mutual fund misclassification evidence based on style analysis an iterative application of william sharpe s method of style analysis is applied to the classification of equity mutual funds a new methodology for creating purified mutual fund style indexes is used to verify existing classifications results suggest that 9 percent of all equity funds are seriously misclassified and another 31 percent are somewhat misclassified two factors emerge as the most likely reasons for misclassification 1 the ambiguity of the current classification system and 2 competitive pressures in the mutual fund industry and compensation structures that reward relative performance monte carlo simulations on out of sample data show that this misclassification has a significant effect on investors ability to build diversified portfolios of mutual funds

credit market constraints consumption smoothing and the accumulation of durable production assets in low income countries investments in bullocks in india in this paper we formulate and estimate a finite horizon structural dynamic model of agricultural investment behavior that incorporates the major features of low income agricultural environments income uncertainty constraints on borrowing and rental markets and the use of investment assets to generate income and smooth consumption the model is fit to longitudinal indian household data on farm profits bullock stocks and pump sets the estimated structural parameters are used to assess the effects on the life cycle accumulation of bullocks agricultural profits and welfare associated with complete markets and bullock liquidity and with second best policies that provide assured sources of income to farmers and weather insurance

the investor specific price of renewable energy project risk a choice experiment with incumbent utilities and institutional investors abstract renewable energy investments in germany have recently soared trebling the output of wind and solar power generation in only ten years while incumbent utilities have lagged behind in terms of investment new entrants have significantly contributed to this growth existing literature has primarily focused on explaining the lethargy of incumbents former investments although there is a growing need to investigate recent investment drivers to secure the necessary power plant capacity at a moderate cost from incumbents and new entrants alike to close this gap a choice experiment involving 1 659 investment choices by 52 european professional investors was conducted in significant contrast to the case with altruistic investors this survey underlines the importance of using financial incentives to attract professional investors given full exposure to electricity price risk incumbent utilities would facilitate projects at a 3 04 risk premium whereas institutional investors demand 6 61 generally incumbent utilities and institutional investors are equally attracted by low risk projects however when risk increases institutional investors are more hesitant to become involved while incumbent utilities confidently navigate these higher risk projects

asset prices and institutional investors empirical evidence indicates that trades by institutional investors have sizable effects on asset prices generating phenomena such as index effects asset class effects and others it is difficult to explain such phenomena within standard representative agent asset pricing models in this paper we consider an economy populated by institutional investors alongside standard retail investors institutions care about their performance relative to a certain index our framework is tractable admitting exact closed form expressions and produces the following analytical results we find that institutions optimally tilt their portfolios towards stocks that comprise their benchmark index the resulting price pressure boosts index stocks while leaving nonindex stocks unaffected by demanding a higher fraction of risky stocks than retail investors institutions amplify the index stock volatilities and aggregate stock market volatility and give rise to countercyclical sharpe ratios trades by institutions induce excess correlations among stocks that belong to their benchmark index generating an asset class effect institutions finance their additional purchases of index stocks by taking on leverage a policy prescription that calls for a reduction in leverage while reducing the riskiness of institutional portfolios would also reduce the ability of institutions to tilt their portfolios towards index stocks depressing the index level

a target group specific approach to green power retailing students as consumers of renewable energy an extensive body of literature exists on the obstacles that have to be overcome in green power retailing in this article target group specific marketing is evaluated as a strategy to increase the share of residential customers of green power a sample of students in the city of freiburg germany was interviewed in order to assess their awareness of environmental issues their willingness to change to green power products and to better understand individual hindrances in changing the power supplier the analysis shows that students are highly positive towards green power products but for several reasons difficult to reach in marketing campaigns aspects to be considered in addressing this consumer group include the students particular expectations towards green products their living conditions price sensitivity and their perception of the relative effort involved in changing the power provider

financial incentives to mobilise local citizens as investors in low carbon technologies a systematic literature review abstract mobilising greater levels of private finance through local citizen investment in low carbon technologies can help bridge the capital shortfall to meeting climate objectives while also building societal support for the low carbon transition within this context we undertake a systematic review of literature assessing the impact of technology specific economic and financial incentives promoting greater levels of investment in low carbon technologies from local citizen investors both individuals and community groups we focus in particular on the impact of feed in tariffs compared to quota schemes grants tax incentives and soft loans the analysis suggests that local citizen investors do not necessarily act in an economically rational manner in response to these incentives it underscores the importance of understanding the preferences of target demographics the local context as well as the characteristics of the technologies in question and suggests interventions should be considered as part of wider policy packages while identifying challenges to be overcome through instrument design we find that feed in tariffs grants and tax incentives can be successful in mobilising greater levels of investment from local citizen investors but that soft loans tend to be less effective as a stand alone instrument the review identifies areas meriting further exploration in this emerging field of research

difficulty is critical the importance of social factors in modeling diffusion of green products and practices abstract despite the very positive as measured by market surveys attitude towards eco innovations and sustainability in general the actual market penetration of green products and practices generally falls behind the expectations in this paper we argue that considering difficulty of engagement as used in the campbell paradigm is of critical importance when modeling diffusion of eco innovations such a notion of difficulty possesses three desired properties i parsimony it is represented by a single value ii interpretability it can be regarded as an estimator of the otherwise complex notion of behavioral cost and iii applicability it can be easily measured through market surveys in an extensive simulation and analytical study involving empirically measured difficulty and an agent based model spanned on different social network structures we show that innovation adoption may exhibit abrupt changes in market penetration as a result of even small changes in difficulty the latter may be of particular interest to policy makers who have to make strategic decisions when introducing socially but not necessarily individually desired products and practices like dynamic or green electricity tariffs

portfolios in disguise window dressing in bond fund holdings abstract this paper builds on the limited body of research on window dressing by bond mutual funds our monthly bias free sample allows us to undertake a more comprehensive study than is possible with the quarterly data traditionally employed in otherwise similar studies we test window dressing in a straightforward manner using monthly undisclosed portfolios which makes it possible to compare changes in public debt allocations around quarterly disclosures our results support the hypothesis that window dressing patterns vary with market conditions we also conduct thorough tests that indicate the significant influence of fund size on window dressing individual analyses provide evidence that this cosmetic practice is not a widespread behaviour in the spanish bond fund industry

