smallholder market participation concepts and evidence from eastern and southern africa abstract this paper reviews the evidence on smallholder market participation with a focus on staple foodgrains i e cereals in eastern and southern africa in an effort to help better identify what interventions are most likely to break smallholders out of the semi subsistence poverty trap that appears to ensnare much of rural africa the conceptual and empirical evidence suggests that interventions aimed at facilitating smallholder organization at reducing the costs of intermarket commerce and perhaps especially at improving poorer households access to improved technologies and productive assets are central to stimulating smallholder market participation and escape from semi subsistence poverty traps macroeconomic and trade policy tools appear less useful in inducing market participation by poor smallholders in the region

activity choice labor allocation and forest use in malawi this article examines the determinants of activity choice affecting forest use among low income households in malawi data from three villages are used to estimate a system of household labor share equations for maize production forest employment and non forest employment a system estimation approach is used to identify factors influencing the competing and synergistic livelihood strategies which households undertake at the forest margin results from constrained maximum likelihood estimation indicate heightened incentives to degrade forests when returns to forest use are high factors reducing forest pressure include favorable returns to non forest employment secondary education of the household head and wealth

information acquisition and under diversification if an investor wants to form a portfolio of risky assets and can exert effort to collect information on the future value of these assets before he invests which assets should he learn about the best assets to acquire information about are ones the investor expects to hold but the assets the investor holds depend on the information he observes we build a framework to solve jointly for investment and information choices with general preferences and information cost functions although the optimal research strategies depend on preferences and costs the main result is that the investor who can first collect information systematically deviates from holding a diversified portfolio information acquisition can rationalize investing in a diversified fund and a concentrated set of assets an allocation often observed but usually deemed anomalous copyright wiley blackwell

a simple model of a money management market with rational and extrapolative investors abstract i analyze a simple model of competition in fees among mutual funds the funds are vertically differentiated in terms of the expected return they can generate for investors following berk and green 2004 i assume that a fund s net return is decreasing in the amount of capital it manages and that there is an infinite supply of capital by rational investors unlike the berk green model i assume there is also a finite supply of capital by non rational investors who naively chase recent net returns investor behavior and the funds fee profile induce a long run average amount of managed capital for each fund i analyze nash equilibrium in the game played by the funds focusing on the implications of fund skill on fees capital flows and net performance

market access well being and nutrition evidence from ethiopia summary we use a unique data source from a rural area in northwestern ethiopia to analyze the relationship between household individual well being nutrition and market access we find that households residing in relatively more remote areas consume substantially less than households nearer to the market they are more food insecure and their school enrollment rates are lower although their diets are also less diverse we find no significant differences in mother and child anthropometric measures part of the differences in well being that we do observe can be attributed to lower household agricultural production in remote areas nonetheless agricultural production differences alone do not account for all the differences in household consumption levels for remote households an additional contributing factor is the terms of trade for remote households that negatively affect both the size of the agricultural surplus that these households market and the quantity of food items that they purchase reducing transaction costs for remote households and facilitating migration could help equalize well being among more or less favored locations

strategic price complexity in retail financial markets abstract there is mounting empirical evidence to suggest that the law of one price is violated in retail financial markets there is significant price dispersion even when products are homogeneous also despite the large number of firms in the market prices remain above marginal cost and may even rise as more firms enter in a non cooperative oligopoly pricing model i show that these anomalies arise when firms add complexity to their price structures complexity increases the market power of the firms because it prevents some consumers from becoming knowledgeable about prices in the market in the model as competition increases firms tend to add more complexity to their prices as a best response rather than make their disclosures more transparent because this may substantially decrease consumer surplus in these markets such practices have important welfare implications

stock market returns and annuitization abstract i investigate the strong negative relation between recent stock returns and the annuitization of retirement savings using a novel data set with over 100 000 actual payout decisions after controlling for several standard explanations e g wealth effects i present evidence supporting naive beliefs and extrapolation from past returns the effect of recent returns on annuitization dramatically increases with age confirming that the elderly rely most heavily on recent information my results provide insights into how beliefs are formed in old age and have implications for the design of public policies seeking to promote annuitization

fertilizer trade under market liberalization preliminary evidence from kenya abstract this paper reports results of a study aimed at identifying broad demand side and supply side influences on trade in inorganic fertilizers in kenya where following decades of government control the fertilizer market has been fully liberalized multiple regression analysis using data from a country wide survey of fertilizer traders indicates that significant demand side factors include agroecological conditions and maize market prices in the regions in which fertilizer traders operate on the supply side the number of years in fertilizer trading and access to credit are important implications for policy and research are drawn

