perfect equilibria in a negotiation model rubinstein s alternating offers bargaining model is enriched by assuming that players payoffs in disagreement periods are determined by a normal form game it is shown that such a model can have multiple perfect equilibria including inefficient ones provided that players are sufficiently patient delay is possible even though there is perfect information and the players are fully rational the length of delay depends only on the payoff structure of the disagreement game and not on the discount factor not all feasible and individually rational payoffs of the disagreement game can be supported as average disagreement payoffs indeed some negotiation games have a unique perfect equilibrium with immediate agreement

dividend stripping risk exposure and the effect of the 1984 tax reform act on the ex dividend day behavior this article investigates the importance of risk exposure and the effects of the 1984 tax reform act on the ex dividend day behavior the tax reform appears to have inhibited short term trading activities by increasing the risk exposure of incorporated traders moreover stocks for which existing listed options permitted the reduction of risk through hedged dividend stripping strategies were affected much less from the new tax code than their nonoptionable counterparts this implies that risk affects investors dividend yield choice and that the ex dividend day behavior may be caused in part by the existence of risk premia copyright 1989 by the university of chicago

policies for african seed enterprise development abstract the commercial seed sector has been slow to develop in sub saharan africa the paper examines the major impediments and identifies areas in which seed policies can be strengthened seed enterprise development has been hampered by regulatory frameworks that favor parastatal enterprises and that inhibit commercial innovation in addition government and donor projects provide large amounts of free or subsidized seed that further discourages seed enterprise development in addition to regulatory reform and the curtailment of many seed distribution projects there are other policy changes that need to be implemented national agricultural research institutes need to invest more resources in promoting their varieties and helping to stimulate commercial seed production greater emphasis is required on regional strategies for public plant breeding and private seed marketing national policies need to strengthen input marketing capacity and infrastructure finally donors governments and ngos should shift from trying to encourage village level commercial seed production and instead strengthen farmers capacities to assess new varieties and to be effective consumers of commercial inputs

preferences over solutions to the bargaining problem there are several solutions to the nash bargaining problem in the literature since various authors have expressed preferences for one solution over another we find it useful to study preferences over solutions in their own right we identify a set of appealing axioms on such preferences that lead to unanimity in the choice of solution which turns out to be the solution of nash

tick size share prices and stock splits minimum price variation rules help explain why stock prices vary substantially across countries and other curiosities of share prices companies tend to split their stock so that the institutionally mandated minimum tick size is optimal relative to the stock price a large relative tick size provides an incentive for dealers to make markets and for investors to provide liquidity by placing limit orders despite its placing a high floor on the quoted bid ask spread a simple model suggests that idiosyncratic risk firm size and visibility of the firm affect the optimal relative tick size and thus the share price in stock markets around the world the average price per share differs substantially the median u s stock for example sells for about 40 a typical london stock sells for about 5 7 50 and a typical hong kong share is about 2 furthermore when stock prices rise above a country s usual trading range firms often split their stocks to restore prices to that range why are these price ranges so different among countries these trading ranges can be remarkably stable over time during the half century from 1943 to 1994 the s p composite index increased over 1 500 percent yet the average new york stock exchange nyse share price was

money burning and multiple equilibria in bargaining abstract this paper synthesizes recent work on delay and multiple equilibria in complete information rubinstein bargaining we identify a general principle money burning underlying prior results and develop a general model of the phenomena money burning is a threat by one player to destroy surplus which can serve to enhance that player s bargaining power if it is credible our results show that the uniqueness and efficiency properties of the subgame perfect equilibrium of rubinstein bargaining are vulnerable to players ability to burn money journal of economic literature classification number 026

ex dividend day stock price behavior the case of the 1986 tax reform act this paper analyzes the behavior of stock prices around ex dividend days after the implementation of the 1986 tax reform act that dramatically reduced the difference between the tax treatment of realized long term capital gains and dividend income in 1987 and completely eliminated the differential in 1988 we show that this tax change had no effect on the ex dividend stock price behavior which is consistent with the hypothesis that long term individual investors have no significant effect on ex day stock prices during this time period the results indicate that the activity of short term traders and corporate traders dominates the price determination on the ex day

