government programs and adoption of conservation tillage practices on nonirrigated wheat farms a whole farm simulation analysis is used to investigate producer preferences for adoption of separate tillage practices minimum till combination till or no till under provisions of both the 1981 and 1985 farm bills an analysis of preference for participation or nonparticipation in government programs under both farm bills is also considered for risk averse producers a combination tillage practice with program participation is found to dominate as measured by stochastic dominance the other strategies considered under both the 1981 and 1985 provisions

resource degradation and adoption of land conservation technologies in the ethiopian highlands a case study in andit tid north shewa abstract this paper reports results from a study of resource degradation and conservation behavior of peasant households in a degraded part of the ethiopian highlands peasant households choice of conservation technologies is modeled as a two stage process recognition of the erosion problem and adoption and level of use of control practices an ordinal logit model is used to explain parcel level perception of the threat of the erosion problem and the extent of use of conservation practices results show the importance of perception of the threat of soil erosion household land and farm characteristics perception of technology specific attributes and land quality differentials in shaping conservation decisions of peasants furthermore where poverty is widespread and appropriate support policies are lacking results indicate that population pressure per se is unable to encourage sustainable land use the challenge of breaking the poverty environment trap and initiating sustainable intensification thus require policy incentives and technologies that confer short term benefits to the poor while conserving the resource base

non farm income household welfare and sustainable land management in a less favoured area in the ethiopian highlands a bio economic model has been calibrated to the socio economic and biophysical characteristics of a less favoured area in the ethiopian highlands land degradation population growth stagnant technology and drought necessitates development of non farm employment opportunities in the area the model has been used to assess the impact of improved access to non farm income on household welfare agricultural production conservation investments and land degradation in the form of soil erosion the model simulations indicate that access to low wage off farm income is restricted by lack of employment opportunities since households otherwise would have engaged in more off farm wage employment than observed the simulations show that better unconstrained access to low wage non farm income has a substantial positive effect on household income total agricultural production crop and livestock production and farm inputs used are reduced when access to non farm employment is improved and thus increases the need to import food to the area access to non farm income reduces farm households incentives to invest in conservation and this leads to more overall soil erosion and more rapid land degradation even though intensity of production is reduced special policies are therefore needed to ensure land conservation and to sustain local food production

land degradation drought and food security in a less favoured area in the ethiopian highlands a bio economic model with market imperfections abstract this paper presents a bio economic model of andit tid a severely degraded crop livestock farming system with high population density and good market access in the highlands of ethiopia land degradation population growth stagnant technology and drought threaten food security in the area drought or weather risk appears to have increased in recent years the bio economic model is used to analyse the combined effects of land degradation population growth market imperfections and increased risk of drought on household production welfare and food security we find that the indirect effects of drought on household welfare through the impact on crop and livestock prices are larger than the direct production effects of drought provision and adoption of credit for fertiliser although risky in itself may lead to increased grain production and improved household welfare and food security provision of credit may have a negative effect on conservation incentives but this effect may be mitigated by linking a conservation requirement to the provision of credit for fertiliser

generating and sustaining backward linkages between maquiladoras and local suppliers in northern mexico abstract despite 25 years of growth mexico s in bond assembly or maquila operations use very little material inputs that are made in mexico mexican content is less than 2 of value added and those coming from the northern border region are even more miniscule some of the reasons for the paucity of local sourcing are reviewed with particular emphasis on corporate and plant purchasing arrangements mexican policies designed to support national suppliers are reviewed and the authors offer suggestions that stress the need for a regional focus that concentrates on fostering local technological capacities the study relies in part on surveys of plant managers and corporate purchasing officers

informational externalities strategic delay and optimal investment subsidies this paper examines optimal government policy when private investment generates information but investors cannot internalize the informational value their actions have to others equilibrium exhibits inefficient delay as investors adopt a wait and see approach the government can alter incentives via an investment subsidy but complications arise since future subsidies may induce investors to disregard current policy initiatives the paper shows that the government achieves its desired outcome only when the the investment subsidy is financed by a non distortionary lump sum tax when taxation is distortionary the government faces a time inconsistency problem that may prevent effective policy ce texte examine la politique optimale du gouvernement quand l investissement prive engendre de l information mais que les investisseurs ne peuvent pas internaliser la valeur informationnelle que leurs actions ont sur les autres l equilibre est marque par des delais inefficaces a proportion que les investisseurs adoptent une attitude attendre pour voir le gouvernement peut modifier les incitations en creant une subvention a l investissement mais des complications sont possibles puisque des subventions possibles dans l avenir peuvent amener les investisseurs a ne pas se prevaloir des initiatives mises de l avant par la politique courante le texte montre que le gouvernement atteint le resultat desire seulement quand la subvention a l investissement est finance par une taxe forfaitaire non distorsionnante quand la taxe cree des distorsions le gouvernement fait face a un probleme d inconsistance dans le temps qui empeche que la politique soit effective

social networks and technology adoption in northern mozambique despite their potentially strong impact on poverty agricultural innovations are often adopted slowly using a unique household dataset on sunflower adoption in mozambique we analyse whether and how individual adoption decisions depend upon the choices of others in the same social networks since farmers anticipate that they will share information with others we expect farmers to be more likely to adopt when they know many other adopters dynamic considerations however suggest that farmers who know many adopters might strategically delay adoption to free ride on the information gathered by others we present empirical evidence that shows that the relationship between the probability of adoption and the number of known adopters is shaped as an inverse u in line with information sharing the network effect is stronger for farmers who report discussing agriculture with others the data contains information which is needed to ameliorate the identification issues that commonly arise in this context in particular social networks are precisely identified and in addition we can control for village heterogeneity and endogenous group formation

option pricing and foreign investment under political risk abstract the paper analyses asset prices in a context of uncertainty over future government policy as current policy is maintained perceived risk abates thus leading to a gradual appreciation of asset prices and a gradual decrease in their conditional variance option values computed under this process have time series and the term structure of conditional volatility which in general are downward sloping in price series without a policy reversal implied volatility from option prices will exceed actual volatility with this wedge progressively disappearing this may be viewed as the volatility analogue of the peso premium for assets subject to large infrequent price drops

