observable and unobservable determinants of replacement of home appliances despite the dominant role of replacement purchases in many consumer durable categories the research in this area has not been extensive only in the last few years has the economic theory made progress towards a more rigorous analysis of the dynamic nature involved in replacement decisions as a consequence of this applied researchers have switched from conventional discrete choice models to new econometric techniques e g duration analysis that allow for richer relationships between socioeconomic variables characteristics of the durable good and the likelihood of its replacement over time our study focuses on two home appliances taken from the residential energy consumption survey recs based on a duration model that allows for unobserved heterogeneity across households we conclude that household demographics and product features both observable and unobservable in general have statistical power to explain replacement decisions over time

decisions to replace consumer durables goods an econometric application of wiener and renewal processes current sales of most consumer durable goods are accounted for by replacements however only in recent years has the economic literature provided a more rigorous analysis of replacement purchases by incorporating elements of dynamic programming and of the theory of stochastic processes this paper is an empirical study of household replacement decisions modeled as an optimal stopping rule using data from the residential energy consumption survey recs of the u s department of energy we conclude that demographic variables operation and replacement costs and equipment characteristics may affect ownership spells of appliances such as electric heaters and central air conditioners

designing supply contracts contract type and information asymmetry this paper studies the value to a supplier of obtaining better information about a buyer s cost structure and of being able to offer more general contracts we use the bilateral monopoly setting to analyze six scenarios three increasingly general contracts wholesale pricing schemes two part linear schemes and twopart nonlinear schemes each under full and incomplete information about the buyer s cost structure we allow both sides to refuse to trade by explicitly including reservation profit levels for both for the supplier this is implemented through a cutoff policy we derive the supplier s optimal contracts and profits for all six scenarios and examine the value of information and of more general contracts our key findings are as follows first the value of information is higher under two part contracts second the value of offering two part contracts is higher under full information and third the proportion of buyers the supplier will choose to exclude can be substantial

efficient adaptation in long term contracts take or pay provisions for natural gas to mitigate the inflexibility of long term contracting for natural gas parties will look for terms that minimize the need for costly adjudication while maintaining incentives for appropriate adaptation the authors examine the incident of take or pay provisions in contracts between natural gas producers and pipelines from this perspective they argue that take obligations can be viewed as a mechanism for effecting appropriate incentives for contractual performance and show that efficient breach considerations define an optimal take percentage as a function of characteristics of the transaction these incentives are distorted by regulated price ceilings which cause the adoption of take obligations in excess of optimal levels the findings refute the common perception that take or pay provisions are just an artifact of wellhead price regulation and serve no useful purpose in the absence of regulation 20 references 1 figure 1 table

modelling the consumer s decision to replace durable goods a hazard function approach this article analysis the consumer s durable good replacement decision using hazard models in contrast to the typical limited dependent variable model often used in durable good demand studies hazard models allow for much richer replacement to illustrate the technique a recursive system consisting of a regression equation and a hazard model is used to examine home heating system replacement decisions by residencial customers of a major southeasten us electric utility the results indicate that overall system replacement rates decline over time and that the probability of replacement for specific households depends negatively on the age of the head of household abd the availability of natural gas and positively on system age and higher than expected household energy use

a probabilistic choice model for market segmentation and elasticity structure marketing scholars commonly characterize market structure by studying the patterns of substitution implied by brand switching though the approach is useful it typically ignores the destabilizing

the disposition effect in farmers selling behavior an experimental investigation the identification of the optimal selling time of stored goods is among the most essential economic decisions on a farm beyond monetary aspects behavioral factors influence farmers selling decisions in financial economics the disposition effect is a commonly observed phenomenon it describes the fact that investors hold losing stocks too long while they sell stocks that gained in value too early in the context of agriculture this behavioral bias has not been analyzed thoroughly yet to close this research gap we conducted an incentivized online experiment with 112 farmers from germany the experimental design was based on a well proven experiment from financial economics and adapted to an agricultural decision context where stored goods must be sold farmers were provided information on the uncertain price developments in addition lotteries were conducted to elicit farmers risk attitude probability weighting and loss aversion results indicate that there is a robust disposition effect in farmers selling behavior furthermore more loss averse farmers exhibited a higher realization of gains

