a behavioral framework for time diversification the box of factors that we call risk is both too large and too small the box is large enough to include many sometimes conflicting measures of risk variance and semivariance probabilities of losses and their amounts but the box is too small to include factors that affect choices but fall outside the boundaries of risk frames and cognitive errors self control and regret we explore the role of these factors in time diversification the belief that time diversification reduces risk underlies the current drive to invest social security funds in stocks but is such investment prudent we discuss the role of advisors in providing prudent advice changes in the standards of prudence over time the use of time diversification in guiding investors to prudent portfolios and its use in the current debate on social security

the influence of probability on risky choice a parametric examination abstract the appeal of expected utility theory as a basis for a descriptive model of risky decision making has diminished as a result of empirical evidence which suggests that individuals do not behave in a manner consistent with the prescriptive tenets of eut in this paper we explore the influence of probability on risky choice by proposing and estimating a parametric model of risky decision making our results suggest that models which provide for probability transformations are most appropriate for the majority of subjects further we find that the transformation differs for most subjects depending upon whether the risky outcomes are gains or losses most subjects are considerably less sensitive to changes in mid range probability than is proposed by the expected utility model and risk seeking behavior over long shot odds is common

can we explain inflation persistence in a way that is consistent with the microevidence on nominal rigidity this paper adopts the impulse response methodology to under stand inflation persistence it has often been argued that existing models of pricing fail to explain the persistence that we observe we adopt a common general framework which allows for an explicit modelling of the distribution of contract lengths and for different types of price setting we also evaluate how far the theories are consistent with recent evidence on price and wage rigidity we find that allowing for a distribution of durations can take us a long way to solving the puzzle of inflation persistence but not all the way yet

performance evaluation of optimized portfolio insurance strategies abstract we use s p 500 index return data for the time period 1985 2013 to evaluate the performance of portfolio insurance strategies we shed light on the question if the performance of a constant proportion portfolio insurance cppi strategy can be improved by means of a time varying multiplier which depends on the estimated future volatility neglecting any inter temporal hedging demand the theoretical foundation of the strategies is given by maximizing the expected utility of a hara investor in a diffusion model setup if the risk premium is assumed to be proportional to the variance the optimal strategy is a cppi strategy otherwise the multiple is time varying ppi it turns out that even time varying multiple strategies based on a rolling window of historical volatility estimates give a significant improvement of cppi strategies the out performance is robust w r t alternative performance measures and is also true for proportional transaction costs and adequate trigger trading

specific experience household structure and intergenerational transfers farm family land and labor arrangements in developing countries data from indian rural household survey was used to test th hypothesis that the coexistence in traditional rural societies of extended intergenerational families infrequent land sales and high reliance on family members as farm laborers is the result of the economic advantages which accrue from the knowledge gained by farming a particular ploy of land over a long period of time the land specific experience of elderly members of a intergenerational household who farmed the land as a child and then as an adult are expecially critical in adverse weather years most previous investigators attributed the existence of multigenerational households the use of family members rather than hired laboreds and the infrequency of land sales to deficiencies in the market i e labor market imperfections and an absence of capital insurance and asset markets in the present investigations these same characteristics are viewed as having an economic advantages a model for estimating the contribution of the experience of the elderly household members to agricultural profits was developed and applied to data from a 3 year panel study of 2900 indian rural farm households the data was collected between 1968 71 by the national council of applied economic research the survey collected information on farm profits farm inputs demographic characteristics and the effects of weather conditions on profits a major limitation of the study was a lack of information on the duration of land ownership age of household members was substituted as a proxy for duration of ownership findings were consistent withe the hypothesis in poor agricultural years gross returns for households which contained an elderly household member were greater than the gross returns for comparable households which did not contain an elderly member the economic advantages of specific knowledge embodied in the experienced elderly farmer were comparable to the economic advantages which accrued to households whose members were more educated the hypothesis cannot fully explain the existence of intergenerational families since there is a relatively large proportion of such families among nonfarm families in many countries including india findings suggest that intergenerational families may provide for more occupational diversity and thereby reduce income risks the specific experience hypothesis has policy implications if technological changes are introduced the value of specific experience may be lost and the frequency of intergenerational households may decline the hypothesis may also explain why farmers are reluctant to agree to land redistribution and consolidation schemes this reluctance may disappear after sufficient technological change has occurred