informal insurance arrangements with limited commitment theory and evidence from village economies recent work on consumption allocations in village economies finds that idiosyncratic variation in consumption is systematically related to idiosyncratic variation in income thus rejecting the hypothesis of full risk pooling we attempt to explain these observations by adding limited commitment as an impediment to risk pooling we provide a general dynamic model and completely characterise efficient informal insurance arrangements constrained by limited commitment and test the model using data from three indian villages we find that the model can fully explain the dynamic response of consumption to income but that it fails to explain the distribution of consumption across households

a new product growth for model consumer durables this article originally appeared in management science january 1969 volume 15 number 5 pp 215 227 published by the institute of management sciences a growth model for the timing of initial purchase of new products is developed and tested empirically against data for eleven consumer durables the basic assumption of the model is that the timing of a consumer s initial purchase is related to the number of previous buyers a behavioral rationale for the model is offered in terms of innovative and imitative behavior the model yields good predictions of the sales peak and the timing of the peak when applied to historical data a long range forecast is developed for the sales of color television sets

risk and insurance in a rural credit market an empirical investigation in northern nigeria credit contracts play a direct role in pooling risk between households in northern nigeria repayments owed by borrowers depend on realizations of random shocks by both borrowers and lenders the paper develops two models of state contingent loans the first is a competitive equilibrium in perfectly enforceable contracts the second permits imperfect information and equilibrium default estimates of both models indicate that quantitatively important state contingent payments are embedded in these loan transactions but that a fully efficient risk pooling equilibrium is not achieved the research is based on a year long survey in zaria nigeria conducted by the author

liberalising european electricity markets opportunities and risks for a sustainable power sector the process of liberalising european electricity markets encompassing a wide range of restructuring activities has mainly been spurred by the attempt to increase the economic efficiency of the whole sector this process might be used to trigger a development towards a sustainable power sector by increasing the use of renewable energy sources and enhancing energy efficiency on the supply and demand side however by taking a closer look at the current trends of the european electricity markets it becomes obvious that the liberalisation not only implies opportunities but also risks for the creation of a sustainable power sector many of these risks are due to market distortions and imperfections caused by the delay in creating a fully functional single european market thus in the short term the market liberalisation tends to constitute more risks than opportunities without government actions to prevent these risks in the long run though the efficiency gains of the sector and the appearance of new market factors are likely to bring forth the opportunities of liberalisation and actively foster a transformation towards a sustainable electricity sector

household energy use applying behavioural economics to understand consumer decision making and behaviour household energy conservation has emerged as a major challenge and opportunity for researchers practitioners and policymakers consumers also seem to be gaining greater awareness of the value and need for sustainable energy practices particularly amid growing public concerns over greenhouse gas emissions and climate change yet even with adequate knowledge of how to save energy and a professed desire to do so many consumers still fail to take noticeable steps towards energy efficiency and conservation there is often a sizeable discrepancy between peoples self reported knowledge values attitudes and intentions and their observable behaviour examples include the well known knowledge action gap and value action gap but neither is household energy consumption driven primarily by financial incentives and the rational pursuit of material interests in fact people sometimes respond in unexpected and undesirable ways to rewards and sanctions intended to shift consumers cost benefit calculus in favour of sustainable behaviours why is this so why is household energy consumption and conservation difficult to predict from either core values or material interests by drawing on critical insights from behavioural economics and psychology we illuminate the key cognitive biases and motivational factors that may explain why energy related behaviour so often fails to align with either the personal values or material interests of consumers understanding these psychological phenomena can make household and community responses to public policy interventions less surprising and in parallel can help us design more cost effective and mass scalable behavioural solutions to encourage renewable and sustainable energy use among consumers

behavioral innovations the missing capital in sustainable development abstract many scholars argue that environmental issues can be addressed through technological innovation a proposal which echoes a lasting debate between environmental and ecological economics about the substitution rate between natural and manufactured capital in addition to these two established types of capital this paper introduces the idea of behavioral capital we define behavioral capital as the latent potential of behavioral change to affect improvement in environmental quality our contribution argues that technological and traditional regulatory innovations serve as insufficient tools for addressing modern environmental issues and ensuring sustainable development without discarding these solutions we contend that because human behavior is a significant contributor to environmental problems it should be regarded as a key component of continued solutions we suggest that the dual interest theory can serve as an integrative framework for behavioral innovations related to environmental issues in suggesting this we assume that behavioral innovations can both overcome some of the limitations of technological innovations and offer new solutions our main insight is to suggest that some depletion of natural capital but not all can be offset by behavioral changes without decreasing or even increasing subjective well being

systematic share price fluctuations after bankruptcy filings and the investors who drive them beginning in the 1990s firms often continue to trade on the major national exchanges after chapter 11 bankruptcy filings for bankruptcies filed from 1993 2003 we find that the more negative the filing period price reaction the more favorable the immediate post filing returns on average this reversal is not attributable to bid ask bounce it holds after controlling for other factors associated with post filing returns and it appears more attributable to the activities of large traders than to small traders supplementary tests reveal that the pattern of post filing returns differs significantly for bankruptcies filed in bull versus bear markets bankruptcies filed during the 1993 to 1999 bull market enjoy substantial but short lived reversals averaging one third of the filing period price plunge these reversals are inconsistent with efficient assimilation of the bankruptcy information in contrast we find no evidence of post filing reversals for bankruptcies filed from 2000 to 2003

investment decisions depend on portfolio disclosures a weekly database of retail money fund portfolio statistics is uneconomical for retail investors to observe so it allows direct comparison of disclosed and undisclosed portfolios this makes possible a more direct and unambiguous test for window dressing than elsewhere in the literature the analysis shows that funds allocating between government and private issues hold more in government issues around disclosures than at other times consistent with the theory that intermediaries prefer to disclose safer portfolios cross sectional comparisons locate the most intense rebalancing in the worst recent performers money managers are typically required to disclose their portfolios on prearranged dates whether investors receive new information depends on whether managers are influenced by the disclosure requirement managers can ignore the disclosure schedule when they invest in which case the disclosed portfolios will be unbiased albeit noisy estimates of their investing strategies alternatively they can plan their investing around the schedule by moving briefly into and out of the portfolios they prefer to disclose thereby reducing or destroying the power of the disclosures to reveal anything meaningful the goal of this paper is to establish which scenario best describes the behavior of money market mutual fund managers the idea that portfolio weights interact with disclosure dates surfaces now and again in the academic and trade literature surviving on circumstantial evidence rather than direct observation the odd behavior of asset prices around common disclosure dates particularly the end of the year comprises

