the effect of supply uncertainty in price setting newsvendor models abstract we consider a price setting newsvendor model in which a firm needs to make joint inventory and pricing decisions before the selling season the supply process is uncertain such that the received quantity is the product of the order quantity and a random yield rate two cost structures are investigated the in house production case in which the firm pays for the input quantity and the procurement case in which the firm pays for the quantity received only our objective is to investigate the effect of yield randomness on optimal decisions and expected profit by using the theory of stochastic comparisons we find that under both cost structures a less variable yield rate leads to a lower optimal price and a higher expected profit moreover we show that in the in house production case a stochastically larger yield rate also results in a lower optimal price and a higher profit but this is not true in the procurement case examples show that the effect of supply uncertainty on optimal order quantity is not universal

what have we learned from the illinois reemployment bonus experiment this article analyzes an experimental program that offered payments to unemployment insurance ui recipients who found a job quickly the experiment provided exogenous differences in individual incentives which i use to test labor supply and search theories of unemployment i examine predictions about the timing of exits from unemployment and the effect of the fixed amount bonus on different wage level groups i also argue that the experimental evidence does not show the desirability of a permanent program a permanent program would sharply increase the compensation for short ui spells likely increasing the claims rate and possibly increasing unemployment

customer and retailer rebates under risk aversion abstract in a supply chain setting we analyze a manufacturer s customer and retailer rebates which are sales incentives offered to the end buyers and retailers respectively the performance of both rebates is influenced by the retailer s objective and response to the promotion due to his intermediary position in the channel earlier studies investigating rebates in distribution channels have traditionally assumed that the retailer is risk neutral with the objective of maximizing expected profits in our paper we consider a risk averse retailer we formally model risk aversion by adopting the conditional value at risk cvar decision criterion using a stochastic and effective price dependent demand we analyze the manufacturer s rebate amount decisions and the retailer s joint inventory and pricing decisions in a game theoretical framework we provide several structural properties of the objective functions and show monotonicity of the retailer s decisions in the degree of risk aversion for the case of retailer rebates we characterize the unique equilibrium and for the case of customer rebates we prove the existence of an equilibrium using numerical examples we provide further insights on the impact of risk aversion for example given an exogenous wholesale price we observe a threshold value on the retailer s risk aversion parameter below above which the manufacturer is better off with retailer rebates customer rebates implying that the manufacturer s preferred rebate type can be different depending on whether the retailer is risk neutral or sufficiently risk averse

extended benefits and the duration of ui spells evidence from the new jersey extended benefit program abstract this paper examines the impact on the duration of unemployment insurance receipt of a politically motivated program that offered 13 weeks of extended benefits for 6 months in 1996 using state level data and individual administrative records from before during and after the program we find that it raised the fraction of claimants who exhausted their regular benefits by 1 3 percentage points had the program run long enough to affect claimants from the first day of their spell the fraction exhausting would have risen by 7 percentage points and the average recipient would have collected regular benefits for one extra week

labor unemployment risk and corporate financing decisions this paper examines the impact of labor unemployment risk on corporate financing decisions theory suggests that firms choose conservative financial policies partly as a means of mitigating worker exposure to unemployment risk using changes in state unemployment insurance benefit laws as a source of variation in the costs borne by workers during layoff spells we explore the connection between unemployment risk and the corporate financing decisions of public firms in the united states we find that increases in legally mandated unemployment benefits lead to increases in corporate leverage the impact of reduced unemployment risk on financial policy is especially strong for firms that have greater layoff separation rates labor intensity and financing constraints the estimated premium required to compensate workers for unemployment risk due to financial distress is about 57 basis points of firm value for a bbb rated firm these findings suggest that labor market frictions have a significant impact on corporate financing decisions

uncertainty and sustainability in the management of rangelands abstract we analyze a dynamic and stochastic ecological economic model of grazing management in semi arid rangelands the ecosystem is driven by stochastic precipitation a risk averse farmer chooses a grazing management strategy under uncertainty such as to maximize expected utility from farming income grazing management strategies are rules about which share of the rangeland is given rest depending on the actual rainfall in that year in a first step we determine a myopic farmer s optimal grazing management strategy and show that a risk averse farmer chooses a strategy such as to obtain insurance from the ecosystem the optimal strategy reduces income variability but yields less mean income than possible in a second step we analyze the long run ecological and economic impact of different strategies we conclude that a myopic farmer if he is sufficiently risk averse will choose a sustainable grazing management strategy even if he does not take into account long term ecological and economic benefits of conservative strategies

optimal inventory and hedging decisions with cvar consideration abstract we consider a newsvendor who makes an ordering decision to meet stochastic demand and buys a put option written on the demand to hedge against the risk of low demand to maximize his expected utility which is measured by the conditional value at risk cvar the put option is fairly priced with specifications for the strike price and the strike quantity with the consideration of lost sale penalty cost we derive structural results on the optimal ordering and hedging polices we show that the newsvendor will not order more than that without the option contract when the strike quantity is pre determined and low and he will order more when the strike quantity is a decision variable moreover the optimal strike quantity is less than or equal to the optimal order quantity in the risk neutral setting and interestingly there are cases in which the optimal hedging ratio first increases then keeps constant as the newsvendor becomes less risk averse we also show that the value of the put option increases as the newsvendor becomes more risk averse and demand becomes more uncertain furthermore the effect of risk aversion on the value of the option highly depends on the magnitudes of the system parameters

optimal design of pro conservation incentives abstract payments for environmental services pes schemes have become an increasingly accepted and popular mode for governmental and non governmental agencies to use in addressing local and regional declines in ecosystem services in pes schemes payments can either be tied to indicators of actions for service provision or to indicators of the generated service itself performance payments are synonymous for this second group i e payments are completely contingent on the procurement of an environmental good or service such a focus raises several practical issues during implementation we review and translate key aspects of the economic theory of incentives into the context of performance payment schemes with special attention paid to two practical issues risks outside the individual s control and distortion in the measurement of environmental services four different incentive payment approaches are presented and the effects of risk and distortion on optimal incentives are discussed the investigation of each payment approach is accompanied by a discussion of examples from the field

measurement error in models of welfare participation we consider the problem of modeling welfare participation when measurement error may affect simulated welfare entitlement we identify a flaw in past implementations of the ml approach and develop a more appropriate ml approach a model of welfare participation is estimated for british pensioners linking the probability of participation to the value of benefit entitlement incorporating the nonlinear rule relating entitlement to the household s income and financial assets the model is used to evaluate the claim costs incurred by participants when we allow for measurement errors in income and assets estimated claim costs are substantially reduced

