how to set minimum acceptable bids with an application to real estate auctions in a general auction model with affiliated signals common components to valuations and endogenous entry we compute the equilibrium bidding strategies and outcomes and derive a lower bound on the optimal reserve price this lower bound can be computed using data on past auctions combined with information about the subsequent sales prices of unsold goods we illustrate how to compute the lower bound using data from real estate auctions

indecisiveness in behavioral welfare economics abstract when an individual s preferences depend on the time or frame at which decisions are made the preferences that appear at different frames must be aggregated in order to make social decisions suppose we aggregate each individual i s frame based preferences with a behavioral welfare relation that ranks x above y if when both x and y are available i sometimes choose x and not y and never chooses y and not x the set of pareto optima can then be large in fact a small amount of preference diversity across frames can cause every allocation to be pareto optimal more generally the set of pareto optima will have the same dimension as the set of allocations the pareto criterion then will not be able to discriminate locally among policy options a small distortion for example will call for no policy response

substitution possibility between unpriced pulp and wastepaper in the u s paper and paperboard industry a greater use of recycled wastepaper would preserve virgin forests as well as reducing the amount of wastepaper going to landfills these environmental goals depend critically on the elasticity of substitution between pulp and wastepaper in producing paper and paperboard since most of the pulp consumed by u s paper mills and paperboard mills is transferred internally from vertically integrated pulp mills the price data on pulp is not available this paper constructs an econometric model which enables us to estimate the substitution possibility between unpriced pulp and wastepaper in the u s paper and paperboard industry empirical results show that the elasticity of substitution between unpriced pulp and wastepaper is positive but not statistically significant

partial static equilibrium model of newsprint recycling estimation of the demand for old newspapers as an input to us newsprint production reveals that demand is highly price inelastic in both the short and long run this implies that separation and collection programmes which lower prices in secondary markets will not effectively stimulate recycled newsprint production the results also indicate that policies to raise the price of woodpulp will have little impact a slightly more effectivbe recycling policy may be tax preferences aimed at encouraging investment in newsprint capacity the major finding is that growth in output creates an opportunity for greater old newspaper use thus the most effective recycling policy will be one that promotes us newsprint production

dynamic nonpoint source pollution control policy ambient transfers and uncertainty when a regulator cannot observe or infer individual emissions corrective policy must rely on ambient pollution data assuming this kind of environment we study a class of dierential games of pollution control with prot functions that are polynomial in the global pollution stock given an open loop emissions strategy satisfying mild regularity conditions an ambient transfer scheme is exhibited that induces it in markov perfect equilibrium mpe proposed transfers are a polynomial function of the dierence between actual and desired pollution levels moreover they are designed so that in mpe no tax or subsidy is ever levied their applicability under stochastic pollution dynamics is studied for a symmetric game of polluting oligopolists with linear demand we discuss a quadratic scheme that induces agents to adopt markovian emissions strategies that are stationary and linearly decreasing in total pollution total expected ambient transfers are non positive and their magnitude is linearly increasing in physical volatility the size of the economy and the absolute value of the slope of the inverse demand function however if the regulator is interested in inducing a constant emissions strategy then in expectation transfers vanish the total expected ambient transfer is compared to its point source equivalent

the disparity between willingness to accept and willingness to pay measures of value psychologists have long argued that people are much more averse to a loss than attracted to an equivalent gain this behavior termed loss aversion has been formalized by kahneman and tversky 1979 in their reformulation of expected utility theory prospect theory in prospect theory the utility function is replaced by a value function that evaluates changes in income from the current level increases in income are weighted by a relatively small marginal utility decreases in income are weighted by a much larger marginal utility in effect the value function implies that a kink in the relationship between utility and income occurs at the initial income or reference point and that the slope of the utility function for losses in income is steeper than it is for gains in a recent paper knetsch and sinden 1984 report a series of experiments that demonstrate the existence of a large disparity between willingness to accept wta and willingness to pay wtp measures of value they argue that the psychological theory of loss aversion explains this difference economic theory would suggest that individuals who exhibit a large disparity between wta and wtp are perhaps underperceiving the value of gains or overperceiving the value of losses are behaving in an irrational manner and will consequently achieve a lower level of well being than if they behaved in a true utility maximizing manner this would in contrast to loss aversion usually imply near equal values for wta and wtp see willig 1976 further documentation of a larger than expected disparity between wta and wtp has been obtained in surveys asking for the value of a variety of public goods for example cummings brookshire and schulze 1986 document six

an empirical analysis of entrant and incumbent bidding in road construction auctions this paper explores differences in the bidding patterns of entrants and incumbents in road construction auctions we find that entrants bid more aggressively and win auctions with significantly lower bids than incumbents the differences in their bidding patterns are consistent with a model of auctions in which the distribution of an entrant s costs exhibits greater dispersion than that of an incumbent s and relations of stochastic dominance in the distributions do not persist for the entire range of estimated costs we also find that more efficient firms bid on average more aggressively and firms with greater backlogs bid less aggressively

choice by sequential procedures article history we propose a rule of decision making the sequential procedure guided by routes and show that three influential boundedly rational choice models can be equivalently understood as special cases of this rule in addition the sequential procedure guided by routes is instrumental in showing that the three models are intimately related we show that choice with a status quo bias is a refinement of rationalizability by game trees which in turn is also a refinement of sequential rationalizability thus we provide a sharp taxonomy of these choice models and show that they all can be understood as choice by sequential procedures