understanding household energy use decision making and behaviour in guinea conakry by applying behavioural economics abstract for decades generalized frauds have left the electrical sector of guinea with an entirely defective financial scheme as a developing nation guinea s electricity consumption has been relatively low for a long time although it has been increasing recently due to increasing power generation the growth in power capacity is due to the construction of two new dams kaleta dam 240 mw which is already operational and souapiti dam 550 mw which is still under construction taking into account that the country has so far been without electricity there is a need to assess and predict consumer behaviour before the full completion of these projects the aim of this study is to make the household and community reactions to public policy interventions less surprising however even sufficient knowledge of how to conserve energy and a stated desire to do so many consumers still fail to take perceptible measures to increase energy efficiency and conservation why is this so by focusing on crucial insights from behavioural economics and psychology we highlight the incentive factors the basic cognitive biases and the psychological phenomena that cause this disconnect understanding these factors can help us to design sustainable energy use among consumers in guinea conakry

agents watching agents evidence from pension fund ownership and firm value abstract this paper examines the valuation effects associated with the incentive structures of different types of institutional investors using the ownership levels of public and private pension funds in a firm the results suggest that institutional monitoring is associated with valuation effects when both observable and unobservable aspects of the relationship between institutions and firms are taken into account moreover the valuation effects vary according to the objective functions of institutions administrators thus other shareholders do not necessarily benefit from relationships between institutions and managers and they could be hurt when the institutional agents watching firm agents have conflicts of interest with other shareholders

success factors for environmentally sustainable product innovation a systematic literature review the growing awareness regarding environmental sustainability has fully reached business reality consumers and companies alike are looking for alternatives to mitigate pressing environmental demands resulting from continuous population and economic growth on the other hand companies must deal with an increasingly competitive scenario where innovation is regarded as a survival need in most markets it is thus clear that systematic academic research is paramount to guide companies to succeed in environmentally sustainable product innovation in this context this paper i consolidate extant research and aggregate findings of different studies on environmentally sustainable product innovation through an interpretative framework of published literature on the topic and ii map critical success factors that drive the success of product innovation developed in this new logic of production and consumption to achieve these objectives a systematic literature review on environmentally sustainable product innovation was conducted results show that there are four main critical success factors for environmentally sustainable product innovation market law and regulation knowledge interfunctional collaboration innovation oriented learning and r d investments the factors identified in this research and corresponding variables were subjected to a brief empirical test by professionals the test allowed a preliminary approval of the developed framework and identification of the most important variables within each factor a research agenda based on the state of the art on the topic is also proposed

energy efficiency policy analysis using socio technical approach and system dynamics case study of lighting in latvia s households abstract worldwide the lighting sector demands around 1 5 of total electricity used while the diffusion of new lighting technologies occurs quickly and prices for these technologies drop at the same time around 1 3 of households in developed european countries continue to choose incandescent light bulbs this phenomena shows a large potential for saving electricity therefore the aim of our research is to model the diffusion of innovation for energy efficiency solutions in households in latvia the methodology combines an empirical study with system dynamics modelling the model showed that electricity consumption in households decreased by 14 from the year 2015 until the year 2040 the sensitivity analysis shows that changes in the parameters used in this analysis caused expected behaviour where the uncertainly in electricity consumption in households accounted for 16 in the year 2040 although this developed system dynamics model was based on a specific process of diffusion of innovation its general application to other products and services is possible since the developed model serves as a white box the structure of the model can be used for other studies the model can be enhanced with the newest results or adapted for other case studies

mutual fund tournaments the sorting bias and new evidence previous findings regarding the risk shifting behavior of mid year underperforming mutual fund managers are mixed in this article i show that this is due to a sorting bias which is caused by the sorting of first half risk levels when establishing relative mid year performance even without risk shifting behavior mean reversion of these sorted risk levels results in the detection of tournament behavior after correcting for this bias i find evidence supporting the hypothesis that first half underperforming managers increase portfolio risk during the second half of the year and that this tournament behavior is not dependent on first half market conditions the author 2011 published by oxford university press on behalf of the society for financial studies all rights reserved for permissions please e mail journals permissions oup com oxford university press

recent experiences with tariffs for saving electricity in households abstract financial incentives or disincentives in the form of electricity tariffs can be used to encourage energy efficiency in this paper two simple tariffs aimed at residential consumers are reviewed progressive tariffs pts which penalise high consumption of electricity and electricity saving feed in tariffs esfits which provide incentives to reduce consumption of electricity the effectiveness of these tariffs is quantified and compared using the price elasticity for pt and an incentive elasticity for esfit the results indicate that pts are more effective in mobilising electricity saving than esfits and confirm biases in human decision making here loss aversion while further research is necessary we propose a tariff which would motivate consumers to reduce their consumption by offering both an incentive for reaching an energy saving goal and a disincentive for failing to reach this goal the flexibility of such a tariff makes it a promising solution suitable for application in countries with a comparatively high household income and liberalised retail electricity market

strategic interactions and portfolio choice in money management theory and evidence the author study portfolio choice of strategic fund managers in the presence of a peer based under performance penalty while the penalty generates herding behavior correlated trading among managers is exacerbated when a strategic setting is considered the equilibrium portfolios are driven by the least restricted manager who may vary according to the realization of returns the author compare model predictions to evidence from the colombian pension fund management industry where six asset managers are incharge of portfolio allocation for the mandatory contributions of the working population these managers are subject to a peer based under performance penalty known as the minimum return guarantee mrg the author study trading behavior by managers before and after a change in the strictness of the mrg in june 2007 the evidence suggests that a tighter mrg results in more trading in the direction of peers a behavior that is more pronounced for under performing managers is how that these findings areconsistent with the qualitative and quantitative predictions of the theoretical model