delay and cycles when the profitability of investment depends on the general level of economic activity entrepreneurs have an incentive to delay investments during a recession endogenous delay thus prolongs the recovery from a recession and heightens the effect of the boom this paper describes a dynamic model that exhibits both delay and cycles and develops methods for analysing the role of delay in propogating business cycles a number of interesting characteristics of the cycle are revealed first the effect of delay is asymmetric it lengthens the recovery but not the downturn second delay can increase the amplitude and typically reduces the frequency of the cycle third it can reduce the average level of activity but it achieves this effect by prolonging the recession rather than by reducing the amplitude of the cycle the welfare effects of delay are ambiguous however

stochastic dominance analysis of soil and water conservation in subsistence crop production in the eastern ethiopian highlands the case of the hunde lafto area the aim of this paper is to analyze whether investment in soil and water conservation results in a higher yield and income and or mitigate variability in yield and income to subsistence farm households in the hunde lafto area net returns from crop production with and without soil and water conservation swc are compared based on stochastic dominance sd criteria a non parametric first order sd and normalized second order are used for data analysis analysis is based on the soil conservation research program scrp database for the hunde lafto research unit the results of the analysis suggest that adopting a conservation strategy results in higher grain yield and net return than in not adopting the normalized second order sd analysis results do not support the hypothesis that conservation strategy is unambiguously better than a noconservation strategy in reducing variability in yield and net return to farmers however conservation strategy has shown second order dominance at lower levels of yield and income that often correspond to unfavorable rainfall conditions this makes it a preferred strategy to cope with the most prevalent risk factor of moisture shortage therefore appropriate policies to help and encourage farmers to adopt swc structures will contribute to improving the welfare of subsistence farm households in the study area and in other similar settings in the country designing and implementing swc techniques that may result in unambiguous second order sd dominance will further improve the desirability and adoption of conservation measures

conversation information and herd behavior experimental evidence shows that an important reason why people tend to imitate others to exhibit herd behavior is that they assume that the others have information that justifies their actions the information cascade models of banerjee 1992 and bikhchandani et al 1992 are significant developments in showing some general equilibrium and welfare effects of such rational imitative behavior but these models as specified may be of limited applicability since they assert that differences across groups in herd behavior can be attributed to the random decisions of first movers differences across groups in herd behavior might be explained more often in terms of different modes of interpersonal information transmission patterns of human conversation imply great selectivity to the kinds of information transmitted within groups this abstract was borrowed from another version of this item

an economic model of soil conservation by introducing soil depth and soil loss into a simple model of agricultural production this paper seeks to determine when the private path of erosion differs from the socially optimal path considering the depletion of soil only and abstracting from the environmental disruption caused by erosion the paper argues that under most institutional arrangements the social and private rates of erosion are the same the paper concludes that public policy should be directed toward reducing erosion only when it leads to significant pollution externalities

strategic delay in market entry two firms are contemplating entry into a market that is viable for only one firm in a good state we show that even if each firm receives a signal that perfectly reveals a good state both might strategically delay entry owing to the fear that the other firm might enter in the same period as well we also find the conditions where the informed firm will let the rival firm know about the market s profitability and the two will merge to enter the market we discuss the applications of this model to the oil industry and the generic drug industry jel classification l71 d8

risks and returns from soil conservation evidence from low income farms in the philippines abstract this paper examines risks and returns associated with soil conservation on hillside farms in the philippines stochastic efficiency analysis is combined with a heteroskedastic regression model to assess the impacts of contour hedgerows on low income corn farms regression analysis indicates that over time contour hedgerows can improve yields up to 15 compared with conventional practices the analysis also provides weak support for a hypothesis that hedgerows are variance reducing however results show that the reduction in yield variability afforded by hedgerows is modest and that yield variability may increase by as much as 5 as hedgerow intensity rises tests for stochastic dominance show that compared with the conventional tillage system hedgerows do not constitute an unambiguously dominant production strategy stochastic efficiency with respect to a function is used to identify a range for the coefficient of relative risk aversion within which hedgerows dominate conventional tillage results suggest this range would be rather high hedgerows dominate the conventional cropping strategy only for decision makers with relative risk aversion coefficients in the range 3 5 5 implications for soil conservation adoption in low income settings are discussed

learning and capacity expansion under demand uncertainty a competitive dynamic model of entry into a new industry is set up and both its positive and normative aspects are studied the main assumptions are that entry is sequential that it occurs under imperfect information on the size of the market and that better information becomes available as time goes on the gradual improvement in information is due to the fact that later waves of entrants are able to observe the profitability of earlier entrants the major results reported here under suitable restrictions are that the equilibrium rate of entry is monotonically decreasing over time and that at any given point in time it is smaller than the socially optimal one when a new market opens as a result of a product being newly invented for instance or when an existing market starts to expand uncertainty with respect to its size is likely to prevail as a result of this uncertainty entry of firms into such markets typically will occur in waves some firms will enter initially while others will wait to see the consequences of that initial entry if the experience of early entrants is favourable entry will continue otherwise entry will cease hence with the introduction of a new product two phases are associated the growth phase typified by positive operating profits for existing firms and expansion of productive capacity due to entry of new firms and the mature phase typified by erosion of profits and fixed total productive capacity empiricists estimating the time pattern of investments during the growth phase have found an s shaped diffusion curve see mansfield 1986 and gort and klepper 1982 the purpose of the present paper is to theoretically characterize these time patterns and to investigate their welfare properties any attempt to model the type of entry described above must account for differences in both entry dates and resultant earnings in other words the theory must explain why the realized earnings of different cohorts of firms are not equal often such ex post differences are reconciled by assuming heterogeneity with respect to some latent underlying characteristic managerial ability for instance and attributing differences in earnings to differences in that characteristic in this paper instead earning differentials are attributable to luck only ex ante all firms are technologically identical and equally capable of forecasting market prospects and rationally acting upon those forecasts ex post some firms turn out to have entered at the right time and are for that reason more profitable the model developed in this paper analyzes a parametric example of a sequential entry problem in which the uncertainty over market size is gradually resolved over time in a bayesian setting in an environment of perfect competition and constant returns toscale a free entry equilibrium concept is introduced and the aggregate implications of the time path of investments are derived i then compare this actual time path to the optimum this comparison is interesting because the equilibrium is analysed under the