global warming and energy demand list of tables list of figures list of contributors preface 1 global warming and energy elasticities terry barker paul ekins and nick johnstonepart 1 estimating long term energy elasticities 2 alternative approaches to estimating long run energy demand elasticities an application to asian developing countries ron smith and m hashem pesaran 3 a survey of international energy elasticities neil manning and jago atkinson 4 long run demand elasticities for gasoline thomas sterner and mikael franzen 5 responses of energy demand in uk manufacturing to the energy price increases of 1973 and 1979 80 alan ingham 6 elasticities for oecd aggregate final energy demand lakis vouyoukas 7 modelling uk energy demand derek hodgson and keith millerpart ii energy the economy and greenhouse gas abatement 8 endogenous technological progress in fossil fuel demand laurence boone stephen hall david kemball cook and clare smith 9 uk energy price elasticities and their implications for long term co2 abatement terry barker 10 price elasticity and market structure overcoming obstacles to ensure energy efficiency tim jackson 11 rethinking the use of energy elasticities stefan p schleicher 12 revisiting the costs of co2 abatement paul ekins 13 asymmetrical price elasticities of energy demand michael grubb14 conclusions terry barker paul ekins and nick johnstone bibliography index

strategic delay in market entry two firms are contemplating entry into a market that is viable for only one firm in a good state we show that even if each firm receives a signal that perfectly reveals a good state both might strategically delay entry owing to the fear that the other firm might enter in the same period as well we also find the conditions where the informed firm will let the rival firm know about the market s profitability and the two will merge to enter the market we discuss the applications of this model to the oil industry and the generic drug industry jel classification l71 d8

optimizing environmental product life cycles in this paper we propose a methodology based on materials accounting and operational research techniques to assess different industry configurations according to their life cycle environmental impacts rather than evaluating a specific technology our methodology searches for the feasible configuration with the minimum impact this approach allows us to address some basic policy relevant questions regarding technology choice investment priorities industrial structures and international trade patterns

is status quo bias consistent with downward sloping demand by now there is a large experimental literature showing some kind of status quo bias 1 if the subject is given a coffee mug candy bar and later given the possibility of trading it for a candy bar coffee mug of equal value the subject is likely to stick with the original allocation knetsch 1989 here we ask whether status quo bias can be made consistent with downward sloping demand curves this paper thus differs in intent from a large body of research that incorporates a different notion of status quo bias into a more general formulation of revealed preference e g masatlioglu and ok 2005 sagi 2006 such research demonstrates that there are different sets of primitives that lead to different axioms of revealed preference in this paper we do not care which set of primitives holds or whether such results can be incorporated into the neoclassical model of consumer behavior as munro and sugden 2003 have done 2 instead we undertake a strict behavioralist approach individuals display status quo bias and downward sloping demand curves whether such behavior can be derived from a consistent set of assumptions is irrelevant to our purpose indeed we do not require the existence of a preference relation that rationalizes choices at all all that is required is choice behavior what we want to find out is the implications of such observed behavior in particular we want to determine whether status quo bias and downward sloping demand curves are consistent with each other the short answer is yes but the consumer will display addictive behavior 3 the remainder of the paper will be devoted to demonstrating this result we will make the following set of assumptions ai there are two goods x candy and y wine which are continuously divisible a2 prices and incomes are exogenously determined that is the person has a budget line and budget set a3 the individual chooses a point on the budget line a4 strictly downward sloping demand if the person chooses x sub t y sub t for a given budget set b sub t and then the person is faced with a different budget set b sub t l that goes through x sub t y sub t but where the relative price of x has gone down up then x sub t 1 x sub t and y sub t 1 y sub t 4 i an intuitive example before proceeding with the formal exposition it is useful to consider the intuition behind the argument to make the logic as accessible as possible in the intuitive example i will assume that individuals have indifference curves and that these indifference curves are homothetic before the subjects come to the experiment they made choices based on their individual budget sets and preferences the budget sets of these various individuals have the same slope the market prices facing the individuals are the same but the richer individuals have budget sets that are farther out if individuals have status quo bias then each individual s choice is based on his her budget set and his her unique set of indifference curves which in turn are based on the reference point established by the individual s experiences and history while we can use any time period for the analysis let us suppose here that the time period of analysis is daily so that before and after the experiment individuals decide each day how much candy and wine to choose the experimenter divides the subjects into three groups in the first group the experimenter gives the subjects 10 and then each subject gets to choose either candy or wine or some combination in between knetsch actually did this with candy and coffee cups and found that the subjects split evenly between the two choices in the second group the subjects are given 10 worth of candy and then later are allowed to trade in some or all of the candy for the equivalent value of wine

what does she see in him the effect of sharing on the choice of spouse all husbands and wives share in the spoils of marriage sharing makes each partner a residual claimant and encourages spouses to provide marital inputs however because each spouse is only a partial residual claimant each may be inclined to provide a suboptimal level of marital inputs the choice of spouse influences the level of distortion and under some circumstances the eficient mating is between individuals of equal value people tend to end up choosing partners of approximately their own social worth romantic choices appear to be a delicate compromise between one s desire to capture an ideal partner and one s realization that he must eventually settle for what he deserves

status quo maintenance reconsidered changing or incomplete preferences after reviewing the evidence for status quo maintenance sqm i consider how to reconcile sqm with traditional consumer theory behavioural economists usually let agents preferences change as a function of their endowments treating the same person with different endowments as a set of distinct agents many properties of preferences then become immune to empirical test and it becomes impossible to judge whether an agent s decisions make the agent better or worse off this impedes prediction of when decision rules are likely to change sqm can alternatively be explained with unchanging preferences if preferences are incomplete sqm is then consistent with self interest and there is no reason why it should not persist

