risk taking and taxation an alternative perspective abstract the analysis of risk taking and taxation has almost invariably been in a portfolio choice framework this paper presents the alternative perspective of an occupational choice framework where risk taking involves the additional element of discrete choice between safe and risky activities it is shown that the specification of equilibrium must of necessity have a general equilibrium character in this setting the paper develops rules for government intervention in the market equilibrium and analyses the effects of taxation on risk taking

assessing the influence of campaign expenditures on voting behavior with a comprehensive electoral market model this paper extends previous single equation econometric modeling efforts of the sales advertising relationship in elections operating within the perspective of the general demand context of voting behavior it develops a comprehensive electoral market model that takes account of potential simultaneous relationships among votes cast campaign expenditures and voting participation turnout the model is estimated using 3sls techniques with aggregate electoral district data from each of eight canadian provincial elections the model appears to yield consistent and therefore generalizable empirical results across the eight election events chief among the empirical results is the expected relationship between campaign efforts and voting behavior own communications efforts as proxied by campaign expenditures have a positive impact on votes received while competitive communications efforts draw votes away from a candidate

optimal input trade policy under economic uncertainties in a small open economy this article theoretically analyses optimal input trade policy under economic uncertainties in a small open economy the benchmark model explains both key business cycle moments and asset prices of

the impact of competition on advertising the case of political campaign expenditures this paper uses constituency level political campaign expenditures to analyze the impact of competition on advertising a theoretical model based on expected utility maximization predicts an uncertain impact of increased competition on campaign spending the direction of this impact is tested using data from the 1979 and 1980 canadian federal elections competition is found to have a positive effect on spending and several other plausible hypotheses of expenditure determination are rejected these include constant spending per voter or per constituency the random allocation of funds and spending based on incumbency ministerial status or the spending of other political parties

an s 1 s inventory system with emergency orders in this paper we develop an approximate model of an inventory control system in which there exist two options for resupply with one having a shorter lead time we assume that demand and the fixed ordering costs are small relative to the holding cost so that a one for one ordering policy is appropriate we consider a policy for placing emergency orders that uses information about the age of outstanding orders we derive the steady state behavior of this policy and present some computational results

a new approach to the spatial theory of electoral competition in his unidimensional model of electoral competition downs argues that voters use party ideology as an informational short cut for forecasting the policies that a party will pursue if elected parties are perceived by voters as points on an ideological axis in the davis hinich multidimensional model on the other hand the axes are real issues and the principal actors are politicians who are modeled as points in the multi issue space this paper reformulates spatial voting theory in terms of a model that connects what we call predictive dimensions with political issues that are salient during a given election campaign this model is both a synthesis and an extension of the downs and davis hinich spatial models we obtain a median voter result for one predictive dimension that is similar to the downs result but with important differences we also obtain results showing the electoral advantage of incumbency and the tendency for incremental change when there is a great deal of heterogeneity in voter perceptions about the candidates

restricted stock markets in simple general equilibrium models with production uncertainty it is shown that in a two sector production model with uncertainty analogous to work of batra and sakai there exists an implicit and arbitrarily restricted stock market interpretation of the model and that the appropriate duality lies between the relation of factor endowments and equity outputs and the relation of factor prices and equity prices these observations permit a generalization of the batra sakai assumption of maximization of expected utility of profits this is accompanied by an extensive characterization of the implicit market and several of its comparative statics properties a 2 2 2 2 joint production formulation is developed to examine stability properties

international trade and incomplete markets trade theorists since the influential paper by helpman and razin 1978 have considered the impact of uncertainty and international trade in securities from the point of view of available risk markets helpman and razin elegantly showed that in a model with multiplicative production uncertainty the validity of the traditional theorems of international trade follows from the existence of domestic securities markets and international trade in securities under their assumptions output was written

news consumption and media bias bias in the market for news is well documented recent research in economics explains the phenomenon by assuming that consumers want to read watch news that is consistent with their tastes or prior beliefs rather than the truth the present paper builds on this idea but recognizes that i besides biased consumers there are also conscientious consumers whose sole interest is in discovering the truth and ii consistent with reality media bias is constrained by the truth these two factors were expected to limit media bias in a competitive setting our results reveal the opposite we find that media bias may increase when there are more conscientious consumers however this increased media bias does not necessarily hurt conscientious consumers who may be able to recover more information from multiple media outlets the more the outlets are biased we discuss the practical implications of these findings for media positioning media pricing media planning and the targeting of advertising