modeling the impact of technological change on nutrition and marketed surplus abstract this study develops and demonstrates procedures for modeling the impact of agricultural technology adoption decisions on consumption and nutrition in a subsistence farming context the method is based on expected direct utility maximization edum formulation and incorporates subsistence quantities for broad aggregates of protein calories and other consumption goods the method is applied to a hillside farming system of southern honduras where new sorghum cultivars and erosion control techniques are being introduced the expected direct utility maximization model allows the estimation of the effects of new technology on consumption and marketed surplus in situations where marginal values of products vary by state of nature and are affected by consumption and production choices the introduction of the new technologies in southern honduras results in improved nutrition and substantial increases in marketed surplus these effects are due to simultaneous changes in output and consumption patterns this work extends the subject of household modeling to problems with risk and thus complements prior work in both the integrated analysis of production consumption decisions and stochastic decision analysis

subsistence response to market shocks microeconomic models posit that transaction costs isolate subsistence producers from output market shocks we integrate microeconomic models of many heterogeneous households into a general equilibrium model and show that supply on subsistence farms may respond in apparently perverse ways to changes in output market prices price shocks in markets for staple goods are transmitted to subsistence producers through interactions in factor markets in the case presented a decrease in the market price of maize reduces wages and land rents stimulating maize production by subsistence households however real incomes of subsistence households fall

behavioral biases of mutual fund investors we examine the effect of behavioral biases on the mutual fund choices of a large sample of us discount brokerage investors using new measures of attention to news tax awareness and fund level familiarity bias in addition to behavioral and demographic characteristics of earlier studies behaviorally biased investors typically make poor decisions about fund style and expenses trading frequency and timing resulting in poor performance furthermore trend chasing appears related to behavioral biases rather than to rationally inferring managerial skill from past performance factor analysis suggests that biased investors often conform to stereotypes that can be characterized as gambler smart overconfident narrow framer and mature

measuring investors socially responsible preferences in mutual funds the aim of this study is to analyze investor behavior towards socially responsible mutual funds the analysis is based on an experimental study where a sample of individuals takes investment decisions under different parameters of information about the investment alternatives and expected returns in the experiment each participant decides how to distribute an investment budget between two funds returns on which are uncertain and change over time two treatments are conducted each providing a different degree of information on the socially responsible sr character of one of the two investment alternatives the results obtained suggest that although individuals criteria for investment are essentially guided by returns and diversification participants invest significantly more in a fund when they are explicitly informed about its sr nature in particular participants who declare being concerned about sr actually invest significantly more in the sr alternative furthermore the level of sr faithfulness among a small group of investors is such that they invest the main share of their budget in the sr fund even when the return differential is highly unfavorable providing clear information about the sr characteristics of an investment is crucial to help investors express their preferences

portfolio selection with mental accounts and delegation das et al 2010 develop an elegant framework where an investor selects portfolios within mental accounts but ends up holding an aggregate portfolio on the mean variance frontier this investor directly allocates the wealth in each account among available assets in practice however investors often delegate the task of allocating wealth among assets to portfolio managers who seek to beat certain benchmarks accordingly we extend their framework to the case where the investor allocates the wealth in each account among portfolio managers our contribution is threefold first we provide an analytical characterization of the existence and composition of the optimal portfolios within accounts and the aggregate portfolio second we present conditions under which such portfolios are not on the mean variance frontier and conditions under which they are third we show that the aforementioned analytical characterization is also applicable within the framework of das et al and thus improves upon their numerical approach

smallholder production structure and rural roads in africa the case of nakuru district kenya data from a 1998 survey of farming households in kenya is used to estimate the effects of poor rural road infrastructure and high market access costs on the structure of smallholder farm production simultaneous estimation of cost and input share equations reveals rational responses by farmers to high access costs in the expected continued absence of major investments in rural infrastructure in countries such as kenya the policy challenge is to identify and catalyse institutional innovations that reduce a range of transaction costs increase financial liquidity increase social capital and reduce risk

market integration development and smallholder forest clearance a significant proportion of deforestation in latin america is caused by smallholders living at the frontier of modern rural markets this paper develops a household model that examines the roles of market integration subsistence time preference and non timber forest uses in the household s decision to clear forest for future agriculture the model explores the possible impacts of development programs that encourage market integration the model shows that rates of forest clearance should be exacerbated in areas in which market integration is most rapid an empirical estimation using household data from the tsimane people of bolivia tests hypotheses from the model

do after tax returns affect mutual fund inflows abstract this paper explores the relationship between the after tax returns that taxable investors earn on equity mutual funds and the subsequent cash inflows to these funds previous studies have documented that funds with high pretax returns attract greater inflows this paper presents evidence based on a large sample of retail equity mutual funds over the period 1993 1999 that after tax returns have more explanatory power than pretax returns in explaining inflows in addition funds with large overhangs of unrealized capital gains experience smaller inflows all else equal than funds without such unrealized gains a large capital gain overhang discourages both gross fund inflows and gross outflows but the inflow effect dominates the outflow effect

lottery players stock traders the behavior of stock traders and lottery buyers can teach us about our common aspirations thoughts and emotions and help answer many questions of finance

unpacking the meaning of market access evidence from rural kenya summary this paper critically examines the dimensions of market access using farm panel survey data from kenya we investigate changes in ten indicators of market access during the 1997 2010 post liberalization period we find major improvements in certain market access conditions and little change in others there is generally low correlation between alternative indicators of market access all purpose indicators may not accurately reflect specific market access conditions of interest distances to physical infrastructure are often not representative of farmers access to markets changes in specific market access conditions may have more to do with the behaviors of marketing agents we consider the implications of these findings for agricultural marketing policies and for research methods