time variation of ex dividend day stock returns and corporate dividend capture a reexamination this paper documents some empirical facts about ex day abnormal returns to high dividend yield stocks that are potentially subject to corporate dividend capture we find that average abnormal ex dividend day returns are uniformly negative in each year after the introduction of negotiated commission rates and that time variation in ex day returns during the negotiated commission rates era is consistent with corporate tax based dividend capture ex day returns are more negative when the tax advantage to corporate dividend capture is greatest and more positive when increases in transaction costs and risk reduce incentives to engage in corporate tax based dividend capture copyright the american finance association 2000

simultaneous offers bargaining with a mediator abstract an arbitrator is often introduced into bargaining to avoid disagreement the arbitrator s role is to impose some agreement when negotiators cannot reach an agreement however in models with an arbitrator a fair agreement for negotiators is eliminated from equilibrium outcomes if the arbitrator is biased to avoid disagreement without eliminating the achievability of a fair agreement in equilibrium we consider introducing a mediator while an arbitrator imposes an agreement a mediator can only give advice we analyze a simultaneous offers bargaining model with a mediator and obtain the following desirable results first disagreement is not supported as an outcome of a stationary subgame perfect equilibrium sspe second even if a mediator is biased the fair agreement in the sense of the nash bargaining solution nbs is always one of the sspe agreements finally if a mediator is fair negotiators always reach an agreement with the nbs in sspe

final offer arbitration and risk aversion in bargaining negotiations are often conducted under the stipulation that an impasse is to be resolved using final offer arbitration foa in fact foa frequently is not needed in major league baseball for instance more than 80 of the salary negotiations that could go to arbitration instead reach a bargained agreement we show that the risk aversion of at least one side explains this phenomenon we then model pay negotiation in baseball by applying a bargaining solution with a variable disagreement outcome representing foa studying the existence of pure nash equilibrium initial offers and their effects on the player s eventual pay and considering the nash solution as a special case

perfect equilibria in a model of bargaining with arbitration abstract we consider an alternating offer bargaining model in which the players may agree to call in an arbitrator in case of disagreement the main message of our study is that the mere presence of an arbitrator who can only become active with the consent of both parties in the background of negotiations may entirely drive their outcome we compare our results with those obtained in models with outside options journal of economic literature classification number c78

seed regulation choices on the road to reform major changes in national seed systems including the rapid development of commercial seed enterprises the growth of non governmental organization ngo seed projects and the concomitant decline of public sector seed provision call for a re examination of seed regulatory frameworks in developing countries privatization and deregulation are often presented as logical partners but the nature of seed system change and the complexities of regulatory responsibility make seed regulatory reform less straightforward than it first appears challenges include the limited opportunities for commercial seed development the need to provide guidance to seed systems in transition the international pressures for plant variety protection pvp and significant differences among various national regulatory approaches problems with the conduct of current seed regulations include significant inefficiency the use of inappropriate standards inadequate opportunities for the participation of new entrants to the seed system and a lack of transparency specific guidelines are offered for reorganizing variety registration and performance testing providing a balanced opportunity for pvp and broadening participation in seed quality control national seed regulatory agencies will see their role shift from the direct supervision of seed production towards technical and policy support for the development of a wider range of seed provision options

the role of mediation in peacemaking and peacekeeping negotiations abstract we develop a model of bargaining that provides a rationale for the difference in the method of negotiation depending on the nature of the conflict we distinguish those negotiations that take place previous to a potential conflict peacekeeping and negotiations inside the conflict peacemaking in these contexts we study the role of a mediator who tries to achieve a certain balance between the efficiency of the agreement and the equality of the final sharing we show that the credibility of the mediator comes from her willingness to impose delays in the negotiation even if that implies costs we also find how the player with a weak bargaining position in a conflict can strategically profit from the mediator s quest for equality finally we show how the capacity of the mediator to induce a higher equality in the sharing is always higher in a peacemaking situation than in a peacekeeping one