anomalies or illusions evidence from stock markets in eighteen countries abstract this paper examines five seasonal patterns in stock markets of eighteen countries the weekend turn of the month end of december monthly and friday the thirteenth effects we find a daily seasonal in nearly all the countries but a weekend effect in only nine countries interestingly the daily seasonal largely disappears in the 1980s the last trading day of the month has large returns and low variance in most countries many countries have large december pre holiday and inter holiday returns the january returns are large in most countries and a significant monthly seasonal exists in ten countries

an investigation of the rationality of consumer valuations of multiple health risks after developing a conceptual analysis of consumer valuation of multiple risks we explore both economic and cognitive hypotheses regarding individual risk taking using a sample of over 1 500 consumers our study ascertains risk dollar tradeoffs for the risks associated with using an insecticide and a toilet bowl cleaner we observe the expected positive valuation of risk reductions and find empirical support for a diminishing in the valuation of risk reduction as the extent of the risk reduction increases we also find evidence of certainty premiums for the total elimination of one risk but no strong evidence of additional certainty premiums for the elimination of multiple risks strong reference risk effects are evident as increases in risk were valued much more greatly than were decreases

consumer rationality and the status quo received microeconomic theory presumes rational consumers maximize utility over all commodity bundles recent analysis however suggests that a consumer s status quo may limit economic rationality bias consumer decisions and induce serious errors in survey based valuations of public and private goods using regression and choice theoretic frameworks we investigate the existence of status quo effects in the consumer valuation of a particular unpriced product the reliability of residential electrical service such valuations have become important in electric utility resource planning and rate making we find substantial status quo effects which must be addressed in welfare comparisons regarding electric service reliability

preferred habitat for liquidity in international short term interest rates abstract risk shifting window dressing and a preferred habitat for liquidity have been offered as possible explanations as to why us money market rates are higher before the year end than afterwards the two hypotheses differ in the timing of the rate decline at the year end and the evidence on the timing of the decline supports the preferred habitat hypothesis in us money markets this paper extends this line of research to the behavior of international short term interest rates at year ends and quarter ends using london interbank offer rates libor for 11 different currencies the results suggest that the behavior of libor for five currencies the us dollar euro japanese yen swiss franc and german mark is consistent with year end or quarter end preferred habitats for liquidity other currencies do not demonstrate consistently distinct patterns in turn of the year and turn of the quarter yields none of the results provides any support for risk shifting window dressing

decision making over time and under uncertainty a common approach this paper considers a number of parallels between risky and intertemporal choice we begin by demonstrating a one to one correspondence between the behavioral violations of the respective normative theories for the two domains i e expected utility and discounted utility models we argue that such violations or preference reversals are broadly consistent with three propositions about the weight that an attribute receives in both types of multiattribute choice specifically it appears that 1 if we add a constant to all values of an attribute then that attribute becomes less important 2 if we proportionately increase all values of an attribute or if we change the sign of an attribute from positive to negative then that attribute becomes more important the generality of these propositions as well as the constraints they would impose on separable representations of multiattribute preferences is discussed

wage and labor supply effects of illness in cote d ivoire and ghana instrumental variable estimates for days disabled abstract sickness should make individuals less productive but there are problems in measuring this effect first how is adult morbidity measured in a household survey second how is the impact or morbidity on productivity inferred if earning is partly used to improve health self reported functional activity limitation due to illness is considered an indicator of morbidity for wage earners and self employed people to deal with both the measurement and joint determination problems an instrumental variable estimation approach is used where local food prices and health services instrument for disability days that reduce wages by at least 10 and hours by 3 or more

understanding the diffusion of sustainable product service systems insights from the sociology of consumption and practice theory the sustainable product service system spss concept highlights that achieving sustainability requires changes in both production and consumption nevertheless attention has focused mainly on production this paper enriches the spss approach with insights from the sociology of consumption and practice theory to provide a deeper understanding of the use of products and services in daily life contexts the paper advances three key insights related to a the internal dynamics of user practices b the strength of linkages of practice elements loose and tight coupling c external linkages to other practices these insights are mobilised to provide a deeper understanding of the uptake and diffusion of innovations such as spss the insights are illustrated with two cases in which interventions designed to stimulate diffusion have had differential success energy efficient light bulbs and low temperature laundry implications for understanding the diffusion of spss are discussed

stress testing the equity home bias a turnover analysis of eurozone markets abstract shifts in equity turnover happen on and around holidays because rationally bounded investors become distracted their pattern reveals a persistent equity home bias even in the eurozone a stress test case for the survival of this bias given the high level of economic and financial development and integration in this area the bias is greater for small caps because investors are reluctant to hold this class of foreign asset our study corroborates calendar anomalies in trading volumes but refutes the hypothesis regarding turnover sensitivity to stock returns common in the empirical and theoretical literature based on investor heterogeneity and short sale constraints our results reveal vanishing cost asymmetries in taking long rather than short positions

the dynamics of technological substitution the case of eco innovation diffusion of surface cleaning products some eco innovations have already reached a mature state but they diffuse slowly there is little known about the importance of various factors on the diffusion process of eco innovations the aim of this research is to propose a conceptual model for eco innovation diffusion where particular case study of eco innovation micro fibre cloth mfc for surface cleaning purposes is given the work will study the relative importance of various motivations on diffusion processes as well as the influence of information campaigns this novel methodology has been developed under the system dynamics framework and is coupled with the logistic regression model structural validation tests were done for the proposed model the methodology is proposed then the integrated empirical study and system dynamics model are completed the results of the logistic regression models show that the overall attitudes and social influence has the most dominant impact on intention to use the studied eco innovation products the most sensitive parameters in the system dynamics model were found to be the adoption faction of information received by word of mouth households adopting micro fibre cloth at the beginning of the simulation and the contact rate per household the proposed methodology and developed mathematical model can also be used as the basis for other studies of other diffusion processes since system dynamics modelling is a white box modelling approach and the structure of the model can be enhanced with the latest results from other studies