indecisiveness undesirability and overload revealed through rational choice deferral three reasons why decision makers may defer choice are indecisiveness between various feasible options unattractiveness of these options and choice overload this paper provides a choice theoretic explanation for each of these phenomena by means of three deferral permitting models of decision making that are driven by preference incompleteness undesirability and complexity constraints respectively these models feature rational choice deferral in the sense that whenever the individual does not defer he chooses a most preferred feasible option as a result choices are always consistent with the weak axiom of revealed preference the three models suggest novel ways in which observable data can be used to recover preferences as well as their indecisiveness desirability and complexity components or thresholds several examples illustrate the relevance of these models in empirical and theoretical applications

complementing empirical evidence on global recycling and trade of waste paper this comment provides a critical analysis of van beukering and bouman s world development 29 2001 1717 article on global paper recycling and trade we first question their notion that developin

materials product chains theory and an application to zinc and pvc gutters a framework is presented for the analysis of economic and environmental impacts of policies applied to materials product mp chains this is based on materials flows product flows costs prices and optimal management of an mp chain the main differences compared with other studies focusing on materials flows is that here the link between products or services and materials is explicitly dealt with the framework is developed on the basis of materials balance conditions production functions allowing for substitution and recycling of both materials and products after presenting theoretical mp chain models and analytical results an application to the problem of choosing between zinc and pvc gutters is discussed here optimal mp chain management decisions are presented for various policy and strategy scenarios

two supply curves for economists implications of mobility and career attachment of women the pool of women with highly specialized trainiing is increasing and the tolerance of such women for accepting occupational seg regationi and narrow views of their career potentials is dimiiinishinig it is crucial that we understand the differences between lab or markets for men anid women at professionial levels the resulting differellces in career patterns and how barriers to full career development for women impinge on occupational rewards only then can we plani effcctively for the generation of younig womento come particularly important at this time is analysis of the market for h elds anid occupations that are atypical for women overall societal attitudes toward the proper role of women are evolving yet on the demand side employers perceived differences as to the employability of women whether real or imaginary result in barriers that vary in intensity by occupation economics a stereotypically male profession has relatively intense barriers for women on the demand side over and above variations in aggregate demand 1 the demand side barriers are different from those associated with stereotypically female occupations on the supply side barriers to full career development for women are likely to be those common to all professional occupations plus the effect of women s perceptions of the intensity of the demand side barriers for the particular profession i e any lack of support of male colleagues professional isolation and lack of access to information network or employers lack of perception of the women s career potential one group of supply side barriers includes presence of children husband s unfavorable attitudes guilt feelings of the women related to a high sense of responsibility for monitoring consumption at home and poor earlier education choices based on limited perception of career possibilities in addition the two probably most important are geographic mobility or immobility related to demands of family and lack of the on the job training caused by either gaps in the women s career patterns or diminished opportunities for investment in human capital for women when working the purposes of this paper are to use preliminary data from the committee on the status of women in the economics profession cswep american economic association aea 1974 75 survey of economists to test a model showing that two supply curves exist for economists instead of one with the division related to nonpecuniary returns for women and then consider whether more than two supply curves should be formulated to allow for whether workers are major earners in the family equal earners or secondary earners 2 the model used as a starting point professor of economics southern methodist university i wvant to thank patricia kirby and anna fay ifriedlander for help in computing and prograimming 1 for a qualitative discussion of such barriers see kenneth e boulding and barbara b reagani 2 informationi on the sampling and survey procedure anid qualityof sample may be obtained from the author

do better informed investors always do better a buyback puzzle we explore the value of private investment information using data from a singular source auctions of yearling racehorses horse breeders possess superior information about their own horses and have strong financial incentives to buy the best of these back at auction however those they repurchase subsequently perform significantly worse on average earning 30 less at the racetrack than horses purchased by outsiders moreover this underperformance is concentrated in male horses despite these being purchased exclusively for racing purposes these puzzling findings cannot be explained by differences in horse risk or breeder abilities or by nonfinancial objectives or by behavioral or selection biases jel g02 g11 g14 l83 d44

conditionally predictive supply elasticity estimates secondary materials obtained from municipal residuals abstract new capital intensive waste processing plants have been developed that can recover secondary materials and energy from the municipal solid waste stream resulting in lower disposal costs than traditional methods the potential supply of secondary glass ferrous metals aluminum and energy is estimated using an engineering cost model of secondary materials and energy supply under alternative prices for energy and materials econometric estimates of the own and cross price elasticities of supply for the materials and energy are then estimated from the data set significant cross price effects are shown

modeling the supply of wastepaper abstract utilizing a price expectations model of wastepaper supplies edwards j environ econ manag 6 332 334 1979 claims to be able to explain certain anomalies in earlier empirical work while reaffirming the view that wastepaper supply is generally price inelastic this paper presents evidence to show that the price expectations model does not offer an adequate explanation of the state of affairs in the u k wastepaper market the low price elasticity of supply findings are however confirmed

the effect of shill bidding upon prices experimental evidence this paper explores through a series of experiments the effect of shill bidding upon revenues and prices in auctions we study the practice of shill bidding in a common value framework our findings are consistent with the prediction that if bidders are aware of the possibility of seller participation in an auction profits will be reduced on average we also study factors that affect bidder and seller participation decisions shill bidding can alleviate the problem of the winner s curse by lowering the price and it can thus provide benefits to bidders

