one period continuously compounded return series is used to achieve more attractive statistical properties the autoregressive moving average with exogenous variables armax model is used to catch the linear relationship between price return series and explanatory variable load series the generalized autoregressive conditional heteroscedastic garch model is used to unveil the heteroscedastic character of residuals and awnn is used to present the nonlinear nonstationary impact of load series on electricity prices the monte carlo method is adopted to generate more evenly distributed random numbers used for time series and awnn models to accelerate the convergence several criteria such as average mean absolute percentage error amape and the variance of forecast errors are used to assess the model and measure the forecasting accuracy illustrative price forecasting examples of the pjm market are presented to show the efficiency of the proposed method

does social distrust always lead to a stronger support for government intervention the paper considers trust as an empirical determinant of individual support for government intervention the central notion is that the influence of generalized trust on policy attitudes is conditional on confidence in both state actors and major companies the starting point is the idea that individuals who generally distrust other persons have a stronger taste for the regulation of economic activities while people with high interpersonal trust are in favor of less stringent regulatory control yet people who do not trust unknown others also tend to mistrust government and private companies if mistrust in state actors dominates we should not necessarily expect stronger interventionist preferences estimating the determinants of interventionist attitudes using data from the world values survey european values study for approximately 130 000 individuals in forty oecd and eu countries we find evidence that the impact of social trust on government intervention attitudes is conditional on institutional trust confidence in major companies appears to have a stronger effect on preference formation than trust in state actors

a new data set measuring income inequality this article presents a new data set on inequality in the distribution of income the authors explain the criteria they applied in selecting data on gini coefficients and on individual quintile groups income shares comparison of the new data set with existing compilations reveals that the data assembled here represent an improvement in quality and a significant expansion in coverage although differences in the definition of the underlying data might still affect inter temporal and international comparability based on this new data set the authors do not find a systematic link between growth and changes in aggregate inequality they do find a strong positive relationship between growth and reduction of poverty

oligopolistic pricing with sequential consumer search n identical stores compete by choosing prices for a homogeneous good with constant marginal costs consumers search sequentially with perfect recall for the lowest price one class of consumers called shoppers have zero search costs while all other consumers have a positive search cost c there is a unique symmetric nash equilibrium price distribution with the property that it changes smoothly from marginal cost pricing when all consumers are shoppers and or c 0 and monopoly pricing when no consumers are shoppers remarkably as the number of stores increases the nash equilibrium becomes more monopolistic copyright 1989 by american economic association

price quality and reputation evidence from an online field experiment we examine the link between price quality seller claims and seller reputation in internet auctions after purchasing actual baseball cards and having them professionally graded we find that some buyers in the online graded market are misled by incredible claims of quality they pay higher prices but do not receive better quality and in fact are defrauded more often online seller reputation is effective for identifying good faith sellers but conditional on completed auctions reputable sellers do not provide better quality evidence also suggests that high claim sellers target less experienced buyers we attribute these patterns to two loopholes in the ebay rating system we benefited from the comments of austan goolsbee raphael thomadsen john shea dan vincent david reiley larry ausubel peter cramton v joseph hotz jeff smith jimmy chan vincent crawford mark duggan and attendees at numerous seminars and conferences we are particularly grateful to seth sanders and john list for their constructive advice at the early stage of the research to timothy bresnahan rachel kranton and thomas hubbard for their detailed suggestions in reshaping earlier versions and to editor ariel pakes and two anonymous referees for their careful readings special thanks to eight friends who acted as our agents in purchasing baseball cards in retail markets and to numerous sports card store owners who shared their insights on the sportscard industry excellent research assistance from randy alexander moore and krzysztof fizyta is gratefully acknowledged any remaining errors are ours

imperfect product testing and market size we consider an imperfect test of product quality and ask how it interacts with adverse selection to affect market size although one might expect adverse selection to be mitigated there are scenarios where it is exacerbated also two counter intuitive comparative static results emerge first a small increase in the test cost can increase the equilibrium expected profits earned by sellers of higher quality units and so expand the market second the equilibrium expected profits earned by sellers with lower quality units can be increased by a small improvement in the accuracy of an imperfect test

a garch forecasting model to predict day ahead electricity prices price forecasting is becoming increasingly relevant to producers and consumers in the new competitive electric power markets both for spot markets and long term contracts price forecasts are necessary to develop bidding strategies or negotiation skills in order to maximize profits this paper provides an approach to predict next day electricity prices based on the generalized autoregressive conditional heteroskedastic garch methodology that is already being used to analyze time series data in general a detailed explanation of garch models is presented and empirical results from the mainland spain and california deregulated electricity markets are discussed