growing their own unobservable quality and the value of self provisioning abstract many important food quality and safety attributes are unobservable at the point of sale particularly in informal markets with weak reputation effects through a framed field experiment conducted in western kenya we show that farmers place a large premium on maize they have grown themselves relative to that available for purchase providing information on the origin of maize and on its taste and safety reduces this gap we conclude that information which is unavailable during typical market transactions is important to how consumers value maize and that imperfect information may contribute to the prevalence of agricultural production for subsistence needs in developing countries

costly search and mutual fund flows this paper studies the flows of funds into and out of equity mutual funds consumers base their fund purchase decisions on prior performance information but do so asymmetrically investing disproportionately more in funds that performed very well the prior period search costs seem to be an important determinant of fund flows high performance appears to be most salient for funds that exert higher marketing effort as measured by higher fees flows are directly related to the size of the fund s complex as well as the current media attention received by the fund which lower consumers search costs

cash crop production food price volatility and rural market integration in the third world large farmers in the third world often devote to cash crops a larger share of their land than do small farmers this paper suggests a possible explanation even in the presence of food markets third world farmers food security is best assured by food self sufficiency a model of crop portfolio choice under multivariate risk is used to show that reasonable assumptions regarding risk and preferences reproduce the observed pattern simulations further indicate that food market integration reduces the need for food self sufficiency policy implications are drawn regarding domestic trade liberalization and agricultural technology

transition in sub saharan africa agriculture urbanization and income growth abstract econometric analysis of some 40 years of data has provided mixed results because of the defects of the data and because there are some relatively sudden structural economic shifts an important shift is when agricultural labor ceases to grow now happening in sub saharan africa ssa a model of the interrelationship over time of the rural mainly agricultural sector and the urban mainly manufacturing and service sector is proposed each provides a market to the other growth in both requires investment but of distinctly different types their interaction results in an s shaped curve many ssa countries are in the acceleration phase and its agriculture particularly in semi arid areas is increasingly oriented to the growing home market case studies show farmers have invested and adopted new technologies but the transition to an urbanized economy has been hindered by poor policies the current need is for appropriate investments and policies to develop the productivity of the urban sectors so that they can continue to stimulate agriculture and provide jobs for those who are leaving farming

determinants of smallholder farmers participation in banana markets in central africa the role of transaction costs a bivariate probit model was employed to jointly and separately estimate banana market participation decisions of buying and selling households in rwanda and burundi using household survey data selectivity bias was corrected for estimating the transacted volumes using heckman s procedure the results showed that transaction cost related factors such as geographical location of households market information sources and travel time to the nearest urban center influence market participation non price related factors such as security of land tenure labor availability off farm income gender of the household head and years of farming experience had a significant influence on the transacted volumes output prices had a significant correlation with sales volume indicating price incentives increased supply by sellers generally the findings suggest that policies aimed at investments in rural road infrastructure market information systems collective marketing and value addition of banana products may provide a potential avenue for mitigating transaction costs and enhancing market participation and production of marketed surplus by rural households

ex ante analysis of the benefits of transgenic drought tolerance research on cereal crops in low income countries this article develops a framework to examine the ex ante benefits of transgenic research on drought in eight low income countries including the benefits to producers and consumers from farm income stabilization and the potential magnitude of private sector profits from intellectual property rights iprs the framework employs country specific agroecological drought risk zones and considers both yield increases and yield variance reductions when estimating producer and consumer benefits from research benefits from yield variance reductions are shown to be an important component of aggregate drought research benefits representing 40 of total benefits across the eight countries further estimated annual benefits of us 178 million to the private sector suggest that significant incentives exist for participation in transgenic drought tolerance research

access to capital and agrarian production organisation there are two problems both universal that entrepreneurs in any economy must contend with firstly an agent generally has access only to a limited amount of working capital secondly workers hired by an agent are subject to moral hazard and this necessitates their supervision this paper models for an agrarian economy the constraints imposed on entrepreneurs activities by these two problems and endogenously determines the various organisational forms of production as well as the allocation of resources that will obtain with a simple model we endeavour to explain a diverse set of empirical observations pertaining to the less developed countries in terms of the general processes that determine the distribution of income among the various agents and the hierarchical relationships that develop among them agricultural production typically involves a period of several months between the time the inputs are purchased and the time the output is marketed access to working capital and hence to the credit market thus plays an important role in a farmer s production decisions the distribution of access to credit in turn tends to be an important determinant of income distribution in poor agrarian economies credit is invariably rationed according to the ability to offer collateral the amount of working capital a farmer can mobilise therefore depends on the amount of land he owns which is often a good proxy for his overall wealth and thus his ability to offer collateral further since hired hands have a propensity to shirk they need to be supervised and therefore the