ngos and seed provision to smallholders in developing countries abstract public sector provision of improved seeds in developing countries has often fallen foul of government failure while commercial seed supply has faced unusually high transactions costs and some market failure both have met difficulties in providing appropriate seed for marginal farm lands into the gap have come nongovernmental organisations ngos most of them involved in small scale seed multiplication and distribution evidence from a review of 19 ngo programs suggests that their seed activities operate on a small scale sometimes with little distinctive technical competence and tend to ape other formal sector methods above all they face a challenge in making their efforts sustainable the most promising avenue seems to lie in their supporting the growth of small seed production and distribution enterprises at farm and village level

reduction of constraints on arbitrage trading and market efficiency an examination of ex day returns in hong kong after introduction of electronic settlement previous research documents positive ex dividend day returns in excess of one percent in the unique institutional setting of hong kong where neither dividends nor capital gains are taxed short term arbitrage trades around the ex day were hampered by physical settlement procedures after the recent switch to an electronic settlement system which enables such trades ex day abnormal returns have declined to an insignificant 0 17 percent this drop is more pronounced for high yield stocks which are more likely to attract dividend capture trading the evidence points to the crucial role of short term traders in ensuring the pricing efficiency of financial markets the role of short term traders in financial markets is a matter of considerable controversy the debate on this issue has heightened in the wake of the recent asian currency crisis which some governments blamed on the activities of short term traders critics contend that short term traders engage in speculation leading to excessive and debilitating volatility in market prices others argue that short term traders perform a useful role by increasing valuable liquidity berkman and eleswarapu 1998 report that regulatory changes on the bombay stock exchange curbing short term trading had a measurably adverse impact on asset values supporters of short term traders also argue that these traders make a key contribution to the efficiency of financial markets by constantly scouring the markets for arbitrage opportunities this study examines the impact of the

equilibrium strategies for final offer arbitration there is no median convergence final offer arbitration is a procedure for settling disputes between two parties in which an arbitrator chooses the final offer of the party closest to what he considers a fair settlement this procedure is modeled as a two person zero sum game of imperfect information in which the parties are assumed to know the probability distribution of the arbitrator s fair settlements and to make bids in an infinite strategy space that maximize their expected payoffs necessary and sufficient conditions for there to be local and global equilibria in pure strategies are derived and necessary conditions for mixed strategies in a particular case are found such equilibria when they exist in pure strategies represent bids which are symmetric about the median and for most common distributions are separated from one another by two or more standard deviations this finding suggests that final offer arbitration may not accomplish its avowed purpose of inducing the two parties to converge on what they perceive to be t

market valuation of tax timing options evidence from capital gains distributions we examine a distribution that is taxed as a capital gain rather than as a dividend since the distribution induces a realized capital gain while the price change is an unrealized gain ex day return behavior provides evidence of the value of tax timing capital gains we show that investors are compensated 7c in unrealized gains for each dollar of realized capital gains that is 1 of realized capital gains is equivalent to 93c of unrealized gains an investor with a tax rate on realized gains of 15 has an effective tax rate on unrealized capital gains of 8 6 capital gains taxes can be deferred until assets are sold this feature provides the investor who purchases a security with an option regarding the timing of the realization of capital gains and losses this option can be used to lower one s expected tax liability even if capital gains tax rates remain constant for different holding periods an investor who delays the realization of a gain effectively enjoys compound returns on the postponed taxes if capital losses are tax deductible or partially tax deductible tax timing is even more valuable since investors can follow the strategy of selling stocks with capital losses early while postponing the sale of winners recent evidence lends support to the contention that some investors respond to this tax timing option for example odean 1998 shows that u s investors are more likely to sell losers in december than other months similarly grinblatt and keloharju 2002 show that at the end of the tax year finnish investors are more likely to realize losses than gains this type of tax motivated trade seems to affect market returns as shown by poterba and weisbenner 2001 who demonstrate that end of year tax loss selling is related to return variation in the month of january