pricing and the news vendor problem a review with extensions in the newsvendor problem a decision maker facing random demand for a perishable product decides how much of it to stock for a single selling period this simple problem with its intuitively appealing solution is a crucial building block of stochastic inventory theory which comprises a vast literature focusing on operational efficiency typically in this literature market parameters such as demand and selling price are exogenous however incorporating these factors into the mode l can provide an excellent vehicle for examining how operational problems interact with marketing issues to influence decision making at the firm level in this paper we examine an extension of the newsvendor problem in which stocking quantity and selling price are set simultaneously we provide a comprehensive review that synthesizes existing results for the single period problem and develop additional results to enrich the existing knowledge base we also review and develop insight into a dynamic inventory extension of this problem and motivate the applicability of such models

performance of input and output based payments for the conservation of mobile species abstract a conceptual model is presented for the comparison of input based payments where conservation measures are rewarded and output based payments where conservation outcomes are rewarded in a spatially structured landscape the landscape consists of a grid of land parcels each managed by a land user the objective of the conservation agency is the survival of an endangered mobile species in the landscape the comparison of the two payment schemes is made with regard to cost effectiveness maximizing species survival for given total conservation costs and budget effectiveness maximizing species survival for given conservation budget the model is a grid based dynamic stochastic ecological economic simulation model in the model analysis it is found that within the considered model parameter ranges the output based payment outperforms the input based payment except for the cases of risk averse land users and spatial spill overs the comparative advantage of the output based payment increases with increasing viability and decreasing dispersal range of the species and with decreasing spatial variation of the conservation costs in the light of these results output based payments appear as a promising policy option even for mobile species where the local outcome presence of the species in the land parcel of a local conservation measure is uncertain

channel bargaining with risk averse retailer abstract we first consider a supply chain with one manufacturer and one retailer where there is only one product with stochastic demand the retailer is risk averse with conditional value at risk cvar as her risk measure and the manufacturer is a risk neutral agent we model the problem as a nash bargaining problem where the manufacturer and the retailer negotiate about the wholesale price and order quantity we show that there exists a nash bargaining equilibrium for the wholesale price and order quantity with equal and unequal bargaining power we also find that even for the equal bargaining power between the two agents the retailer s bargaining power for the supply chain profit increases as she becomes more risk averse we then extend the model to the case where demand is endogenous and can be manipulated by setting the retail price we show that there exists a nash bargaining equilibrium for the wholesale price retail price and the order quantity under equal bargaining power

a value of information approach to measuring risk in multi period economic activity abstract in this paper we discuss measures of risk for uncertain outcomes of economic activity which are based on the notion of the value of full information in stochastic programs information is measured in terms of algebras for multi period income streams information is represented by filtrations i e sequences of algebras the basic properties of our risk measures are multi period coherence diversification decreases risk compound concavity random alternatives increase risk and convex monotonicity insurance decreases risk

designing payments for environmental services in theory and practice an overview of the issues abstract payments for environmental services pes have attracted increasing interest as a mechanism to translate external non market values of the environment into real financial incentives for local actors to provide environmental services es in this introductory paper we set the stage for the rest of this special issue of ecological economics by reviewing the main issues arising in pes design and implementation and discussing these in the light of environmental economics we start with a discussion of pes definition and scope we proceed to review some of the principal dimensions and design characteristics of pes programs and then analyze how pes compares to alternative policy instruments finally we examine in detail two important aspects of pes programs their effectiveness and their distributional implications pes is not a silver bullet that can be used to address any environmental problem but a tool tailored to address a specific set of problems those in which ecosystems are mismanaged because many of their benefits are externalities from the perspective of ecosystem managers pes is based on the beneficiary pays rather than the polluter pays principle and as such is attractive in settings where es providers are poor marginalized landholders or powerful groups of actors an important distinction within pes is between user financed pes in which the buyers are the users of the es and government financed pes in which the buyers are others typically the government acting on behalf of es users in practice pes programs differ in the type and scale of es demand the payment source the type of activity paid for the performance measure used as well as the payment mode and amount the effectiveness and efficiency of pes depends crucially on program design

outsourcing and capacity planning in an uncertain global environment firms employing offshore outsourcing strategies may face both exchange rate and demand uncertainties in this paper we show that the firms may benefit from operational option to switch production by keeping capacities with both domestic and foreign suppliers the value of the operational option increases as the exchange rate uncertainty or demand uncertainty increases in addition when the firms become risk averse they may use domestic capacity to hedge against offshore capacity as a result the firms may choose to hold local capacity even if it exhibits negative marginal contribution to the profit furthermore risk averse firms may keep more total capacity than risk neutral firms

the welfare cost of means testing pensioner participation in income support we estimate parametric and semi parametric binary choice models of benefit take up by british pensioners and use a revealed preference argument to infer the cash equivalent value of disutility arising from stigma or complexity of the claims process these implicit costs turn out to be relatively small averaging about 3 4 per week across income support recipients using the foster greer thorbecke measure of poverty among pensioners we find that allowing for implicit claim costs incurred by benefit recipients raises the measured degree of poverty by not more than 13 copyright 2007 john wiley sons ltd

a price setting newsvendor problem under mean variance criteria the single product single period newsvendor problem with two decision variables namely price and stock quantity is considered the performance measure in addition to the expected revenue includes the variance of the income scaled with a risk parameter we present conditions for the concavity of this risk sensitive performance measure and the uniqueness of the optimal solution for both risk averse and risk seeking cases under the additive demand model and compare the results to others previously published these conditions are introduced in terms of the lost sales rate elasticity furthermore we provide numerical examples that aim to endorse the theoretical results herein explained

the impact of the potential duration of unemployment benefits on the duration of unemployment abstract this paper examines the impact of the potential duration of unemployment insurance ui benefits on unemployment in the united states first we use a large sample of household heads to examine differences in the unemployment spell distributions of ui recipients and nonrecipients sharp increases in the escape rate from unemployment both through recalls and new job acceptances are apparent for ui recipients around the time of benefits exhaustion such increases are not apparent at similar points of spell duration for nonrecipients second our analysis of accurate administrative data from 12 states indicates that a one week increase in potential benefit duration increases the average duration of the unemployment spells of ui recipients by 0 16 to 0 20 weeks

optimal inventory decisions for a risk averse retailer when offering layaway abstract layaway allows economically disadvantaged budget constrained consumers to purchase expensive items through amortized payments and nominal program fees as opposed to using high interest financing options such as credit cards and payday loans we consider a risk averse retailer s ordering decisions when offering a layaway program we use the net loss and total loss functions found in the literature to determine a risk averse retailer s optimal order quantity under conditional value at risk cvar we next analyze the effects of the model parameters retailer s risk aversion the market default rate enrollment fee cancellation fee and so on on the optimal order quantity decisions we show that the optimal order quantity depends on different loss functions and different demand distribution functions further we show that as market default rate increases or the retailer becomes more risk averse then a rational retailer will not offer a layaway program