impacts of prices and transactions costs on input usage in a liberalizing economy evidence from tanzanian coffee growers despite improvements in production incentives agricultural output in africa remained sluggish through the 1990s low use of purchased inputs may be part of the cause of persistently low productivity in african agriculture this article analyzes the roles of relative prices and transactions costs in explaining low use of chemical inputs among tanzanian coffee growers a sample selection model indicates that output prices exert great influence on input purchases and that both fixed and variable transactions costs affect input use decisions travel costs in input and output markets have distinct effects on input usage implying distinct avenues for interventions to promote more intensive use of agricultural inputs

tax motivated trading by individual investors we study the stock trades of a large number of individual investors to investigate how tax incentives affect the realization of capital gains and losses we compare investors realization behavior in their taxable and tax deferred accounts and thereby identify the effect of taxes on trading decisions we reach four conclusions first we find clear evidence of a lock in effect for capital gains in taxable accounts relative to tax deferred accounts we find evidence of the disposition effect the tendency for investors to hold losses and sell gains in both types of accounts and especially at short holding periods the lock in effect is stronger for large stock transactions than for small ones second we find tax loss selling throughout the calendar year though it is most pronounced in december tax loss trading is more pronounced among investors who have realized capital gains elsewhere in the portfolio during the year third we observe substantial heterogeneity in individual investors propensity to trade controlling for this heterogeneity however does not alter the relation between a stock s past performance and the realization decision finally we find that relatively few investors repurchase stocks that they have sold at a loss even after the 30 day wash sale holding period has expired

smallholders institutional services and commercial transformation in ethiopia this article examines the role of institutional services of credit input supply and extension in the overall commercial transformation process of smallholder agriculture in ethiopia survey data collected in 2006 from 309 sample households in three districts of ethiopia are used for the analyses tobit regression models are used to measure the effect of access to services on the intensity of inputs use for fertilizer and agrochemicals a probit model is used to measure these effects on the adoption of improved seeds intensity of use of seeds is analyzed using an ordinary least squares model logarithmic cobb douglass functions are estimated to analyze the effect of access to services on crop productivity heckman s two stage estimation is used to examine determinants of household market participation and the extents of participation results show that access to institutional support services plays a significant role in enhancing smallholder productivity and market orientation our results imply that expanding and strengthening the institutional services is critical for the intensification and market orientation of smallholder agriculture in ethiopia in particular appropriate incentives and regulatory systems are urgently needed to encourage the involvement of the private sector in the provision of agricultural services

temporal and spatial modelling of tropical deforestation a survival analysis linking satellite and household survey data we estimate a spatially explicit model of the forest clearance process among smallholder farmers in an agricultural frontier of southern mexico our analysis takes as its point of departure a simple utility maximising model that suggests many possible determinants of deforestation in an economic environment characterised by missing or thin markets hypotheses from the model are tested on a data set that combines a time series of satellite imagery with data collected from a survey of farm households whose agricultural plots were geo referenced using a global positioning system gps we implement a survival analysis to identify the effect of household level explanatory variables on the probability of deforestation this approach allows us to introduce a measure of the time until clearance as a covariate thereby affording a control for the effect of potentially important explanatory variables that vary through time but are not directly observable in addition to identifying several variables relevant for policy analysis including household demographics proximity to roads and government provision of agricultural support model results suggest that the deforestation process is characterised by non linear duration dependence with the probability of forest clearance first decreasing and then increasing with the passage of time

the market structure of broadband telecommunications the recent growth of the internet is creating markets for broadband telecommunications networks in the past virtually all such infrastructure networks have been subject to government regulation two reasons advanced for this market intervention are i such networks constitute a natural monopoly and ii to achieve universal service in which all citizens have access to services in this paper we develop a model and estimate it using engineering data which tests if these two hypotheses are likely to obtain for broadband networks we find that oligopolistic competition is likely to emerge for demand levels approaching that of today s cable television

brothers from different mothers how distribution fees change investment behavior abstract we ask whether loads affect investment flows in the us mutual fund industry we argue that sales fees make the investment decision partially irreversible under these circumstances investors await for a stronger signal of managerial ability before committing to a new fund this stronger signal can take the form of a particularly strong performance or a particularly long series of positive performance realizations looking at pairs of fund shares with the same portfolio but different sales fee arrangements we show that investment flows in share classes with front loads react disproportionally to good performances higher convexity in the flow performance relationship and react to performance realizations further back in time longer memory a counterfactual example of fund shares with back end loads allows us to rule out the hypothesis that this behavior is due to the incentive structure of brokers finally we show that these behavioral modifications induced by front loads have a negative and significant effect on investors timing ability

interlinked markets and the cash crop food crop debate in land abundant tropical agriculture the purpose of this article is to illustrate how such institutions do arise in the african context under certain preconditions it is argued that the lack of a land market due largely to a non capitalist conception of property rights over land 3 along with other conditions to be examined below leads to the failure of labor and private sector credit markets in response indigenous institutions have evolved to cope with the market failures