a letter to the editor on wage bargaining abstract the rubinstein perfect information alternating offers bargaining model is problematic when applied to wage negotiations a strike or any other industrial action is not an automatic consequence of a delay in reaching an agreement because production can continue normally also when negotiations take place this paper extends the rubinstein model to incorporate the choice of calling a strike and it is shown that in this model there is no longer a unique subgame perfect equilibrium and that strikes with a length in real time can occur in equilibrium

the private delivery of public crop varieties rice in andhra pradesh although there has been a considerable growth of private seed enterprises in developing countries there are few examples of the private delivery of seed of public crop varieties that are not hybrids this paper discusses the example of rice in andhra pradesh where private enterprise is supplying an increasing proportion of the seed used by farmers the institutional conditions for private expansion into rice seed are examined the paper discusses instances where low transaction costs allow for the emergence of a wide range of seed enterprises but despite the success of private seed delivery inadequate attention has been given to incentives for variety promotion and to the importance of consumer education

marginal stockholder tax effects and ex dividend day price behavior evidence from taxable versus nontaxable closed end funds almost all research on the movement of stock prices on ex dividend days has found that prices decline by less than the dividend though this is consistent with tax effects several papers have argued that this phenomenon could be caused by market microstructure effects in this paper we make use of a natural experiment that provides support for the tax explanations of ex dividend behavior some closed end funds have taxable and some have nontaxable dividend distributions both types are subject to taxes on capital gains the implication of this for ex dividendday price behavior is very different between these two types of funds if taxes matter this paper demonstrates that the direction of ex dividendday price behavior is consistent with a tax explanation and that ex dividend day price behavior changes as theory would suggest with changes in the tax law

ex date stock price adjustment to stock dividends a note many recipients of stock dividends look upon them as distributions of corporate earnings and usually in an amount equivalent to the fair value of the additional shares received furthermore it is to be presumed that such views of recipients are materially strengthened in those instances which are by far the most numerous where the issuances are so small in comparison with the shares previously outstanding that they do not have any apparent effect upon the share market price and consequently the market value of the shares previously held remains substantially unchanged

tax induced trading of equity securities evidence from the adr market we examine ex dividend date trading of american depositary receipts adrs using a sample of 1 043 dividends over the period 1988 to 1995 adr dividends are often subject to foreign withholding taxes creating incentives for certain investors to avoid the distribution adrs exhibit negative abnormal ex dividend day returns and their prices behave consistently with their related withholding taxes abnormal trading volume for taxable issues exceeds 130 percent and 300 percent of normal volume on the cum and ex dates respectively abnormal volume is an increasing function of foreign withholding tax rates and decreasing function of transactions costs this abnormal exdate trading activity is consistent with tax motivated trading this paper provides empirical evidence from a sample of american depositary receipts adrs that foreign taxes on dividend income are positively associated with abnormal ex dividend day trading activity researchers have long been interested in the question of whether taxes affect investor behavior around ex dividend days such work has implications for corporate financial and distribution policies and for government tax policies adrs provide a unique setting in which to examine the effects of taxes on investor trading behavior because of the unique features of the foreign withholding taxes that apply to them a number of studies have attempted to isolate the determinants of ex dividend day pricing and trading activity of u s equities and there is considerable evidence of tax induced investor behavior around the ex dividend day for common

bargaining and international environmental agreements this article surveys game theoretic papers focused on the negotiation process that leads to an international environmental agreement most of the papers considered apply bargaining theory although other approaches have been considered as well among other issues the papers considered analyze the burden sharing rule that will result from a negotiation over a global public good the role of information asymmetries the impact of unilateral commitments delegation and ratification whether or not countries are going to form groups during the negotiation process and the influence of the expectation of a future bargaining process on investment decisions the basic bargaining model is optimistic as it predicts that countries will reach an efficient agreement immediately however all the developments of this model surveyed afterwards are rather pessimistic and even the basic model has perverse incentives for pre negotiation signals