macroeconometric equivalence microeconomic dissonance and the design of monetary policy abstract macroeconometric equivalence means that estimates of dsge models using first order approximations to equilibrium conditions fail to distinguish between alternative preference technology configurations microeconomic dissonance means that the underlying microeconomic differences between ostensibly equivalent models become important when optimal monetary policy is derived the relevance of these concepts is established by analysis of optimal monetary policy using a small scale new keynesian model microeconomic and financial datasets are promising tools with which to overcome the equivalence dissonance problem

the quantitative analytics of the basic neomonetarist model this paper constructs a dynamic macroeconomic model with less than perfect price flexibility which has a classical side consistent with real business cycle theory augmented by investment adjustment costs increasing returns to scale and a new flexible formalization of imperfect competition something akin to the classical dichotomy is justified by a mode of approximation appropriate for a model in which one state variable adjusts quickly while another state variable adjusts slowly even with investment adjustment costs monetary expansions are found to raise the real interest rate the determinants of real rigidity and the macroeconomic rate of price adjustment are investigated copyright 1995 by ohio state university press

women s work and economic development using a cross country dataset and microdata from india and thailand we examine how women s work status changes with economic development several clear patterns emerge women s labor force participation first declines and then rises with development women move from work in family enterprises to work as paid employees fertility declines and gender gaps in education narrow women s education levels and those of their spouses appear to be important determinants of women s labor market activities broad welfare indicators such as mortality rates and education levels indicate that women s well being improves on average with development both in absolute terms and relative to men

benchmarking portfolio insurance and technical analysis a monte carlo comparison of dynamic strategies of asset allocation abstract this paper makes an extensive simulation comparison of popular dynamic strategies of asset allocation for each strategy alternative measures have been calculated for risk return and risk adjusted performance sharpe ratio sortino ratio return at risk moreover the strategies are compared in different market situations bull bear no trend markets and with different market volatility taking into account transaction costs and discrete rebalancing of portfolios the simulations show a dominant role of constant proportion strategies in bear and no trend markets and a preference for benchmarking strategies in bull markets these results are independent of the volatility level and the risk adjusted measure adopted

child fostering in africa when labor and schooling motives may coexist abstract the paper proposes a theoretical framework for understanding purposive child fostering in africa whereby a non orphaned child is sent to live temporarily with relatives in the model adults decide whether to foster in or out a child in conjunction with other household choices e g own time allocation between market and non market activities children s amount of work and schooling by allowing for positive externalities from fostering and thus asymmetric motives for fostering in labor and out human capital the proposed framework predicts that school age children are sent to better off households and that some families may foster in and out simultaneously the model identifies the conditions under which all actors involved children included may benefit from fostering arrangements but also points to situations where fostering may become an opportunity to marginalize a subset of children the paper aims to provide a sound theoretical foundation that sheds light on why there exists mixed empirical evidence on the effects of fostering on children s well being and cautions against demonizing non parent residence as unequivocally detrimental to children

income shocks and gender gaps in education evidence from uganda abstract this paper uses exogenous variation in rainfall across districts in uganda to estimate the causal effects of household income shocks on children s enrollment and academic performance conditional on gender i find negative deviations in rainfall from the long term mean to have negative and highly significant effects on female enrollment in primary schools and the effect grows stronger for older girls i find no effect of rainfall variation on the enrollment of boys and young girls moreover i find that when schooling is free of charge and both marginal boys and girls are enrolled a negative income shock has an adverse effect on the test scores of female students while boys are not affected the results imply that households respond to income shocks by varying the amount of schooling and resources provided to girls while boys are to a large extent sheltered a finding consistent with a model where parents values of child labor differ across sexes

decision making under uncertainty a field study of cumulative prospect theory abstract the presented research tests cumulative prospect theory cpt kahneman d tversky a 1979 prospect theory an analysis of decision under risk econometrica 47 263 291 tversky a kahneman d 1981 the framing of decisions and the psychology of choice science 211 453 480 in the financial market using us stock option data option prices possess information about actual investors preferences in such a way that an exploitation of conventional option analysis along with theoretical relationships makes it possible to elicit investor preferences the option data in this study serve for estimating the two essential elements of the cpt namely the value function and the probability weighting function the main part of the work focuses on the functions simultaneous estimation under cpt original parametric specification the shape of the estimated functions is found to be in line with theory comparing to results of laboratory experiments the estimated functions are closer to linearity and loss aversion is less pronounced

