modelling long run scenarios this paper intends to draw overall lessons from a long term study on co2 emission in france a country with a rather low energy gdp ration and in which transition to non fossil based production of electricity has been achieved more generally it points out the importance of possible bifurcation effects and draws methodological and policy implications from these statements it discusses modelling approaches to the linkages between energy and the rest of economy and addresses the issue of difficulties in cost assessment analysis in the presence of several baseline scenarios finally it proposes a more encompassing definition of no regrets policies

carbon capture and storage as a corporate technology strategy challenge latest estimates suggest that widespread deployment of carbon capture and storage ccs could account for up to one fifth of the needed global reduction in co2 emissions by 2050 governments are attempting to stimulate investments in ccs technology both directly through subsidizing demonstration projects and indirectly through developing price incentives in carbon markets yet corporate decision makers are finding ccs investments challenging common explanations for delay in corporate ccs investments include operational concerns such as the high cost of capture technologies technological uncertainties in integrated ccs systems and underdeveloped regulatory and liability regimes in this paper we place corporate ccs adoption decisions within a technology strategy perspective we diagnose four underlying characteristics of the strategic ccs technology adoption decision that present unusual challenges for decision makers such investments are precautionary sustaining cumulative and situated understanding ccs as a corporate technology strategy challenge can help us move beyond the usual list of operational barriers to ccs and make public policy recommendations to help overcome them

proportionality and turnout evidence from french municipalities many studies find that voter turnout is higher in proportional representation pr elections than in plurality elections but because the two systems differ in multiple ways and are used in differe

ambiguity aversion and comparative ignorance decisions under uncertainty depend not only on the degree of uncertainty but also on its source as illustrated by ellsberg s observation of ambiguity aversion in this article we propose the comparative ignorance hypothesis according to which ambiguity aversion is produced by a comparison with less ambiguous events or with more knowledgeable individuals this hypothesis is supported in a series of studies showing that ambiguity aversion present in a comparative context in which a person evaluates both clear and vague prospects seems to disappear in a noncomparative context in which a person evaluates only one of these prospects in isolation

directed technical change with capital embodied technologies implications for climate policy abstract we develop a theoretical model of directed technical change in which clean zero emissions and dirty emissions intensive technologies are embodied in long lived capital stocks switching from dirty to clean innovation leads to ongoing reductions in the relative costs of producing clean investment goods making them ever cheaper to purchase and so encouraging clean investment at the same time falling replacement costs imply falling asset values consequently continuing innovation in capital embodied clean technologies also generates obsolescence costs which are borne by users of clean capital the negative effect of obsolescence costs on demand for clean investment and consequently on the speed of transition to clean growth has been neglected in the literature on directed technical change we show theoretically and using numerical simulations that optimal policies differ in our model of embodied technological change relative to an otherwise comparable model of disembodied technological change with embodied technologies i optimal emissions taxes start higher and rise faster ii much higher clean research and development subsidies are required to effect the switch to clean innovation and iii climate damages under optimal policies are greater we suggest that more attention should be paid to the role of obsolescence costs in modelling transitional effects of climate policies