bilateral monopoly with imperfect information abstract the problem at stake in this paper is the determination of the price and the quantity transacted in a bilateral monopoly with imperfect information a simple characterization of incentive compatible contracts is given that significantly generalizes a previous one due to green and honkapohja this allows an easy study of two interesting families of such contracts and their institutional counterpart namely cost plus contracts and contracts with quantity rationing

policy review section in this policy review section gerry stoker of the institute of local government studies presents a critical review of the role of urban development corporations udcs in comparing the experience of the udcs consideration is given to the varying nature of the land and property market in each udc area to the relationship with local authorities and other local bodies and the regeneration strategies pursued by the udcs this is followed by an assessment of the impact of the udcs in economic social and political terms in the second article john britton of the university of toronto examines the theoretical case for interventionist public policies to assist the innovation process in small and medium sized enterprises these arguments are supported by a review of the experience of various national support programmes introduced in the uk in particular the manufacturing advisory service introduced in 1978 and the design advisory service launched in 1982

prospect theory and risk preferences of oregon seed producers prospect theory relates risk preference classifications to gains and losses from a reference income level this study applies prospect theory to reinterpret historical studies of risk preferences of oregon grass seed growers a significant relationship between changes in classifications of preferences and changes in income was found results indicated that those who lost income were concentrated in the category of changing to risk preferrers income changes calculated from crop combinations were also found to be correlated in a theoretically correct pattern with positive measures of risk from crop enterprises the research therefore is consistent with further applications of prospect theory to farm management

bargaining and regulation with asymmetric information about demand and supply abstract rate regulation is studied as a bargaining process in which consumers and the firm negotiate output and payments under asymmetric information the feasible set of transactions given incentive compatibility and individual rationality constraints is characterized the set of interim incentive efficient mechanisms for the direct revelation game is also characterized sufficient conditions are given for efficient mechanisms to be full information efficient efficient mechanisms are identified which correspond to nonlinear monopoly pricing monosony compensation schedules and the baron myerson regulation model

optimal nonuniform prices we consider optimal nonuniform pricing schedules where the price depends upon the amount purchased such schedules are regularly used by public utilities and other services welfare optimal nonuniform prices are related to the theory of optimal uniform prices developed by ramsey we characterize situations in which upward or downward discontinuities in pricing schedules are optimal our results are applicable to a number of related problems including optimal taxation insurance and incentives economic theory has confined most of its attention to markets with uniform prices in which the price per unit charged is invariant to the level of a customer s purchases this focus is warranted when goods are resellable since any attempt to charge nonuniform prices could be circumvented by reselling amongst customers but when goods are not resellable nonuniform prices are not only possible but common public utilities have declining block pricing with lower unit charges for large levels of consumption many agencies providing services including communications transportation even education use two part pricing with a fixed entry or retainer charge and a further charge per unit consumption nonuniform price schedules can be expected to be ever more common as services become a larger fraction of total output the increasing prevalence of nonuniform pricing policies have made them the focus of recent public and economic attention oi 1971 feldstein 1972 and ng and weisser 1974 have examined optimal two part pricing policies leland and meyer 1976 examine block pricing and show by example that optimal welfare policies may require nonuniform prices if zero profit constraints are binding in this paper we consider arbitrary nonuniform pricing policies using variational techniques two part and block pricing schedules are of course special cases of the environment we consider the work most closely related to our examination is the seminal paper by spence 1978 and subsequent analysis by roberts 1979 spence however does not pay explicit attention to the key role played by constraints on optimal pricing schedules roberts considers upward price discontinuities which lead to bunching of consumers at a given level of consumption but not downward price discontinuities which lead to regions in which no consumer chooses to consume gaps bunching or gaps may appear in the optimal price schedule even when underlying demand and cost functions are smooth and well behaved the prevalence of discontinuous pricing schedules e g the block pricing structures of public utilities argues that these questions are of practical as well as theoretical interest