the strategic bequest motive although recent research suggests that intergenerational transfers play an important role in aggregate capital accumulation our understanding of bequest motives remains incomplete we develop a simple model of strategic bequests in which a testator influences the decisions of his beneficiaries by holding wealth in bequeathable forms and by conditioning the division of bequests on the beneficiaries actions the model generates falsifiable empirical predictions that are inconsistent with other theories of intergenerational transfers we present econometric and other evidence that strongly suggests that bequests are often used as compensation for services rendered by beneficiaries

intra household gender disparity in school choice evidence from private schooling in india abstractthis paper explores gender inequality within households in the decision of private versus government school choice in india using a three period longitudinal dataset on rural households from uttar pradesh a northern state of india this paper estimates a household fixed effects model and finds that there is an intra household gender bias of 6 percentage points in private school enrolment among children aged 6 16 years contrary to the trend in overall enrolment the gender gap in private school choice is rising over time and is more pronounced in villages with a larger cost difference between private and government schooling this finding remains robust even after controlling for average school quality and considering potential endogeneity of the cost variables

input choices in agriculture is there a gender bias summary this paper examines evidence of gender biases in the decisions of agricultural households utilizing data from international crops research institute for the semi arid tropics s village level studies in india 1975 85 the main empirical finding is that households with a high proportion of boys tend to use some agricultural inputs including fertilizers and irrigation services more intensively than households with girls this pattern is more pronounced among wealthier households but does not appear to be driven solely by bequest motives or male child labor productivity

option replication in discrete time with transaction costs option replication is discussed in a discrete time framework with transaction costs the model represents an extension of the cox ross rubinstein binomial option pricing model to cover the case of proportional transaction costs the method proceeds by constructing the appropriate replicating portfolio at each trading interval numerical values of these prices are presented for a range of parameter values the paper derives a simple black scholes type approximation for the option prices with transaction costs and demonstrates numerically that it is quite accurate for plausible parameter values

the reset inflation puzzle and the heterogeneity in price stickiness new keynesian models have been criticised on the grounds that they require implausibly large price shocks to explain inflation bils et al 2012 show that while these shocks are needed to reduce the excessive inflation persistence generated by the models they give rise to unrealistically volatile reset price inflation this paper shows that introducing heterogeneity in price stickiness in the models overcomes these criticisms directed at them the incorporation of heterogeneity in price stickiness reduces the need for large price shocks with smaller price shocks the new model comes close to matching the data on reset inflation

does us monetary policy respond to oil and food prices a common view is that us monetary policy does not respond to changes in volatile energy and food prices despite this view the popular new keynesian models assume taylor type rules under which the short term interest rates react to headline inflation this paper evaluates the fit of alternative taylor rules within an estimated new keynesian model a main finding is that the us central bank includes energy and food prices in its policy rule although the weight assigned to these prices is much smaller than their share in the economy

consistent testing for stochastic dominance under general sampling schemes we propose a procedure for estimating the critical values of the extended kolmogorov smirnov tests of stochastic dominance of arbitrary order in the general k prospect case we allow for the observations to be serially dependent and for the first time we can accommodate general dependence amongst the prospects which are to be ranked also the prospects may be the residuals from certain conditional models opening the way for conditional ranking we also propose a test of prospect stochastic dominance our method is based on subsampling and we show that the resulting tests are consistent and powerful against some n 1 2 local alternatives we also propose some heuristic methods for selecting subsample size and demonstrate in simulations that they perform reasonably we describe an alternative method for obtaining critical values based on recentring the test statistic and using full sample bootstrap methods we compare the two methods in theory and in practice

optimal monetary policy with international trade in intermediate inputs abstract this paper examines optimal monetary policy in a two country new keynesian model with international trade in intermediate inputs we derive the loss function of a cooperative monetary policymaker and find that the optimal monetary policy must target intermediate goods price inflation rates final goods price inflation rates final goods output gaps and relative price gaps we use the welfare loss under the optimal monetary policy as a benchmark to evaluate the welfare implications of three taylor type monetary policy rules a main finding is that the degree of price stickiness at the stage of intermediate goods production is a key factor to determine which policy rule should be followed specifically when the degree of price stickiness at the stage of intermediate goods production is high the policymaker should follow intermediate goods ppi based taylor rule whereas cpi based taylor rule should be followed when the degree of price stickiness at the stage of intermediate goods production is intermediate or low

