the politicization of crime electoral competition and the supply of maritime piracy in indonesia electoral competition in weak institutional settings has been shown to increase criminal violence in particular homicides electoral competitiveness by virtue of threatening the ability of incumbents to maintain informal corruption agreements with criminal networks is argued to increase crime because of violent competition among criminal groups over future influence we link elections to maritime piracy a form of criminal behavior that has increased substantially since the end of the cold war and for which cross national temporally and spatially disaggregated data are available we argue that electoral competition reinforces piracy because political changes threaten to disrupt collusive agreements between pirates and government authorities anticipating a disruption of criminal activity pirates elevate their attack rates before political changes undermine these agreements this disruption effect suggests that jurisdictions holding competitive electoral contests should experience more maritime piracy we test our hypothesis on electoral competitiveness and piracy with subnational data for the 1999 and 2004 elections in indonesia our results show that piracy escalates in proximity to highly competitive electoral districts

resolving differences in willingness to pay and willingness to accept reply gwendolyn c morrison 1997 raises a logical point regarding our experimental test of the divergence between willingness to pay wtp and willingness to accept wta measures of economic value shogren et al 1994 she argues that our design does not provide a true test of the existence of a fundamental endowment effect since we did not control for the potential of a pivoting indifference map daniel kahneman et al 1990 she concludes that even though our ev idence shows that the mean wtp and wta bids for market goods with close substitutes e g candy bars and coffee mugs converge after market experience the endowment effect might still be alive and well albeit at statisti cally insignificant levels

new labour energy policy and competitive markets by the end of new labour s first term four central objectives of energy policy had become established cheap energy the relief of fuel poverty a major reduction of carbon dioxide emissions and energy security through maintaining a wide diversity of primary fuel supplies all to be achieved through competition after surveying new labour energy policy documents the paper argues that new labour failed to appreciate i the extent to which under such a laissez faire policy regime these objectives were mutually inconsistent ii that the apparent successes of energy market liberalisation during the preceding conservative governments had little to do with competition and iii that the transaction costs of injecting increasing competition into both british and european energy systems are likely to exacerbate the growing threat to energy security the paper concludes with a brief examination of the implications of transaction cost economics for the organisational structure of the uk energy supply industry

values elicited from open ended real experiments abstract the idea that preferences are only revealed by real incentives is deeply embedded in economists worldview consequently evidence from hypothetical experiments has not readily permeated economic thinking one method for determining whether hypothetical experiments provide useful information about preferences is to compare them to similar real goods experiments this study looks at responses elicited by three real experiments we examine the proportion of responses that meet a series of criteria that range from a broad appeal of plausibility to a narrow restriction based on quasi concavity of preferences we argue that these proportions are unreasonably low

a test of the theory of reference dependent preferences eight alternative methods of eliciting preferences between money and a consumption good are identified two of these are standard willingness to accept and willingness to pay measures these methods differ with respect to the reference point used and the dimension in which responses are expressed the loss aversion hypothesis of tversky and kahneman s theory of reference dependent preferences predicts systematic differences between the preferences elicited by these methods these predictions are tested by eliciting individuals preferences for two private consumption goods the experimental design is incentive compatible and controls for income and substitution effects the theory s predictions are broadly confirmed

black white wage inequality employment rates and incarceration the observed gap in average wages between black men and white men inadequately reflects the relative economic standing of blacks who suffer from a high rate of joblessness the authors estimate the black white gap in hourly wages from 1980 to 1999 adjusting for the sample selection effect of labor inactivity among working age men in 1999 accounting for labor inactivity including prison and jail incarceration leads to an increase of 7 20 in the black white wage gap adjusting for sample selectivity among men ages 22 30 in 1999 increases the wage gap by as much as 58 increasing selection bias which can be attributed to incarceration and conventional joblessness explains about two thirds of the rise in black relative wages among young men between 1985 and 1998 apparent improvement in the economic position of young black men is thus largely an artifact of rising joblessness fueled by the growth in incarceration during the 1990s

explaining occupational sex segregation and wages findings from a model with fixed effects does segregation arise because female occupations have financial advantages for women planning to spend some time as homemakers as human capital theorists claim do male occupations have more onerous working conditions that explain their higher earnings as the neoclassical notion of compensating differentials suggests or do female occupations have low wages that are depressed by the sort of discrimination at issue in comparable worth as sociologists have argued to answer these questions the authors use a model with fixed effects to predict the earnings of young men and women from a pooled cross section time series of the national longitudinal survey analyses are undertaken for both blacks and whites a fixed effects model is useful for answering these questions because it corrects for the selection bias that results from the tendency of persons who differ on stable characteristics that are unmeasured but affect earnings to select themselves into different occupations the authors find little evidence that female occupations provide either low penalties for intermittent employment at high starting wages the advantages human capital theorists have argued them to have rather there is evidence of pay discrimination against men and women in predominantly female occupations implications for economic and sociological theories of labor markets are discussed authors