estimating time varying bargaining power a fishery application i introduction many economists and ecologists alike have supported rights based management systems as a form of fishery management that addresses the causes of inefficient resource use e g costello et al 2008 despite these convincing studies most fisheries have yet to impose any form of rights based management in fact in the united states from 1996 through 2002 a moratorium was in effect on the creation of management systems that assigned fishing quota to individual vessels often referred to as individual fishing quota ifq management 1 there has been some political resistance to the move from regulated open access management which imposes total catch limits for the fishery but no individual limits to rights based management which generally imposes some form of individual fishing rights at the core of this resistance is not the question of efficiency but the possibility of potentially severe changes or distortions in rent distribution in the market between fishers and processors the ex vessel market processors and some researchers have been concerned that fishers will achieve near total rent extraction when ifqs are given only to fishers as is typically the case e g matulich et al 1996 models that assume complete rent extraction by fishers also assume that the ex vessel market is perfectly competitive for many fisheries this assumption of perfect competition is not appropriate the geographic remoteness of many fishing areas often creates markets in which multiple fishing vessels must deliver their catch to a small number of processing facilities when one considers this remoteness together with the possibility of limited entry restrictions on the harvesting and processing sectors processing firm consolidation fishers bargaining associations and instances of fisher processor vertical integration it is evident that there are a host of reasons why ex vessel markets are normally not completely competitive thus the creation of property rights through ifqs occurs not in an idealized purely competitive environment but in an imperfectly competitive market with a myriad of factors that affect both processors and fishers abilities to extract rents a bilateral bargaining framework has been suggested by several researchers as an alternative to the competitive market specification for some ex vessel markets e g halvorsen et al 2000 matulich et al 1995 munro 1982 in this framework fishers act as upstream monopolist oligopolists selling whole fish to downstream monopsonistic oligopsonistic fish processors we follow this specification to analyze the rent distribution effect that switching to ifq management has had on a specific fishery the alaskan sablefish fishery in doing so we develop an unobserved components ucs inspired econometric technique to estimate a fixed quantity i e the quantity transacted is exogenously determined bilateral bargaining model in the presence of unobserved reservation prices and potentially time varying bargaining power this technique is general in its formulation and could thus have applicability in other contexts given the wide range of industries for which the bilateral bargaining framework is appropriate the organization of the paper is as follows in the next section we explain how imposing property rights in a fishery through an ifq system may affect the bargaining position of fishers and processors in the ex vessel market in section iii we introduce the general purpose model of bilateral bargaining used in this study and the econometric technique we use to estimate this model we provide some brief background information for the alaskan sablefish fishery in section iv in section v we present and discuss our estimation results and we conclude in the final section ii impacts of ifq management matulich et al 1996 present a theoretical model which is restated in matulich and sever 1999 with both competitive fishing and processing sectors to analyze the effect of ifq management implementation on rent distribution between the two sectors