replicating options with positions in stock and cash in most situations of practical relevance the price behavior of a call option is very similar to a combined position involving the underlying stock and borrowing the call price and the stock price will change in the same direction the effect on the call price of a one dollar change in the stock price however will depend on the current price of the stock the number of shares of stock in the replicating portfolio must equal the slope of the call price curve at that price when the call is deep out of the money i e when the stock price is much lower than the striking price a one dollar change in the stock price has little effect on the call price when the stock price is equal to the striking price a one dollar change in the stock price produces roughly a half dollar change in the call price if the stock price rises until the call is deep in the money a one dollar move in the stock price results in nearly a one dollar move in the call price because the call price behaves this way we must revise

real income equivalence among one earner and two earner families in an earlier paper we proposed a technique for making income comparisons across various household sizes in this paper we employ a modified version of that method to convert nominal income to some real equivalent comparable across families of a given size but with one or two family earners we begin with a discussion of some of the conceptual difficulties involved in making cross family size or structure comparisons in income we then describe spending pattern differences between one and two earner families the final section discusses our effort to convert nominal income into comparable real income units we conclude that nominal income differences between two and one earner families far overstate differences in standards of living excerpt

where there is a will fertility behavior and sex bias in large families this paper demonstrates that the social institutions of lineage maintenance patrilocality and joint families have a significant role in explaining sex differences in survival and health outcomes in rural india tests using panel data from rural households support this explanation which accounts for 7 percent of excess female mortality in haryana and rajasthan and 4 percent in punjab an institutional explanation suggests limits on the role for public policy in addressing large sex differences in health and mortality outcomes

why do mothers breastfeed girls less than boys evidence and implications for child health in india breastfeeding is negatively correlated with future fertility because nursing temporarily reduces fecundity and because mothers usually wean on becoming pregnant again we model breastfeeding under son biased fertility preferences and show that breastfeeding duration increases with birth order especially near target family size is lowest for daughters and children without older brothers because their parents try again for a son and exhibits the largest gender gap near target family size when gender is most predictive of subsequent fertility data from india confirm each prediction moreover child survival exhibits similar patterns especially in settings where the alternatives to breastmilk are unsanitary

investment horizon and the attractiveness of investment strategies a behavioral approach we analyze the attractiveness of investment strategies over a variety of investment horizons from the viewpoint of an investor with preferences described by cumulative prospect theory cpt currently the most prominent descriptive theory for decision making under uncertainty a bootstrap technique is applied using historical return data of 1926 2008 to allow for variety in investors preferences we conduct several sensitivity analyses and further provide robustness checks for the results in addition we analyze the attractiveness of the investment strategies based on a set of experimentally elicited preference parameters our study reveals that strategy attractiveness substantially depends on the investment horizon while for almost every preference parameter combination a bond strategy is preferred for the short run stocks show an outperformance for longer horizons portfolio insurance turns out to be attractive for almost every investment horizon interestingly we find probability weighting to be a driving factor for insurance strategies attractiveness

inefficient dynamic portfolio strategies or how to throw away a million dollars in the stock market a number of portfolio strategies followed by practitioners are dominated because they are incompletely diversified over time the payoff distribution pricing model is used to compute the cost of following undiversified strategies simple numerical examples illustrate the technique and computer generated examples provide realistic estimates of the cost of some typical policies using reasonable parameter values the cost can be substantial and should not be ignored by practitioners a section on generalizations shows how to extend the analysis to term structure models and other general models of returns this abstract was borrowed from another version of this item

retail banking and behavioral financial engineering the case of structured products abstract we apply cumulative prospect theory and hedonic framing to evaluate discount reverse convertibles drcs and reverse convertible bonds rcbs as important examples of structured products from a boundedly rational investor s point of view while common expected utility theory would also conclude that drcs and rcbs are of interest to investors with moderate return expectations and underestimated stock return volatility that theory would overestimate the market success of drcs and underestimate that of rcbs in comparison to a situation with bounded rationality hedonic framing and relatively low subjectively felt competence levels of investors are decisive for the demand for rcbs

how loss averse are investors in financial markets abstract we investigate loss aversion in financial markets using a typical asset allocation problem our theoretical and empirical results show that investors in financial markets are more loss averse than assumed in the literature moreover loss aversion changes depending on market conditions investors become far more loss averse during bull markets than during bear markets indicating their more profound disutility for losses when others enjoy gains contrary to most previous results we find that investors are more sensitive to changes in losses than changes in gains