investor protection and corporate governance recent research has documented large differences among countries in ownership concentration in publicly traded firms in the breadth and depth of capital markets in dividend policies and in the access of firms to external finance a common element to the explanations of these differences is how well investors both shareholders and creditors are protected by law from expropriation by the managers and controlling shareholders of firms we describe the differences in laws and the effectiveness of their enforcement across countries discuss the possible origins of these differences summarize their consequences and assess potential strategies of corporate governance reform we argue that the legal approach is a more fruitful way to understand corporate governance and its reform than the conventional distinction between bank centered and market centered financial systems

arima models to predict next day electricity prices price forecasting is becoming increasingly relevant to producers and consumers in the new competitive electric power markets both for spot markets and long term contracts price forecasts are necessary to develop bidding strategies or negotiation skills in order to maximize benefit this paper provides a method to predict next day electricity prices based on the arima methodology arima techniques are used to analyze time series and in the past have been mainly used for load forecasting due to their accuracy and mathematical soundness a detailed explanation of the aforementioned arima models and results from mainland spain and californian markets are presented

reducing electricity price forecasting error using seasonality and higher order crossing information commodity prices are volatile and their volatility changes over time electricity prices are even more volatile in general because customers cannot easily switch to other energy source when the electricity prices fluctuate electricity prices also have strong seasonal behavior because the demand of electricity depends on the season to address these characteristics a time series forecasting model with seasonality and higher order crossing information for electricity prices is proposed the model measures the similarity between two time series by using their higher order crossing information the model can predict not only day ahead prices short term forecasting but also a series of prices for one week ahead or even longer simultaneously medium term price curve forecasting the model is tested on both high and low volatile data sets to evaluate its robustness and generality it is also shown that the model can produce more accurate prediction than some well known models

adverse selection in the market for slaves new orleans 1830 1860 this paper seeks to cast some light on the importance of adverse selection in competitive markets by examining the market for the sale of slaves in pre civil war new orleans estimates of the degree of adverse selection in the new orleans market are obtained by examining the relative prices of slaves from different regions of origin these estimates indicate that slaves brought to market may on average have been of 20 percent to 40 percent lower quality than the slave population in general and that good slaves were perhaps three times less likely to be sold than low quality ones

inequality does cause underdevelopment insights from a new instrument consistent with the provocative hypothesis of engerman and sokoloff 1997 2000 this paper confirms with cross country data that agricultural endowments predict inequality and inequality predicts development the use of agricultural endowments specifically the abundance of land suitable for growing wheat relative to that suitable for growing sugarcane as an instrument for inequality is this paper s approach to problems of measurement and endogeneity of inequality the paper finds inequality also affects other development outcomes institutions and schooling which the literature has emphasized as mechanisms by which higher inequality lowers per capita income it tests the inequality hypothesis for development institutional quality and schooling against other recent hypotheses in the literature while finding some evidence consistent with other development fundamentals the paper finds high inequality to independently be a large and statistically significant barrier to prosperity good quality institutions and high schooling

classification of future electricity market prices forecasting short term electricity market prices has been the focus of several studies in recent years although various approaches have been examined achieving sufficiently low forecasting errors has not been always possible however certain applications such as demand side management do not require exact values for future prices but utilize specific price thresholds as the basis for making short term scheduling decisions in this paper classification of future electricity market prices with respect to pre specified price thresholds is introduced two alternative models based on support vector machines are proposed in a multi class multi step ahead price classification context numerical results are provided for classifying prices in ontario s and alberta s markets

a novel approach to forecast electricity price for pjm using neural network and similar days method price forecasting in competitive electricity markets is critical for consumers and producers in planning their operations and managing their price risk and it also plays a key role in the economic optimization of the electric energy industry this paper explores a technique of artificial neural network ann model based on similar days sd method in order to forecast day ahead electricity price in the pjm market to demonstrate the superiority of the proposed model publicly available data acquired from the pjm interconnection were used for training and testing the ann the factors impacting the electricity price forecasting including time factors load factors and historical price factors are discussed comparison of forecasting performance of the proposed ann model with that of forecasts obtained from similar days method is presented daily and weekly mean absolute percentage error mape of reasonably small value and forecast mean square error fmse of less than 7 mwh were obtained for the pjm data which has correlation coefficient of determination of 0 6744 between load and electricity price simulation results show that the proposed ann model based on similar days method is capable of forecasting locational marginal price lmp in the pjm market efficiently and accurately