on sales effort and pricing decisions under alternative risk criteria abstract in the literature different risk criteria are proposed for risk averse decision making but it is often unclear which risk criteria should be used and what their differences may be this study investigates this problem when a risk averse make to order firm decides its pricing and sales effort two factors affecting demand we consider alternative risk criteria commonly used in the literature namely expected utility theory eut mean variance mv mean semideviation ms value at risk var conditional value at risk cvar and loss aversion la we find that all of these criteria lead to similar qualitative behaviors regarding how risk loss averse decisions deviate from risk neutral ones a particularly interesting result is that the form of demand randomness i e additive or multiplicative can completely reverse the effect of risk loss aversion in certain cases we also find that the risk aversion models i e eut mv ms var and cvar are essentially equivalent in inducing the same set of optimal solutions under adverse market states however loss aversion is a mild version of risk aversion in that the la model can only lead to a subset of the solutions generated by other models these results may not be valid for other applications such as the newsvendor pricing problem so we can conclude that the relationship between alternative risk criteria is case sensitive and should be evaluated more carefully

the impact of unemployment insurance benefit levels on recipiency this article studies the effect of unemployment insurance benefit levels on recipiency increasing benefit levels as measured by the fraction of weekly earnings of the lost job that they replace is found to significantly increase the probability of unemployment insurance recipiency among the eligible there is some evidence however that the effect is smaller at high replacement rates cost increases resulting from take up responses are found to be substantial for increases in the state s maximum benefit amount and for increases in the weekly benefit amount in low replacement rate states

measuring the influence of unemployment insurance on unemployment experiences this article investigates the comprehensive effects of unemployment insurance ui policies on the amount of time and unemployment that individuals report between jobs the econometric model jointly determines the effects of ui on the lengths of nonemployment spells the classification of these spells as unemployment and the likelihood of collecting program benefits the model carefully attempts to isolate variation in ui benefits attributable to differences in generosity across programs to avoid biases in estimating policy effects induced by other contaminating sources of benefit variation using data on men from the national longitudinal survey of youth the empirical results find a ui recipients typically experience longer spells between jobs at least up to the exhaustion of ui benefits and report substantially larger fractions of these spells as unemployment b weekly benefit amounts exert no significant influence on the likelihood of ui recipiency on the length of spells between jobs or on t

unemployed but optimistic optimal insurance design with biased beliefs biased perceptions of risks change the perceived value of insurance and the per ceived returns to avoiding these risks i show empirically that unemployed workers overestimate how quickly they will nd work but underestimate the return to their search eorts i analyze the consequences for the optimal design of unemployment insurance with biased beliefs contracts equalizing the marginal smoothing ben e t and the moral hazard cost of insurance are suboptimal social and private insurance diverge a paternalistic social planner corrects the moral hazard cost for the distortion in the insured s eort choice while private insurers focus on the perceived rather than the true smoothing bene ts when unemployed workers are optimistic privatizing unemployment insurance may result in ine ciently low or rapidly decreasing unemployment bene ts

the long term effects of unemployment insurance evidence from new brunswick and maine 1940 1991 using data spanning half a century for adjacent jurisdictions in the united states and canada the authors study the long term effects of a generous unemployment insurance ui program on the distribution of weeks worked they find substantial effects for example in 1990 about 12 6 of working age men in maine s northernmost counties worked between 1 and 39 weeks just across the border in new brunswick the figure was 25 6 according to the estimates new brunswick s much more generous ui system accounts for more than three fourths of this differential in part because part year workers are drawn from both ends of the distribution of annual weeks worked 0 weeks and 40 52 weeks the generosity of new brunswick s program had only modest estimated effects on total labor supply even as it substantially increased ui program participation and expenditures

revisiting incentive effects in workers compensation do higher benefits really induce more claims an important question to ask regarding social insurance programs such as workers compensation wc is to what extent do higher benefits lead to more claims the authors of this study revisit incentive effects of wc using 25 years of data 1977 2004 from the march current population survey cps to estimate the relationship between wc cash benefit levels and the frequency of wc receipt providing new evidence on the subject they demonstrate that conclusions regarding workers incentives to claim benefits differ dramatically depending upon how one controls for the confounding influence of an individual s past earnings the authors expanded empirical specifications which include flexible earnings controls yield benefit participation elasticities smaller than 0 1 their findings suggest that wc claims are not particularly responsive to changes in benefit levels and that labor supply disincentives may warrant less concern than economists or policymakers have typically exhibited the authors also find th

the risk averse and prudent newsboy the effects of risk and risk aversion in the single period inventory newsboy problem are examined comparative static effects of changes in the various price and cost parameters are determined and related to the newsboy s risk aversion the addition of a random background wealth and of an increase in the riskiness of newspaper demand are also examined although many of the comparative effects generally are ambiguous some fairly simple restrictions on preferences and or risk increases are shown to lead to qualitatively deterministic results

the effect of unions on the receipt of unemployment insurance benefits using national longitudinal survey of youth data for 1979 91 the authors analyze the effect of union representation on the likelihood that individuals eligible for unemployment insurance ui bene

the impact of alternative performance measures on portfolio procurement with contingent option contracts abstract this paper studies a single period procurement problem in which a buyer procures using a set of contingent option contracts as well as the random spot market to meet the uncertain demand for the contingent option contracts the buyer can pay a unit reservation price for the right to buy a unit of product in the future at a discount rate of the market price we analyze the portfolio procurement strategy in this setting with both risk neutral objective and risk measure of conditional value at risk cvar of the procurement cost in the risk neutral case we show that the problem can be solved using a simple line search method while for the cvar objective it is a difficult planning problem as the objective function involves multiplication of two random parameters demand and spot price thus we use the elegant solution approach for the risk neutral problem to propose a simple heuristic for the risk adjusted procurement problem with cvar objective computational experiments show that our proposed heuristic works well in controlling risk exposure while sacrificing slightly on the expected procurement cost we also conduct numerical experiments to compare the solution and performance of these two alternative planning approaches and discuss the managerial insights