optimal investment and consumption when allowing terminal debt we analyze a dynamic optimization problem which involves the consumption and investment of an investor with constant relative risk aversion for consumption but with a risk aversion for final wealth which does not necessarily imply that terminal wealth must always be positive we require risk aversion for terminal wealth to be positive but not monotone there is a point of maximal risk aversion at zero wealth and the investor may continue to consume when wealth is negative using dual optimization methods we can derive explicit solutions and we find that the optimal solution differs in a fundamental way from the case where risk aversion is monotone it turns out that the optimal consumption function is convex and concave at different wealth levels and that the optimal investment strategy may no longer be monotone as a function of the remaining time to invest and consume

reset price inflation and the impact of monetary policy shocks abstract many business cycle models use a flat short run phillips curve due to time dependent pricing and strategic complementarities to explain fluctuations in real output but in doing so these models predict unrealistically high persistence and stability of us inflation in recent decades we calculate reset price inflation based on new prices chosen by the subsample of price changers to dissect this discrepancy we find that the models generate too much persistence and stability both in reset price inflation and in the way reset price inflation is converted into actual inflation our findings present a challenge to existing explanations for business cycles jel e31 e52

traditional vs modern production systems price and nonmarket considerations of cacao producers in northern ecuador many factors besides profit maximization such as nonmarket ecological and social benefits influence smallholder households to adopt a specific agricultural production system or sell in a particular market thus different analytical techniques are needed that take into consideration more than monetary income to fully capture these additional benefits to better understand the production decisions of smallholder farmers we build on previous work on the household model and shadow wage estimation to develop a shadow wage for ecuadorian cacao producers that includes these nonmarket benefits we found that the shadow wage correctly indicated that on average these households would prefer to use an agroforestry production system instead of the more profitable modern system because of the nonmarket benefits received from the former system

collective labor supply and welfare the paper develops a general collective model of household labor supply in which agents are characterized by their own possibly altruistic preferences and household decisions are only assumed to be pareto efficient an alternative interpretation is that there are two stages in the internal decision process agents first share nonlabor income according to some given sharing rule then each one optimally chooses his or her own labor supply and consumption this setting is shown to generate testable restrictions on labor supplies moreover the observation of labor supply behavior is sufficient for recovering individual preferences and the sharing rule up to a constant finally the traditional tools of welfare analysis can be adapted to the new setting

from boom til bust how loss aversion affects asset prices this article studies the impact of heterogeneous loss averse investors on asset prices in very good states loss averse investors become gradually less risk averse as wealth rises above their reference point pushing up equity prices when wealth drops below the reference point the investors become risk seeking and demand for stocks increases drastically eventually leading to a forced sell off and stock market bust in bad states heterogeneity in reference points and initial wealth of the loss averse investors does not change the salient features of the equilibrium price process such as a relatively high equity premium high volatility and counter cyclical changes in the equity premium

a utility and cpt based comparison of life insurance contracts with guarantees abstract some recent literature studies whether contracts including financial guarantees can be preferred by a utility maximizing investor the main result for contracts exposed solely to financial risk e g doskeland and nordahl 2008 dichtl and drobetz 2011 is that expected utility theory eut fails to interpret demand for guarantees while cumulative prospect theory cpt is able to support the demand while the development of the financial market has a significant impact on the portfolio choice some other non financial risk might play an important role too in the present paper we take life insurance products as an example where the long term nature of these contracts places a special emphasis on the uncertain lifetime of the investor we incorporate the mortality risk and investigate its effect on the attractiveness of contracts offering minimum interest rate guarantees to eut and cpt investors for this purpose we introduce two approaches for the consideration of multiple risk sources within cpt we illustrate the theoretical framework with numerous simulations and our numerical results show that a long term risk averse eut investor prefers products with guarantees

state dependent or time dependent pricing does it matter for recent u s inflation in the 1988 2004 micro data collected by the u s bureau of labor statistics for the cpi price changes are frequent every 4 7 months depending on the treatment of sale prices and large in absolute value on the order of 10 the size and timing of price changes varies considerably for a given item but the size and probability of a price change are unrelated to the time since the last price change movements in aggregate inflation reflect movements in the size of price changes rather than the fraction of items changing price due to offsetting movements in the fraction of price increases and decreases neither leading time dependent models taylor or calvo nor 1 st generation state dependent models match all of these facts some 2 nd generation state dependent models however appear broadly consistent with the empirical patterns