making waves to innovate or be a fast second internal finance leads to a stalemate in innovation games each firm wants to free ride on the others costly experimentation when instead innovation is financed externally e g with venture capital or initial public offerings there is an endogenous cost to delay waiting to make risky irreversible investment conveys pessimistic information i characterize the relative sizes of waves of leaders and followers in innovation cycles and the endogenous intertemporal distribution of quality as each wave builds and crashes finally old waves leave an adverse selection hangover such that too much early innovation can cause the market for future innovation to break down

a stochastic dominance comparison of reduced tillage systems in corn and soybean production under risk returns per acre of reduced tillage systems including conventional chisel till plant and no till are examined under general assumptions concerning risk these returns are calculated using com and soybean experimental plot yields stochastic dominance rankings indicate an advantage second degree of conventional and chisel over no till when soil loss costs are not assigned annual per acre soil loss costs of 5 15 shift rankings towards the reduced tillage systems a 10 per acre cost results from corn yield losses of 0 06 per year 170 bushel per acre yield base over fifty years with a 5 real discount rate

adoption of agricultural innovations in developing countries a survey this paper reviews various studies which have provided a description and possible explanation to patterns of innovation adoption in the agricultural sector the survey points out that the tendency of many studies to consider innovation adoption in dichotomous terms adoption nonadoption may not be appropriate in many cases where the actual decisions are defined over a more continuous range more attention needs to be given to the socio cultural and institutional environment in area studies so that their interrelation with economic factors affecting adoption can be inferred the presence of several interrelated innovations is another aspect that needs to be considered more carefully in future research since a number of simultaneous decisions may be involved furthermore the possibility of regular sequential patterns in adopting components of a new technological package should be specifically addressed in future studies finally the impact of differential adoption rates on land holding distribution merits attention in future research

consumption risk farm characteristics and soil conservation adoption among low income farmers in the philippines abstract this paper investigates patterns of soil conservation adoption among low income farmers in the philippines a model is presented that focuses attention on the role of assets and consumption risk in influencing soil conservation adoption decisions results from a reduced form probit model of adoption are reported these econometric findings indicate that patterns of soil conservation adoption reflect relative risk considerations in addition to farm and household characteristics farm size tenure security labor availability and land quality all exhibit a positive association with soil conservation adoption in contrast controlling on these and other household characteristics the probability of adoption falls as consumption risk rises these results underscore a need for greater sensitivity among policymakers to the role of consumption risk in influencing soil conservation decisions in low income settings

rational herding in financial economics abstract this paper briefly describes recent papers on the economics of rational herding in financial markets some models can predict perfect herding in which rational agents all act alike without any countervailing force such herding typically arises either from direct payoff externalities negative externalities in bank runs positive externalities in the generation of trading liquidity or in information acquisition principal agent problems based on managerial desire to protect or signal reputation or informational learning cascades the paper also provides a few pointers to related literature and suggests issues to be addressed in future research

behavioral biases in endogenous timing herding games an experimental study abstract we experimentally study behavior in an endogenous timing herding game we find that subjects respond to their type and to observed investment activity in a sensible way but there are also substantial departures from nash equilibrium some departures can be viewed as mere noise in decision making while other departures represent systematic biases reflecting subjects failure to appreciate subtle aspects of the game

first versus second mover advantage with information asymmetry about the profitability of new markets is it better to move first or second to innovate or to imitate we show that if one player s information about the profitability of new markets is only modestly superior the possibility of foreclosing the market can lead to a first mover advantage on the other hand more extreme information superiority can reverse this leading to a second mover advantage knowing more surely what is the best choice the better informed player wants to delay to keep his information private and the less informed player wants to delay to learn because of this more accurate information can actually lead to inefficiency by increasing the incentive to delay and exogenous costs of delay can aid efficiency by neutralizing that strategic incentive in fact in some circumstances a player may purposely coarsen his information to deter imitation

endogenous timing of actions under conflict between two types of second mover advantage in a model two players heterogeneous in their information quality compete with each other with perfect information about the other player s information quality if they can decide their timings of actions endogenously the less informed player has an incentive to delay her action for learning on the other hand the more informed player wants to delay her action to prevent her information from being revealed not to enable her to learn the consict of these two types of second mover advantages yields a war of attrition although both players can bene t from acting as the follower the gain from a delay for learning is greater than that for preventing the other s learning therefore a cost for the delay in action plays an important role in characterizing the equilibrium in contrast to the literature in which only informational externalities are considered this article shows that the introduction of payoff externalities contributes to different procedures and reasoning processes through which the heterogeneous players timings of actions are decided endogenously

an equilibrium analysis of information aggregation and fluctuations in markets with discrete decisions abstract this paper shows how the interaction between decentralized information gathering and discreteness of investment decisions at the individual level can generate random fluctuations in aggregate investment that involve occasionally large allocation errors this interaction is illustrated in a model in which private information is costly to acquire and prices reveal information the unique rational expectations equilibrium outcome of the model is shown to always be noisy and characterized by investment levels which may be high simply because uninformed investors are buying under the impression that the high price is a signal of good investment opportunities

decentralization duplication and delay we argue that although decentralization has advantages in finding low cost solutions these advantages are accompanied by coordination problems which lead to delay or duplication of effort or both consequently decentralization is desirable when there is little urgency or a great deal of private information but it is strictly undesirable in urgent problems when private information is less important we also examine the effect of large numbers and find that coordination problems disappear in the limit if distributions are common knowledge

herd behaviour by japanese banks after financial deregulation this paper investigates whether japanese banks followed herd behaviour during the 1980s and 1990s the results indicate the existence of herding during the sample period while the inefficiency of herding is concentrated in the early to mid 1980s the period immediately after financial deregulation began evidence for the inefficient herding is observed in the behaviour of banks that made loans to new borrowers and in the behaviour of banks that followed the type of banks that were more informed on lending to new borrowers on the other hand inefficient herd behaviour is rarely observed in the 1990s

fragmentation and east asia s information technology trade this article studies the growth and determinants of information technology it trade in the asia pacific region we argue that the rise of it trade must be understood within the context of increasing vertical fragmentation of production processes that has occurred over the past two decades to evaluate this empirically we estimate a set of pooled bilateral it export equations for eight asian countries the usa and the eu where foreign direct investment fdi inflows are introduced as a proxy for fragmentation we apply a panel cointegration approach that allows for heterogeneity in short run dynamics and in fixed effects consistent with production fragmentation we find that the evolution of it trade can be explained in part by traditional income and relative price effects but also by fdi inflows