inventory cost rate functions with nonlinear shortage costs this article considers five cost rate models for inventory control each summarizing the expected holding and shortage costs per period as a function of the inventory position all models have linear holding costs and shortage cost coefficients of dimension unit period unit and period the latter two coeficients may be the shadow costs of a fill rate and a ready rate service constraint respectively one of the cost rate models is a new suggestion intended to facilitate modeling of periodic review inventory systems if and only if conditions on the demand process are presented for which the cost rate is quasi convex in the inventory position the typical sufficient condition requires that the cumulative demand distribution be logconcave a condition that is met by most demand distributions commonly used in the inventory literature the results simplify optimization and extend the known optimality of s s and nq r policies to cost structures common in applications and to the presence of typical service constraints as a prerequisite for the study a series of new monotonicity results are derived for compound renewal processes

the rise in the disability rolls and the decline in unemployment between 1984 and 2001 the share of nonelderly adults receiving social security disability insurance income di rose by 60 percent to 5 3 million beneficiaries rapid program growth despite improving aggregate health appears to be explained by reduced screening stringency declining demand for less skilled workers and an unforeseen increase in the earnings replacement rate we estimate that the sum of these forces doubled the labor force exit propensity of displaced high school dropouts after 1984 lowering measured u s unemployment by one half a percentage point steady state calculations augur a further 40 percent increase in the rate of di receipt

beyond expected utility subjective risk aversion and optimal portfolio choice under convex shortfall risk measures abstract we conduct a decision theoretic analysis of convex shortfall risk measures regarding their flexibility to represent subjective risk aversion and discuss the implications for the choice of optimal portfolios as convex shortfall risk measures are closely related to the expected utility functional we draw upon the expected utility framework as our benchmark first we show that unlike expected utility convex shortfall risk measures do always represent constant absolute risk aversion this constitutes a significant limitation when changing initial wealth of e g investors is relevant interestingly though it is exactly this limitation that provides additional degrees of freedom in representing subjective risk aversion beyond expected utility when initial wealth is fixed as e g in returned based portfolio selection models in the tradition of markowitz 1952 second we apply convex shortfall risk measures to the standard portfolio problem between a riskless and a risky asset we provide a procedure that allows inferring the optimal portfolios under convex shortfall risk measures from certain optimal expected utility portfolios the procedure incorporates the additional degrees of freedom in modeling subjective risk aversion and thus allows more flexible and realistic portfolios compared to expected utility third we address the optimal portfolio choice between a riskless and a risky asset in the presence of an additional background risk again we prove a correspondence result between optimal portfolios under convex shortfall risk measures and expected utility and obtain more flexible and realistic portfolios compared to expected utility we also compare the optimal risky investments without and with background risk and provide a necessary and sufficient condition for a reduction of the risky investment

the effect of risk aversion on distribution channel contracts implications for return policies the return policy is often used in retailing supply chains however it is controversial in judging their practical value in the literature various theoretical and modeling explanations of why the return policy is used in practice and is preferred by the retailer and manufacturer have been put forth the literature focusing on the channel agents risk attitudes to explain the adoption seems to have led to the conclusion that the two agents preferences for adopting the full return policy over the no return policy are always in conflict and thus the risk attitudes do not explain the adoption of return policy in practice in this paper we reinvestigate this issue we first identify two distinct phases of risk averseness high or low for each of the two agents we show distinct behaviors of how the wholesale price and order size are set in each phase then we show that the full return policy can be preferred over the no return policy by both the agents if both of them are high risk averse this implies that the agents risk attitudes can explain the adoption of return policy this is a new theoretical result which is contrary to the existing understanding in the literature our result highlights the importance and intricacy of channel policies especially when the risk attitudes of agents are considered

the risk averse newsvendor problem with random capacity abstract we study the effect of capacity uncertainty on the inventory decisions of a risk averse newsvendor we consider two well known risk criteria namely value at risk var included as a constraint and conditional value at risk cvar for the risk neutral newsvendor we find that the optimal order quantity is not affected by the capacity uncertainty however this result does not hold for the risk averse newsvendor problem specifically we find that capacity uncertainty decreases the order quantity under the cvar criterion under the var constraint capacity uncertainty leads to an order decrease for low confidence levels but to an order increase for high confidence levels this implies that the risk criterion should be carefully selected as it has an important effect on inventory decisions this is shown for the newsvendor problem but is also likely to hold for other inventory control problems that future research can address

technical note a risk averse newsvendor model under the cvar criterion the classical risk neutral newsvendor problem is to decide the order quantity that maximizes the one period expected profit in this note we consider a risk averse newsvendor with stochastic price dependent demand we adopt conditional value at risk cvar a risk measure commonly used in finance as the decision criterion the aim of our study is to investigate the optimal pricing and ordering decisions in such a setting for both additive and multiplicative demand models we provide sufficient conditions for the uniqueness and existence of the optimal policy comparative statics show the monotonicity properties and other characteristics of the optimal pricing and ordering decisions we also compare our results with those of the newsvendor with a risk neutral attitude and a general utility function

an economic model of welfare stigma perhaps the most basic assumption of the economic theory of consumer demand is that more is better than less virtually all of the major propositions of consumer theory can in a certain sense be derived from the assumption that goods are good interestingly however this tenet seems to be violated by the behavior of many individuals in the low income population for many turn out to be eligible for a positive welfare benefit but do not in fact join the welfare rolls for example it has been estimated that in 1970 only about 69 percent of the families eligible for afdc aid to families with dependent children participated in the program see richard michel 1980 the corresponding percentage for afdc u the program for which families with an unemployed male are eligible was only 43 percent and the participation rate in the food stamp program was only 38 percent see maurice mcdonald 1977 this phenomenon has puzzled many investigators because such individuals do not locate on the boundaries of their budget sets consequently most investigators ignore the problem when studying the effects of welfare programs on behavior in this paper this seemingly irrational rejection of an increase in income is modeled as resulting from welfare stigma that is from disutility arising from participation in a welfare program per se 1 the existence of stigma has been amply documented in the sociological literature patrick horan and patricia austin 1974 lee rainwater 1979 where interviews of recipients have often uncovered feelings of lack of self respect and negative self characterizations from participation in welfare nevertheless this phenomenon has not been modeled and many questions consequently remain when is the disutility of participation strong enough to prevent participation shouldn t we expect individuals to weigh the disutility of participation against the potential benefit in their decisions what is the elasticity of participation with respect to the potential benefit also in a slightly different vein how are the work disincentives of welfare affected by stigma these questions have been given scant attention by economists yet they are crucial for our ability to predict the impact of various welfare programs on the lowincome population here these questions are addressed by modeling nonparticipation as a utility maximizing decision the model is developed and estimated for the afdc program 2 the model posits an individual utility function containing not just disposable income but