probabilistic lmp forecasting considering load uncertainty in power market studies the forecast of locational marginal price lmp relies on the load forecasting results from the viewpoint of planning it is well known that short term load forecasting results always carry certain degree of errors mainly due to the random nature of the load at the same time lmp step changes occur at critical load levels clls therefore it is interesting to investigate the impact of load forecasting uncertainty on lmp with the assumption of a certain probability distribution of the actual load this paper proposes the concept of probabilistic lmp and formulates the probability mass function of this random variable the expected value of probabilistic lmp is then derived as well as the lower and upper bound of its sensitivity in addition two useful curves alignment probability of deterministic lmp versus forecasted load and expected value of probabilistic lmp versus forecasted load are presented the first curve is designed to identify the probability that the forecasted price in a deterministic lmp matches the actual price at the forecasted load level the second curve is demonstrated to be smooth and therefore eliminates the step changes in deterministic lmp forecasting this helps planners avoid the possible sharp changes during decision making process the proposed concept and method are illustrated with a modified pjm five bus system and the ieee 118 bus system

forecasting next day electricity prices by time series models in the framework of competitive electricity markets power producers and consumers need accurate price forecasting tools price forecasts embody crucial information for producers and consumers when planning bidding strategies in order to maximize their benefits and utilities respectively this paper provides two highly accurate yet efficient price forecasting tools based on time series analysis dynamic regression and transfer function models these techniques are explained and checked against each other results and discussions from real world case studies based on the electricity markets of mainland spain and california are presented

energy price forecasting in the ontario competitive power system market this paper introduces a method for forecasting energy prices using artificial intelligence methods such as neural networks and fuzzy logic and a combination of the two the new approach is compared with some of the exiting methods various factors affecting the market clearing price are investigated results for the ontario electricity market are presented

preferences for redistribution in the land of opportunities this paper explores how individual preferences for redistribution depend on future income prospects in addition to estimating the impact of individuals socioeconomic background and of their subjective perceptions of future mobility we employ panel data to construct dobjectivet measures of expected gains and losses from redistribution for different categories of individuals we find that such measures have considerable explanatory power and perform better than dgeneral mobilityt indexes we also find that preferences for redistribution respond to individual beliefs on what determines one s position in the social ladder ceteris paribus people who believe that the american society offers equal opportunities are more averse to redistribution d 2004 published by elsevier b v

electricity price short term forecasting using artificial neural networks this paper presents the system marginal price smp short term forecasting implementation using the artificial neural networks ann computing technique the described approach uses the three layered ann paradigm with backpropagation the retrospective smp real world data acquired from the deregulated victorian power system was used for training and testing the ann the results presented in this paper confirm considerable value of the ann based approach in forecasting the smp

energy clearing price prediction and confidence interval estimation with cascaded neural networks the energy market clearing prices mcps in deregulated power markets are volatile good mcp prediction and its confidence interval estimation will help utilities and independent power producers submit effective bids with low risks mcp prediction however is difficult since bidding strategies used by participants are complicated and various uncertainties interact in an intricate way furthermore mcp predictors usually have a cascaded structure as several key input factors need to be predicted first cascaded structures are widely used however they have not been adequately investigated this paper analyzes the uncertainties involved in a cascaded neural network nn structure for mcp prediction and develops the prediction distribution under the bayesian framework a computationally efficient algorithm to evaluate the confidence intervals by using the memoryless quasi newton method is also developed testing results on a classroom problem and on new england mcp prediction show that the method is computationally efficient and provides accurate prediction and confidence coverage the scheme is generic and can be applied to various networks such as multilayer perceptrons and radial basis function networks

search with learning from prices does increased inflationary uncertainty lead to higher markups aggregate cost uncertainty arising from real shocks or unanticipated inflation reduces the informativeness of prices by scrambling relative and aggregate variations but when agents can acquire additional information such increased noise may in fact lead them to become better informed and price competition will intensify we examine these issues in a model of search with learning where consumers search optimally from an unknown price distribution while firms price optimally given consumers search rules we show that the decisive factor in whether inflation variability increases or reduces the incentive to search and thereby market efficiency is the size of informational costs

day ahead electricity price forecasting using the wavelet transform and arima models this paper proposes a novel technique to forecast day ahead electricity prices based on the wavelet transform and arima models the historical and usually ill behaved price series is decomposed using the wavelet transform in a set of better behaved constitutive series then the future values of these constitutive series are forecast using properly fitted arima models in turn the arima forecasts allow through the inverse wavelet transform reconstructing the future behavior of the price series and therefore to forecast prices results from the electricity market of mainland spain in year 2002 are reported