conservation payments under risk a stochastic dominance approach conservation payments can be used to preserve forest and agroforest systems to explain landowners land use decisions and determine appropriate conservation payments it is necessary to focus on revenue risk marginal conditional stochastic dominance rules are used to derive conditions for determining the conservation payments required to guarantee that the environmentally preferred land use dominates an empirical application to shaded coffee protection in the biologically important choco region of west ecuador shows that conservation payments required for preserving shaded coffee areas are much higher than those calculated under risk neutral assumptions further the extant distribution of land has strong impacts on the required payments

the heterogeneous effect of shocks on agricultural innovations adoption microeconometric evidence from rural ethiopia abstract theoretically the relationship between shocks and agricultural innovation adoption could be ambiguous while shocks could lower the competence and capacity of households to adopt new agricultural innovations households can also take up agricultural innovations as a coping mechanism against the different shocks they face using a nationally representative household data from ethiopia of the living standards measurement study integrated surveys on agriculture lsms isa of the world bank this paper analyzes the effect of idiosyncratic and covariate shocks on adoption of different agricultural innovations assuming interdependence among the innovations we find shocks to have heterogeneous effects on the adoption of agricultural innovations specifically production and health shocks have negative effects on the adoption of high cost innovations such as improved seeds chemical fertilizer and irrigation however production shocks are positively associated with low cost innovations such as organic fertilizer to enhance farmers adoption of agricultural innovations especially high cost innovations there is a greater need towards the design of policies and interventions that would reduce household s exposure to production and health shocks

on industry life cycles delay entry and shakeout in beer brewing abstract this paper proposes a new explanation for industry shakeout an event evident in the life cycle of many industries in which the number of firms drops significantly in a short interval of time based on an in depth analysis of the shakeout in the united states beer brewing industry between 1880 and 1890 we propose that industry shakeouts naturally follow periods of mass entry by firms similar patterns are evident in two other industries we briefly examine the us automobile and tire industries while entry rates fluctuate broadly in all these industries we find that the timing of exit for a given cohort of entrants is remarkably similar over time the exit hazard rate is peaked in the first two years of every cohort s life and drops dramatically to low and stable levels for subsequent ages in this sense mass exit follows mass entry and does not require a deep explanation it is the mass entry evident in the data for these industries that requires an explanation we propose a theoretical model of information accumulation to explain entry into an industry entrepreneurs are uncertain about the profitability of the industry and this uncertainty is resolved through sufficient accumulation of information regarding the fortunes of incumbent firms delay in entry occurs solely due to the fact that it takes time to accumulate sufficient information to support more entry the resulting entry pattern from simulations of the model looks much like that observed in the industries we study

experimentation in markets we present a model of entry and exit with bayesian learning and price competition a new product of initially unknown quality is introduced in the market and purchases of the product yield information on its true quality we assume that the performance of the new product is publicly observable as agents learn from the experiments of others informational externalities arise we determine the markov perfect equilibrium prices and allocations in a single market the combination of the informational externalities among the buyers and the strategic pricing by the sellers results in excessive experimentation if the new product is launched in many distinct markets the path of sales converges to the efficient path in the limit as the number of markets grows in multi agent learning situations informational externalities may reduce the number of experiments undertaken below the socially efficient level as buyers choose among new experience goods or firms decide whether to adopt a new technology the availability of information from others decisions gives rise to a free rider problem rather than perform a costly experiment herself a buyer may opt to wait and see how the market evaluates the new product in this paper we develop a simple market model of experimentation and analyse the informational effects in a model with buyers and sellers in contrast to the one sided experimentation problems we find that equilibrium experimentation often exceeds the pareto optimal level in two sided models the first model we consider is a dynamic duopoly in continuous time with homogeneous buyers two firms with differentiated products engage in price competition over time one product has a known value while the other is new and its true value is initially uncertain to all the parties in the model the value of the product is determined by the quality of the match between consumer preferences and product characteristics additional information is acquired only through repeat purchases in each period buyers observe a noisy signal of the true value of the product we assume that all signals are publicly observable and that all uncertainty is about a common value component with this assumption all buyers and sellers condition their behaviour on the same information and we can abstract from individual differences in past observations this is justified in economic situations where public data on other buyers choices is available and informative for example when choosing among providers of communication or transportation services such as mail delivery firms or airlines it is reasonable to rely on consumer reports and other published data in addition to one s private experience we also show that our model has an alternative interpretation as one where a flow of buyers make a once and

the effects of the market structure on the adoption of evolving technologies abstract we study the speed at which technologies are adopted depending on how the market power is shared between the firms that sell technologies and the firms that buy them our results suggest that because of a double marginalization problem adoption is fastest when either sellers or buyers hold all the market power thus competition between sides of the market may delay the adoption of technologies

price dispersion and learning in a dynamic differentiated goods duopoly we study the evolution of prices set by duopolists who are uncertain about the perceived degree of product differentiation customers sometimes view the products as close substitutes sometimes as highly differentiated as the informativeness of the quantities sold increases with the price differential there is scope for active learning by firms when information has low value to the firms they charge the same price as would be set by myopic players and there is no price dispersion when firms value information more highly on the other hand they actively learn by creating price dispersion such price dispersion arises in a cyclical fashion and is most likely to be observed when the firms environment changes sufficiently often but not too frequently firms payoffs are higher when they use correlated pricing strategies contrary to what one might expect such coordination need not hurt consumers provided they are sufficiently impatient

policy instruments for sustainable land management the case of highland smallholders in ethiopia degradation of land continues to pose a threat to future food production potential in many developing economies various approaches mainly based on command and control policies have been tried with limited success in the past to encourage adoption of erosion control practices by farm households high transactions costs and negative distributional impacts on the welfare of the poor limit the usefulness of standards and taxes for soil and water conservation one innovative approach is the use of interlinked contracts which create positive incentives for land conservation this study analyses the social efficiency of such policies for erosion control in the ethiopian highlands using a non separable farm household model incentive contracts linked with conservation seem to be promising approaches for sustainable resource use in poor rural economies this may suggest that conservation programs should give greater consideration to better fine tuning and mix of policies that help achieve both economic and environmental objectives