fair bargains distributive justice and nash bargaining theory the suppes sen dominance relation is a weak criterion of impartiality in distributive justice i propose its application to nash bargaining theory the nash bargaining solution nbs is characterized by replacing the controversial independence of irrelevant alternatives axiom with an axiom embodying the suppes sen principle this allows a clear interpretation of the nbs as a fair arbitration scheme in addition the proposed characterization is more robust than the standard one with respect to variations in the domain of bargaining problems

ex dividend day stock price behavior discreteness or tax induced clienteles abstract since prices are constrained to discrete tick multiples while dividends are essentially continuous ex day price changes will not equal dividends we argue that the expected price drop is strictly less than the dividend but within one tick of the dividend the price drop to dividend ratio will i be less than one ii increase with dividends generally and iii decline between tick multiples giving a sawtooth pattern in the data since dividends and dividend yields are highly correlated discreteness will give the impression of tax induced dividend clienteles even if there are none taxable cash dividends and nontaxable stock dividends exhibit similar ex day behavior

dividends taxes and common stock prices the ex dividend day behavior of common stock prices before the income tax this study examines the ex dividend day behavior of common stock prices before the enactment of the federal income tax on ex dividend days during the pre tax period stock prices fell on average by the full amount of the dividend the data are consistent with the hypothesis that i investors in the pre tax period value dividends and capital gains as perfect substitutes and ii the differential taxation of dividends and capital gains has since caused investors to discount the value of taxable cash dividends in relation to capital gains

tax reform and ex dividend day behavior this paper investigates the effect of a major canadian tax reform on the ex dividend day behavior of companies on the toronto stock exchange the results are inconsistent with the hypothesis that price changes on ex dividend days reflect the relative taxation of dividends and capital gains for the representative investor but are consistent with the hypothesis that ex dividend day price behavior reflects short term trading activities

striking for a bargain between two completely informed agents this paper models the wage contract negotiation procedure between a union and a firm as a sequential bargaining process in which the union must decide in each period whether or not to strike for the duration of that period we show that there exist subgame perfect equilibria in which the union engages in several periods of strikes prior to reaching a final agreement although both parties are completely rational and fully informed this has implications for other inefficient phenomena such as tariff wars debt negotiations and wars in general we characterize the set of equilibria show that strikes can occur in real time and discuss extensions of the model such as lockouts and the possibility of multiple recontracting opportunities copyright 1991 by american economic association

union leaders as experts wage bargaining and strikes with union wide ballot requirements to avoid strikes and to curb labour militancy some governments have introduced legislation stating that union leadership as well as wage offers should be decided through union wide ballots this paper shows that members still have incentives to appoint militant union leaders if these leaders have access to information critical for the members voting decisions furthermore conflicts may arise in equilibrium even though the contract zone is never empty and there is an option to resolve any incomplete information ballot requirements hence preclude neither militant union bosses nor inefficient conflicts

bargaining with surplus destruction in a two player alternating offer bargaining model if one player can destroy the surplus to be allocated then the value to bargain for is endogenous except at the beginning even with complete information the model has perfect equilibria with delayed agreement and or surplus destruction the model therefore explains inefficiency and destruction that may appear irrational we characterize the set of equilibrium payoffs and its limiting be haviour as the time between offers vanishes real time delay remains possible even in the limit we also consider the case of surplus destruction that is exogenously limited by the