gender of children bargaining power and intrahousehold resource allocation in china abstract based on the prevalent son preference in china this paper proposes a new measure of relative bargaining power within the household using data from china health and nutrition survey we show that a woman with a first born son has a 3 9 percentage points greater role in household decision making than a woman with a first born daughter having a first born son improves the mother s nutrition intakes and reduces her likelihood of being underweight while thinking of these impacts as being channeled through intrahousehold bargaining power we cannot fully rule out other possible direct effects of a first born son on the outcomes

economic growth and the rise of forests although forests have diminished globally over the past 400 years forest cover has increased in some areas including india in the last two decades aggregate time series evidence on forest growth rates and income growth across countries and within india and a newly assembled data set that combines national household survey data census data and satellite images of land use in rural india at the village level over a 29 year period are used to explore the hypothesis that increases in the demand for forest products associated with income and population growth lead to forest growth the evidence is consistent with this hypothesis which also shows that neither the expansion of agricultural productivity nor rising wages in india increased local forest cover

theory of constant proportion portfolio insurance abstract we study constant proportion portfolio insurance cppi a dynamic strategy that maintains the portfolio s risk exposure a constant multiple of the excess of wealth over a floor up to a borrowing limit we use this simple rule to investigate how transaction costs and borrowing constraints affect portfolio insurance type strategies absent transaction costs cppi is equivalent to investing in perpetual american call options and is optimal for a piecewise hara utility function with a minimum consumption constraint as the multiple increases the payoffs under cppi approach those of a stop loss strategy the expected holding period return is not monotonic in the multiple and a higher expected return can be obtained under cppi than with a stop loss strategy

option pricing and replication with transactions costs transactions costs invalidate the black scholes arbitrage argument for option pricing since continuous revision implies infinite trading discrete revision using black scholes deltas generates errors which are correlated with the market and do not approach zero with more frequent revision when transactions costs are included this paper develops a modified option replicating strategy which depends on the size of transactions costs and the frequency of revision hedging errors are uncorrelated with the market and approach zero with more frequent revision the technique permits calculation of the transactions costs of option replication and provides bounds on option prices

portfolio insurance and prospect theory investors popularity and optimal design of capital protected financial products abstract portfolio insurance strategies are used on both the institutional and the retail side of the asset management industry while standard utility theory struggles to provide an explanation this study justifies the popularity of portfolio insurance strategies in a behavioral finance context we run monte carlo simulations as well as historical simulations for popular portfolio insurance strategies and benchmark strategies in order to evaluate the outcomes using cumulative prospect theory our simulation results indicate that most portfolio insurance strategies are the preferred investment strategy for a prospect theory investor moreover the analysis provides insights into how portfolio insurance products should be designed and structured to meet the preferences of prospect theory investors as accurately as possible

performance evaluation of portfolio insurance strategies using stochastic dominance criteria abstract this paper evaluates the performance of the stop loss synthetic put and constant proportion portfolio insurance techniques based on a block bootstrap simulation we consider not only traditional performance measures but also some recently developed measures that capture the non normality of the return distribution value at risk expected shortfall and the omega measure we compare them to the more comprehensive stochastic dominance criteria the impact of changing the rebalancing frequency and level of capital protection is examined we find that even though a buy and hold strategy generates higher average excess returns it does not stochastically dominate the portfolio insurance strategies nor vice versa our results indicate that a 100 floor value should be preferred to lower floor values and that daily rebalanced synthetic put and cppi strategies dominate their counterparts with less frequent rebalancing

the impact of household structure on female autonomy in developing countries abstractjoint household structures in which several generations co reside in a single house are common across developing countries such households may confer benefits on all the family members through household public goods with the patriarch exercising greater control over resources therefore the household structure may affect the bargaining power of its members this paper estimates the effect of joint versus nuclear household structure in india on the autonomy of women and their labour force participation and the heterogeneity in the effects by income caste and region i use an instrumental variable approach and find that women living in nuclear households have greater decision making power