of tournaments and temptations an analysis of managerial incentives in the mutual fund industry we test the hypothesis that when their compensation is linked to relative performance managers of investment portfolios likely to end up as losers will manipulate fund risk differently than those managing portfolios likely to be winners an empirical investigation of the performance of 334 growth oriented mutual funds during 1976 to 1991 demonstrates that mid year losers tend to increase fund volatility in the latter part of an annual assessment period to a greater extent than mid year winners furthermore we show that this effect became stronger as industry growth and investor awareness of fund performance increased over time

window dressing by pension fund managers this paper takes a first look at investment strategies of managers of 769 pension funds with total assets of 129 billion at the end of 1989 the data show that managers of these funds tend to oversell stocks that have performed poorly relative sales of losers accelerate in the fourth quarter when funds portfolios are closely examined by the sponsors this result supports the view that fund managers window dress their portfolios to impress sponsors and suggests that managers are evaluated on their individual stock selections and not just aggregate portfolio performance this abstract was borrowed from another version of this item

the effect of implicit contracts on the movement of wages over the business cycle evidence from micro data in this paper we address the question of whether wages are affected by labor market conditions in a manner more consistent with a contract approach than with a standard spot market model from a simple implicit contract model we derive implications about the links between wages and past labor market conditions using individual data from the current population survey and the panel study of income dynamics we find that an implicit contract model with costless mobility describes these links better than either a simple spot market model or an implicit contract model with costly mobility

the turn of the year effect and tax loss selling by institutional investors prior studies attribute the turn of the year effect whereby small capitalization stocks earn unusually high returns in early january to tax loss selling by individual investors and window dressing by institutional investors my results suggest that a significant portion of the effect on turn of the year returns that prior studies attribute to window dressing is actually attributable to tax loss selling by institutional investors among small capitalization stocks i find that institutional investors with strong tax incentives and weak window dressing incentives realize significantly more losses in the fourth quarter than in the first three quarters of the calendar year and that their fourth quarter realized losses have a significant impact on turn of the year returns a one percentage point change in these institutional investors fourth quarter realized losses scaled by a firm s market capitalization results in an increase of 47 basis points in the firm s average daily return over the first three trading days of january which represents a 46 percent change for the mean firm

wages rents and the quality of life this study focuses on the role of wages and rents in allocating workers to locations with various quantities of amenities the theory demonstrates that if the amenity is also productive then the sign of the wage gradient is unclear while the rent gradient is positive the theory is extended to include the housing market and nontraded goods these extensions require little modification of the conclusion the empirical work on wages shows that the regional wage differences can be explained largely by these local attributes with the use of site price data implicit prices are estimated and quality of life rankings for the cities are computed

wealth weather risk and the composition and profitability of agricultural investments despite the growing evidence that farmers in low income environments are risk averse there has been little empirical evidence on the importance of risk in shaping the actual allocation of production resources among farmers differentiated by wealth the authors use panel data on investments in rural india to examine how the composition of productive and nonproductive asset holdings varies across farmers with different levels of total wealth and across farmers facing different degrees of weather risk income variability is a prominent feature of the experience of rural agents in low income countries the authors report evidence based on measures of rainfall variability that the agricultural investment portfolio behavior of farmers in such settings reflects risk aversion due evidently to limitations on consumption soothing mechanisms such as crop insurance or credit markets the authors results suggest that uninsured weather risk is a significant cause of lower efficiency and lower average incomes a one standard deviation decrease in weather risk measured by the standard deviation of the timing of the rainy season would raise average profits by up to 35 percent among farmers in the lowest wealth quartile moreover rainfall variability induces a more unequal distribution of average incomes for a given distribution of wealth wealthier farmers are willing to absorb significant risk without giving up profits to reduce production risk smaller farmers have to invest their limited wealth in ways that reduce their exposure to risk at the cost of lower profit rates the authors found that at high levels of rainfall variability differences in rates of profit per unit of agricultural assets were similar across classes of wealth but over the sample range of rainfall variability these rates of profit were always higher for the poorer farmers than for the wealthier ones suggesting that the disadvantages of small farmers in risk diffusion are more than offset by their labor cost advantage

environmental innovations and profitability how does it pay to be green an empirical analysis on the german innovation survey much of the empirical literature analysing the relation between environmental innovation and competitiveness has focused on the question whether it pays to be green we differentiate between different types of environmental innovations which will be disentangled in those aiming at reducing the negative externalities and those allowing for efficiency increases and cost savings what we analyze is at first the extent to which these two typologies have impacts on firms profitability with opposite signs and secondly whether the motivations driving the adoption of those innovations make the difference in terms of economic gains we find empirical evidence that both the typology of environmental innovation and the driver of their adoption affect the sign of the relationship between competitiveness and environmental performance the empirical strategy is based on a sample of german firms and makes use of a merge of two waves of the mannheim innovation panel in 2011 and 2009 that allow overcoming some endogeneity issues which may arise in a cross section setting

on relative performance contracts and fund manager s incentives abstract for pension schemes mutual funds banks and other financial intermediaries large portfolio decisions are increasingly delegated to fund managers recently there has been growing concern that these managers seem to adopt extremely similar investment strategies one possible explanation for this phenomenon may be found in reward schemes based on relative performance we show how relative performance reward schemes may arise as optimal contracts our focus is the fund owners fund manager relationship in which the manager before making a portfolio decision on behalf of the owners may acquire at some cost information that is not available to the owners payment schemes based on relative performance afford the owners tighter control of their manager s activities however if two managers of different funds both accept contracts that depend on their relative as well as absolute performances then there may exist equilibria in the managers subgame that result in undesirable outcomes for the owners

motivating non ratepaying households with feedback and social nudges a cautionary tale abstract behavioral interventions have been shown to be valuable instruments in reducing energy use among ratepaying customers but their effect on non ratepayers has received less attention this study uses a randomized controlled trial research design to examine the effect of feedback and a social nudge in the form of peer comparison on energy consumption of non ratepaying households the study setting is a university family housing complex and findings are based on hourly observations of energy use by 62 households over thirteen weeks our results suggest that neither feedback or peer comparison is an effective instrument to reduce energy use of non ratepaying households and may even increase energy consumption in some contexts we find heterogeneous effects among households that are low and high users of energy in the pre treatment period with high users increasing energy consumption in response to feedback thus caution is needed in applying behavioral interventions when financial incentives to reinforce intended effects are absent