testing mixed strategy equilibria when players are heterogeneous the case of penalty kicks in soccer the concept of mixed strategy is a fundamental component of game theory and its normative importance is undisputed however its empirical relevance has sometimes been viewed with skepticism the main concern over the practical usefulness of mixed strategies relates to the indifference property of a mixedstrategy equilibrium in order to be willing to play a mixed strategy an agent must be indifferent between each of the pure strategies that are played with positive probability in the mixed strategy as well as any combination of those strategies given that the agent is indifferent across these many strategies there is no bene t to selecting precisely the strategy that induces the opponent to be indifferent as required for equilibrium why an agent would in the absence of communication between players choose exactly one particular randomization is not clear of course whether agents in real life actually play nash equilibrium mixed strategies is ultimately an empirical question the evidence to date on this issue is based almost exclusively on laboratory experiments e g barry o neill 1987 amnon rapoport and richard b boebel 1992 dilip mookherjee and barry sopher 1994 jack ochs 1995 kevin a mccabe et al 2000 the results of these experiments are mixed o neill 1987 concludes that his experimental evidence is consistent with nash mixed strategies but that conclusion was contested by james n brown and robert w rosenthal 1990 with the exception of mccabe et al 2000 which looks at a three person game the other papers generally reject the nash mixedstrategy equilibrium while much has been learned in the laboratory there are inherent limitations to such studies it is sometimes argued that behavior in the simpli ed arti cial setting of games played in such experiments need not mimic real life behavior in addition even if individuals behave in ways that are inconsistent with optimizing behavior in the lab market forces may discipline such behavior in the real world finally interpretation of experiments rely on the assumption that the subjects are maximizing the monetary outcome of the game whereas there may be other preferences at work among subjects e g attempting to avoid looking foolish that distort the results tests of mixed strategies in nonexperimental data are quite scarce in real life the games played are typically quite complex with large strategy spaces that are not fully speci ed ex ante in addition preferences of the actors may not be perfectly known we are aware of only one paper in a similar spirit to our own research using data from classic tennis matches mark walker and john wooders 2001 test whether the probability the player who serves the ball wins the point is equal for serves to the right and chiappori department of economics university of chicago 1126 east 59th street chicago il 60637 levitt department of economics university of chicago groseclose graduate school of business stanford university 518 memorial way stanford ca 94305 the paper was presented at games 2000 in bilbao and at seminars in paris and chicago we thank d braun j m conterno r guesnerie d heller d mengual p reny b salanie and especially j l ettori for comments and suggestions and m mazzocco and f bos for excellent research assistance any errors are ours 1 the theoretical arguments given in defense of the concept of mixed strategy equilibria relate either to puri cation john c harsanyi 1973 or to the minimax property of the equilibrium strategy in zero sum games for recent elaborations on these ideas see authur j robson 1994 and phil reny and robson 2001 2 the ultimatum game is one instance in which experimental play of subjects diverges substantially from the predicted nash equilibrium robert slonim and alvin e roth 1998 demonstrate that raising the monetary payoffs to experiment participants induces behavior closer to that predicted by theory although some disparity persists

two round elections one round determinants evidence from the french municipal elections using a new database of french municipalities that covers 821 towns and two elections 2001 and 2008 we examine how the budget structure degree of electoral competition and the economic context affect the share of votes for the incumbent we take into account the institutional details of the two round structure of the electoral process created by french electoral rules dual ballot under plurality rules we show that in the first round of the electoral process spending on equipment including infrastructures can influence the voter and that electoral competition has a strong impact on the incumbent s score in the second round the incumbent s vote is affected more by national considerations and local budget variables have no effect we show that the dynamics between the first and the second rounds are intense the results suggest that the determinants of each round s outcome in a two round electoral process are different

do closeness and stake increase voter turnout evidence from election results in small french towns in brittany abstractdo closeness and stake increase voter turnout evidence from election results in small french towns in brittany regional studies this article explores the determinants of second round voter turnout in small french towns with a focus on two hypotheses first an increase in the closeness of the race may lead to an increase in turnout second a higher seats stake that is a higher proportion of the total number of seats that remain to be filled in the second round of the election may increase turnout results show that increases in both closeness and seats stake lead to higher voter turnout thus evidence is given in favour of the assumption of rationality in voting in local elections

closeness expenditures and turnout in the 1982 u s house elections students of elections have repeatedly found that the closeness of an election is modestly correlated with turnout this may be due to a direct response of instrumentally motivated voters but recent theoretical work casts doubt on the adequacy of this explanation another possibility is that elite actors respond to closeness with greater effort at mobilization we explore the latter possibility by using fec and state data on campaign expenditures in house senate and gubernatorial races our results indicate that closeness has an effect at both the mass and elite levels we also provide quantitative estimates of the effect of senate and gubernatorial expenditure on house turnout