inventory control in a fluctuating demand environment we present an inventory model where the demand rate varies with an underlying state of the world variable this variable can represent economic fluctuations or stages in the product life cycle for example we derive some basic characteristics of optimal policies and develop algorithms for computing them in addition we show that certain monotonicity patterns in the problem data are reflected in the optimal policies

presidential campaign expenditures evidence on allocations and effects this paper analyzes the impact of presidential campaign spending on election results analyses of expenditures and voting are often plagued by simultaneity between campaign spending and expected vote share however game theoretic models of resource allocation decisions made by a central actor i e a presidential campaign suggest that candidates will spend more in close races and in races likely to be pivotal we provide empirical support for this theory using federal communications commission data from the 1972 presidential election we find that expenditures were higher in states where the election was expected to be closer and in states likely to be pivotal we use these two factors as instruments in a two stage least squares model to estimate the effect of spending on votes we find that contrary to previous theory and research presidential campaign spending significantly increases a candidate s vote share

constant increasing and decreasing risk aversion with many commodities the arrow 1971 pratt 1964 theory of risk aversion has achieved important successes in the study of economic responses to risk this theory applies to a special class of cases in which the von neumann morgenstern expected utility hypothesis is used to explain these responses under this hypothesis individuals who maximize the expected utility of different utility functions will in general make different choices in the face of uncertainty for the purpose of predicting which of two different utility functions will lead to locally more risk averse economic behaviour the essential feature of these functions is their associated arrow pratt absolute risk aversion measures in fact the local comparisons can be extended to global comparisons if the arrow pratt absolute measures are uniformly comparable the arrow pratt measure of absolute risk aversion and a closely related measure of relative risk aversion also play crucial roles in the investigation of changes induced by wealth increases in the risk taking behaviour of a single expected utility maximizing individual this study has resulted in a satisfactory theory of increasing decreasing and constant absolute and relative risk aversion the special cases to which the arrow pratt theory is directly applicable are those in which the utility functions in question are functions of a single variable e g wealth unfortunately the models required to explain many economic decisions employ a version of the expected utility hypothesis in which the argument of the utility function is a multidimensional vector one example arises in the study of the consumption savings decision another occurs in the analysis of the combined consumption savings portfolio decision a final example is obtained in the investigation of demand for goods of uncertain quality the papers of kihlstrom mirman 1974 and diamond stiglitz 1974 have suggested a partial generalization of the arrow pratt theory of absolute risk aversion this

the heckscher ohlin and travis vanek theorems under uncertainty abstract the heckscher ohlin theorem is valid under uncertainty of the special benchmark sort modelled by helpman razin their pessimism over its validity is vanquished by more structure rational expectations are imposed on consumers and identical and constant relative aversion to income risk is assumed under these circumstances with free commodity trade the heckscher ohlin theorem holds for the international exchange of equities

dynamic stability and international trade under uncertainty in the presence of output or price uncertainty the heckscher ohlin samuelson h o s model with incomplete risk markets has been shown to exhibit a wide range of perverse comparative statics responses which contradict the predictions d la stolper samuelson and rybczynski and opens up the possibility of perverse price output responses this paper revisits the question raised by neary 1978 and examines the dynamic stability properties of an h o s model under uncertainty in relation to the conditions under which these perverse responses emerge the findings suggest that once the risk attitudes of the representative entrepreneur is appropriately accounted for in the specification of value factor intensities dynamic stability with respect to a marshallian adjustment process is necessary and sufficient for the normality of all of the standard comparative statics responses except for the rybczynski result the basic analytics are then applied to various existing setups of the h o s model under uncertainty in each case the applicability of the stability condition in precluding comparative static responses that violate standard predictions is examined

repairable stocking and expediting in a fluctuating demand environment optimal policy and heuristics we consider a single stock point for a repairable item facing markov modulated poisson demand repair of failed parts may be expedited at an additional cost to receive a shorter lead time demand that cannot be filled immediately is backordered and penalized the manager decides on the number of spare repairables to purchase and on the expediting policy we characterize the optimal expediting policy using a markov decision process formulation and provide closed form necessary and sufficient conditions that determine whether the optimal policy is a type of threshold policy or a no expediting policy we derive further asymptotic results as demand fluctuates arbitrarily slowly in this regime the cost of this system can be written as a weighted average of costs for systems facing poisson demand these asymptotics are leveraged to show that approximating markov modulated poisson demand by stationary poisson demand can lead to arbitrarily poor results we propose two heuristics based on our analytical results

on the prediction power of market share attraction models logical consistency of market share models has received considerable attention in the recent marketing literature the reports suggest that at least theoretically attraction type specifications a