institutions and the turn of the year effect evidence from actual institutional trades abstract using a large proprietary database of institutional trades we investigate whether institutional investors drive the turn of the year toy effect institutions that engage in window dressing tax loss selling or risk shifting will contribute to the toy effect by selling small poorly performing stocks at the end of december and or buying those same stocks at the beginning of january we find abnormal pension fund selling in small stocks with poor past performance during the final trading days in december providing some support for the window dressing hypothesis however we find little evidence that institutional tax loss selling or risk shifting trading strategies contribute to toy returns furthermore stocks with no institutional trading around the year end exhibit considerably stronger toy return patterns than stocks in which institutions trade taken together our results suggest that institutions play a limited role in driving the toy effect

the impact of electricity market liberalization in turkey free consumer and distributional monopoly cases abstract electricity sector has grown substantially in turkey since the early 1960s as a result of rapid industrialization and urbanization the vertically integrated state owned company had a legally established monopoly on the generation transmission and distribution of electricity in turkey with the support and encouragement of international organizations like the world bank turkey has initiated a comprehensive program to liberalize and privatize the electricity market in 2001 the liberalization of the electricity market in turkey started in the distribution side of the market the distribution network was divided into 21 distribution regions and in each of these separate initially state owned distribution companies have been authorized to distribute and sell electricity the plan envisaged to complete privatization of all distribution companies until the end of 2006 this study compares the welfare implication of privatization of the distribution networks by comparing two extreme cases a pure regional distributional monopoly case and a representative pure free consumer case with a benchmark case of administered price regulation for this purpose we develop a simulation model of the turkish electricity system and use the data on generation and distribution costs our simulation analysis shows that substantial welfare losses occur if the distributional companies behave as regional monopolists our findings reiterate the importance of regulation and market design

acute morbidity and labor outcomes in mexico testing the role of labor contracts as an income smoothing mechanism abstract economic development is associated with an increase in the share of workers in salaried jobs this process may be accompanied by a reduction in wage fluctuations if labor contracts are used as income smoothing mechanisms this paper tests to what extent salaried jobs help reduce the volatility of wages by insuring workers against productivity shocks analysis of mxfls data indicates that the average contractual arrangement in mexico insures the worker against idiosyncratic productivity fluctuations associated with episodes of illness the evidence is stronger for workers in formal jobs to validate the methodology the test is also implemented on a sample of self employed workers in this case it correctly rejects the presence of insurance against productivity shocks

on the merit of equal pay performance manipulation and incentive setting abstract work performance is often difficult to assess thus leaving room for manipulation of commonly used metrics we created a laboratory workplace in which we can precisely assess both work performance along with manipulation activities using two independent experiments we show that whenever pay for performance is used manipulation is pervasive leading to both a waste of organizational resources and a weakening of incentives by contrast paying organizational members equally effectively deters manipulation attempts leading to higher organizational production

accounting year end dispersion and seasonality in the japanese corporate bond market using monthly yield data on straight bonds this article investigates seasonality in the japanese corporate bond market a statistical examination of spreads between the yield of each bond and a bond market index reveals that the yield spread consistently decreases from april to august whereas it increases from september to december because accounting year ends for most investors in japan are concentrated in either march or december this seasonality supports the hypotheses of tax loss selling and window dressing moreover the seasonality becomes more pronounced as the debt rating declines consistent with the findings in previous studies investigating the us bond market

testing intertemporal substitution implicit contracts and hours restriction models of the labor market using micro data we present new tests of three theories of the labor market intertemporal substitution hours restrictions and implicit contracts the intertemporal substitution test we implement is an exclusion test robust to many specification errors and we consistently reject this model we model hours restrictions as part of an endogenous switching model we compare the implicit probit equation to an unrestricted probit equation for unemployment and reject the hours restriction model for the implicit contracts model we estimate non separable within period labor supply and consumption equations we test a cross equation restriction of the model and cannot reject the implicit contracts model jel e30 j22 j60

sovereign wealth funds the norwegian experience sovereign wealth funds have rapidly become significant international institutions the performance of funds varies substantially across countries but comprehensive and systematic analyses of funds have been hampered by the lack of transparency of most funds the relative transparency of the norway fund allows us to do an econometric analysis of the fund s performance the record resembles that of a mutual fund that has taken on greater risk over time there is no evidence that the fund has disrupted foreign financial markets more than mutual funds do there remains a question as to whether the fund and its finance ministry have been effective agents for the norwegian citizens whose assets they are managing

strategic niche management from a business perspective taking cleaner vehicle technologies from prototype to series production strategic niche management has been outlined as a policy approach to assist development and diffusion of cleaner new technologies based on a case study describing the efforts of a leading actor in the heavy vehicle industry to develop and commercially introduce hybrid electric vehicles this paper discusses strategic niche management from the perspective of the manufacturing firm in particular the paper analyses experiences from extensive field tests executed in london tests which involved a number of different manufacturers hybrid systems and vehicles the scale of this technological niche added confidence and credibility to the technology and helped opening up an important niche market which was supported by an extensive subsidy scheme the analysis shows how the field tests and the subsidies jointly functioned as bridging policies that facilitated an important step in the market formation process the analysis further points at a critical tension between niches and the volume oriented business of a major vehicle manufacturer showing how investments in new technology need to be warranted in market trends and projections of future sales and production volumes to become accepted within a vehicle manufacturer s organization

ossified materialism introduction to the special volume on absolute reductions in materials throughput and emissions drawing from papers in this special volume sv this introductory paper on absolute reductions argues that the magnitude scope and urgency of the sustainability challenge require a drastic change in global civilisation including a radical transformation of the institutional arrangements and socio technical systems that facilitate the pursuit of wellbeing the authors of this paper identify four main challenges to absolute reductions including the resource intensive conventional template for development macroeconomic structures and trade policies creating burden shifting and inequality a resourceefficiency improvements fallacy and the dominant consumerist culture and lifestyles the paper demonstrates