empirical evidence on recycling and trade of paper and lead in developed and developing countries empirical evidence on recycling at a global scale is scant often data on recycling are provided on national levels only the few obtainable cross country studies on recycling are mostly focussed on one particular material or region therefore it is difficult to draw general conclusions on recycling in developed and developing countries an aggregated overview of trade and recycling in both regions was presented in chapter 1 it was recognised that trade in secondary materials from developed to developing countries has increased significantly in the last three decades this typical trade pattern is a strong indication for specialisation in the recycling sector of both regions

exchange asymmetry in experimental settings abstract we review past trading experiments and present 11 new experiments designed to show how the trading rate responds to alterations of the experimental procedure in agreement with earlier studies results show that if the trade decision is converted to one resembling a choice between goods the exchange asymmetry disappears but otherwise the asymmetry is remarkably robust results also indicate that when trading is public herding can occur which may have caused some of the more extreme examples of the exchange asymmetry and that some of the lack of trade may result from preference indifference nevertheless some form of status quo bias which may consist of a combination of loss aversion gain attraction regret avoidance and dislike of trading and which may be enhanced by indifference between the goods offered probably remains as an important influence on the trading rate

an econometric analysis of global waste paper recovery and utilization the main purpose of this paper is to provide aneconometric analysis of the most importantdeterminants of inter country differences inwaste paper recovery and utilization rates byemploying pooled t

exhaustible resources and secondary materials a macroeconomic analysis abstract in this paper we have developed an endogenous growth model to deal with exhaustible resources and secondary materials together under the assumptions that these two inputs are or are not technologically perfect substitutes of each other in order to compare the results obtained under both hypotheses we highlight the implication of these two assumptions on the rate of growth of total output and upon the flow of exhaustible resources extracted there are also some other interesting findings related to the spill over on welfare of the waste recycling process and the dynamics of shadow prices of both inputs considered finally some implications on hotelling s rule also emerge in our analytical framework

decoupling waste generation from economic growth a cge analysis of the swedish case abstract over the past decades we have seen the quantities of solid waste increase in close relation to economic growth to tackle this problem of continuing waste growth the eu has on its agenda that waste generation should decouple from economic growth within the eu in the future sweden also has stated a target of non increasing future waste quantities the strength of the policy measures needed to attain this target is here illustrated by comparing the waste intensity outcomes in a decoupling scenario and a baseline scenario of the swedish economy 2006 2030 a computable general equilibrium cge model is used for linking waste generation to firms material input firms production and households consumption when projecting future quantities of hazardous and non hazardous waste in sweden we show that to offset the effect of economic growth on waste generation in the decoupling scenario the intensities of material related wastes must decrease at a yearly rate that is about twice the historically estimated reduction rate used in the baseline scenario the reduction in the intensities of waste related to firms production and households consumption must also be substantial compared to historical estimates

a comparison of public policies for lead recycling policies that encourage recycling may be used to reduce environmental costs from waste disposal because direct restrictions on disposal are difficult to enforce four recycling policies have been advanced i taxes on the use of virgin materials ii deposit refund programs iii subsidies to recycled material production and iv recycled content standards in this article i analyze the structure of these policies and their cost effectiveness in achieving reductions in disposal i then examine the policies in the empirical context of the recycling of lead from automobile batteries in order to calculate the effects of recycling programs i estimate the elasticities for primary and secondary lead supply and demand my results suggest that price based policy mechanisms can be successful in increasing lead recovery and that the difference in efficiency between the four approaches is similar

does international harmonization of environmental policy instruments make economic sense harmonization of the instruments used in environmental policy has beenconsidered necessary to guarantee fair competition in internationalmarkets we examine the economic costs of harmonizing paper recyclingstandards in countries where the urgency of the waste disposal problemsdiffer using data of seven european countries we estimate thetechnologically feasible input combinations of pulp and waste paper forpaper production short term effects of two environmental policy measures minimum content requirement and utilization rate target are analyzed bytranslating the two administrative instruments into taxes and subsidies weshow that the shadow costs of the harmonization vary considerably betweencountries the difference in the domestic availability of waste may explainthe variation and a modification of the policy measures to incorporate thisaspect is suggested

decision time consideration time and status quo bias economists increasingly appreciate the value of studying the time taken to make decisions in order to provide insights into decision makers choices this article shows that studying how time is allocated among individual options is also valuable in helping researchers to understand the impact default options have on decision makers attention allocation as approximated by how the time is allocated the study of this impact generates new insights into the well known choice phenomenon of status quo bias which typically refers to decision makers tendency to stick to a default option by designing a series of novel experiments i find that this bias arises even when the choice is among prizes of fixed monetary value expressed in arithmetic form i also find asymmetric attention i e more time devoted to default options and strikingly asymmetric choice errors specifically decision makers fail to select an alternative better than the default 28 of the time while they incorrectly select an alternative worse than the default only 11 of the time and provide evidence supporting a causal relationship between asymmetric attention and asymmetric errors jel d03 d12 d83

a nonuniform pricing model of union wages and employment unlike implicit contracts models the nonuniform pricing model of unions assumes that firms can always shut down ex post to avoid any payments to the union under this restriction employment can differ from a first best even if both workers and firms are risk neutral in general the union chooses to offer quantity discounts on labor and needs to use a seniority rule that regulates the order in which workers are hired to implement these discounts unions lower almost all workers employment probabilities and increase the cyclical volatility of employment and the union nonunion average wage differential will move countercyclically workers preferences over union wage profiles conditional on their seniority exhibit within limits a convenient unanimity property