new policies for the stochastic inventory control problem with two supply sources we study an inventory system under periodic review in the presence of two suppliers or delivery modes the emergency supplier has a shorter lead time than the regular supplier but the unit price he offers is higher excess demand is backlogged we generalize the recently studied class of dual index policies veeraraghavan s a scheller wolf 2008 now or later dual index policies for capacitated dual sourcing systems oper res 56 4 850 864 by proposing two classes of policies the first class consists of policies that have an order up to structure for the emergency supplier we provide analytical results that are useful for determining optimal or near optimal policies within this class this analysis and the policies we propose leverage our observation that the classical lost sales inventory problem is a special case of this problem the second class consists of policies that have an order up to structure for the regular supplier here we derive bounds on the optimal order quantity from the emergency supplier in any period and use these bounds for finding effective policies within this class finally we undertake an elaborate computational investigation to compare the performance of the policies we propose with that of dual index policies one of our policies provides an average cost saving of 1 1 over the best dual index policy and has the same computational requirements another policy that we propose has a cost performance similar to the best dual index policy but its computational requirements are lower

bayesian learning in an infant industry model abstract most analyses of the infant industry argument assume that production early on benefits subsequent production in deterministic fashion this paper presents an alternative framework for evaluating the infant industry argument that focuses on imperfect information as a barrier to entry initial entrants provide information of social value by reducing uncertainty for potential followers about the suitability of local conditions in contrast to earlier work i show that factors that increase the informational barrier to entry may lower the optimal subsidy to the infant industry and that the standard test of the success of infant industry policy is not always valid 1997 elsevier science b v

election campaign resource allocation this paper examines an electoral competition model where a candidate allocates his campaign efforts resources on two competing projects prior to election a candidate is congruent if his objective is consistent with the wishes of his constituents and there is no potential political shirking we show that a congruent candidate needs not exert any efforts towards successful implementation prior to election however a less than perfectly congruent candidate must exert efforts prior to election in equilibrium two campaign resource allocation strategies emerge 1 concentrate resources on one project and 2 allocate resources evenly across both projects we discuss potential inefficiencies that are resulted by these allocation strategies

a reexamination of the neoclassical trade model under uncertainty abstract this paper presents a model that pinpoints the exact places and reasons that the propositions of the heckscher ohlin samuelson model break down under uncertainty within the model if preferences exhibit decreasing absolute risk aversion i a capital poor country tends to obtain lower revenues from its resources than the same resources would yield in capital rich countries ii if there is one riskless and one risky sector a capital abundant country tends to have a comparative advantage in the risky sector and iii the pattern of trade depends on the intra national as well as the inter national distribution of endowments

trade patterns under uncertainty with country specific shocks the helpman razin model of international trade under uncertainty is extended to allow for country specific productivi ty shocks it is shown that for the multiple sector multiple factor case there exists a set of interesting sufficient conditions under w hich it is possible to predict the pattern of international trade in securities goods and factor content on the basis of cross country d ifferences in factor endowments it is shown that under these circum stances some well known empirical tests have to be modified copyright 1988 by the econometric society

a continuous review model for an inventory system with two supply modes in this paper we develop an approximate model of an inventory control system in which there exist two options for resupply with one having a shorter lead time because the optimal policy appears to be extremely complex we consider a reasonable extension of the standard q r policy to allow for two different lot sizes q1 and q2 and two different reorder levels r1 and r2 expressions for the expected on hand inventory and the expected backorders are developed and a procedure for determining the policy parameters is given the model is validated by simulation and calculations are included which compare the average annual cost with and without emergency ordering

electoral turnout in rational voting and consumption perspectives a single equation econometric model of voting participation behavior is developed within the context of rational voter and household investment consumption theories the model is tested using aggregate electoral district level data from 10 canadian provincial elections and the 1970 canadian census the regression estimates show substantial consistency across the various elections which comprise this study s data base despite considerable collinearity education and income appear to be strongly related to voting turnout in a manner which is consistent with the predictions of economic theory

s 1 s policies for perishable inventory we consider s 1 s policies for a single item whose lifetime is fixed and known with certainty demands are generated by a stationary poisson process and there is a positive leadtime for replenishment we believe this study gives the only analysis for perishables with a positive order leadtime the analysis involves the derivation of the stationary distribution of the s dimensional stochastic process corresponding to the time elapsed since the last s orders were placed this distribution is then used to obtain an expression for the expected cost rate of operating the system in steady state as a function of s a computer program has been developed to compute optimal s values and expected annual costs we report a computation for a variety of system parameters which show some of the unusual features of the problem finally we show how this model can be used in the context of a problem of optimizing availability of operating equipment subject to scheduled maintenance as well as random failure