links between rural poverty and the environment in developing countries asset categories and investment poverty abstract this paper presents a framework for analyzing the links between poverty and the environment in rural areas of developing countries it introduces the concept of investment poverty and relates it to other measures of poverty in analysis of these links the notion of poverty is examined in the context of categories of assets and categories of environment change with particular focus on farm household income generation and investment strategies as determinants of the links the strength and direction of the poverty environment links are shown to differ even invert depending on the composition of the assets held by the rural poor and the types of environmental problems they face policy strategies need to focus on conditioning variables that affect market development community wealth infrastructure household asset distribution and the affordability and appropriateness of natural resource conservation technologies

social influence and collective action effects on farm level soil conservation effort in rural kenya abstract this paper analyzes the effects of social influence and participation in collective action initiatives on soil conservation effort among smallholder farmers in lake naivasha basin kenya we apply binary and ordered probit models in a two stage regression procedure to cross sectional data collected through a household survey among randomly selected smallholder farmers smallholder farming systems in the research area are associated with practices that render farmlands susceptible to soil erosion causing negative impacts on land and the environment therefore strategies that encourage soil conservation are likely to also offer solutions for dealing with agri environmental challenges and poverty alleviation results indicate that social capital facilitates participation in collective action initiatives which then influence individual soil conservation efforts neighborhood social influences subjective norms gender education level farm size access to credit and livestock ownership also emerge as key determinants of soil conservation effort policy implications drawn by this study encourage strategies to increase participation and effectiveness in collective action initiatives as a boost to soil conservation implementation of soil conservation practices could also be encouraged through awareness increasing instruments facilitating access to agricultural micro credit and paying attention to gender related challenges on knowledge access and rights over land and other natural resources

the impact of water conservation and intensification technologies empirical evidence for rice farmers in ghana this study employs the propensity score matching model to examine the impact of the adoption of water conservation and intensification technologies on farm output and income among small scale lowland rice farmers in the northern region of ghana the matching was conducted based on the mahalanobis distance combined with the propensity score balancing tests by checking the mean standardized absolute bias in the matched sample were conducted as well as a sensitivity analysis was conducted to check for hidden bias due to unobservable selection the empirical results show a positive and significant impact of the adoption of bunds technology on input demand as well as a positive but insignificant impact on output supply and net returns adopters of the dibbling technology were found to have higher output supply whereas no statistically significant difference was found between the incomes of adopters and nonadopters of dibbling seed method the results however reveal a positive and significant effect on output and net returns when the dibbling method is combined with intensified weeding the estimates were found to be relatively insensitive to hidden bias

learning from the behavior of others conformity fads and informational cascades learning by observing the past decisions of others can help explain some otherwise puzzling phenomena about human behavior for example why do people tend to converge on similar behavior why is mass behavior prone to error and fads the authors argue that the theory of observational learning and particularly of informational cascades has much to offer economics business strategy political science and the study of criminal behavior

on vertical relations and the timing of technology adoption we study the timing of new technology adoption in markets with input outsourcing and thus with vertical relations we find that technology adoption can take place earlier when firms engage in input outsourcing than when they produce the input in house hence the presence of vertical relations can accelerate the adoption of a new technology we also find that particular features of a vertically related market such as the distribution of bargaining power and the contract type through which trading is conducted can crucially affect the speed of technology adoption

should i stay or should i go bandwagons in the lab abstract we experimentally investigate the impact of strategic uncertainty and complementarity on leader and follower behavior using the model of farrell and saloner 1985 at the core of the model are endogenous timing irreversible actions and private valuations we find that strategic complementarity strongly determines follower behavior once a subject decides to abandon the status quo the probability that other players jump on the bandwagon increases sharply however there is a reluctance to lead when leading is a conditional best response we explain this deviation from the neo classical equilibrium by injecting some noise in the equilibrium concept we also find that cheap talk improves efficiency

bringing the firm back in local decision making and human capital development in mexico s maquiladora sector summary the recent decline in mexico s maquiladora sector provides an opportunity to reassess the sustainability of basing national economic competitiveness on low wages 1 focusing on human capital as an important component of equitable growth the authors argue that models of its development which consider market factors alone are inadequate combining their own case study with a review of other studies over the past 20 years the authors propose a management centered as opposed to a market centered model of human capital development as a basis for discussing the relative merits of in bond industrial programs and considering measures to improve levels of human capital

predicting individual analyst earnings forecasts in this study i propose and test a model that predicts individual analyst forecasts of corporate earnings per share eps using the change in the mean consensus forecast of other analysts since the date of the analyst s current outstanding forecast the deviation of the analyst s current forecast from the consensus forecast and cumulative stock returns since the date of the analyst s current forecast i find that these three variables explain about 38 of the variability in analyst forecast revisions while there is evidence of a relation between changes in earnings expectations and price changes virtually all of the explanatory power of my model arises from other analyst forecasts section 2 describes the data bases used and the sample selection process section 3 presents the model and method for predicting individual analyst forecasts section 4 reports the bias and accuracy of the predicted forecasts conclusions are in section 5

how can african agriculture adapt to climate change a counterfactual analysis from ethiopia we analyze the impact of different adaptation strategies on crop net revenues in the nile basin of ethiopia we estimate a multinomial endogenous switching regression model of climate change adaptation and crop net revenues and implement a counterfactual analysis households data are combined with spatial climate data we find that adaptation to climate change based upon a portfolio of strategies significantly increases farm net revenues changing crop varieties has a positive and significant impact on net revenues when coupled with water conservation strategies or soil conservation strategies but not when implemented in isolation jel q54 q56

herding a synchronous updating and heterogeneity in memory in a cbs abstract this paper considers a simple continuous beliefs system cbs to investigate the effects on price dynamics of several behavioural assumptions i herd behaviour ii a synchronous updating of beliefs and iii heterogeneity in time horizons memory among agents the recently introduced concept of a cbs allows one to model the co evolution of prices and the beliefs distribution explicitly while keeping track of the unpredictable nature of individual preferences technical report cendef working paper 03 05 university of amsterdam tinbergen institute discussion paper 2003 073 1 as a benchmark model we take a simple cbs which in a market with many traders exhibits a random walk driven by news using the explicit nature of the dynamics of the cbs we show that the introduction of herding modifies the random walk to an arima 0 1 1 process which is observationally equivalent to a reduction of the number of market participants in terms of returns the model predicts ma 1 structure with a negative coefficient a synchronous updating leads to an ma 1 model for returns with garch 1 1 innovations and predicts a relation between the arch and garch coefficients heterogeneity in memory leads to long range dependence in returns in the empirical section we perform a modest reality check concerning the predicted sign of the ma coefficient and the relation between the arch and garch coefficients for exchange rate data