tick size nyse rule 118 and ex dividend day stock price behavior abstract bali and hite 1998 and dubofsky 1992 propose models in which market microstructure effects play a role in the ex dividend day price drop anomaly bali and hite suggest that the anomaly is caused solely by price discreteness while dubofsky suggests that nyse rule 118 is also involved we test these models by examining cum to ex day price drops during the one eighth one sixteenth and decimal tick size regimes while the evidence is qualitatively consistent with dubofsky s predictions neither model is satisfactory in a quantitative sense one of our main empirical findings is that no significant decline was evident in the magnitude of the ex day anomaly after the tick size reduction

dividend taxation in firm valuation new evidence in this paper we develop a residual income model showing how taxes on dividends affect the relative valuation of retained earnings versus contributed equity as well as the value of expected future earnings tests of predictions from our model for a sample of compustat firms from 197594 suggest that overall firm value and the relative valuation weights investors assign to retained earnings contributed equity and current earnings all critically depend on dividend taxes the findings also suggest that investors take a proprietary perspective in valuation and impute an unrecorded shareholder level tax liability on retained earnings the u s tax system subjects retained earnings to dividend taxes upon distribution to shareholders while contributed equity is returned to shareholders as a nontaxable return of capital from the shareholder s proprietary perspective therefore retained earnings should be valued on

ex dividend price behavior of common stocks this study examines common stock prices around ex dividend dates such price data usually contain a mixture of observations some with and some without arbitrageurs and or dividend capturers active our theory predicts that such mixing will result in a nonlinear relation between percentage price drop and dividend yield not the commonly assumed linear relation this prediction and another important prediction of theory are supported empirically in a variety of tests marginal price drop is not significantly different from the dividend amount thus over the last several decades one for one marginal price drop has been an excellent average rule of thumb article published by oxford university press on behalf of the society for financial studies in its journal the review of financial studies

a microstructure analysis of ex dividend stock price behavior before and after the 1984 and 1986 tax reform acts this article extends ex dividend research by explicitly modeling trading at bid and ask quotations this refinement distinguishes between buying and selling for long term investors and short term dividend capture traders it also explicitly incorporates the bid ask spread and eliminates some potential measurement errors that may bias returns marginal conditions are tested during 1983 and 1988 periods that span the 1984 and 1986 tax reform acts results for long term investors are consistent with the elimination of favorable capital gains tax rates at observed prices tax neutral short term traders cannot profit corporate dividend capture traders face profit opportunities during 1983 that disappear by 1988 copyright 1996 by university of chicago press

strategic bargaining with destructive power abstract this note studies a two player alternating offers bargaining model in which one of the agents has the ability to damage permanently the pie bargained over beside the rubinsteinian bilateral monopoly outcome i show that it is possible to select a harming equilibrium in which the sequence of damages to the pie is endogenously determined

debt restructuring and economic recovery analysing the argentine swap when argentine sovereign default in december 2001 led to a collapse of the peso the burden of dollar debt became demonstrably unsustainable but it was not clear what restructuring was feasible nor when eventually in 2005 after a delay of more than three years a super majority of creditors accepted a swap that essentially involved the pesification of dollar liabilities with the imf not playing its customary role in arranging a swap we consider whether a bilateral bargaining approach can help explain the final settlement and the delay in achieving it we find that the swap broadly corresponds to a bargaining outcome where substantial delay occurred for both political and economic reasons even after political legitimacy was assured by general elections negotiators seeking a sustainable outcome at a time of deep recession profound currency under valuation and high sovereign spreads realised it was better to wait before settling other factors discussed include the definition of sustainability criteria the effect of inter creditor conflict and the role of third parties in promoting good faith bargaining we suggest that while these issues need further investigation there are institutional changes that could make them less problematic

alternating offer games with final offer arbitration abstract i analyze an alternating offer model that integrates the common practice of having an arbitrator determine the outcomes if both players offers are rejected i assume that the arbitrator uses final offer arbitration as in professional baseball i find that if the arbitrator does not excessively favor one player then the unique subgame perfect equilibrium always coincides with the subgame perfect equilibrium outcome in rubinstein s infinite horizon alternating offer game however if the arbitrator sufficiently favors the player making the initial offer then delay occurs in equilibrium