climate change and the economy in baja california assessment of macroeconomic impacts of the state s climate action plan abstract despite its developing country status mexico ranks 10th worldwide in total greenhouse gas ghg emissions however mexico s vulnerability to climate change impacts is a major motivating factor behind its announced intended contributions at cop21 to cut its baseline emissions by at least 25 in 2030 we analyze the macroeconomic impacts of the climate action plan cap process undertaken in the mexican border state of baja california bc we adapt a state of the art regional macroeconometric model to analyze the bc economy wide impacts of 22 ghg mitigation policy options recommended in the baja california cap the combined effects include an average annual increase of 1680 new jobs or about 0 11 of the average annual employment in the baseline economic forecast and a gross state product gsp increase of 9 85 billion pesos in npv over the 2015 2030 planning horizon although the main objective of ghg mitigation is to reduce atmospheric concentrations and hence future potential damages of these pollutants the stimulus to the bc economy from the implementation of its cap represents a valuable co benefit moreover it is a tangible one that will take place in the near term in contrast to the more long term and more uncertain benefits associated with reducing climate change damages

technologies energy systems and the timing of co2 emissions abatement an overview of economic issues abstract this paper provides an overview of economic issues involved in timing limitations on co2 emissions from energy systems it highlights issues relating to technology availability development and diffusion and the inertia of energy systems as being particularly important the paper sets this in the context of wider uncertainties surrounding the problem and briefly considers other aspects relevant to timing the paper is stimulated by the debate in the usa about optimal abatement paths in particular recent claims that it would be economically preferable to defer such abatement action in favour of measures that support technology development but do not affect emission trends for many years this paper categorizes the various economic issues involved and concludes that for each economic argument that has been advanced to justify deferring emission constraints there are counter vailing economic arguments that could be used in support of rapid near term emissions abatement rational policy lies between these extremes a policy of deferring all emissions abatement exposes economic systems and industries as well as the environment to significantly greater costs and risks than those arising from a more balanced approach furthermore the modelling studies that have been used to justify deferring emissions abatement do so because they embody the economic factors favourable to delay and largely neglect the countervailing issues to the point where their results have little relevance to the overall problem of timing emissions abatement

decision time and steps of reasoning in a competitive market entry game entry decisions in market entry games usually depend on the belief about how many others are entering the market the belief about the own rank in a real effort task and subjects risk preferences in this paper i am able to replicate these basic results and examine two further dimensions i the level of strategic sophistication which has a positive impact on entry decisions and ii the impact of time pressure which has a partly negative influence on entry rates furthermore when ranks are determined using a real effort task differences in entry rates are explainable by higher competitiveness of males additionally i show that individual characteristics are more important for the entry decision in more competitive environments

learning information and sorting in market entry games theory and evidence previous data from experiments on market entry games n player games where each player faces a choice between entering a market and staying out appear inconsistent with either mixed or pure nash equilibria here we show that in this class of game learning theory predicts sorting that is in the long run agents play a pure strategy equilibrium with some agents permanently in the market and some permanently out we conduct experiments with a larger number of repetitions than in previous work in order to test this prediction we find that when subjects are given minimal information only after close to 100 periods do subjects begin to approach equilibrium in contrast with full information subjects learn to play a pure strategy equilibrium relatively quickly however the information which permits rapid convergence revelation of the individual play of all opponents

employment and other macroeconomic benefits of an innovation led climate strategy for the united states abstract climate protection policy and its analysis are pursued in the context of other societal goals among them the maintenance of economic growth and high employment too often however analysis of energy and climate policy does not realistically reflect technological conditions and the dynamics of technological change this tendency unnecessarily associates the decline in energy consumption or carbon emissions with the decline in national economic output or income but there is ample prima facie evidence to the contrary just as in the 19th century when the perceived need to reduce labor inputs as part of the production process spurred labor saving technological progress now the need to reduce energy and pollution costs could spur innovation and diffusion of efficient and clean energy technologies this in turn can increase overall growth in economic productivity energy technology analysts have identified many such existing and near term commercial technologies as well as innovations that can be foreseen beyond the immediate technological horizon which would become widely used if policies were developed to overcome market and institutional barriers this paper presents a macroeconomic analysis for a set of policies that would induce the adoption of more efficient and low carbon technologies and finds that overall employment and economic output could be increased by small amounts while significantly reducing carbon emissions

