resolving differences in willingness to pay and willingness to accept reply gwendolyn c morrison 1997 raises a logical point regarding our experimental test of the divergence between willingness to pay wtp and willingness to accept wta measures of economic value shogren et al 1994 she argues that our design does not provide a true test of the existence of a fundamental endowment effect since we did not control for the potential of a pivoting indifference map daniel kahneman et al 1990 she concludes that even though our ev idence shows that the mean wtp and wta bids for market goods with close substitutes e g candy bars and coffee mugs converge after market experience the endowment effect might still be alive and well albeit at statisti cally insignificant levels

a cost function of greek non ferrous metal industry abstract a translog cost function in the form of a third order series taylor expansion was used for the estimation of cost in the greek non ferrous metal industry which is based on an annual time series for the period 1969 1990 concerning the price of production factors the production volume and the total cost of production the estimated cost function permit us to have average and marginal cost curves of typical form for each time point also it is useful for projecting costs and the optimum scale of production under conditions which concern 1 i the development of prices production and product factors and 2 ii demand

clearly irrational financial market behavior evidence from the early exercise of exchange traded stock options this paper analyzes the early exercise of exchange traded options by different classes of investors over the 1996 to 1999 period a large number of exercises are identified as clearly irrational without invoking any model of market equilibrium customers of discount brokers and customers of full service brokers both engage in a significant number of irrational exercises while traders at large investment houses exhibit no irrational early exercise behavior rational and irrational exercise is triggered for discount and full service customers by the underlying stock price attaining its highest level over the past year and by high returns on the underlying stock it is well known that in the absence of market frictions it is irrational to exercise american call options early except in some circumstances just before the underlying stock goes ex dividend even in the presence of market frictions it is possible to identify without the imposition of any model of market equilibrium call exercises that are clearly irrational in this paper we employ a previously unavailable data set to analyze the rationality of early exercises of chicago board option exchange cboe calls over the 1996 to 1999 period by customers of discount brokers discount customers customers of full service brokers full service customers and traders at large investment houses trading for their firms own accounts firm proprietary traders our first main finding is that there are a large number of early exercises that can be definitively identified as irrational and irrational exercise activity is not evenly distributed across the investor classes discount customers and full ser

using maimonides rule to estimate the effect of class size on scholastic achievement the twelfth century rabbinic scholar maimonides proposed a maximum class size of 40 this same maximum induces a nonlinear and nonmonotonic relationship between grade enrollment and class size in israeli public schools today maimonides rule of 40 is used here to construct instrumental variables estimates of effects of class size on test scores the resulting identiecation strategy can be viewed as an application of donald campbell s regression discontinuity design to the class size question the estimates show that reducing class size induces a signiecant and substantial increase in test scores for fourth and efth graders although not for third graders when asked about their views on class size in surveys parents and teachers generally report that they prefer smaller classes this may be because those involved with teaching believe that smaller classes promote student learning or simply because smaller classes offer a more pleasant environment for the pupils and teachers who are in them mueller chase and walden 1988 social scientists and school administrators also have a longstanding interest in the class size question class size is often thought to be easier to manipulate than other school inputs and it is a variable at the heart of policy debates on school quality and the allocation of school resources in many countries see e g robinson 1990 for the united states ofsted 1995 for the united kingdom and moshel ravid 1995 for israel this broad interest in the consequences of changing class size

size seasonality and stock market overreaction recent research finds that the prior period s worst stock return performers losers outperform the prior period s best return performers winners in the subsequent period this potential violation of the efficient markets hypothesis is labeled the overreaction phenomenon this paper shows that the tendency for losers to outperform winners is not due to investor overreaction but to the tendency for losers to be smaller sized firms than winners when losers are compared to winners of equal size there is little evidence of any return discrepancy and in periods when winners are smaller than losers winners outperform losers

employment protection legislation and firm growth evidence from a natural experiment a swedish reform in 2001 made it possible for firms with less than 11 employees to exclude two from the last in first out principle in case of layoffs the reform increased employment growth with o

psychological factors and stock option exercise we investigate stock option exercise decisions by over 50 000 employees at seven corporations controlling for economic factors psychological factors influence exercise consistent with psychological models of beliefs employees exercise in response to stock price trends exercise is positively related to stock returns during the preceding month and negatively related to returns over longer horizons consistent with psychological models of values that include reference points employee exercise activity roughly doubles when the stock price exceeds the maximum price attained during the previous year