manufacturer s return policy in a two stage supply chain with two risk averse retailers and random demand abstract this paper studies the manufacturer s return policy and the retailers decisions in a supply chain consisting of one manufacturer and two risk averse retailers under a single period setting with price sensitive random demand we characterize each retailer s risk embedded objective via conditional value at risk and construct manufacturer stackelberg games with and without horizontal price competition between the retailers we explore through numerical studies the effects of the retailers aversion to risk and other parameters on the manufacturer s return policy and profit and the retailers decisions we further investigate the effect of distribution asymmetry by comparing the results with normal and lognormal demand

the multi product price setting newsvendor with resource capacity constraints abstract in this paper we consider a newsvendor problem commonly encountered in retail stores that cater to budget sensitive shoppers the newsvendor sells multiple products and in addition to determining order quantities must also determine the selling price of each product sold the demand for each product is of a stochastic nature and depends on the demands of other products i e is cross elastic we transform the objective function into a form that is amenable to developing integer programming solutions and then develop a numeric optimization procedure rooted in the nelder mead search technique we obtain encouraging numerical results on some small scale and large scale problems to the best of our knowledge this is the first work that produces implementable solutions for a scenario that is particularly relevant to retailers catering to budget sensitive customers who are abundant in the current economy

the impact of fiscal incentives on student disability rates abstract in this paper i estimate the elasticity of student disability rates with respect to the generosity of state reimbursements the classification response is identified from policy induced variation in the amount of state aid generated by serving a disabled student across local school districts in texas from 1991 1992 through 1996 1997 my central estimates imply that fiscal incentives can explain nearly 40 of the recent growth in student disability rates in texas the magnitude of the institutional response varies by district size and enrollment concentration student race ethnicity and the level of fiscal constraint

newsvendor problem with random shortage cost under a risk criterion abstract we study profit maximization vs risk approaches for the standard newsvendor problem with uncertainty in demand as well as a generalized version with uncertainty in the shortage cost as often applies in practice we consider two well known risk approaches value at risk var included as a constraint and conditional value at risk cvar we first derive the explicit expressions of the optimal solution with uncertainty of shortage cost under different risk measures and then perform a numerical analysis to quantify the effect of uncertainty in shortage cost and risk measures for the standard newsvendor problem we find that the optimal quantity under cvar is always lower than that under the var constraint which in turn is lower than the order quantity that maximizes the expected profit insightful explanations for this result are that a a higher degree of risk aversion drives the newsvendor to order fewer products increasing the likelihood that all will be sold b this effect is stronger for the cvar approach as this does not consider the expected profit at all another interesting and counter intuitive observation for the cvar approach is that a higher retail price may lead to a smaller order quantity as fewer items need to be sold in order to attain a sufficient profit these results show that one should be careful in employing the cvar risk measure for newsvendor type problems the results remain valid if the shortage cost becomes uncertain however increased uncertainty of this type does improve the relative profitability under the cvar approach by increasing the order quantity under that criterion whilst there is no effect under the other criteria

risk shaping in production planning problem with pricing under random yield abstract in this paper we address a basic production planning problem with price dependent demand and stochastic yield of production we use price and target quantity as decision variables to control the risk of low production yield the value of risk control becomes more important especially for products with short life cycle where high losses are unbearable in the short run in this cases optimization of a solely scalar function of profit is not sufficient to control the risk we apply conditional value at risk cvar measure to model the risk preferences of the producer the producer is interested in shaping the risk by bounding from below the means of tail distributions of profit for different values of the resulting model is nonconvex we propose an efficient solution algorithm and present a sufficient optimality condition

the loss averse newsvendor model with backordering abstract in this paper we study the optimal order quantity in the loss averse newsvendor model with backordering we first obtain the optimal order quantity to maximize the expected utility to hedge against the risk arising from the uncertainty of market demand we introduce the conditional value at risk cvar measure and derive the optimal order quantity to maximize the cvar objective about utility it is found that the optimal order quantity with the cvar objective is decreasing in the confidence level and thus is smaller than the optimal order quantity to maximize the expected utility it is proved that under the optimal order quantity with the cvar objective the loss averse newsvendor s expected utility is decreasing in the confidence level it further confirms that high risk implies high return and low risk comes with low return

evaluating the performance of the search and matching model abstract does the search and matching model fit aggregate u s labor market data while the model has become an important tool of macroeconomic analysis recent literature pointed to some significant failures in accounting for the data this paper aims to answer two questions i does the model fit the data and if so on what dimensions ii does the data fit the model i e what are the data which are relevant to be explained by the model the analysis shows that the model fits certain specifications of the data on many dimensions though not on all this includes capturing the high persistence and high volatility of most of the key variables the negative co variation of unemployment and vacancies and the behavior of the worker job finding rate a key role in this fit is played by the convexity of hiring costs and the stochastic properties of the separation rate the latter is a major component of the rate discounting the future value of the job worker match the paper offers a workable empirically grounded version of the model for the analysis of aggregate u s labor market dynamics

role of risk aversion in price postponement under supply random yield price postponement is an effective mechanism to hedge against the adverse effect of supply random yield however its effectiveness and the resulting production decisions have not been studied for

changes in safety net use during the great recession abstract we examine how participation in social safety net programs differs by income to poverty levels and how that relationship changed after the great recession we define income to poverty based on the average of 2 years of merged cps data and investigate program participation among households with income less than 300 percent of poverty we find changes in both the level and distribution of safety net program participation during the great recession with snap expanding most at the bottom the eitc expanding most in the middle and ui expanding most at the top of the income ranges that we investigate tanf did not expand

risk aversion in inventory management traditional inventory models focus on risk neutral decision makers i e characterizing replenishment strategies that maximize expected total profit or equivalently minimize expected total cost over a planning horizon in this paper we propose a framework for incorporating risk aversion in multiperiod inventory models as well as multiperiod models that coordinate inventory and pricing strategies we show that the structure of the optimal policy for a decision maker with exponential utility functions is almost identical to the structure of the optimal risk neutral inventory and pricing policies these structural results are extended to models in which the decision maker has access to a partially complete financial market and can hedge its operational risk through trading financial securities computational results demonstrate that the optimal policy is relatively insensitive to small changes in the decision maker s level of risk aversion

recent trends in insured and uninsured unemployment is there an explanation this paper explores the recent decline in the fraction of unemployed workers who receive unemployment insurance benefits using march current population surveys we compare the fraction who are potentially eligible for benefits with the fraction who receive them the decline in insured unemployment is almost entirely due to a decline in the early 1980s in the takeup rate for benefits we analyze the determinants of the takeup rate using both aggregated state level data and micro data at least half the decline is due to an increasing share of unemployment in states with lower takeup rates