the economics of changing course implications of adaptability and inertia for optimal climate policy this paper reviews evidence that energy technologies and systems adapt over time to accommodate external pressures that technical innovation and systemic change in the energy sector is largely induced by need and restrained by potentially large transitional costs a simple integrated model of optimal greenhouse gas abatement over time is presented in which the abatement cost depends on both fixed and transitional elements it is shown that the optimal current response and long run prospects differ radically between the classical economic case in which the cost of a given cutback in emissions is fixed exogenously and the adaptive case in which the response is ultimately adaptive but heavily constrained by inertia ie low fixed but high transitional cost if energy systems are indeed to a large degree adaptive the results demonstrate that as compared with the classical non adaptive case long run stabilization of atmospheric co2 may be optimal even with moderate damages from climate change greater near term abatement efforts are justified and the cost of a given delay in response may be several times higher neglect of the issue of induced technical change and other adaptive responses may invalidate the policy implications drawn from most integrated assessment models developed to date

everyone likes a winner an empirical test of the effect of electoral closeness on turnout in a context of expressive voting under instrumental voting closer elections are expected to have higher turnout under expressive voting however turnout may increase with decreasing closeness when voters have a preference for winners an empirical test using data on belgian municipal elections supports this we find that turnout reaches a local maximum when the largest party in the election obtains just over 52 of the seats and then falls supporting the instrumental closeness argument there is however another turning point the presence of a highly dominating party receiving at least two thirds of the votes stimulates turnout despite the fact that dominance implies lower closeness

how could emissions trading benefit developing countries abstract this paper aims to show how an emissions trading system could work if some participating entities are allocated an emissions budget or non binding target this will allow them to sell allowances if their actual emissions are less than their budget but will not obligate them to buy allowances if their emissions exceed their budget different rules aiming at ensuring the environmental integrity of such a system are considered parties to the framework convention on climate change may wish to consider building a regime where developing countries are allocated emissions budgets on some provisions of the kyoto protocol and in full respect with the principles of the convention in any case such system would be complementary to the clean development mechanism the potential benefits would be to provide non annex i developing countries with substantial capital inflows and stimulate their economic growth to allow annex i industrialised countries achieving their kyoto commitments at the lowest possible cost and to achieve global participation towards the objective of the convention while reducing the risk of creating tropical hot air by giving some developing countries more allowances than they need under a business as usual scenario

spatial and temporal efficiency in climate policy applications of fund fund is an integrated assessment model of the interactions between climate and economy nine world regions emit greenhouse gases and suffer damages from climate change a number of greenhouse gas emission reduction policies are compared including optimal and cost effective strategies strategies with early and late abatement and strategies with and without international co operation the analyses confirm that co operation matters resulting in substantially lower costs or higher welfare the real commitments of policy targets based on an absolute level e g 1990 emissions are hard to estimate because of the uncertainties in the baseline postponing action conflicts with minimising costs and maximising welfare but so does sharp emission reduction at the short term as proposed in the kyoto protocol

the impact of learning by doing on the timing and costs of co2 abatement abstract a particular ceiling on atmospheric co 2 concentrations can be maintained through a variety of emission pathways over the past decade there has been considerable debate over the characteristics of a least cost pathway some have suggested that a gradual departure from the emissions baseline will be the most cost effective because it reduces the pressure for premature retirement of the existing capital stock and it provides valuable time to develop low cost low carbon emitting substitutes others counter that a major flaw in analyses that support this line of reasoning is that they ignore learning by doing lbd in this paper we examine the impact of lbd on the timing and costs of emissions abatement with regard to timing we find that including learning by doing does not significantly alter the conclusions of previous studies that treated technology cost as exogenous the analysis supports the earlier conclusion that for a wide range of stabilization ceilings a gradual transition away from the no policy emissions baseline is preferable to one that requires substantial near term reductions we find that the major impact of including learning by doing is on the costs of emission abatement depending upon the sensitivity of costs to cumulative experience lbd can substantially reduce the overall costs of emissions abatement