the disparity between willingness to accept and willingness to pay measures of value psychologists have long argued that people are much more averse to a loss than attracted to an equivalent gain this behavior termed loss aversion has been formalized by kahneman and tversky 1979 in their reformulation of expected utility theory prospect theory in prospect theory the utility function is replaced by a value function that evaluates changes in income from the current level increases in income are weighted by a relatively small marginal utility decreases in income are weighted by a much larger marginal utility in effect the value function implies that a kink in the relationship between utility and income occurs at the initial income or reference point and that the slope of the utility function for losses in income is steeper than it is for gains in a recent paper knetsch and sinden 1984 report a series of experiments that demonstrate the existence of a large disparity between willingness to accept wta and willingness to pay wtp measures of value they argue that the psychological theory of loss aversion explains this difference economic theory would suggest that individuals who exhibit a large disparity between wta and wtp are perhaps underperceiving the value of gains or overperceiving the value of losses are behaving in an irrational manner and will consequently achieve a lower level of well being than if they behaved in a true utility maximizing manner this would in contrast to loss aversion usually imply near equal values for wta and wtp see willig 1976 further documentation of a larger than expected disparity between wta and wtp has been obtained in surveys asking for the value of a variety of public goods for example cummings brookshire and schulze 1986 document six

economies of scale and scope in the securities industry abstract economies of scale and scope for the securities industry are estimated for the first time using previously unavailable survey data and employing the translog multiproduct cost function model the results reveal economies of scale for smaller specialized firms and diseconomies of scale for larger more diversified firms economies of scope do not appear to be important in the industry if the glass steagall restrictions are relaxed the results suggest that banks can enter the securities industry with a brokerage division of moderate scale of about 30 million in revenues the five million in new equity required suggests that only banks with assets over 1 billion and over 60 million in capital can enter the industry with a relatively modest investment there are however a substantial number of banks with over 1 billion in assets who can be considered as potential entrants

the boundaries of loss aversion abstract in this article the authors propose some psychological principles to describe the boundaries of loss aversion a key idea is that exchange goods that are given up as intended do not exhibit loss aversion for example the authors propose that money given up in purchases is not generally subject to loss aversion the results of several experiments provide preliminary support for the hypotheses the authors find that consistent with prospect theory loss aversion provides a complete account of risk aversion for risks with equal probability to win or lose the authors propose boundaries for this result and suggest further tests of the model

portfolio serial correlation and nonsynchronous trading common stock portfolios of large heavily traded firms exhibit daily first order serial correlation in excess of what would be expected given the individual security coefficients further this correlation rises as the number of securities in the portfolio increases the direct implication of this finding is that nonsynchronous trading is not the only cause of correlation in daily market indices related implications are also discussed

factor related and specific returns of common stocks serial correlation and market inefficiency one of the most basic tests of market efficiency is the test for serial correlation of returns if the return on a typical stock in period t is correlated with its return in period t 1 then the best unbiased minimum mean square error prediction for the return in period t equals the prior return multiplied by the correlation coefficient an investor concerned only about the mean and variance of portfolio return would use the prediction to improve the mean variance trade off of portfolio return by shading the portfolio toward stocks predicted to have high returns and away from stocks predicted to have low returns hence using knowledge about the previous month s returns the investor produces a portfolio with superior mean variance performance this violates the weak form of market efficiency fama 1 in the sense that the expected return for each stock based upon knowledge of the previous month s return is different from the expected return based only upon the current stock price the same argument may be applied to any component of returns as distinct from total return for example in a linear multiple factor plus specific return model of security returns total excess return is decomposed into factor related return and specific return the empirical results in this paper find positive serial dependence in the factor related component and negative serial dependence in the specific component which nearly offset one another resulting in zero correlation in total excess returns formally

the employment consequences of wrongful discharge laws large small or none at all uniquely in the industrialized world the united states has long had the presumption that employers may legally fire workers at will that is for good cause bad cause or no cause at all during the 1970 s and 1980 s this presumption eroded rapidly most u s state courts created three classes of common law restrictions that limited employers ability to fire these exceptions garnered media headlines created costly litigation and perhaps as importantly generated substantial uncertainty among employers about when they could terminate workers with impunity we refer to these common law exceptions as wrongful discharge laws briefly summarized the public policy exception prevents employee discharges that would thwart an important public policy for example performing jury duty filing a worker s compensation claim reporting an employer s wrongdoing or refusing to commit perjury the good faith exception prohibits employers from firing workers to deprive them of earned benefits such as sales commissions or pension bonuses the implied contract exception makes informal employer assurances of ongoing employment such as those found in personnel manuals or promotion letters legally enforceable under the implied contract exception an employer implicitly offering ongoing employment can only terminate a worker for good cause understanding the economic consequences of these doctrines is essential to an evaluation of the costs of using litigation to protect employment rights fortunately for empirical analysis states vary greatly in the timing and extent of adoption of wrongful discharge laws most state courts have adopted at least one wrongfuldischarge law in the last three decades three states florida georgia and rhode island have never adopted an exception while 10 states recognize all three exceptions one may potentially use this cross state over time variation to analyze how wrongful discharge laws affected employment and earnings in state labor markets we are not the first authors to recognize this opportunity in an influential paper james n dertouzos and lynn a karoly 1992 dk hereafter estimated that the adoption of wrongfuldischarge laws was economically equivalent to a 10 percent employer side tax on wages leading to a 3 percent reduction in aggregate employment in states that allow workers to sue for punitive tort damages for wrongful discharge as is typically true under the good faith and public policy exceptions moreover dk found that states that adopted a doctrine under which plaintiffs may sue only for economic contract losses typically the implied contract discussants henry farber princeton university joshua angrist massachusetts institute of technology richard thaler university of chicago