why does the law of one price fail an experiment on index mutual funds we conduct an experiment to evaluate why individuals invest in high fee index funds in our experiments subjects allocate 10 000 across four s p 500 index funds and are rewarded for their portfolio s subsequent return subjects overwhelmingly fail to minimize fees we can reject the hypothesis that subjects buy high fee index funds because of bundled non portfolio services search costs for fees matter but even when we eliminate these costs fees are not minimized instead subjects place high weight on annualized returns since inception fees paid decrease with financial literacy interestingly subjects who choose high fee funds sense they are making a mistake

agricultural policy market barriers and deforestation the case of mexico s southern yucatan summary this paper examines the linkages between agricultural policies and deforestation in a development frontier of southern mexico focusing on support programs targeted at buffering farmers from structural reforms we argue that local barriers to market participation condition the responsiveness of farmers to program incentives thereby constituting a key channel through which agricultural policies impact the environment an econometric model parameterizes the influence of two programs procampo and alianza para el campo on cultivation consistent with an economic environment characterized by market barriers results suggest that program support even when decoupled from production decisions significantly determines land use and deforestation

behavioral portfolio theory we develop a positive behavioral portfolio theory bpt and explore its implications for portfolio construction and security design the optimal portfolios of bpt investors resemble combinations of bonds and lottery tickets consistent with friedman and savage s 1948 observation we compare the bpt efficient frontier with the mean variance efficient frontier and show that in general the two frontiers do not coincide optimal bpt portfolios are also different from optimal capm portfolios in particular the capm twofund separation does not hold in bpt we present bpt in a single mental account version bpt sa and a multiple mental account version bpt ma bpt sa investors integrate their portfolios into a single mental account while bpt ma investors segregate their port folios into several mental accounts bpt ma portfolios resemble layered pyramids where layers are associated with aspirations we explore a two layer portfolio where the low aspiration layer is designed to avoid poverty while the high aspiration layer is designed for a shot at riches

effects of economic conditions and policy interventions on oecd broadband adoption the positive effects of broadband networks and services on productivity and economic growth are well established looking at broadband as an engine of economic prosperity the oecd and its member states are seeking to foster its widespread adoption however which public policies best promote the adoption of broadband remains controversial this article contributes in two ways to this discussion it offers a comprehensive discussion of the factors that influence broadband adoption and uses an econometric approach that is well suited to overcome the challenges of modelling broadband adoption this framework allows drawing more robust and nuanced policy recommendations

investors distraction and strategic repricing decisions in this paper i analyze investors reactions to changes in the expense ratios of equity mutual funds i show that investment flows response to fees cannot be fully explained by looking at investors performance sensitivity while performance sensitivity monotonically increases with past performance price sensitivity does not investors who buy top past performers seem to be distracted by the fund s previous return and pay relatively little attention to the expense ratios moreover price sensitivity increases with fund visibility while performance sensitivity decreases and while looking at data from 1986 to 2006 no discernible trend can be observed in the average performance sensitivity price sensitivity strongly increases due to the dramatic increase in the availability of mutual funds information for retail investors finally i show that investment companies strategically time their repricing decisions in order to exploit time variations in price and performance sensitivities and that fund governance quality affects the degree to which investment companies engage in this opportunistic behavior

mobile telecommunications and the impact on economic development using annual data from 192 countries over the period 1990 2007 we assess the impact of mobile telecommunications on economic growth we find that this impact is smaller for countries with a low mobile penetration usually low income countries while in low income countries the mobile telecommunications contribution to annual gdp growth is 0 11 for high income countries this is 0 20 the increasing returns from mobile adoption are also emerging when assessing the impact on productivity growth to promote mobile telecommunications penetration liberalization policies along with appropriate regulatory frameworks are recommended such policies should be pursued more forcefully in cases where serious shortcomings exist harald gruber and pantelis koutroumpis

are investors rational choices among index funds s p 500 index funds represent one of the simplest vehicles for examining rational behavior they hold virtually the same securities yet their returns differ by more than 2 percent per year although the relative returns of alternative s p 500 funds are easily predictable the relationship between cash flows and performance is weaker than rational behavior would lead us to expect we show that selecting funds based on low expenses or high past returns outperforms the portfolio of index funds selected by investors our results exemplify the fact that in a market where arbitrage is not possible dominated products can prosper

variety characteristics and maize adoption in honduras abstract this paper summarises research into factors contributing to low levels of adoption of improved maize varieties in honduras empirical analysis was based on an agricultural household model which explicitly incorporates variety characteristics into the household s optimisation process we considered a multitude of production and consumption characteristics valued by farmers as well as an array of household socioeconomic characteristics and measures of village specific marketing costs empirical results indicated that marketing costs and production characteristics are important explanators of variety choice whereas consumption characteristics are not and that information deficits may be an important limiting factor to adoption of improved varieties

transport costs and smallholder cropping choices an application to siaya district kenya smallholders regularly devote shares of resources to low yielding food crops than they do to cash crops that have higher market returns in this paper costly exchange is incorporated into an agricultural household model and a numerical nonseparable version of the model is used to show that seemingly inefficient cropping choices of this type in siaya district kenya can be explained as rational food import substitution given high transport costs in product markets improved rural road networks that reduce these costs could abate motives to meet food needs through domestic production and promote specialization that raises farm incomes