demand for differentiated durable products the case of the u s computer printer market i introduction this paper aims to provide a theoretical and empirical description of consumer behavior in a dynamic market for differentiated durable goods the computer hardware industry serves as an example of the type of market we consider markets for computer systems and components as well as for many other high technology products exhibit some striking similarities that are of particular concern for an empirical economist as follows products are differentiated in multiple dimensions in addition to price products are durable yielding consumption services over multiple periods product quality rapidly improves over time empirical work on estimating differentiated product demand systems has been dominated by static discrete choice models with random utility see berry levinsohn and pakes 1995 goldberg 1995 and nevo 2001 among others however markets for durable goods exhibit several features at odds with their assumption of myopic consumer behavior first traditional static discrete choice models implicitly assume that consumers participate in the market every period choosing one of the available products or an outside option thus the fraction of consumers who do not buy any product in a given period could only be explained by the high value they assign to the outside alternative for durable goods however purchases are made infrequently and result in a consumer s exiting the market for a significant period of time hence the model needs to account for consumers outflow from the market arising from their purchase decisions second a static framework may give a misleading picture of the aggregate sales time pattern in a dynamic industry in many markets for durable products it is not uncommon to see rapidly improving product quality and falling prices given any reasonable set of consumer preferences over the product characteristics space static discrete choice models for such an industry will tend to predict an upward trend in aggregate sales this fails to account for a variety of patterns commonly seen in the data third the evolution of product quality leads to the possibility of intertemporal demand substitution by forgoing a current purchase the consumer retains the option to buy a potentially better product in the future hence the decision of when to buy may be just as important for consumers as the decision of what to buy this trade off cannot be accounted for in the static framework the purpose of this paper is to remedy these shortcomings of static discrete choice models in durable goods markets with particular attention paid to technological change and the dynamics of new products adoption the paper presents a dynamic model of consumer demand for differentiated durable products that explicitly accounts for consumers expectations of future product quality and consumers outflow from the market that arises endogenously from their purchase decisions in this model the consumer faces a sequence of static discrete choice problems over a non stationary choice set we show that for a subclass of random utility models which include the multinomial logit and the mcfadden 1978 generalized extreme value gev model there exists a scalar valued sufficient statistic that determines the value of the option to postpone the purchase this allows us to model industry evolution over a vastly reduced state space and to formalize the consumer s decision of when to buy as an optimal stopping problem a solution to that problem defines the hazard rate of product adoptions while the nested discrete choice model determines the alternative specific purchase probabilities integrating individual decisions over the population distribution generates rich dynamics of aggregate and product level sales the paper proceeds to present monte carlo evidence that ignoring the time dimension of consumer choice will induce a downward bias in the estimates of consumer preferences over quality sometimes reversing the sign of the coefficients

from plantations to smallholder production the role of policy in the reorganization of the sri lankan tea sector summary the sri lankan tea sector has changed from one dominated by vertically integrated plantations to one where independent processors of black tea purchase their input green leaf tea from small independent growers this paper provides a unifying conceptual framework to characterize three major factors affecting the changes in vertical coordination arrangements transaction production and management costs regulation and government policy have altered these determinants of organizational change transaction costs have been reduced by state intervention into the price for green leaf which subsequently lowered the risk of processors re negotiating prices downward production costs which continue to be dominated by labor expenses due to the lack of technological developments for harvesting have increased more for plantations than independent producers due to union pressures

producer attitudes toward output price risk experimental evidence from the lab and from the field a number of agricultural and food policy instruments are predicated on the idea that producers dislike output price risk we test experimentally some theoretical predictions about the behavior of producers in the face of output price risk namely sandmo s 1971 prediction that price risk at the extensive margin causes risk averse producers to decrease how much they produce and batra and ullah s 1974 prediction that price risk at the intensive margin causes producers whose preferences exhibit decreasing absolute risk aversion to further decrease how much they produce we do so in labs with us college students as well as in the field with peruvian farmers first as regards price risk at the extensive margin we find no support for sandmo s prediction second consistent with batra and ullah s prediction we find that output decreases in response to price risk at the intensive margin when imposing a linear relationship between output and price risk when relaxing the assumption of linearity between output and price risk however we find a nonmonotonic relationship between output and price risk taken together these results are broadly inconsistent with expected utility theory alternative models of behavior in the face of risk such as prospect theory may explain the behavior we observe