empowerment and efficiency tenancy reform in west bengal the paper analyzes the effect of agricultural tenancy laws offering security of tenure to tenants and regulating the share of output that is paid as rent on farm productivity theoretically the net impact of tenancy reform is shown to be a combination of two effects a bargaining power effect and a security of tenure effect analysis of evidence on how contracts and productivity changed after a tenancy reform program was implemented in the indian state of west bengal in the late 1970s suggests that tenancy reform had a positive effect on agricultural productivity there

market opportunities genetic endowments and intrafamily resource distribution child survival in rural india the authors examine how intrafamily resource allocations respond to changes in economic conditions and to genetic differences in children by estimating the determinants of variations in the sex specific survival differentials of rural indian children based on standard census and household survey data they explore in particular the hypothesis that such differences are related to the relative returns to survival with households selectively allocating resources to children in response to variation in sex differences in their expected earnings opportunities as adults data are from the 1961 census and a 1971 household survey excerpt

the effects of volatility misestimation on option replication portfolio insurance to insure a stock portfolio one could purchase a put option with a striking price equal to some desired minimum value for the portfolio alternatively one could replicate this stock plus put portfolio with a portfolio of stock and cash the initial allocations to stock and cash will depend upon the parameters of an option valuation formula and will change as those parameters change in particular the construction of such synthetic optionreplicating portfolio insurance hence its outcome will depend critically on correct estimation of the volatility of the portfolio being insured volatility misestimation will cause the price of the synthetic put to deviate from its expected price and will result in incorrect allocations between stock and cash as a result the outcome of a synthetic portfolio insurance strategy based on misestimated volatility will be unpredictable a manager who underestimates volatility will typically end up buying less insurance than is necessary to ensure a given return while a manager who overestimates volatility will buy more insurance than is necessary both outcomes can be costly in terms of missed floors and forgone gains simulations of portfolio insurance performance over the period of the october 1987 market crash indicate that most insured portfolios would have fallen short of their promised values in general however the lower the guaranteed floor of the insurance program hence the lower its insurance the worse its results

explaining the energy efficiency gap expected utility theory versus cumulative prospect theory abstract energy efficiency is one of the key factors in mitigating the impact of climate change and preserving non renewable resources although environmental and economic justifications for energy efficiency investments are compelling there is a gap between the observable and some notion of optimized energy consumption the so called energy efficiency gap behavioral biases in individual decision making have been resonated by environmental research to explain this gap to analyze the influence of behavioral biases on decisions upon energy efficiency investments quantitatively we compare expected utility theory with cumulative prospect theory on basis of a real world example we illustrate how the extent of the gap is influenced by behavioral biases such as loss aversion probability weighting and framing our findings indicate that cumulative prospect theory offers possible explanations for many barriers discussed in literature for example the size of the gap rises with increased risk and investment costs because behavioral biases are systematic and pervasive our insights constitute a valuable quantitative basis for environmental policy measures such as customer focused and quantitatively backed public awareness campaigns financial incentives or energy savings insurances in this vein this paper may contribute to an accelerated adaption of energy efficiency measures by the broader public

do parents favor boys in an optimizing model of parental allocation systematic differences in human capital investments betwen the sexes may originate in at least 3 ways 1 parents may respond to expected gender wage differentials 2 parents may respond to systematic differences by gender in the price of human capital investments 3 parental preferences may favor girls or boys in the sense that they value identical outcomes at the same cost more highly for one sex than for the other this paper analyzes the role of parental preferences in general and unequal concern in particular in the allocation of human capital investments among children the authors generalize their earlier model of the human capital investments among children to incorporate the possibility that the returns to such investments may include not only the childs own ecpected earnings but also the expected earnings of his or her spouse thus the model assumes that parents may value returns that accrue trough the marriage market as well as through education the relevant returns to education may include marrying a spouse with higher expected earnings the empirical analysis indicates that gender wage differentials like endowment differentials are mildly reinforced by the parental allocation of human capital investments marriage market outcomes are significant determinants of the allocation of human capital investments among children there is no evidence that parental preferences favor boys this study shows that parental preferences either exhibit equal concern or slightly favor gils

towards a theory of famine relief policy abstract this paper examines how famine mortality is related to the distribution of food consumption a theoretical model is proposed of how individual survival chances are affected by changes in consumption uncertainty in survival prospects arises from the errors made by any observer in assessing health at given current consumption the theory is used to explore two policy issues in famine relief the choice of budgetary rules for allocating emergency aid and the case for price stabilization policies during famines applications to data for two famines in south asia suggest that successful price stabilization would have had substantial benefits in reducing mortality