is the income elasticity of environmental improvements less than one we estimated the income elasticity of environmental improvements for a number of european data sets the value of this parameter is consistently found to be less than one with few exceptions our findings are compared with state of the art contingent valuation studies from other countries we also compared our findings with those reported in the literature on charitable donations and corporate donations these studies show a similar pattern donations decrease as a percentage of income as income increases

exploration and development of u s oil and gas fields 1955 2002 we study the exploration and development of oil and gas fields in the u s over the period 1955 2002 we make four contributions to explain the economic evolution of the oil and gas industry during this period first we derive a testable model of the dynamics of competitive oil and gas field exploration and development second we show how to empirically distinguish hotelling scarcity effects from effects due to technological change third we test these hypotheses using statewide panel data of exploration and development drilling we find that the time paths of exploration development and total wells drilled are dominated by hotelling scarcity effects finally we offer an explanation for why fixed costs from exploration can make the contracting equilibrium in the mineral rights market efficient

universal health insurance in the clinton plan coverage as a tax financed public good the financing arrangements embodied in the clinton health reform plan involve some important differences in the way in which public goods are usually financed the subsidies to small low wage firms mandated to provide benefits distort markets in both labor and products and offer incentives for the creation of small firms in addition the financing scheme implicitly envisions a head tax on families at modest income levels but offers a possible rationale for it nevertheless the main reason for many of the financing features appears to be an attempt to hold down the apparent budgetary cost of universal coverage

trade union efficiency and overemployment with seniority wage scales inefficient unemployment of union members depends upon the inability of the union to bargain over employment as well as wages the issue of union membership limitations has received less attention as seen in the survey by oswald i 983 grossman i983 considers endogenous membership size with mixed efficiency results but he imposes a number of severe restrictions on allowable contracts in the current paper we examine the issue of union membership size under very general contracts where unions negotiate over wage rates employment levels and compensation payments to laid off workers and further can negotiate differential treatment of seniority groups these general contracts represent a useful benchmark case recognising that the results will change as various limitations on the contract are imposed the treatment of seniority is crucial and we model this by an overlapping generations approach continuing workers at the firm negotiate the contract to be applicable to the following period new hires over that period in the number stipulated in the contract then gain seniority and negotiate the contract for the period after the formulation of the problem with the exception of the treatment of new hirings is similar to that in the implicit contracting literature and many of the results will be familiar unemployment of union members only occurs when the marginal value product of labour fails below the opportunity cost leisure value

contract selection and performance in competitive bidding for electricity generation third parties bidding to supply utilities with electric generation facilities is a new and increasingly important practice six states have either establishes bidding programmes or are considering doing so the paper uses data from maine the first state to use electric generation bidding to examine which bids are awarded contracts and which contracts fail to fulfill their provisions results show that bid price plays a very small role if any in the selection process

learning from the behavior of others conformity fads and informational cascades learning by observing the past decisions of others can help explain some otherwise puzzling phenomena about human behavior for example why do people tend to converge on similar behavior why is mass behavior prone to error and fads the authors argue that the theory of observational learning and particularly of informational cascades has much to offer economics business strategy political science and the study of criminal behavior

can relaxation of beliefs rationalize the winner s curse an experimental study we use a second price common value auction called the maximal game to experimentally study whether the winner s curse wc can be explained by models which retain best response behavior but allow for inconsistent beliefs we compare behavior in a regular version of the maximal game where the wc can be explained by inconsistent beliefs to behavior in versions where such explanations are less plausible we find little evidence of differences in behavior overall our study casts a serious doubt on theories that posit the wc is driven by beliefs

a household level environmental kuznets curve abstract richer households may create more vehicle emissions because they own more vehicles and drive more poorer households may pollute more because they use high polluting vintages and maintain them less well this paper uses 1993 california vehicle microdata to show that there is a kuznets u shaped hydrocarbon emissions relation

the response of mining investment to a decline in economic growth the case of copper in the 1970s abstract this paper analyses how an industry like mining where investments take long to complete adjusts to a permanent decline in demand growth optimal control theory is the method used it is shown that an extended period of excess capacity and low prices will follow after a slowdown in growth this is because profit maximizing firms will continue to complete projects to which large investment funds have already been committed even when they anticipate the price fall numerical solutions of the control problem obtained by using parameters relevant to the copper industry are compared with actual performance of this industry in the late 1970s

explaining the variation in household recycling rates across the uk household waste recycling rates vary significantly both across and within regions of the uk this paper attempts to explain the variation by using a new data set of waste recycling rates and policy determinants for all of the uk s 434 local authorities over the period 2006q2 to 2008q4 our results suggest that the method of recycling collection chosen by policy makers is an important factor influencing the recycling rate we also find an inverse relationship between the frequency of the residual waste collection and the recycling rate

human capital true love and gender roles is sex destiny abstract we assume optimal specialization in the nuclear family involves one partner doing homework and the other wagework basic human capital for one or the other is imparted to individuals through early childhood training mates are chosen on the basis of noneconomic criteria true love because love strikes randomly after basic human capital is acquired a coordination problem arises in choosing complementary specializations even with no discrimination there exist equilibria characterized by gender roles perfect correlation between sex and family roles there may also exist other equilibria in which the correlation between sex and family roles is imperfect and individuals are trained by aptitude we rank the equilibria when they coexist and demonstrate that affirmative action policies can increase average welfare by eliminating some equilibria the analysis is conducted in a framework which characterizes individuals by training by aptitude and by family role in a 2 2 2 model in this framework we formalize the equality of the sexes as well as the relative importance of nature versus nurture and various types of training