soil erosion and smallholders conservation decisions in the highlands of ethiopia abstract soil erosion is one of the most serious environmental problems in ethiopia coupled with growing populations falling per capita food production and worsening poverty loss of productive land due to land degradation undermines rural livelihoods and national food security despite their awareness of the erosion problem peasants investments in land have been limited we use an applied nonseparable model to simulate conservation decisions pervasive market imperfections poverty and high rates of time preference seem to undermine erosion control investments lack of technologies which provide quick returns to subsistence constrained peasants also seem to deter such investments lower private incentives to internalize the intertemporal land degradation externality may require public intervention

investment timing and learning externalities abstract we study a duopoly model of investment in which each player learns about the quality of a common value project by observing some public background information and possibly the experience of his rival investment costs are private information and the background signal takes the form of a poisson process conditional on the quality of the project being low the resulting attrition game has a unique symmetric equilibrium which depends on initial public beliefs we determine the impact of changes in the cost and signal distributions on investment timing and how equilibrium is affected when a first mover advantage is introduced

ex post regret and the decentralized sharing of information abstract firms reveal private information about the value of investment through their investment decisions as a consequence they may have ex post regret once they see other firms investments we define a notion of rational expectations equilibrium for games which imposes a no regret property in this equilibrium all firms make the same investment decision but despite the absence of ex post regret the investment herd can be inefficient in addition equilibrium might not exist we introduce a notion of probabilistic existence and identify conditions under which if the number of firms is large enough information comes out so that investment herds are first best efficient with high probability and equilibrium exists with high probability journal of economic literatureclassification numbers c7 d8

taking the road less traveled by does conversation eradicate pernicious cascades abstract we offer a model in which sequences of individuals often converge upon poor decisions and are prone to fads despite communication of the payoff outcomes from past choices this reflects both direct and indirect action based information externalities in contrast with previous cascades literature cascades here are spontaneously dislodged and in general have a probability less than one of lasting forever furthermore the ability of individuals to communicate can reduce average decision accuracy and welfare

second mover advantage and entry timing we describe a model of entry timing assuming that a second mover can benefit from observing the experience of a first mover we focus on how market attractiveness characteristics such as size and cost affect the time until first entry the effects depend on whether the number of participants is exogenous or endogenous in the former case a more attractive market leads to earlier entry in the latter case it leads to later entry treating the number of firms as an integer free entry leads to non monotone but testable effects of market attractiveness on entry timing

investment in soil conservation in northern ethiopia the role of land tenure security and public programs abstract a double hurdle statistical analysis of 250 farms in the tigray region of ethiopia reveals different causal factors for soil conservation adoption versus intensity of use farmers reasons for adopting soil conservation measures vary sharply between stone terraces and soil bunds long term investments in stone terraces were associated with secure land tenure labour availability proximity to the farmstead and learning opportunities via the existence of local food for work ffw projects by contrast short term investments in soil bunds were strongly linked to insecure land tenure and the absence of local food for work projects public conservation campaigns on private plots reduced adoption of both stone terraces and soil bunds whereas capacity factors largely influenced the adoption decision expected returns carried more influence for the intensity of stone terrace adoption measured as metres of terrace per hectare more stone terracing was built where fertile but erodible silty soils in higher rainfall areas offered valuable yield benefits intensity of terracing was also greater in remote villages where limited off farm employment opportunities reduced construction costs these results highlight the importance of the right kind of public interventions direct public involvement in constructing soil conservation structures on private lands appears to undermine incentives for private conservation investments when done on public lands however public conservation activities may encourage private soil conservation by example secure land tenure rights clearly reinforce private incentives to make long term investments in soil conservation

foreign investment and the global geography of production why the mexican consumer electronics industry failed abstract explanations of industrial development in late developing countries have become narrowly focused on the capability of governments to promote pressure or punish nationally owned firms often overlooked is the contribution of firms both national and multinational in propelling coordinating and determining the path and location of such development this paper examines the conditions that led to the decline of mexico s consumer electronics industry and presents new evidence to support a more complex account of the role of both industrial and state actors within this process in contrast to the traditional market or state based theories we argue that the decline of mexico s consumer electronics industry largely resulted from its foreign investment regime particularly the timing of investment and the geographical locations of local and foreign manufacturers and the subsequent depth and quality of the relationships between these firms the differences between mexico s regime and that of taiwan during the same period provide further evidence of the important role that foreign firms play in inserting local suppliers into the global production chain we argue that mexico s foreign investment regime and the resulting weak local foreign ties rather than inadequate state policy sealed the fate of mexico s once thriving domestic electronics industry

reputation and performance among security analysts members of the institutional investor all american research team supply more accurate earnings forecasts than other analysts when forecasts are matched by the corporation followed and by the date of brokerage house issuance this contemporaneous advantage is complemented by a timing advantage all americans supply forecasts more often than other analysts stocks returns immediately following large upward forecast revisions suggest that all americans impact prices more than other analysts however there is virtually no difference in returns following large downward revisions nevertheless the collective results suggest a positive relation between reputation and performance and assuming that all americans are better paid pay and performance

testing participation constraints in contract design for sustainable soil conservation in ethiopia abstract this paper focuses on contract design to improve the incentive structure of current coordination mechanisms related to sustainable land use management in the ethiopian highlands the main objective is to assess whether and if so under which terms and conditions rural households are willing to enter into contractual agreements to invest in soil conservation measures on their land participation constraints are tested under different soil erosion and institutional economic conditions in a choice experiment targeting 750 rural households we show that contracts provided by local government peasant associations offering additional credit land use security and extension services could be an effective means to increase the share of farmers implementing soil conservation measures however trust in contract terms and conditions appears to play an important role farmers living in the most erosion prone areas are most likely to participate while farmers taking soil conservation measures already are less likely to enter into a contractual agreement with the local government farmers not taking soil conservation measures will only do so if the contract price is lower than or equal to the income losses suffered from soil erosion