frames of mind in intertemporal choice recent research has demonstrated that choices between gambles are systematically influenced by the way they are expressed kahneman and tversky s prospect theory kahneman d a tversky 1979 prospect theory an analysis of decision under risk econometrica472 363 391 explains many of these framing effects as shifts in the point of reference from which prospects are evaluated this paper demonstrates the applicability of the reference point concept to intertemporal choice three experiments demonstrate that when people choose between immediate and delayed consumption the reference point used to evaluate alternatives can significantly influence choice the first study elicited relative preference for immediate and delayed consumption using three methods each of which differently framed choices between alternatives offering identical end state consumption the conventional discounted utility model predicts that the three methods of elicitation should yield similar estimates of time preference but preferences were found to differ in accordance with a reference point model the second and third studies extend and replicate the results from the first the third using real rather than hypothetical choices

willingness to pay compensating variation and the cost of commitment hicksian welfare theory is static in nature but many decisions are made in a dynamic environment we present a dynamic model of an agent s decision to purchase or sell a good under the realistic conditions of uncertainty irreversibility and learning over time her willingness to pay wtp contains both the intrinsic value of the good as in hicksian theory plus a commitment cost associated with delaying to obtain more information the hicksian equivalence between wtp willingness to accept wta and compensating and equivalent variations no longer holds the wtp and wta divergence may arise and observed wtp values are not always appropriate for welfare analysis jel d60 d83

a test of competing explanations of compensation demanded the disparity between willingness to pay and willingness to accept also known as compensation demanded is a robust experimental finding two types of explanations been proposed the first invokes psychological effects broadly categorized as reference dependence and loss aversion the second explanation is that there are large substitution effects but that underlying behavior is neoclassically utility theoretic the key observation motivating the present study is that loss aversion implies concavity of willingness to accept whereas the utility theoretic explanation implies convexity we report experiments in which subjects were endowed with 3 items and asked the minimum payments they required to be willing to relinquish 1 2 or 3 of them we examine whether the compensation demanded is convex concave neither or both in the number of items being relinquished

political competition and violence in mexico hierarchical social control in local patronage structures many countries that have recently undergone transitions to democracy have experienced increases in violent crime yet sociological theories have generally failed to consider the impact of political factors on crime the author examines the relation between greater electoral competition and homicide at the subnational level in a country undergoing an uneven transition to democracy in societies characterized by the presence of patronage networks social and political changes that undermine the source of unequal exchange between actors at different levels in the social hierarchy result in a temporary loss of social control and an increase in crime the relation between electoral competition and homicide is tested using electoral results from a sample of 1 800 mexican municipalities greater electoral competition is associated with higher homicide rates across municipalities and over time even after controlling for standard correlates of violent crime consistent with the hypothesis that the increase is due to the disruption of patronage networks this association is present only in rural areas where patron client relations are more common

managing transportation externalities in the pyrenees region measuring the willingness to pay for road freight noise reduction using an experimental auction mechanism abstract the estimation of the noise impact caused by road freight transportation is critical to have acknowledgment of the ambiance pollution caused by road traffic crossing geographical areas containing important natural resources thus our work proposes a within subject survey where a contingent valuation method cvm is combined with a laboratory economic experimental auction our study objective is to measure the willingness to pay wtp for reducing traffic noise nuisances due to freight transportation in the region of navarre spain a special focus is made regarding the measurement of the hypothetical bias when a comparison is done between hypothetical wtp coming from the cvm study with real incentivized one as the outcome of the economic experiment additionally statistical analyses are conducted in order to find explanation factors for these outcomes results suggest a strong evidence for an upward hypothetical bias from 50 to 160 indicating the income the educational level the gender and the age as the main factors which explain that bias

the difficult transition from clientelism to citizenship lessons from mexico author s fox jonathan a abstract electoral competition is necessary but not sufficient for the consolidation of democratic regimes not all elections are free and fair nor do they necessarily lead to actual civilian rule or respect for human rights if there is more to democracy than elections then there is more to democratization than the transition to elections but in spite of the rich literature on the emergence of electoral competition the dynamics of political transitions toward respect for other fundamental democratic rights is still not well understood political democracy is defined here in classic procedural terms free and fair electoral contestation for governing offices based on universal suffrage guaranteed freedoms of association and expression accountability through the rule of law and civilian control of the military although analyses of democratization typically acknowledge that these are all necessary criteria most examine only electoral competition this study however develops a framework for explaining progress toward another necessary condition for democratization respect for associational autonomy which allows citizens to organize in defense of their own interests and identities without fear of external intervention or punishment