health nutrition and economic development the relationship between health and economic development is explored focusing on nutrition based health indicators the spotlight is placed on the inter related feedbacks between the influence of health on productivity on one hand and the influence of income on health status on the other disentangling causality in these relationships has preoccupied much of the literature we evaluate different empirical strategies that have been adopted and assess the results there is now a body of evidence based on careful empirical studies that demonstrates a causal relationship between health and labor productivity there is also evidence that at least among the very poor additional income is spent on improved nutrition there are two issues that have received little attention although we argue they are likely to be very important first measurement of health is discussed in detail evidence is presented on how taking into account differences in the extent of measurement error is critical for interpreting the impact of health on wages the same theme emerges in studies of the effect of income on health specifically calorie intake the key role of non linearities in these relationships is highlighted and we demonstrate that a good deal of the variation in estimates of income elasticities of demand for calories can be ascribed to the role of measurement and functional form authors

redefining innovation eco innovation research and the contribution from ecological economics while innovation processes toward sustainable development eco innovations have received increasing attention during the past years theoretical and methodological approaches to analyze these processes are poorly developed against this background the term eco innovation is introduced in this paper addressing explicitly three kinds of changes towards sustainable development technological social and institutional innovation secondly the potential contribution of neoclassical and co evolutionary approaches from environmental and innovation economics to eco innovation research is discussed three peculiarities of eco innovation are identified the double externality problem the regulatory push pull effect and the increasing importance of social and institutional innovation while the first two are widely ignored in innovation economics the third is at the least not elaborated appropriately the consideration of these peculiarities may help to overcome market failure by establishing a specific eco innovation policy and to avoid a technology bias through a broader understanding of innovation finally perspectives for a specific contribution of ecological economics to eco innovation research are drawn it is argued that methodological pluralism as established in ecological economics would be very beneficial for eco innovation research a theoretical framework integrating elements from both neoclassical and evolutionary approaches should be pursued in order to consider the complexity of factors influencing innovation decisions as well as the specific role of regulatory instruments and the experience gathered in ecological economics integrating ecological social and economic aspects of sustainable development is highly useful for opening up innovation research to social and institutional changes 2000 elsevier science b v all rights reserved

smoothing consumption by smoothing income hours of work responses to idiosyncratic agricultural shocks in rural india while research has demonstrated that farm households in developing economies are able to protect consumption from idiosyncratic crop shocks little evidence shows how this is achieved this paper examines the extent to which labor markets allow households to shift labor from farm to off farm employment and the extent to which such a shift explains the observed lack of correlation between consumption and idiosyncratic crop shocks the empirical analysis uses a novel measure of the idiosyncratic crop income shock which utilizes information on start of season cropping choices to more accurately estimate household expectations of weather

herding on noise the case of johnson redbook s weekly retail sales data recent models of herding suggest that speculators may rationally trade on information unrelated to fundamentals when their trading horizons are short this study provides an empirical example where this appears to be the case johnson redbook s weekly retail sales figures predicted bond returns for a short time after a significant number of bond traders began purchasing and trading on the data the significant relationship between the data and bond returns disappeared just after the wall street journal started to report it mean while there was little or no change in the relationship between the data and retailers stock returns perhaps because the data have long been followed by retail stock analysts johnson redbook s original investor clientele

starting on the wrong foot seasonality in mutual fund performance abstract we document a systematic seasonal component in the aggregate underperformance of active mutual funds at the aggregate level active funds underperform the market and other passive benchmarks only in the first month of a quarter this intra quarter performance seasonality holds across fund sizes and investment styles the pattern is consistent with short term stock return reversal effects along with aggregate window dressing and to a lesser extent nav inflation practices around quarter ends we find marginal or no evidence of microstructure biases fund investor flows or cash distributions as sources of this seasonality our findings highlight new features of the active management underperformance puzzle

the effect of holdings data frequency on conclusions about mutual fund behavior abstract a number of articles in financial economics have used quarterly or semi annual mutual fund holdings data to test hypotheses about investment manager behavior this article reexamines four well known hypotheses in finance to determine whether the results of prior tests of these hypotheses remain valid when higher frequency monthly holdings data are employed the areas examined are momentum trading tax motivated trading window dressing and tournament behavior we find that the use of monthly holdings data rather than quarterly holdings data or in the case of tournament behavior holdings data rather than monthly return data change and in some cases reverse previous results this occurs because monthly holdings data capture a large number of trades missed by quarterly data 18 5 of the trades and permit a more precise estimation of the timing of trades

concentration in the european electricity industry the internal market as solution abstract this article offers an analysis of the present competitive and regulatory framework of the european electricity sector and the results achieved with the liberalisation process considering the reactions of incumbents to the liberalisation the focus in this work is mainly on the problem of market concentration in the sector the new trends toward the creation of national champions as well as recent mergers between gas suppliers and electricity producers raise serious concerns about abuses of market power and risk of future collusion in particular the strategic linkage of existing markets and the expansion into new ones are analyzed in the light of the multimarket contact theory considering investment in interconnection among member states the internal market issue is investigated as a solution to the risks coming from liberalisation

information the dual economy and development we examine the interactions between different institutional arrangements in a general equilibrium model of a modernizing economy there is a modern sector where productivity is high but information asymmetries are large and a traditional sector where productivity is low but information asymmetries are small consequently agency costs in the modern sector make consumption lending difficult while such lending is readily done in the traditional sector the resulting trade off between credit availability and productivity implies that not everyone will move to the modern sector in fact the laissez faire level of modernization may fail to maximize net social surplus this situation may also hold in the long run in a dynamic version of the model a trickle down effect links the process of modernization with reduction in modern sector agency costs this effect may be too weak and the economy may get stuck in a trap and never fully modernize the two sector structure also yields a natural theoretical testing ground for the kuznets inverted u hypothesis we show that even within the sectoral shifting class of models this phenomenon is not robust to small changes in model specification