demand curves and the pricing of money management one reason why funds charge different prices to their investors is that they face different demand curves one source of differentiation is asset retention performance sensitive investors migrate from worse to better prospects taking their performance sensitivity with them in the cross section we show that past attrition significantly influences the current pricing of retail but not institutional funds in time series we show that the repricing of retail funds after merging in new shareholders is predicted by the estimated effect on its demand curve this result is robust to other influences on repricing including asset and account size changes copyright 2002 oxford university press

individual investor perceptions and behavior during the financial crisis combining monthly survey data with matching trading records we examine how individual investor perceptions change and drive trading and risk taking behavior during the 2008 2009 financial crisis we find that investor perceptions fluctuate significantly during the crisis with risk tolerance and risk perceptions being less volatile than return expectations during the worst months of the crisis investors return expectations and risk tolerance decrease while their risk perceptions increase towards the end of the crisis investor perceptions recover we document substantial swings in trading and risk taking behavior that are driven by changes in investor perceptions overall individual investors continue to trade actively and do not de risk their investment portfolios during the crisis

household specific food price differentials and high value crop production in rural ghana using panel data from ghana we have examined the relationship between household specific producer consumer price differentials and rural household cropland allocation between food and high value crops we test the hypothesis that cereal price bands induce a shift of resources away from high value crop production making smallholders appear unresponsive to price incentives our results lend support to this hypothesis implying that a policy aiming at increasing farmers income through high value crop production may fail if hard and soft infrastructure does not improve in rural areas and if staple crop productivity does not increase significantly

institutional and individual investors saving for old age this paper brings together the academic literature on individual and institutional investors in order to understand the nature of difficulties faced by them and set the background for the special issue this introductory article and the papers in the special issue contribute to the debate on how to support individuals in their savings commitments and investment decision making and whether and how institutional investors have fulfilled their role in supporting the development of the funded pension industry there are three main conclusions i individual investors are not ready for the role that has been assigned to them in the pension industry ii institutional investors are a long way short of establishing healthy relational contracts and trustworthy relationships with their clients and iii more effective regulation may be needed

specialization and diversification in agricultural transformation the case of west punjab 1903 92 in this article the role of crop specialization and diversification in agricultural transformation is investigated empirically changes in aggregate land productivity are associated structurally with inter crop and inter district reallocation of land use results from a region with the oldest history of agricultural commercialization in developing countries show that cropping patterns of subsistence agriculture changed substantially with rising concentration of crop acreage in districts with higher and growing productivity rapid specialization in crop production was observed at the district level recently after a phase with sporadic specialization these changes reflected comparative advantage and contributed to the improvement in aggregate land productivity

meso economic filters along the policy chain understanding the links between policy reforms and rural poverty in latin america abstract the paper clarifies the meso economy concept by defining it as comprising both the market mechanisms and administrative procedures through which policy decisions and market signals trickle down to the household level three main bodies of literature are reviewed the policy oriented literature in which the meso economy was initially considered the transaction cost approach analyzing market and policy failures and the micro economy level of agricultural household models the paper develops a synthesis of macro meso and micro economic perspectives which focuses on the roles played by three levels of filters intervening along the policy chain implications for policy and research are drawn

farm to market transaction costs and specialisation in small scale agriculture explorations with a non separable household model using an integrated household model with endogenous transaction costs this article illustrates how even in the absence of risk the tension between gains from specialisation and corresponding increases in transaction costs may lead to enterprise diversification on small farms a numerical example illustrates that this tension may contribute to the prevalence of inter cropped cash crops on small farms in apparent disregard for foregone yield and income from greater specialisation involving pure stands by implication measures that augment households abilities to override trading costs may be critical complements to efforts seeking to raise productivity and incomes in small scale agriculture via increased specialisation

modeling farm households price responses in the presence of transaction costs and heterogeneity in labor markets we develop a farm household model to analyze price responses of farm households this model incorporates various types of transaction costs as well as labor heterogeneity nonproportional variable transaction costs or labor heterogeneity imply that production and consumption decisions become nonseparable even when the household buys or sells labor an empirical model is estimated using data from midwest poland the results show that nonproportional variable transaction costs and labor heterogeneity significantly influence household behavior not all price elasticities however change significantly if these are neglected

incentives and endogenous risk taking a structural view on hedge fund alphas hedge fund managers are subject to several nonlinear incentives performance fee options call equity investors redemption options put and prime broker contracts allowing for forced deleverage put the interaction of these option like incentives affects optimal leverage ex ante depending on the distance of fund value from the high water mark we study how these endogenous effects influence performance measures used in the literature we show that reduced form measures that do not account for these features are subject to economically significant false discovery biases the result is stronger for low quality funds we propose an alternative structural methodology for conducting performance attribution in hedge funds