close encounters of two kinds false alarms and dashed hopes people are frequently exposed to potentially attractive events that are subsequently and unexpectedly reversed and to potentially painful events which are also unexpectedly reversed in the process of being returned to the initial asset position does the sequence in which the positive and negative events occur matter this issue of the combined effect of pleasurable and painful stimuli has received scant theoretical or empirical attention we attempt to fill this lacuna in the literature by studying the retrospective evaluation of surprises that return individuals to their original economic state although such surprises do not change an individual s original economic state we argue that the individual s psychological state changes and the final affective state is among other things a function of the sequence in which the events occur from a theoretical standpoint several perspectives can be brought to bear on the issue for instance one reading of mental accounting based on prospect theory s value function would predict that losses should dominate gains and therefore regardless of sequence people should be unhappy when exposed to two economically equivalent outcomes of different signs conversely the literature on intertemporal choice would suggest that a series that ends on an up note is preferred to a series that ends on a down note because people like to defer gratification so that they may savor positive outcomes similarly people apparently have a preference for happy endings finally the extant literature on recency effects would predict that the last event in a series should have a disproportionate influence on overall affect our model relies on a shift in the reference point to explain how a surprising reversal of an event will lead to a nonzero evaluation of the sequence we suggest that people s reference points shift immediately but imperfectly after a stimulus is presented intuitively this implies that the first stimulus will shift the reference point in its direction as a result of which the evaluation of a sequence of events in which an initial event is unexpectedly reversed will be more favorable if the first event is a loss than if it is a gain this model captures the unanticipated nature of the second event i e the surprise element by allowing the first event to move the reference point consequently by the time the next event occurs the reference point has been updated as a result of which the zero economic outcome of the sequence yields nonzero utility we further posit that the magnitude of the reference point shift should be affected by the time elapsed between the two stimuli specifically the reference point shifts gradually with time until it is fully updated consequently the final affective state of the sequence is also a function of the temporal distance between the two events the main predictions of the model were empirically supported first in a survey using a mall intercept sample subsequently we conducted a study of student subjects involving a coin tossing game in which real money was at stake and in which subjects in one condition experienced the second outcome after a two day delay our results from this second study supported the model s prediction regarding the impact of the elapsed time between the events the experimental tasks involved surprising reversals of initial outcomes thus ensuring that savoring dread types of explanations which require that subjects anticipate the second event could not be operating finally in a series of three follow up studies we tested the claim that the magnitude of outcomes would have an impact on observed affect and consistent with our theory and contrary to recency predictions we observed similar results across different magnitudes while theoretically interesting we should also note that our research is of potential pragmatic significance people s reactions to a series of events is of considerable interest to marketers desirous of generating enhanced attitude affect purchase intention and the like without offering economic inducements such as rebates coupons or other costly discounts additionally public policy officials may be interested in protecting people from being manipulated into purchasing a product simply because of changes in the sequence in which a series of offers is made by the merchant

the economic benefits of the channel tunnel the channel tunnel john kay alan manning and stefan szymanski the channel tunnel connecting the uk to france is due to open in may 1993 this paper analyses both the social and private profitability of the tunnel project we do this by modelling the competitive process in the cross channel market and assessing the impact of the tunnel on prices and demand we find that the characteristics of the tunnel enormous capacity and very low marginal costs will have the effect of driving down prices and hence providing a huge social benefit we find that the private profitability is less clear cut and although positive is quite sensitive to changes in the strength of competition and demand this analysis can be used to explain the fact that although the channel tunnel is widely perceived as a beneficial infrastructure project it proved extremely difficult to raise finance for the venture

using cumulative prospect theory to explain anomalous crop insurance coverage choice farmers decisions about how much crop insurance to buy are not generally consistent with expected utility maximization taking into account both marginal risk benefits and marginal subsidy effects suggests that most farmers have chosen lower coverage levels than would be predicted by standard models by modeling financial outcomes as gains and losses cumulative prospect theory offers an alternative framework to perhaps better understand farmers purchase decisions the role of the reference point that defines outcomes as either a gain or a loss the degree of loss aversion curvature of the value function and the probability weighting function in determining optimal crop insurance coverage levels are explored for three representative farms calibrated to 2009 conditions loss aversion and how crop insurance is framed through choice of the reference point are shown to be the key factors that determine whether predictions from prospect theory are consistent with observed crop insurance coverage choices when crop insurance is framed as a tool to manage farm risk then optimal choices under prospect theory are not consistent with observed choices if crop insurance is framed as a stand alone investment where a loss is felt if the indemnity received is less than the premium paid then prospect theory can generate optimal coverage level choices that are largely consistent with observed decisions this result is shown to be robust to changes in parameterizations as long as loss aversion is maintained and if curvature of the value function is accompanied by decision weights that overweight low probability outcomes