a simple algorithm to incorporate transactions costs in quadratic optimisation quantitative fund management invariably involves portfolio performance being measured in terms of a quadratic objective function due to the inclusion of variance terms as a measure of risk periodically the constituents of the fund are adjusted to improve performance this adjustment incurs a transaction cost which is a modulus function of the changes in holdings thus the fund manager wishes to minimise a combined quadratic and modulus function this paper presents a new approach to deal with the minimisation of this hybrid function using a well tried quadratic programming algorithm the new algorithm is demonstrated using a tactical asset allocation problem and an equity index tracking fund

up close and personal investor sophistication and the disposition effect this paper analyzes the trading records of a major discount brokerage house to investigate the disposition effect the tendency to sell stocks that have appreciated in price winners sooner than stocks that trade below the purchase price losers in contrast to previous research that has demonstrated the disposition effect by aggregating across investors our main objective is to identify differences in the disposition bias across individuals and explain this in terms of underlying investor characteristics building on the findings in experimental economics and social psychology we hypothesize that differences in investor literacy about financial markets and trading frequency are responsible in part for the variation in individual disposition effect using demographic and socioeconomic variables as proxies for investor literacy we find empirical evidence that wealthier individuals and individuals employed in professional occupations exhibit a lower disposition effect consistent with experimental economics trading frequency also tends to reduce the disposition effect we provide guidelines for investment advisors regulators and investment communities to utilize our findings and help investors make better decisions

penny wise dollar foolish buy sell imbalances on and around round numbers this paper provides evidence that stock traders focus on round numbers as cognitive reference points for value using a random sample of more than 100 million stock transactions we find excess buying selling by liquidity demanders at all price points one penny below above round numbers further the size of the buy sell imbalance is monotonic in the roundness of the adjacent round number i e largest adjacent to integers second largest adjacent to half dollars etc conditioning on the price path we find much stronger excess buying selling by liquidity demanders when the ask falls bid rises to reach the integer than when it crosses the integer we discuss and test three explanations for these results finally 24 hour returns also vary by price point and buy sell imbalances are a major determinant of that variation across price points buying selling by liquidity demanders below above round numbers yield losses approaching 1 billion per year this paper was accepted by brad barber teck ho and terrance odean special issue editors

multiproduct technology and market structure a recent line of research has exposed some technological determinants of the structure of industries that produce more than one good the analyses of both multiproduct perfect competition and natural monopoly require a generalized notion of average cost and in addition several newly identified technological characteristics pertinent only to joint production this paper provides an overview of these new results and suggests a unifying framework in which the theory can be further developed

the technological determinants of the u s energy industry structure recent theoretical developments on multiproduct firm costs have increased our understanding of these firms yet to date empirical analysis of the relationship between multiproduct firm costs and industry structure has been limited in this paper the multiproduct nature of us energy producers is explicitly recognized and a multiproduct cost function estimated for the industry the empirical results indicate that the multiproduct structure of large energy firms has at least in part been motivated by economies of scope between petroleum and coal operations 27 references 19 footnotes 3 figures 1 table

profitability of momentum strategies in international markets the role of business cycle variables and behavioural biases the paper investigates whether business cycle variables and behavioural biases can explain the profitability of momentum trading in three major european markets unlike previous studies the paper nests both risk based and behavioural based variables in a two stage model specification in an attempt to explain momentum profits the findings show that although momentum profitability in european markets is unexplained by conditional asset pricing models it is attributable to asset mispricing that systematically varies with global business conditions in addition behavioural variables do not appear to matter much thus risk factors which are undetected thus far and are largely attributable to the business cycle could explain the momentum payoffs in european stock markets

habitual entrepreneurs in the making how labour market rigidity and employment affects entrepreneurial re entry we investigate the impact of country level labour market regulations on the re entry decision of experienced entrepreneurs whereby they become habitual entrepreneurs multilevel logit models on entry decisions among 15 709 individuals in 29 european countries show that labour market regulations have a positive influence on the decision to re enter into entrepreneurship this positive impact is stronger among individuals holding wage jobs at the time of re entry compared to those that do not our results indicate that novice and habitual entrepreneurs may respond very differently to labour market rigidity we discuss and provide tentative explanations for these differences and outline potential policy implications