a century long perspective on agricultural development this article strategically surveys the past century s literature on agricultural development we organize the discussion around three grand themes that reveal the richness of agricultural development as an intellectual endeavor first we explore the role of agriculture in the broader development process from a macroeconomic and political economy perspective we then examine the role of technological and institutional change in successful agricultural development finally the focus turns to a microeconomic perspective on agricultural household decision making and the problems of imperfect and missing markets asymmetric information and transactions costs that lead to widespread apparent inefficiency and disequilibrium

does heterogeneity in goals and preferences affect efficiency a case study of farm households in northern nigeria household characteristics are commonly used to explain variation in smallholder efficiency levels the underlying assumption is that differences in intended behavior are well described by such variables while there is no a priori reason that this is the case moreover heterogeneity in farmer goals and preferences in relation to the role of the farm enterprise are not well documented in developing countries this article makes a contribution to fill this gap by empirically determining heterogeneity in farmer goals and attitudes in nigeria through a pair wise ranking supplemented with likert scales factor analysis is used to reduce these data into behavioral factors we estimate technical and allocative efficiency levels and analyze how these are related to farm characteristics and the identified behavioral factors the models in which both intended behavior and farmer characteristics are included give a significantly better fit over models in which only household characteristics are included these regression results suggest that the socioeconomic environment affects efficiency levels both directly and indirectly through changes in goals and attitudes

impacts of price and productivity changes on banana growing households in uganda this article compares the effects of changing market prices and farm productivity on the welfare of banana growing households in the ntungamo district of uganda a heterogeneous agent model is applied via a series of mathematical optimization problems to simulate production and consumption responses of 70 farm households surveyed in 2006 results show that a given increase in productivity has a greater impact on poverty alleviation than that same increase in market prices despite the effects of productivity gains being comparable across different types of household groups price improvements primarily benefit the incomes of households who are involved in rural producer organizations who are located closer to markets and who sell at the market

what makes an investment risky an analysis of price path characteristics abstract we examine the influence of financial asset historical price path characteristics on investors risk perception return beliefs and investment propensity to that end we run a series of survey experiments in which we present various price patterns to individuals with vested interest in financial matters our findings reveal that price paths with identical daily and monthly returns and consequently identical return standard deviation can lead to substantially different risk perception by investors indicating that historical volatility is insufficient to explain risk perception salient features such as highs lows and crashes are the most influential drivers of perceived risk in price paths return forecasts are primarily driven by past overall returns and the most recent price developments perceived risk and return beliefs strongly predict investment propensity

product differentiation search costs and competition in the mutual fund industry a case study of s p 500 index funds we investigate the role that non portfolio fund differentiation and information search frictions play in creating two salient features of the mutual fund industry the large number of funds and the sizeable dispersion in fund fees in a case study we find that despite the financial homogeneity of s p 500 index funds this sector exhibits the fund proliferation and fee dispersion observed in the broader industry we show how extra portfolio mechanisms explain these features these mechanisms also suggest an explanation for the puzzling late 1990s shift in sector assets to more expensive and often newly entered funds an influx of highinformation cost novice investors

how price path characteristics shape investment behavior abstract price paths are often the only graphical representation of financial products investors receive before making an investment decision we argue that price paths serve as graphical frames that influence the perceived attractiveness of an asset by highlighting specific asset characteristics in a controlled lab experiment we find that price paths have an impact on investment decisions in a regression we test a simple model relating the perception of price path shapes to several heuristics these heuristics are focusing on more recent outcomes deriving implicit reference prices from focal prices focusing on losses and estimating risk from the amplitude of the path we conclude that investment decisions are systematically biased due to the shape of an asset s price path

behavioural and material determinants of production relations in agriculture in this essay we develop a framework for analysing the major institutions governing the production and exchange of output and the primary factors of production in rural areas the analysis incorporates general considerations of risk and information constraints jointly with the principal material attributes of agriculture and of agricultural production factors the framework is used to analyse barriers to the existence of the major intertemporal and factor markets it is applied specifically to land scarce environments for which it provides an internally consistent explanation for many of the well documented institutional features of such settings in addition the analysis provides new implications for among other phenomena the inter relationships among ownership holdings operational scale family size and factor productivity for the scarcity of animal rental markets and use of animals as collateral for the renting out of land by small landowners and for the existence of plantations for certain crops

the impact of marketing systems on soil sustainability of agriculture in developing countries a method and an application this article is concerned with soil sustainability problems of agriculture in developing countries in particular with soil erosion the aim of our study is to develop a comprehensive model that explains the adoption of sustainable agricultural practices with respect to soil conservation our approach includes the following special features a the model is comprehensive in that it includes a large number of institutional personal social economic and physical explanatory variables b particular attention is paid to the influence of marketing systems on the adoption of sustainable agricultural practices which to our knowledge has been neglected in past research c the concept of adopting sustainable agricultural practices asap is differentiated into a limited number of basic components of soil conservation and d the model is estimated by principal component regression which enhances efficient estimation of the impact of many explanatory variables on asap our model is applied to cabuyal hillside farming in colombia the application demonstrates the usefulness of the proposed model asap is differentiated into three basic components soil disturbance control soil protection practices and run off control it appears that soil disturbance control is particularly influenced by farmers characteristics such as education and managerial variables the second component soil protection practices appears to be strongly influenced not only by farmers managerial variables but also by their relationship with their environment in particular marketing institutions the third soil conservation component run off control is influenced by the physical characteristics of the plot and by the available farm labor our empirical results demonstrate the usefulness of the proposed model in designing agricultural policies because it can determine which variables are more likely to influence the adoption of a specific type of soil conservation