hindsight foresight and insight an experimental study of a small market investment game with common and private values we experimentally test an endogenous timing investment model in which sub jects privately observe their cost of investing and a signal correlated with the common investment return subjects overinvest relative to nash we separately consider whether subjects draw inferences in hindsight and use foresight to delay profitable investment and learn from market activity in contrast to nash cursed equilibrium and level k predictions behavior hardly changes across our experimental treatments maximum likelihood estimates are inconsistent with belief based theories we offer an explanation in terms ofboundedly ratio nal rules of thumb based on insights about the game which provides a better fit than quantal response equilibrium jel c72 d82 d83 gil

bayesian learning in social networks we study the perfect bayesian equilibrium of a sequential learning model over a general social network each individual receives a signal about the underlying state of the world observes the past actions of a stochastically generated neighbourhood of individuals and chooses one of two possible actions the stochastic process generating the neighbourhoods defines the network topology we characterize pure strategy equilibria for arbitrary stochastic and deterministic social networks and characterize the conditions under which there will be asymptotic learning convergence in probability to the right action as the social network becomes large we show that when private beliefs are unbounded meaning that the implied likelihood ratios are unbounded there will be asymptotic learning as long as there is some minimal amount of expansion in observations we also characterize conditions under which there will be asymptotic learning when private beliefs are bounded

time discounting and the overexploitation of coral reefs the incentive to overexploit a fishery resource is thought to exist if the resource owner s discount rate is sufficiently higher than the biological productivity of the targeted fish stock coral reef fisheries are extensively overexploited worldwide but the discount rates of reef fishers are largely unknown and there is little information about how discount rates relate to the exploitation status of fisheries we address these two research gaps for 48 small scale reef fisheries around the world we use a life history based method to derive fishery level intrinsic growth rates and then apply fisheries economics theory to investigate the compatibility of 2 different discount rates official and private with the exploitation status of reef fisheries we find that official discount rates that are normally used for policy making appear to be too low to fully reflect the short term outlook of reef fishers instead our inferred annual average private discount rate of 107 for fishers may better reflect the general overexploited state of reef fisheries our results indicate that in order to improve the chances of success fisheries policies which affect local fishers may need to be evaluated using private discount rates rather than the currently used official discount rates

formation of foreign direct investment clustering a new path to local economic development the case of qingdao jun yeup kim and le yin zhang formation of foreign direct investment clustering a new path to local economic development the case of qingdao regional studies this paper investigates the clustering of chinese electronics manufacturers large and small alongside established foreign producers in qingdao north china it examines how the supplier buyer linkages between foreign invested enterprises fies and local firms have driven the development of a successful electronic industry cluster around development zones established by the local authority underpinning the success of the large domestic firms both at home and abroad it also analyses how fies collaboration with local firms fosters local economic development in qingdao by integrating the theoretical perspectives of the hub and spoke model from economic geography and flagship and five partner s model in the science of strategic management it develops its own theoretical lens to investigate the inter firm network between the fies and local fir

investment as a process of search this paper analyzes optimal capital accumulation in the face of structural uncertainty in which the firm does not fully know its own profit function and can discover it only through further investment it is shown that under structural uncertainty capital accumulation is gradual even when adjustment costs are linear and not convex it is further shown that structural uncertainty creates an incentive to market research the paper also presents an example of structural uncertainty in which an additional price uncertainty has a negative effect on investment contrary to the standard models

investment under uncertainty irreversibility and the arrival of information over time in this paper we consider a risk neutral competitive firm which is uncertain about the true state of demand we build upon arrow by demonstrating that the irreversibility of investment in physical capital together with the anticipation of receiving information and of learning the state of demand lead to 1 cautious investment behaviour and hence to lower investment levels than otherwise since the firm cannot disinvest if market conditions turn out to be less favourable than currently anticipated 2 a time varying risk premium or marginal adjustment cost which is shown to arise endogenously and to be positively related to the investment level and to the anticipation of greater information in the sense of blackwell 1951 1953 3 a gradual adjustment of the capital stock to the desired level defined as the optimal capital stock corresponding to the true state of demand

social learning and delay in a dynamic model of price competition abstract this paper studies dynamic price competition between two firms selling differentiated durable goods to two buyers whose valuations of the two goods depend on their own private type as well as that of the other buyer we derive a key intertemporal property of the equilibrium prices and construct an equilibrium based on this property we show that social learning reduces the equilibrium prices in the sense that when the buyers are more interdependent and hence have a stronger incentive to wait and see the firms respond by lowering their period 1 prices interestingly we find that this response by the firms along with the intertemporal property of the equilibrium prices implies that buyers delay their decisions less often when they become more interdependent

experimentation imitation and stochastic stability abstract do boundedly rational agents repeatedly playing a symmetric game with a unique symmetric equilibrium learn over time to play it in this paper we model the dynamic interaction of two types of such agents experimenters and imitators whose behavior is characterized by simple rules of thumb we find that the stochastic process describing their play isstable in the large it converges globally and with probability one to a compact neighborhood of the equilibrium however its local behavior near the equilibrium depends in interesting ways on the details of the model journal of economic literatureclassification number d83

delay in contests abstract why is there delay in contests in this paper we follow and extend the line of reasoning of carl von clausewitz to explain delay for a given contest technology delay may occur if there is an asymmetry between defense and attack if the expected change in relative strengths is moderate and if the additional cost of investment in future strength is low

information cascades and revolutionary regime transitions we combine acemoglu and robinson s model of the economic origins of democracy with lohmann s model of political mass protest this allows us to analyse the economic causes of political regime change based on the microfoundations of revolution we are able to derive conditions under which democracy arises peacefully when it occurs only after a revolution and when oligarchy persists we model these possibilities in a world of asymmetric information where information cascades are possible and where these cascades may involve errors in the sense that they make everyone worse off

the roles of land tenure reforms and land markets in the context of population growth and land use intensification in africa this article reviews the past and potential future roles of land tenure reforms and land markets in sub saharan africa ssa as responses to population growth in the process of land use intensification and livelihood transformation the farm size distribution and the existence of an inverse relationship ir between farm size and land productivity in ssa and the implications of this relationship for efficiency and equity are investigated more secure property rights and removal of restrictions on land markets have the potential to create both efficiency and equity benefits but there are high risks of elite capture of large land areas with inefficient and inequitable outcomes this situation is the case not only in land abundant areas but also in urban and peri urban areas where increasingly larger proportions of people will make their living increasing population pressure in densely populated rural areas contributes to more rapid rural urban migration and creating alternative livelihood opportunities for the migrating youth population is essential to achieving economic development with social stability