vertical contracting with informational opportunism we consider vertical contracting arrangements between a manufacturer and a retailing network when retailers have private information and the organization is run through bilateral contracts we highlight a new form of informational opportunism arising when the manufacturer manipulates information learned separately in each relationship we characterize the set of allocations robust to such opportunism by means of simple ex post incentive compatibility constraints those constraints limit the manufacturer s ability to use yardstick competition among retailers they simplify contracts and restore a rent efficiency trade off even with correlated information we show that sell out contracts are optimal under a wide range of circumstances

reconsidering the initial allocation of itqs the search for a pareto safe allocation between fishing and processing sectors advancement of rights based fishing is stymied by industry and congressional concern over distributional issues arising out of traditional itq design this paper examines the existence and policy feasibility of two alternative initial allocations intended to leave the two principal industry participants the fishers and processors no worse off while maximizing efficiency market structure is shown to be a critical consideration not only to avoid unintended wealth redistribution but also to achieve efficiency

replacement cycles income distribution and dynamic price discrimination this article analyses how income distribution intellectual property rights and other regulatory policies such as minimum quality standards determine pricing strategies in a dynamic context where a monopolist periodically introduces new generations or upgrades of a durable good discrimination through quality and screening in this article takes place in a context where consumers buy several versions of the durable good during their lifetime instead of a single version as in inderst s 2008 or koh s 2006 it also differs from glass 2001 in that an equilibrium may emerge in which different consumer types replace their durable generations with different frequencies our modelling is motivated by stylized facts from the last brazilian pof household budget survey

measuring producers risk preferences a global risk attitude construct in applied agricultural economic research various risk attitude elicitation techniques are used here we investigate whether risk attitude measures rooted in the expected utility framework are related to measures rooted in the multi item scale framework using a second order factor analytical model and data obtained from personal computer guided interviews with 373 farmers we investigate whether the common variance among the latent risk attitude measures can be accounted for by a global risk attitude construct we find that the different risk attitude measures are related and that the global risk attitude construct is significantly related to farmers intention to use futures contracts our research suggests that farmers risk attitude is a higher order characteristic that cannot be effectively extracted by a single measure in empiricalstudies deal ing with risk risk attitudes and producers market behavior various risk attitude measures are used two major approaches to quantify directly farmers risk attitudes can be distinguished measures derived from the expected utility framework and measures derived from responses to multi item scales e g antle chavas and holt goodwin and schroeder saha shumway and talpaz smidts the purpose of this research is to test whether risk attitude measures rooted in the expected utility framework are related to the risk attitude scales rooted in the multiitem scale approach and if so whether these risk attitude measures share a common

unanticipated shocks and the maintenance and replacement of durable goods abstract this paper investigates how a durable goods owner responds to a once for all unanticipated shock in a stationary state market this problem is examined in the context of housing the circumstances are determined under which a landlord will respond in each of the following five ways i abandon his building immediately ii run down his building optimally and then abandon iii operate his building forever iv demolish his building immediately and reconstruct a new building on the site and v run down his building demolish it and reconstruct a new building on the site the analogous cases for other durable goods should be obvious

pricing solutions to the bilateral monopoly problem under uncertainty that uniform pricing solutions to the bilateral monopoly problem are sub optimal is well known see for example scherer 19 and waterson 22 over the years there has been considerable debate in the literature as to what constitutes a correct solution to the static bilateral monopoly problem under certainty this is usefully reviewed in machlup and taber 10 and blair kaserman and romano 3 as the latter paper points out the principal conclusion of this debate is that the solution must involve