distributive justice for behavioural welfare economics the incompleteness of behavioural preferences can lead many or even all allocations to qualify as pareto optimal but the incompleteness does not undercut the precision of utilitarian policy recommendations utilitarian methods can be applied to groups of goods or to the multiple social welfare functions that arise when individual preferences are incomplete and policymakers do not need to provide the preference comparisons that individuals are unable to make for themselves the utilitarian orderings that result although also incomplete can generate a unique optimum non separabilities in consumption reduce this precision but in all cases the dimension of the utilitarian optima drops substantially relative to the pareto optima

recycling social norms and warm glow revisited we examine the role of social norms and warm glow in a theoretical framework and establish that improving the quality of recycling facilities for example through kerbside collection will elicit more recycling effort if warm glow is present drawing on the literature we model the role of social norms with reference to age profile ethnicity and geographical location of the reference group using english local authority data we show that a social norm for recycling does exist we find the expected relationship between the quality of kerbside provision and recycling activity if the household derives warm glow from the activity however it is insignificant amongst the control variables we find evidence that multifamily dwellings recycle less

a theory of sex discrimination abstract in this paper we put forward a theory that explains the way in which social attitudes towards sex discrimination in the labour market have evolved we suggest that sex discrimination in the labour market can generate both costs and benefits and that a sizeable part of these costs can be ameliorated through marriage the fact that marriage is no longer a pervasive and stable institution has contributed to the awareness that sex discrimination in the labour market is a major social problem

incomplete preferences and equilibrium in contingent markets this paper shows that betting or speculative trading between agents with incomplete preferences is likely to occur if agents have access to convex choice sets this contrasts sharply with endowment economy models where preference incompleteness often hinders betting speculative trading or mutually beneficial insurance arrangements our results imply that decision makers with identical tastes and identical feasible sets will potentially gain from speculative trade for generic status quo allocations we also develop a framework for endogenizing the status quo allocations of decision makers that are treated exogenously in the existing literature finally we provide a tractable differential representation of status quo allocations equilibria and conditions where speculative trade may or may not emerge

hindsight foresight and insight an experimental study of a small market investment game with common and private values we experimentally test an endogenous timing investment model in which sub jects privately observe their cost of investing and a signal correlated with the common investment return subjects overinvest relative to nash we separately consider whether subjects draw inferences in hindsight and use foresight to delay profitable investment and learn from market activity in contrast to nash cursed equilibrium and level k predictions behavior hardly changes across our experimental treatments maximum likelihood estimates are inconsistent with belief based theories we offer an explanation in terms ofboundedly ratio nal rules of thumb based on insights about the game which provides a better fit than quantal response equilibrium jel c72 d82 d83 gil

willingness to pay and willingness to accept how much can they differ comment i agree with the point made by edoh y amiran and daniel a hagen 2003 that there can be a substantial or even infinite divergence between the wta and wtp for a public good even where there is a nonzero elasticity of substitution between market goods and the public good provided that the indifference curves are asymptotically bounded with respect to market goods in the manner they describe this is an important point they are also correct to point out that the elasticity of substitution is a local concept whereas their asymptotic boundedness condition applies also for discrete changes my 1991 paper used a local analysis because it was following the structure of the analysis in robert d willig 1976 and alan randall and john r stoll 1980 i wanted to show that while randall and stoll appeared to extend willig s local result on wta versus wtp from price changes to changes in the quantity of a public good the relevant elasticity was in fact different and involved the substitution elasticity as well as the income elasticity i view these points by amiran and hagen as not two separate results but essentially the same result their asymptotic boundedness condition generalizes my zero elasticity of substitution condition to discrete changes the asymptotic boundedness condition can be expressed as follows assuming a bivariate utility function u x q and given a reference point x q associated with a reference utility level u u x q there exists some q q such that for all q q there exists no x such that u x q u in other words no amount of x can substitute for the reduction in public good from q to q q in the case of a zero elasticity of substitution q q but as amiran and hagen show in their theorem 1 this is unnecessarily restrictive when dealing with a discrete reduction in q furthermore their theorem 2 can be viewed as a special case of their theorem 1 in which q 0 which makes q an essential commodity it is well known in consumer theory that the wta to avoid the loss of an essential market good is infinite their theorem 2 extends this result to the case of an essential nonmarket good but as their theorem 1 shows essentialness is not necessary for an infinite wta the boundedness condition is the key and this implies a fundamental lack of substitutability between money market goods and the public good

the demand for scrap and primary metal ores after a decline in secular growth old scrap and primary metal ores are substitute raw materials in metal production the paper explores the changing composition in their use following a permanent deceleration in economic growth the cases of copper and iron steel are employed to track the usage of scrap after a secular slow down in the rate of growth of finished metal demand such as occurred in the mid 1970s the conclusions suggest that the expanding role of scrap will result in stagnant demand for primary metal ores in the 1980s and 1990s la demande deferraille et de minerai de metaux primnaires apres une chute dans la croissance economique seculaire la ferraille et le minerai de m6taux primaires sont des matieres premieres qui sont des substituts dans la production du m6tal ce m6moire examine le changement dans la composition de l usage de l un et de l autre apres une decel6ration permanente dans la croissance 6conomique on examine en d6tail les cas du cuivre et du fer acier pour calibrer l usage de la ferraille apres la sorte de d6clin dans la croissance de la demande de m6tal fini qu on a v6cu dans le milieu des annees 1970 l auteur conclut que le role plus grand de la ferraille va vouloir dire une stagnation de la demande de minerais de metaux primaires dans les annees 1980 et 1990 carl van duyne 1946 1983 my professional colleague and personal friend carl van duyne died at the end of february 1983 as work on the present paper was drawing to a close though physically he is not longer with us his spiritual presence will remain through his valuable contributions in various fields to the academic work of the institute