unemployment insurance take up rates in an equilibrium search model abstract from 1989 to 2012 on average 23 of those eligible for unemployment insurance ui benefits in the us did not collect them to understand the implications of these unclaimed benefits we develop a directed search model with an endogenous ui take up rate in equilibrium ui collectors have longer unemployment durations relative to non collectors the difference results from two forces a consumption effect and a private information effect as ui collection histories are unobservable we characterize both effects analytically and quantitatively with an endogenous take up rate the unemployment rate and average duration of unemployment respond significantly slower to changes in the ui benefit level relative to the standard model with a 100 take up rate the private information effect on non collector job finding rates plays an important role in this result

does the sophistication of use of unemployment insurance evolve with experience the subject of this paper is the repeat use of ui ei benefits in canada the first objective is to investigate empirically the pattern of adjustment that ui users exhibit over a multiple claim horizon our secondary objective is to investigate a behavioural channel that might potentially underlie observed adjustment effects namely individual learning effects we estimate an econometric model of how certain features of their claims change as they file subsequent claims we find strong empirical patterns suggesting that there does appear to be some sort of an adjustment process beneficiaries tend to approach a desired value for these particular facets of their ui claims there appears to be some process of growing sophistication of ui use which some might label gaming the system reflecting the adjustment of claims and the concomitant employment patterns to the provisions and rules of the regime we also uncover evidence in favour of the existence of individual learning effects ce texte examine l usage a repetition des prestations d assurance chomage au canada le premier objectif est d etudier empiriquement le pattern d ajustement des recipiendaires de prestations au fil de multiples reclamations le second objectif est d etudier un canal d ajustement des comportements qui pourrait sous tendre les ajustements observes les effets d apprentissage individuel on calibre un modele econometrique qui expose certains aspects des reclamations qui changent au fil des reclamations qui se repetent des resultats empiriques robustes suggerent qu il semble y avoir un processus d ajustement les beneficiaires tendent a s approcher de valeurs desirees pour certaines facettes de leurs reclamations d assurance chomage il semble y avoir un processus de sophistication dans l usage de l assurance chomage ce que certains pourraient appeler bien jouer avec le systeme reflechissant l ajustement des reclamations et des patterns concomitants d emploi aux dispositions et reglements du regime on decouvre aussi l existence d effets d apprentissage individuel

moral hazard vs liquidity and optimal unemployment insurance this paper presents new evidence on why unemployment insurance ui benefits affect search behavior and develops a simple method of calculating the welfare gains from ui using this evidence i show that 60 percent of the increase in unemployment durations caused by ui benefits is due to a liquidity effect rather than distortions on marginal incentives to search moral hazard by combining two empirical strategies first i find that increases in benefits have much larger effects on durations for liquidity constrained households second lump sum severance payments increase durations substantially among constrained households i derive a formula for the optimal benefit level that depends only on the reduced form liquidity and moral hazard elasticities the formula implies that the optimal ui benefit level exceeds 50 percent of the wage the exact identification approach to welfare analysis proposed here yields robust optimal policy results because it does not require structural estimation of primitives

unemployment insurance takeup rates and the after tax value of benefits the recent decline in the unemployment insurance ui takeup rate has puzzled researchers using administrative data with accurate information on the potential level and duration of benefits we examine whether a separating employee receives ui we find a strong positive effect of the benefit level on takeup and smaller effects of the potential duration and the tax treatment of benefits simulations indicate that the recent inclusion of ui in the income tax base can account for most of the previously unexplained decline in ui receipt

labor market shocks and retirement do government programs matter abstract this paper argues that labor market conditions are an important and often overlooked determinant of retirement transitions in our analysis we examine how the unemployment rate affects retirement and whether the social security ss system and unemployment insurance ui system influence how older workers respond to labor market shocks we use pooled cross sectional data from the march current population survey cps in our analysis we find that downturns in the labor market increase retirement transitions and that the magnitude of this effect is comparable to that associated with moderate changes in financial incentives to retire and to the threat of a health shock facing older workers interestingly retirements only increase in response to an economic downturn once workers become ss eligible suggesting that retirement benefits may help to alleviate the income loss associated with a weak labor market we also estimate the impact of ui generosity on retirement and find little consistent evidence of an effect this suggests that in some ways ss may serve as a more effective form of unemployment insurance for older workers than ui

erratum moral hazard versus liquidity and optimal unemployment insurance this paper presents new evidence on why unemployment insurance ui benefits affect search behavior and develops a simple method of calculating the welfare gains from ui using this evidence i show that 60 percent of the increase in unemployment durations caused by ui benefits is due to a liquidity effect rather than distortions on marginal incentives to search moral hazard by combining two empirical strategies first i find that increases in benefits have much larger effects on durations for liquidity constrained households second lump sum severance payments increase durations substantially among constrained households i derive a formula for the optimal benefit level that depends only on the reduced form liquidity and moral hazard elasticities the formula implies that the optimal ui benefit level exceeds 50 percent of the wage the exact identification approach to welfare analysis proposed here yields robust optimal policy results because it does not require structural estimation of primitives c 2008 by the university of chicago all rights reserved this abstract was borrowed from another version of this item

coping with risk management and fill rate in the loss averse newsvendor model abstract in this paper we introduce the cvar conditional value at risk measure to hedge against the risks for the loss averse newsvendor we derive the optimal order quantities for the loss averse newsvendor to maximize the cvar objective of utility with and without the shortage cost respectively it is shown that when shortage cost is not considered an increase in the degree of loss aversion leads to a decrease in the fill rate therefore the newsvendor should strike a balance between the two conflicting targets in selecting the optimal order quantity when the shortage cost is taken into account and sufficiently large it is proved that an increase in the degree of loss aversion leads to an increase in the fill rate to manage both of the two targets the newsvendor should order more items in this case our sensitivity analysis further verifies that high risk implies high return and low risk comes with low return based on the analysis some management insights for the risk management of the loss averse newsvendor are presented

technical note a risk and ambiguity averse extension of the max min newsvendor order formula scarf s max min order formula for the risk neutral and ambiguity averse newsvendor problem is a classical result in the field of inventory management in this article we extend scarf s formula by deriving an analogous closed form order formula for the risk and ambiguity averse newsvendor problem specifically we provide and analyze the newsvendor order quantity that maximizes the worst case expected profit versus risk trade off risk averse when only the mean and standard deviation of the product s demand distribution are known ambiguity averse and the risk is measured by the standard deviation of the newsvendor s profit we provide both analytical and numerical results to illustrate the combined effect of considering risk aversion and ambiguity aversion in computing the newsvendor order