raising offtake from cattle grazed on natural rangelands in sub saharan africa a transaction cost economics approach farmers in sub saharan africa are constrained by large transaction costs associated with marketing of their livestock however transaction costs are often not taken into account in the analysis of factors hampering the development of livestock marketing in this region this article empirically measures the influence of transaction costs on the offtake from cattle grazed on natural rangelands in uganda the study is based on the monitoring of 696 cattle transactions in three districts of uganda from august 2004 to august 2005 the estimated models suggest that proportional transaction costs represented by the state of roads distance to markets and time taken to reach the market are important variables constraining market participation in order to raise offtake from the national herd it is essential to explicitly address these costs one potential solution is collective action in marketing of livestock in which proportional and fixed transaction costs are reduced and shared among the group members

a selectivity model of household food marketing behavior in sub saharan africa the agricultural household s discrete decision of whether to participate in coarse grain markets is separated here from the continuous decision of how much to sell or buy conditional on participation failure to participate in markets results from high fixed transactions costs a selectivity model endogenously switches households into alternative market participation states correcting for bias caused by the exclusion of unobservable variables affecting both discrete and continuous decisions improved market information increases the probability of participation by sellers while access to cereals processing technology increases quantities transacted by both sellers and buyers conditional on participation

a bandwagon effect in personalized license plates a bandwagon effect in personalized license plates the bandwagon effect is a consumption externality that exists when an individual s demand for a good is increased by his observation of other consumers using that good this paper models a product demand curve with a bandwagon effect and using data on sales of personalized license plates estimates such a demand curve certain more conventional models of product demand including information diffusion and habit formation models are observationally similar to the bandwagon model despite being conceptually different from it i attempt to use the license plate data to discriminate between the bandwagon model and these other models in 1950 harvey leibenstein described the impact on product demand curves of what he called a bandwagon effect the bandwagon effect was said to exist if peoples valuations of a good and thus demand for that good increased when they observed others consuming the good no one to my knowledge has attempted to empirically verify the existence of or estimate the magnitude of a bandwagon effect in any product market in this paper i attempt to do both by looking at the demand for personalized license plates a good that could plausibly be subject to a bandwagon effect in the first section of the paper i develop a simple model of product demand in the presence of a bandwagon effect the model is based on leibenstein s treatment but is modified to fit the case of personalized license plates in the second section data on the sales of personalized plates are described and used to estimate a demand function the results of this estimation are consistent with the theoretical model of the bandwagon effect the search for the bandwagon effect cannot end there however the bandwagon model in which consumers are moved by considerations of fashion and status emulation is observationally similar to other well known but conceptually quite different models of product demand in which consumers are more sober and level headed in particular models of information diffusion or habit formation imply patterns in the data very much like those that follow from the bandwagon model section iii discusses this matter in more detail and presents statistical tests designed to differentiate between the bandwagon model and alternative models of product demand in the final section i draw some conclusions from the empirical evidence i the bandwagon effect consider a product that lasts for a single period of well defined length each period a consumer may purchase at most one of the product the personalized license plate is a product of this sort as are subscriptions to a particular magazine hairstyles club memberships vacations to chic resorts etc assume first that there is no bandwagon effect and let 1 v sub it x sub it z sub t represent the value of the product to individual i in period t where x sub it is a vector of individual characteristics such as age or income and z sub t is a vector of product characteristics in period t the function v sub it is a random variable defined over the population of potential buyers let f sub t v prob v sub it adding a bandwagon effect to this model involves allowing individuals preferences to depend on aggregate behavior liebenstein assumed that in the presence of a bandwagon effect the quantity of a product demanded by each consumer at a given price depended on market level demand at that price this creates a problem when moving from individual to market level demand functions for the market level demand curve is no longer a lateral summation of individual demand curves

increasing returns and market efficiency in agricultural trade abstract using detailed trader surveys in benin madagascar and malawi this paper investigates the presence of increasing returns in agricultural trade after analyzing margins costs and value added we find little evidence of returns to scale motorized transport is found more cost effective for large loads on longer distances but transporters appear to pool quantities from multiple traders margin rates show little relationship with transaction size personal travel costs are a source of increasing returns but the effect is small consequently total marketing costs are nearly proportional to transaction size working and network capital are key determinants of value added constant returns to scale in all accumulable factors working capital labor and network capital cannot be rejected this implies that policies to restrict entry into agricultural trade are neither necessary nor useful governments should focus instead on technological and institutional innovations to upgrade agricultural markets