how do households choose quality and time to replacement for a rapidly improving durable good abstract many durable goods particularly in the high technology sector of the economy experience rapid quality improvement as a result replacement is typically due to obsolescence rather than breakdown and replacement cycles are relatively short when these goods are vertically differentiated consumers must make two important inter related choices upon making a purchase what quality level to buy and how long to wait between purchases in this paper we analyze how these two decisions relate to underlying preferences and to each other both theoretically and empirically we demonstrate how a single tenuous assumption in a commonly used theoretical model can drive the relationships we would predict when we take this model to the data this highlights the necessity of a more direct empirical analysis in our empirics we show that quality choice and replacement cycle length rcl are generally positively correlated we also find evidence of non monotonic relationships between quality choice and marginal utility of quality and rcl choice and marginal utility of money that is households who value quality more don t always buy higher quality pcs and households who value money less don t always buy more frequently ceteris paribus our results provide new insights into the nature of durable goods demand the proper characterization of markets and market segments and welfare measures

formation and adaptation of reference prices in grain marketing an experimental study this study aimed to explore how producers reference prices are formed and adapt over time and how they affect marketing decisions results indicate that producers focus on three major variables to form their reference prices the current market price the highest price to date and their expectation about price behavior further they update their reference prices during the marketing season mainly in response to changes in current market prices their own expectations about price behavior and the general price trend finally our findings suggest that producers marketing decisions are based on the spread between current market price and reference price the general market trend and price expectation

regulation and long term contracting in us natural gas markets this paper addresses the recent experience of the us natural gas industry with contracting and regulation the so called contracts problem between producers and pipelines we develop a simple model of contracting between a single buyer and seller emphasizing the determination of price and minimum purchase take or pay provisions we find that take or pay provisions are likely to emerge in regulated and unregulated markets characterized by uncertainty but that phased deregulation may well exacerbate the problem of contract adjustment our model is supported by empirical evidence drawn from recent samples of contracts between wellhead producers and pipelines

the disposition effect in securities trading an experimental analysis the disposition effect is the tendency to sell assets that have gained value winners and keep assets that have lost value losers disposition effects can be explained by the two features of prospect theory the idea that people value gains and losses relative to a reference point the initial purchase price of shares and the tendency to seek risk when faced with possible losses and avoid risk when a certain gain is possible our experiments were designed to see if subjects would exhibit disposition effects subjects bought and sold shares in six risky assets asset prices fluctuated in each period contrary to bayesian optimization subjects did tend to sell winners and keep losers when the shares were automatically sold after each period the disposition effect was greatly reduced

minimum bill contracts theory and policy this paper examines the efficiency implications of minimum bill cont racts and concludes that minimum bill provisions promote rather than impede efficient adaptation to changing circumstances in particular minimum bills provide a simple mechanism by which parties faced wit h uncertain demand and rising marginal cost can approximate joint pro fit maximizing payment schedules in transaction specific relationship s governed by long term contracts the paper also questions the merit of proposals for legislative or regulatory intervention to reduce mi nimum bill obligations in natural gas contracts and considers the ap propriate legal status of these provisions in the event of contractua l failure copyright 1988 by blackwell publishing ltd

uncertainty asymmetric information and bilateral contracts on considere un monopole bilateral avec incertitude et information asymetrique on donne les conditions necessaires et suffisantes a l existence de contrats qui soient efficaces et a la fois stimulants

a pedagogical treatment of bilateral monopoly most economists are familiar with the concept of bilateral monopoly an upstream monopolist sells its output to a single downstream buyer that may also be a monopolist in its output market the theory of bilateral monopoly has a rich history that can be traced to the writings of cournot 10 and menger 31 over the 150 or so years that the problem has been under consideration however economists have offered a variety of solutions ranging from a completely determinate intermediate good price and output to a completely indeterminate solution within a specified range interestingly this historical divergence of opinion concerning the correct outcome under bilateral monopoly still persists a clear consensus has not yet emerged surprisingly this lack of unanimity exists despite the fact that bowley 5 provided the theoretically correct solution in 1928 2 even more surprising however is the apparent popularity of the incorrect solution a recent survey of the population of intermediate microeconomic texts on the authors bookshelves revealed that over 80 percent of the current treatments of this topic are in error 3 table i presents the results of that survey those authors who present a correct analysis of bilateral monopoly recognize that optimality requires joint profit maximization this leads them to the correct conclusion regarding the determinate quantity of the intermediate product exchanged of the five treatments we have classified