technological change in economic models of environmental policy a survey this paper provides an overview of the treatment of technological change in economic models of environmental policy numerous economic modeling studies have confirmed the sensitivity of mid and long run climate change mitigation cost and benefit projections to assumptions about technology costs in general technical progress is considered to be a noneconomic exogenous variable in global climate change modeling however there is overwhelming evidence that technological change is not an exogenous variable but to an important degree endogenous induced by needs and pressures hence some environmenteconomy models treat technological change as endogenous responding to socio economic variables three main elements in models of technological innovation are i corporate investment in research and development ii spillovers from r d and iii technology learning especially learning by doing the incorporation of induced technological change in different types of environmental economic models tends to reduce the costs of environmental policy accelerates abatement and may lead to positive spillover and negative leakage

tempus fugit time pressure in risky decisions we study the effects of time pressure on risky decisions for pure gain prospects pure loss prospects and mixed prospects involving both gains and losses in two experiments we find that time pressure has no effect on risk attitudes for gains but increases risk aversion for losses for mixed prospects subjects become simultaneously more loss averse and more gain seeking under time pressure depending on the framing of the prospects the results suggest the importance of aspiration levels and thus the overall probability to break even under time pressure we discuss the implications of our findings for decision making situations that involve time pressure

overconfidence and excess entry an experimental approach psychological studies show that most people are overconfident about their own relative abilities and unreasonably optimistic about their futures e g shelly e taylor and j d brown 1988 neil d weinstein 1980 when assessing their position in a distribution of peers on almost any positive trait like driving ability ola svenson 1981 income prospects or longevity a vast majority of people say they are above the average although of course only half can be if the trait is symmetrically distributed this paper explores whether optimistic biases could plausibly and predictably influence economic behavior in one particular setting entry into competitive games or markets many empirical studies show that most new businesses fail within a few years for example using plant level data from the u s census of manufacturers spanning 1963 1982 timothy dunne et al 1988 estimated that 61 5 percent of all entrants exited within five years and 79 6 percent exited within 10 years most of these exits are failures see also dunne et al 1989a 1989b d shapiro and r s khemani 1987

de centralization and voter turnout theory and evidence from german municipalities a vast academic literature illustrates that voter turnout is affected by the institutional design of elections e g compulsory voting electoral system postal or sunday voting in this article we exploit a simple downsian theoretical framework to argue that the institutional framework of public good provision and in particular the distribution of political and administrative competences across government levels likewise affects voters turnout decisions by influencing the expected net benefit of voting empirically we exploit the institutional variation across german municipalities to test this proposition and find supportive evidence

the 11 20 money request game a level k reasoning study we study experimentally a new two player game each player requests an amount between 11 and 20 shekels nis he receives the requested amount and if he requests exactly one shekel less than the other player he receives an additional 20 shekels level k reasoning is appealing due to the natural starting point requesting 20 and the straightforward best response operation nevertheless almost all subjects exhibit at most three levels of reasoning using two variants of the game we demonstrate that the depth of reasoning is not increased by enhancing the attractiveness of the level 0 strategy or by reducing the monetary cost of undercutting the other player

intergenerational attitudes towards strategic uncertainty and competition a field experiment in a swiss bank with a market entry game inspired by camerer and lovallo 1999 we study the attitudes of junior and senior employees towards strategic uncertainty and competition seniors exhibit higher entry rates compared to juniors especially when the market capacity is not too low or when earnings from entry depend on relative performance this difference persists after controlling for attitudes towards non strategic uncertainty and for beliefs on others competitiveness and on relative ability seniors are more willing to compete when they predict a higher number of competitors this contradicts the stereotype of less competitive older employees