land tenure and investment incentives evidence from west africa abstract the existing literature on the relationship between property rights in land and agricultural investment in africa has given results that are often confusing and contradictory i make two clarifying contributions to this literature first i pull together existing studies and investigate whether the results they find have been affected by research methods or local contexts studies with small sample sizes those that use binary investment measures and those that control for household fixed effects are less likely to find a statistically significant link between land tenure and investment self reported tenure security has been a poor predictor of investment outcomes second i test for a relationship between land tenure and agricultural investment in nine data sets from west africa while the link between tenure and investment is significant for fallow and tree planting it is less robust for labor use and other inputs such as manure or chemical fertilizer

herding among security analysts the paper shows that the buy or sell recommendations of security analysts have a signi cant positive in uence on the recommendations of the next two analysts this in uence can be traced to short lived information in the most recent revisions in contrast the in uence of the prevailing consensus is not stronger if the consensus accurately forecasts subsequent stock price movements this indicates consensus herding consistent with models in which analysts herd based on little information the consensus also has a stronger in uence when market conditions are favorable the resulting poorer information aggregation could cause bull markets to be intrinsically more fragilea e g bikhchandani et al j political economy 100 5 1992 992 1026 2000 elsevier science s a all rights reserved jel classixcation g11 g14 g24

learning and information aggregation in an exit game we analyze information aggregation in a stopping game with uncertain common payos players learn from their own private experiences as well as by observing the actions of other players we give a full characterization of the symmetric mixed strategy equilibrium and show that information aggregates in randomly occurring exit waves observational learning induces the players to stay in the game longer the equilibria display aggregate randomness even for large numbers of players

information revelation and strategic delay in a model of investment we model investment as an n player game with a pure informational externality each player s payoff depends only on his own action and the state of nature however because a player s action reveals his private information players wait to see what other players will do equilibrium is inefficient because delay is costly and information is imperfectly revealed we characterize the unique symmetric perfect bayesian equilibrium and study the robustness of delay which turns out to be sensitive to the reaction speed and the number of players we establish the following results i when the period length is very short the game ends very quickly and there is a form of herding or informational cascade which results in a collapse of investment ii as the period length increases the possibility of herding disappears iii as the number of players increases the rate of investment and the information flow are eventually independent of the number of players adding more players simply increases the number who delay iv in the limit the time profile of investment is extreme a period of low investment followed either by an investment surge or a collapse

sequential sales learning and cascades when ipo shares are sold sequentially later potential investors can learn from the purchasing decisions of earlier investors this can lead rapidly to cascades in which subsequent investors optimally ignore their private information and imitate earlier investors although rationing in this situation gives rise to a winner s curse it is irrelevant the model predicts that 1 offerings succeed or fail rapidly 2 demand can be so elastic that even risk neutral issuers underprice to completely avoid failure 3 issuers with good inside information can price their shares so high that they sometimes fail 4 an underwriter may want to reduce the communication among investors by spreading the selling effort over a more segmented market consider a scenario in which an issuer is selling a new security of uncertain value for example an ipo initial public offering of stock or high yield debt through an underwriter the s e c has banned variable price sales while the value of this new security is highly uncertain to individual market participants investors hold perfectly accurate information when aggregated moreover there are many potential investors and a small number of these investors can jointly determine the value of the firm or its project with high precision it would seem that in this scenario underpriced offerings would succeed and overpriced offerings would fail nevertheless this paper shows that if the distribution channels of invest ment banks are limited underpriced offerings can fail and overpriced offer ings can succeed with limited distribution channels it takes the under writer time to approach interested investors therefore later investors can observe how well an offering has sold to date or at least how successful it has sold relative to offerings previously undertaken by this underwriter

persistence and reversal in herd behavior theory and application to the decision to go public we model rational herd behavior when the underlying value changes over time with payoffs that are either dependent or independent of the underlying value we show that herding does not last forever and is not monotone in signal quality high correlation among agents actions does not necessarily imply herding this suggests alternative empirical methods are needed to detect herding the model has many applications including the ipo decision in which payoffs are state dependent the model implies that the decision to go public is more likely associated with herding than the decision to delay an ipo copyright 2002 oxford university press

farmers perceptions and adoption of new agricultural technology evidence from analysis in burkina faso and guinea west africa economists investigating consumer demand have accumulated considerable evidence showing that consumers generally have subjective preferences for characteristics of products and that their demand for products is significantly affected by their perceptions of the product s attributes however the role of farmers preferences in adoption decisions have received very limited attention in adoption studies conducted by economists this paper tests the hypothesis that farmers perceptions of technology characteristics significantly affect their adoption decisions the analysis conducted with tobit models of modern sorghum and rice varietal technologies in burkina faso and guinea respectively strongly supports this hypothesis our results provide a strong case for future adoption studies to expand the range of variables used away from the broad socio economic demographic and institutional factors to include farmers subjective perceptions of the characteristics of new agricultural technologies

delay and information aggregation in stopping games with private information abstract we consider equilibrium timing decisions in a model with a large number of players and informational externalities the players have private information about a common payoff parameter that determines the optimal time to invest they learn from each other in real time by observing past investment decisions we develop new methods of analysis for such large games and we give a full characterization of symmetric equilibria we show that the equilibrium statistical inferences are based on an exponential learning model although the beliefs converge to truth learning takes place too late ex ante welfare is strictly between that without observational learning and that with full information

miracle on sixth avenue information externalities and search after a long dormant period lower sixth avenue in new york has undergone a rapid revitalisation we show that a simple search theoretic model with information spillovers can explain both the period of underuse and the rapid turnaround the model reduces to a simple equation which allows us to do comparative statics on the duration of vacancies we show how the solution reacts to changes in market structure and changes in search technology the model is suggestive of difficulties that may occur in many markets in which there are changes over time in the optimal use of resources at one time lower sixth avenue was one of the most fashionable retail centres in manhattan but the area collapsed as a retail centre when the affluent moved further uptown and to the suburbs today sixth avenue is in the midst of a rapid turnaround as reported in the sunday new york times by claudia