a measure of rationality and welfare evidence showing that individual behavior often deviates from the classical principle of preference maximization has raised at least two important questions 1 how serious are the deviations 2 what is the best way to analyze choice behavior in order to extract information for the purpose of welfare analysis this paper addresses these questions by proposing a new way to identify the preference relation that is closest in terms of welfare loss to the revealed choice

auctions and bidding a primer maybe the contractor was right to think bid jobs are different but it is more likely that he suffered from too simple a view of what is involved in preparing a competitive bid our analysis will show that even an experienced estimator working in familiar terrain can lose money if he doesn t understand the subtleties of competitive bidding the phenomenon experienced by the painting contractor known as the winner s curse is just one of the surprising and puzzling conclusions that have been turned up by modern research into auctions another is the theoretical proposition supported also by some experimental evidence that for example a sealed bid treasury bill auction in which each buyer pays a price equal to the highest rejected bid would yield more revenue to the treasury than the current procedure in which the winning bidder pays the seemingly higher amount equal to his own bid there are also subtle results that demonstrate the equivalence of such apparently different institutions as the standard sealed bid auction in which the auctioneer seller sells the goods to the highest bidder for a price equal to his bid and the dutch auction in which the auctioneer seller begins by asking a high price and gradually lowers the price until

municipal waste kuznets curves evidence on socio economic drivers and policy effectiveness from the eu waste generation and waste disposal are becoming increasingly prominent in the environmental arena from a policy perspective and in the context of delinking analysis in general waste generation is still increasing proportionally with income and economic and environmental costs associated to landfilling are also increasing this paper provides a comprehensive analysis of waste generation incineration and landfill dynamics based on panel data for the eu25 to assess the effects of different drivers economic structural policy and the eventual differences between western and eastern eu countries we show that for waste generation there is still no waste kuznets curve wkc trend although elasticity to income drivers appears lower than in the past landfill and other policy effects do not seem to provide backward incentives for waste prevention and in terms of landfill and incineration as expected they are respectively decreasing and increasing with policy acting as a strong driver eastern countries appear to be performing generally quite well thus benefiting from eu membership and related policies in terms of environmental performance we can conclude that although absolute delinking is far from being achieved for waste generation there are some first positive signs of an increasing relative delinking for waste generation and robust landfill diversion and varying evidence of a significant role of the eu waste policies implemented in the late 1990s and early 2000s our evidence suggests that if while landfill diversion is currently associated to a delinking partly explained by eu policies waste prevention must be the next objective of waste regulation efforts

auctions for initial sale of annual catch entitlement we use a laboratory experiment calibrated to a representative new zealand fishery to assess three sealed bid multi unit demand auction mechanisms under consideration for allocating quota for species being introduced into the quota management system these auctions allocate the k units to the k highest bids but prices are determined according to discriminative kth price and k 1st price rules in our experiment the auctions are equally efficient but revenue is highest in the discriminative auction and lowest in the k 1st price auction results are robust to industry subjects and subjects are responsive to the across unit bidding incentives present in multi unit demand auctions

specialization and competition in marriage models abstract i present a marriage model that includes pre marital investments in human capital individuals expect the future role specialization in marriage the specialization effect but at the same time before marriage individuals have the incentive to invest in order to make themselves more attractive the competition effect the interaction of two effects generates multiple equilibria no equilibria are ex ante efficient when the benefits of role specialization exist the competition effect is a source of coordination failure in the match formation this result stands in contrast to those of other models in which the competition effect leads to efficiency in some equilibrium

indifference and incompleteness distinguished by rational trade abstract we use an agent s strict preferences to define indifference and incompleteness relations that identify the sequences of trades that are rational to undertake if an agent makes sequences of trades of options labeled indifferent the agent will never be led to an inferior outcome but trades of options where no preference judgments obtain can lead to diminished welfare for one shot choices in contrast there can be no behavioral distinction between indifference and incompleteness applications include an isomorphism for incomplete preferences that indicates when weak and strict preferences contain interchangeable information a characterization of the possibly incomplete preference relations consistent with a one shot choice function and an equivalent definition of incompleteness that relies on the philosophical theory of incommensurability

bidding in common value auctions how the commercial construction industry corrects for the winner s curse experienced construction industry executives suffer from a winner s curse in laboratory common value auction markets dyer et al dyer d j h kagel d levin 1989 a comparison of naive and experienced bidders in common value offer auctions laboratory analysis econom j 99 108 115 this paper identifies essential differences between field environments and the economic theory underlying the laboratory markets that account for the executives success in the field and a winner s curse in the lab these are 1 industry specific mechanisms which enable contractors to escape the winner s curse even when they bid too low 2 learned industry specific evaluative processes which enable experienced contractors to avoid the winner s curse in the first place and 3 important private value elements that underlie bidding also identified are a number of industry specific bidding characteristics whose evolution can be explained using modern auction theory lessons are drawn regarding the use of experime

seniority and distribution in a two worker trade union unlike existing models that rely heavily on assumptions regarding unions distributional preferences we present a simple model in which union seniority layoff rules and rising seniority wage profiles result from optimal price discrimination against the firm surprisingly even when cash transfers among union members are ruled out unions optimal seniority wage profiles are likely to be completely unaffected by their distributional preferences because of a kink in the utility possibility frontier this suggests that the simple technology of price discrimination may play a key role hitherto unappreciated in explaining union policies that affect the relative well being of different union members