insuring consumption against illness one of the most sizable and least predictable shocks to economic opportunities in developing countries is major illness we investigate the extent to which families are able to insure consumption against major illness using a unique panel data set from indonesia that combines excellent measures of health status with consumption information we find that there are significant economic costs associated with major illness and that there is very imperfect insurance of consumption over illness episodes these estimates suggest that public disability insurance or subsidies for medical care may improve welfare by providing consumption insurance

public praise vs private pay effects of rewards on energy conservation in the workplace any solution to rising levels of co2 depends on human behavior one common approach to changing human behavior is rewarding desired behavior because financial incentives often have side effects that diminish efficacy we predict that social rewards are more effective because they invoke adherence to descriptive and injunctive social norms we investigated this by measuring electricity use for 13 weeks at a dutch firm each week employees were rewarded for conserving energy they either received monetary rewards 0 5 or social rewards grade points with a descriptive comment rewards were either private or public in both the short and long term public rewards outperformed private rewards and social rewards outperformed monetary rewards this suggests that private monetary rewards although popular may be ineffective instead public social rewards may be a more promising approach to stimulating energy conservation we argue that this approach should be considered more frequently by policy makers

institutions and individuals at the turn of the year this article evaluates the tax loss selling hypothesis against the window dressing hypothesis as explanations for turn of the year anomalies we examine differences between securities dominated by individual investors versus those dominated by institutional investors and find that the effect is more pervasive in the former controlling for capitalization we find that in early january late december stocks with greater individual investor interest outperform underperform stocks with greater institutional investor interest these results hold for both stocks that previously appreciated in value and stocks that previously depreciated in value the results are most consistent with the tax loss selling hypothesis as an explanation for the turn of the year effect

scenario analysis of energy saving and co2 emissions reduction potentials to ratchet up japanese mitigation target in 2030 in the residential sector abstract this paper assesses to what extent co 2 emissions from electricity in the residential sector can be further reduced in japan beyond its post 2020 mitigation target known as intended nationally determined contribution indc the paper examines the reduction potential of electricity demand and co 2 emissions in the residential sector by conducting a scenario analysis electricity consumption scenarios are set up using a time series regression model and used to forecast the electricity consumption patterns to 2030 the scenario analysis also includes scenarios that reduce electricity consumption through enhanced energy efficiency and energy saving measures the obtained results show that japan can reduce electricity consumption and co 2 emissions in the residential sector in 2030 more than the japanese post 2020 mitigation target indicates at the maximum the electricity consumption could be reduced by 35 twh which contributes to 55 4 mtco 2 of emissions reduction in 2030 compared to 2013 if the voluntarily targeted co 2 intensity of electricity is achieved the result implies that japan has the potential to ratchet up post 2020 mitigation targets discussed under the paris agreement of the united nations framework convention on climate change unfccc

assessment of reasonably achievable ghg emission reduction target in lithuanian households abstract lithuania has developed several important climate change mitigation policy documents however there are no attempts in lithuania to develop local climate change mitigation policies or to decentralize climate change mitigation policy the aim of the paper is to analyse climate change mitigation policies in households the paper presents the framework for the assessment of reasonably achievable ghg emission reduction raer potential in households based on behavioral changes related to energy consumption the paper presents the results of empirical application of developed framework in lithuanian households community based social marketing approach was implemented and ghg emission reduction potential was assessed in focus groups of kaunas region county during preparation of sustainable development strategy and long term strategic development plan for kaunas region county

energy conservation nudges and environmentalist ideology evidence from a randomized residential electricity field experiment nudges are being widely promoted to encourage energy conservation we show that while the electricity conservation nudge of providing feedback to households on own and peers home electricity usage works with liberals it can backfire with conservatives our regression estimates predict that a democratic household that pays for electricity from renewable sources that donates to environmental groups and that lives in a liberal neighborhood reduces its consumption by 3 percent in response to this nudge a republican household that does not pay for electricity from renewable sources and that does not donate to environmental groups increases its consumption by 1 percent

consumption smoothing migration and marriage evidence from rural india a significant proportion of migration in low income countries particularly in rural areas is composed of moves by women for the purpose of marriage we seek to explain these mobility patterns by examining marital arrangements among indian households in particular we hypothesize that the marriage of daughters to locationally distant dispersed yet kinship related households is a manifestation of implicit interhousehold contractual arrangements aimed at mitigating income risks and facilitating consumption smoothing in an environment characterized by information costs and spatially covariant risks analysis of longitudinal south indian village data lends support to the hypothesis marriage cum migration contributes significantly to a reduction in the variability of household food consumption farm households afflicted with more variable profits tend to engage in longer distance marriage cum migration the hypothesized and observed marriage cum migration patterns are in dissonance with standard models of marriage or migration that are concerned primarily with search costs and static income gains

changes in institutional ownership and stock returns assessment and methodology although the relation between quarterly changes in institutional investor ownership and contemporaneous stock returns is well documented the source of the relation remains unclear because institutional ownership data are unavailable at higher frequencies in this study we develop a method to generate estimates of higher frequency covariances when one variable is observed at lower frequencies e g quarterly changes in institutional ownership and monthly stock returns our method provides evidence that institutional trading has both temporary and permanent price effects and that the latter is associated with information effects

institutional trades and intraday stock price behavior abstract this paper examines the price effect of institutional stock trading using a unique data set that reports the transactions large and small of 37 large institutional money management firms the direction of each trade and the identity of the management firm behind each trade are known although institutional trades are associated with some price pressure we find that the average effect is small there is also a marked asymmetry between the price impact of buys versus sells we relate our findings to various hypotheses on the elasticity of demand for stocks the cost of executing transactions and the determinants of market impact although market capitalization and relative trade size influence the market impact of a trade the dominant influence is the identity of the money manager behind the trade

self enforcing wage contracts we examine long term wage contracts between a risk neutral firm and a risk averse worker when both can costlessly renege and buy or sell labour at a random spot market wage a self enforcing contract is one in which neither party ever has an incentive to renege in the optimum self enforcing contract wages are sticky they are less variable than spot market wages and positively serially correlated they are updated by a simple rule around each spot wage is a time invariant interval and the contract wage changes each period by the smallest amount necessary to bring it into the current interval