optimal decisions for the loss averse newsvendor problem under cvar abstract most of the existing literature about the newsvendor problem mainly focused on choosing an optimal order quantity to maximize the expected profit of a risk neutral newsvendor however some studies pointed out that in practice managers decisions as to order quantities always deviate from the profit maximization order quantity which is referred to as decision bias in the newsvendor problem then many studies introduced other preferences rather than risk neutrality of the newsvendor to explain such a decision bias this paper thus introduces loss aversion to the research of the newsvendor decision bias we propose a new definition to the loss averse newsvendor problem legacy loss which is defined either as the loss for excess order or the shortage penalty for lost sales when sales time is due the optimal decisions of a loss averse newsvendor are obtained through the following three ways i minimizing the expected legacy loss ii minimizing cvar of legacy loss by combining the cvar measure in risk management iii minimizing the combination of expected legacy loss and cvar of legacy loss and are compared with other existing results besides we present some properties of the optimal decisions as well as relations among them some numerical examples are given to illustrate the obtained results

impact of risk aversion on optimal decisions in supply contracts abstract we introduce the concept of conditional value at risk as the evaluation criterion in a supply contract model we first derive the manufacturer s optimal decisions and then analyze the impact of risk aversion on the manufacturer s decisions we follow by conducting numerical experiments to observe how the manufacturer s risk attitude affects his decisions we obtain results that characterize the explicit relationship between the manufacturer s risk attitude and his optimal decisions we also show the dependence of the decision variables on the price and cost parameters which is seldom given in the literature

should we pay for ecosystem service outputs inputs or both payments for ecosystem service outputs have recently become a popular policy prescription for a range of agri environmental schemes the focus of this paper is on the choice of contract instruments to incentivise the provision of ecosystem service outputs from farms the farmer is better informed than the regulator in terms of hidden information about costs and hidden actions relating to effort the results show that with perfect information the regulator can contract equivalently on inputs or outputs with hidden information input based contracts are more cost effective at reducing the informational rent related to adverse selection than output based contracts mixed contracts are also cost effective especially where one input is not observable such contracts allow the regulator to target variables that are costly to fake as opposed to those prone to moral hazard such as effort further results are given for fixed price contracts and input based contracts with moral hazard the model is extended to include a discussion of repeated contracting and the scope that exists for the regulator to benefit from information revealed by the initial choice of contract the models are applied to a case study of contracting with farmers to protect high biodiversity native vegetation that also provides socially valuable ecosystem services

comparative advantage and unemployment worker heterogeneity in productivity and labor supply is introduced into a matching model workers who earn high wages and work high hours are identified as those with strong market comparative advantage high rents from being employed the model is calibrated to match separation job finding and employment in the sipp data the model predicts a big drop in employment for workers with weak comparative advantage during recessions but the data show that workers with strong comparative advantage also display sizable employment fluctuations implying that aggregate employment fluctuations are not explained by the responses of workers with small rents to employment

dynamic pricing in the presence of inventory considerations research overview current practices and future directions the benefits of dynamic pricing methods have long been known in industries such as airlines hotels and electric utilities where the capacity is fixed in the short term and perishable in recent years there has been an increasing adoption of dynamic pricing policies in retail and other industries where the sellers have the ability to store inventory three factors contributed to this phenomenon 1 the increased availability of demand data 2 the ease of changing prices due to new technologies and 3 the availability of decision support tools for analyzing demand data and for dynamic pricing this paper constitutes a review of the literature and current practices in dynamic pricing given its applicability in most markets and its increasing adoption in practice our focus is on dynamic intertemporal pricing in the presence of inventory considerations

how changes in unemployment benefit duration affect the inflow into unemployment we study the effect of an unexpected reduction in maximum unemployment benefit duration on the inflow into unemployment of elderly workers in the netherlands we analyze the reduction as if it was a natural experiment finding substantial effects

unemployment participation and worker flows over the life cycle we estimate and report life cycle transition probabilities between employment unemployment and inactivity for male workers using current population survey monthly files we assess the relative importance of each probability in explaining the life cycle profiles of participation and unemployment rates using a novel decomposition method a key robust finding is that most differences in participation and unemployment over the life cycle can be attributed to the probability of leaving employment and the probability of transiting from inactivity to unemployment while transitions from unemployment to employment the job finding probability play secondary roles we then show that a simple life cycle extension of a three state labor search model with leisure shocks can qualitatively replicate the empirical unemployment and participation life cycle profiles without introducing age or worker heterogeneity in market abilities we conclude that models that seek to explain life cycle work patterns should not ignore transitions to and from inactivity

supply chain performance and consumer surplus under alternative structures of channel dominance abstract supply chain partnerships exhibit varying degrees of power distribution among the agents this has implications for pricing and operational decisions in the channel and eventually influences the end customers to understand how different power schemes affect the supply chain partners performance and consumer surplus we study channel structures with a dominant manufacturer a dominant retailer and no single agent dominance under random and price sensitive demand channel dominance is interpreted in our setting as exerting power to determine the retail and wholesale prices as well as to transfer the inventory risk to the weaker party we analyze all problems in a game theory based framework and characterize the equilibrium retail price wholesale price and order production quantity we show that the manufacturer dominated channel structure leads to the highest production quantity the lowest retail price and the largest expected surplus for an individual buyer on the other hand the entire channel profit and the total consumer surplus are highest when the retailer holds the channel dominance while both the manufacturer and the retailer are better off when they become a power agent individually channel dominance does not always guarantee higher share of channel profits as we show under the manufacturer dominated structure further insights are derived analytically and numerically from comparisons of the manufacturer retailer dominance schemes with the no single agent dominance structure and integrated channel we also study extensions to investigate the effect of demand model and risk sharing and we address industry settings with alternative schemes of holding cost shortage penalty and salvage value

job search requirements for unemployed at the end of working life effects on unemployment dynamics and self employment probabilities this paper investigates the extent to which job search requirements in unemployment insurance u i increase the probability of self employment as a retirement route for causal identification we apply a difference in differences approach using a dutch 2004 policy reform that introduced job search requirements in u i for persons aged 57 5 and older unemployment dynamics and self employment probabilities are studied using a dynamic multinomial logit model with unobserved heterogeneity the results suggest that job search requirements stimulated people to exit unemployment and discouraged older workers to enter unemployment the probability of self employment as an exit route to retirement increased relative to u i but not relative to paid employment

modeling joint production of wildlife and timber abstract production of marketed commodities and protection of natural systems often conflict a focus on only one goal can result in large losses in other goals and may result in inefficient and unsustainable outcomes in this paper we develop a method that combines economic and ecological models in a dynamic and spatial analysis to evaluate land use decisions and find cost effective alternatives for which it is not possible to do better on one objective without harming another objective the method is demonstrated using timber production and species conservation on a forested landscape over a 100 year planning horizon current land use strategies are simulated and compared with cost effective alternatives the approach is compared to a static reserve approach similar to previous studies and found to produce substantially more efficient management strategies for the case study landscape