mafia elections and violence against politicians organized crime uses political violence to influence politics in a wide set of countries this paper exploits a novel dataset of attacks directed towards italian local politicians to study how and why criminal organizations use violence against them we test two complementary theories to predict the use of violence i before elections to affect the electoral outcome and ii after elections to influence politicians from the beginning of their term we provide causal evidence in favor of the latter hypothesis the probability of being a target of violence increases in the weeks right after an election in areas with a high presence of organized crime especially when elections result in a change of local government

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

the effect of giving it all up on valuation a new look at the endowment effect in three experiments we show that the endowment effect the tendency to demand more money for relinquishing owned goods than one is willing to pay for the same goods fails to emerge when sellers are not fully depleted of their endowment this finding is incompatible with prospect theory s account of the effect as stemming primarily from aversion to loss relative to the individual s current state we suggest a new account of the endowment effect as reflecting the human aversion to giving it all up rather than simply an aversion to incurring any loss relative to the status quo experiments 1 and 2 show the effect employing a pricing paradigm experiment 3 examines what constitutes all in the giving it all up effect this paper was accepted by uri gneezy behavioral economics

using hicksian surplus measures to examine consistency of individual preferences evidence from a field experiment this paper pits neoclassical theory against prospect theory by investigating several clean tests of the competing hypotheses consistent with previous work the field experimental data suggest that prospect theory adequately organizes behavior among inexperienced consumers whereas consumers with intense market experience behave largely in accordance with neoclassical predictions the data indicate that the convergence in values occurs entirely because of lower hicksian equivalent surplus values

the governance institutions of a drug trafficking organization how do drug trafficking organizations organize drug trafficking organizations continue to operate effectively despite incentives for members to defect pressure from damaged communities and government interdiction efforts this paper identifies the problem of defection in this context and applies insights from the literatures on club goods and extralegal governance institutions to explain the puzzling organization and activities of one of mexico s most dangerous drug trafficking organizations la familia michoacana the group uses a reward and punishment scheme to prevent defection from members and to elicit cooperation from the community and government

why did drug cartels go to war in mexico subnational party alternation the breakdown of criminal protection and the onset of large scale violence this article explains why mexican drug cartels went to war in the 1990s when the federal government was not pursuing a major antidrug campaign we argue that political alternation and the rotation

paired comparison estimates of willingness to accept versus contingent valuation estimates of willingness to pay estimating empirical measures of an individual s willingness to accept that are consistent with conventional economic theory has proven difficult the method of paired comparison offers a promising approach to estimate willingness to accept this method involves having individuals make binary choices between receiving a particular good or a sum of money willingness to accept can be inferred from the ranking of dollar amounts and the good of interest using the paired comparison approach mean median willingness to accept for a private good is estimated at 59 52 contingent valuation estimate of willingness to pay for the same good yields a mean median of 28 28 while these estimates are statistically different the ratio of willingness to accept to willingness to pay is less than in most previous studies and closer to ratios found in actual cash experiments

despairing over disparities explaining the difference between willingness to pay and willingness to accept this paper examines the three major explanations for the disparity between willingness to pay wtp and willingness to accept wta observed in contingent value surveys and laboratory experiments a belief that the results must be biased in some fashion hanemann s 1991 substitutes hypothesis and the loss aversion model proposed by tversky and kahneman 1991 starting from the assumption that individuals make utility maximizing choices we develop structural equations that yield parametric tests of the hypotheses within a single non experimental framework the approach is flexible enough to incorporate a variety of functional form and distributional assumptions and can be applied to either data from either open ended bids or dichotomous choice questions the usefulness of the approach is demonstrated using data from a survey that asked both wtp and wta questions the results provide weak support for loss aversion

a test of diminishing marginal value the notion of diminishing marginal value had a profound impact on the development of neoclassical theory early neoclassical scholars had difficulty convincing contemporaries of the new paradigm s value until political economists used the critical assumption of diminishing marginal value to link utility and demand while diminishing marginal value remains a key component of modern economic intuition there is little direct verification of this behavioural property this paper reports experiments on a myriad of subject pools to examine behaviour in both price and exchange settings we report results from nearly 900 subjects across 19 treatments and find strong evidence of diminishing marginal value