asymmetric information information externalities and efficiency the case of oil exploration in this article we examine the efect of private information and information externalities on the ex post eficiency of investment in oil exploration we show that too much drilling tends to occur ifjirms believe that the area is likely to contain a sizeable pool of oil and too little drilling occurs if the opposite is true bargaining with well defined property rights to the information externality can eliminate underinvestment but overinvestment remains a problem because firms have an incentive not to disclose their private information

the impact of public information on bidding in highway procurement auctions a number of papers in the theoretical auction literature show that the release of information regarding the seller s valuation of an item can cause bidders to bid more aggressively this widely accepted result in auction theory remains largely untested in the empirical literature recent theoretical work has also shown that this effect can be more pronounced in auctions with larger common cost uncertainty we examine the impact of a policy change by the oklahoma department of transportation that led to the release of the state s internal estimate of the costs to complete highway construction projects we perform a differences in differences analysis comparing bidding in texas a state that had a uniform policy of revealing the same information all throughout the period of analysis to bidding in oklahoma our results show that in comparison to texas auctions the average bid in oklahoma fell after the change in engineers cost estimate ece policy this decline in bids was even larger for projects where the common uncertainty in costs is greater moreover the within auction standard deviation of bids fell after the change in ece policy with the most significant decline observed again in projects with greater common cost uncertainty

the performance of corporate alliances evidence from oil and gas drilling in the gulf of mexico abstract i use data on oil and gas drilling in the gulf of mexico to measure how a corporate alliance a group of firms that jointly develops an offshore tract performs relative to a solo firm i employ a regression discontinuity strategy based on bids in first price sealed bid auctions for the rights to develop leases by focusing on leases where one organizational form narrowly outbids the other i measure drilling outcomes while controlling for the endogenous matching of projects and organizational forms solo firm leases are less profitable than alliance leases because alliance members combine their information and expertise

bidding behaviour in ocs drainage auctions theory and evidence empirical economists frequently criticize game theoretic models of markets on the grounds that they fail to generate empirically testable hypotheses the complaint is that prices and quantities or entry decisions are explained using factors that are not observable to the econometrician such as private valuations and beliefs of agents the corollary to this argument is that the only way to proceed empirically is through experiments however this approach suffers from the problem that the experience of the subjects may be too limited and the compensation too small for them to perform the requisite optimizing calculations the objective of this paper is to discuss the above criticism of gametheoretic models in the context of our work on markets of offshore oil and gas leases in this case study one group of buyers is better informed about the unknown value of the leaae being sold that another group and the two groups can be identified game theoretic models of markets with informational asymmetries generate restrictions on the relative behaviour and performance of the two groups of buyers and some of these restrictions are empirically testable we examine them using bid and profit data more generally the work serves to illustrate a basic point about testing models of

an overlapping generations model of wage determination this paper provides a novel explanation of rising wage profiles and seniority rules it is argued that whenever a firm bargains over a wage employment package with its whole work force a steady state contract favors older workers the reason is that old workers have no interest in improving the conditions of young workers while young workers do care about the treatment given to old workers therefore the work force as a whole displays a bias toward older workers giving them higher wages as well as more job security these results are derived in an n period overlapping generations model and the effects of a shock to the firm s revenue function are analyzed copyright 1990 by the editors of the scandinavian journal of economics

willingness to pay and compensation demanded experimental evidence of an unexpected disparity in measures of value aside from possible income effects measures of the maximum amounts people will pay to avoid a loss and the minimum compensation necessary for them to accept it are generally assumed to be equivalent unexpectedly wide variations between these sums however have been noted in survey responses to hypothetical options this paper reports the results of a series of experiments that confronted people with actual money payments and cash compensations the results indicate that the compensation measure of value seems to exceed significantly the willingness to pay measure which would appear to call into some question various rules of entitlement damage assessments and interpretations of indifference curves

bid dispersion competition and wage regulation some field evidence from public contract bidding in british columbia the paper uses data from british columbia to show that bid dispersion the difference between the winning and next lowest bids in public school construction contract bidding is very compact and that it varies inversely with the degree of competition it also examines the impact of the skill development and fair wage law sdfwp which promulgated wage scales and required contractors to pay them in public construction projects on the bid dispersion multivariate analysis shows that bid dispersion declined after sdfwp one possible interpretation of this result is that the contractors became less prone to the winner s curse following the sdfwp

structural econometric analysis of descending auctions since vickrey s 1961 paper the theory of auctions has considerably expanded particularly over the last decade see e g milgrom 1985 1986 and mcafee and mcmillan 1987 for recent surveys in contrast except for some experimental work only a few empirical studies have attempted to validate the new theoretical auction models using field auction data two approaches have emerged the first has concentrated upon testing some implications of the theory of auctions using reduced form econometric models with observed bids as the explained variables explanatory variables might then be the reservation price the number of potential bidders when observed and some characteristics of the auctioned object examples are hansen 1985 1986 hendricks et al 1987 and hendricks and porter 1988 the second approach which is structural has a long tradition in econometrics starting from the work of the cowles commission this approach is followed in this paper the basic idea is simple and relies upon

information returns and bidding behavior in ocs auctions 1954 1969 this paper examines federal auctions for leases on the outer continental shelf in the light of the predictions of the first price sealed bid common values model of auctions the authors find that the data strongly support the model for auctions in which one bidder is better informed than the other bidders the evidence for auctions in which bidders have noisy but qualitatively similar information is less conclusive but is consistent with a model in which each bidder does not know either the actual or potential number of bidders on a lease copyright 1987 by blackwell publishing ltd