a risk averse competitive newsvendor problem under the cvar criterion abstract we study a risk averse newsvendor problem with quantity competition and price competition under the conditional value at risk cvar criterion we characterize the optimal quantity and pricing decisions under both quantity and price competition for quantity competition we consider two demand splitting rules namely proportional demand allocation and demand reallocation although competition always leads to overstocking interestingly it does not necessarily lead to a profit loss in certain competitive environments such as demand reallocation by avoiding reducing overstocking that results from competition under the risk neutral criterion for price competition we consider both additive and multiplicative demand we find that the order quantity sale price and the expected profit decrease in the degree of risk aversion further both high price sensitivity and competition intensity force decision makers to lower their prices however high price sensitivity always reduces the order quantity while competition can have the opposite effect

asymmetry and ambiguity in newsvendor models a basic assumption of the classical newsvendor model is that the probability distribution of the random demand is known but in most realistic settings only partial distribution information is available or reliably estimated the distributionally robust newsvendor model is often used in this case where the worst case expected profit is maximized over the set of distributions satisfying the known information which is usually the mean and covariance of demands however covariance does not capture information on asymmetry of the demand distribution in this paper we introduce a measure of distribution asymmetry using second order partitioned statistics semivariance is a special case with a single partition of the univariate demand with mean variance and semivariance information we show that a three point distribution achieves the worst case expected profit and derive a closed form expression for the distributionally robust order quantity for multivariate demand the distributionally robust problem

a note on probability distributions with increasing generalized failure rates distributions with an increasing generalized failure rate igfr have useful applications in pricing and supply chain contracting problems we provide alternative characterizations of the igfr property that lead to simplify verifying whether the igfr condition holds we also relate the limit of the generalized failure rate and the moments of a distribution

a risk tolerance analysis for a joint price differentiation and inventory decisions problem with demand leakage effect abstract price differentiation is a commonly used practice in revenue management rm to improve a firm s profitability however most studies in the literature have considered a risk neutral firm to demonstrate the benefits of price differentiation the main contribution of this paper is in considering several important objectives while determining the optimal product prices and order production quantities for a risk adjusted firm with demand leakage effects in the presence of a price dependent stochastic demand the objectives considered include the maximization of a firm s expected profit and maximizing the probability of exceeding the risk adjusted expected revenue closed form expressions for optimal product prices and production quantities are derived for several of these objectives a numerical study is also presented to calibrate the impact of a firm s risk tolerance and other factors such as demand leakage market demand variability on the firm s profitability and its optimal decision

a risk averse newsvendor model under marketing dependency and price dependency abstract in this paper we analyze a single period inventory model where a risk averse newsvendor makes a joint decision on ordering pricing and marketing under the cvar risk measure criterion the newsvendor can exert marketing effort to enhance market demand we assume that the newsvendor s marketing effort affects the scale of the demand distribution and hence to model the marketing dependent demand as a multiplicative form we characterize sufficient conditions that guarantee existence and uniqueness of the optimal solutions under some mild assumptions on demand distribution expected demand function and marketing effort cost which are widely used in the related literature we show that the optimal order quantity increases in the newsvendor s marketing effort but the optimal price remains unchanged whether the demand is marketing dependent or not additionally we explore impact of exogenous parameters such as unit order cost salvage value and the newsvendor s risk aversion coefficient on the optimal decision variables and find that the optimal marketing effort always keeps the same changing direction with the optimal marketing independent order quantity as the exogenous parameters change this suggests that impact of the parameters on the optimal order quantity gets strengthened in the case of marketing dependent demand

optimal ordering and pricing strategies in the presence of a b2b spot market abstract in the current paper we examine the effect of a b2b spot market on the strategic behavior and the performance of a reseller who continues to use the traditional channel while participating in a b2b spot market we analyze the case in which a risk neutral reseller faces an additive or multiplicative demand function and identify sufficient conditions under which the optimal order quantity and retail price exist and are unique we then analytically examine the case in which a risk averse reseller participates in a fully liquid spot market we also study numerically how varying liquidity spot price volatility demand variability and correlation coefficient affect a firm s strategies and performance we find that demand variability significantly affects both pricing and ordering strategies whereas the spot price volatility has less influence on pricing decisions our results also show that for a risk averse reseller to charge a lower retail price when the spot market liquidity increases is desirable we further show that a b2b spot market cannot always improve a reseller s utility these findings shed light on how resellers can adjust their procurement and pricing strategies to align with the new business environment created by the emergence of b2b spot markets as well as have obvious implications for the development of a b2b spot market

measuring the average marginal tax rate from the individual income tax the economic effects of taxation depend on the configuration of marginal tax rates we consider here the appropriate measure of a marginal tax rate for the federal individual income tax which has a graduated rate structure and allows for numerous legal and illegal deductions from total income our conclusion is that the explicit marginal rate from the tax schedule is the right concept for many purposes hence we construct approximately weighted averages of these marginal tax rates for 1916 80 when weighted by adjusted gross income the arithmetic average of marginal tax rates is 5 in 1920 2 in 1930 6 in 1940 20 in 1950 23 in 1960 24 in 1970 and 30 in 1980 we also discuss the dispersion of marginal tax rates as well as the behavior of average tax rates and deductions from taxable income one noteworthy result concerns the fraction of adjusted gross income that accrues to families that face a marginal tax rate of at least 35 this fraction quadruples from 1964 to 1980 this abstract was borrowed from another version of this item

effects of higher order moments on the newsvendor problem abstract in this paper we propose a stochastic programming model for the well known single period newsvendor problem by adopting the conditional value at risk cvar as the risk metric in the objective function the demand uncertainty is modeled in terms of discrete scenarios that reflect the empirical distributions implied by market demand data our numerical results demonstrate that the higher order moments skewness and kurtosis of demand have obvious effects on the newsvendor problem and the stochastic programming framework provides a flexible and effective decision support tool for the newsvendor problem

a general formula for the optimal level of social insurance in an influential paper baily 1978 showed that the optimal level of unemployment insurance ui in a stylized static model depends on only three parameters risk aversion the consumption smoothing benefit of ui and the elasticity of unemployment durations with respect to the benefit rate this paper examines the key economic assumptions under which these parameters determine the optimal level of social insurance i show that a baily type expression with an adjustment for precautionary saving motives holds in a general class of dynamic models subject to weak regularity conditions for example the simple reduced form formula derived here applies with arbitrary borrowing constraints durable consumption goods private insurance arrangements and search and leisure benefits of unemployment