multiattribute risky choice behavior the editing of complex prospects this investigation draws upon concepts from prospect theory kahneman and tversky kahneman d a tversky 1979 prospect theory an analysis of decisions under risk econometrica 47 263 291 and multiattribute utility theory keeney and raiffa keeney r l h raiffa 1976 decisions with multiple objectives preferences and value tradeoffs wiley new york in an examination of the multiattribute risky choice behavior of 128 managers the questions of how managers edit multiattribute prospects and how editing relates to various independence assumptions were explored the major result is that managers appear to violate attribute independence in its general form and especially in the form of the marginality assumption the most common form of behavior observed was multiattribute risk aversion for prospects involving only gains and multiattribute risk seeking for prospects involving only losses this result reinforces the importance of a target reference point or aspiration level that has been f

prospect theory and the disposition effect this paper shows that prospect theory is unlikely to explain the disposition effect prospect theory predicts that the propensity to sell a stock declines as its price moves away from the purchase price in either direction trading data on the other hand show that the propensity to sell jumps at zero return but it is approximately constant over a wide range of losses and increasing or constant over a wide range of gains further the pattern of realized returns does not seem to stem from optimal after tax portfolio rebalancing a belief in mean reverting returns or investors acting on target prices

the timing of 52 week high price and momentum abstract we propose a new momentum strategy based on the timing of a stock s 52 week high price we find that the stocks that attained the 52 week high price in the recent past significantly outperform the stocks that attained the 52 week high price in the distant past in particular the top 10 of the stocks with the most recent 52 week high price outperform the bottom 10 of the stocks with most distant 52 week high price by 0 70 per month further conditioning on the recency of 52 week high price significantly increases the profitability of momentum strategy based on the nearness of current price to the 52 week high price specifically the average monthly return of this strategy is about twice as large for stocks with recent 52 week high price as compared with stocks with distant 52 week high price

what experimental protocol influence disparities between actual and hypothetical stated values preferences elicited in hypothetical settings have recently come underscrutiny causing estimates from the contingent valuation method to bechallenged due to perceived hypothetical bias given that the receivedliterature derives value estimates using heterogeneous experimentaltechniques understanding the effects of important design parameters onthe magnitude of hypothetical bias is invaluable in this paper we addressthis issue statistically by using a meta analysis to examine data from 29experimental studies our empirical findings suggest that on averagesubjects overstate their preferences by a factor of about 3 in hypotheticalsettings and that the degree of over revelation is influenced by thedistinction between willingness to pay and willingness to accept publicversus private goods and several elicitation methods

all s well that ends well on the importance of how returns are achieved we demonstrate that investor satisfaction and investment behavior are influenced substantially by the price path by which the final investor return is achieved in a series of experiments we analyze various different price paths investors are most satisfied if their assets first fall in value and then recover and they are least satisfied with the opposite pattern independent of whether the final return is positive or negative price paths systematically influence risk preferences return beliefs and ultimately trading decisions our results enable a much more holistic perspective on a wide range of topics in finance such as the disposition effect risk taking behavior after previous gains and losses and behavioral asset pricing

the role of shocks and institutions in the rise of european unemployment the aggregate evidence two key facts about european unemployment must be explained the rise in unemployment since the 1960s and the heterogeneity of individual country experiences while adverse shocks can potentially explain much of the rise in unemployment there is insufficient heterogeneity in these shocks to explain cross country differences alternatively while explanations focusing on labour market institutions explain current heterogeneity well many of these institutions pre date the rise in unemployment based on a panel of institutions and shocks for 20 oecd nations since 1960 we find that the interaction between shocks and institutions is crucial to explaining both stylised facts

the role of legal status in influencing bank financing and new firm growth this paper examines the characteristics of new firm founders who use loans and overdrafts from the clearing banks to finance initially their business bank lending to new firms appears unrelated to the personal characteristics of founders but related to whether individuals provide personal savings and the legal status of the business this contrasts with the factors which influence the growth of new firms here the founder s age employment status and birthplace are associated with larger firms the only variable which appears to influence consistently both bank lending and the employment growth in firms is whether or not the business is a limited company

the costs of wrongful discharge laws we estimate the effects on employment and wages of wrongful discharge protections adopted by u s state courts during the last three decades we find robust evidence that one wrongful discharge doctrine the implied contract exception reduced state employment rates by 0 8 to 1 7 the initial impact is largest for female and less educated workers those who change jobs frequently while the longer term effect is greater for older and more educated workers those most likely to litigate by contrast we find no robust employment or wage effects of two other widely recognized wrongful discharge laws the public policy and good faith exceptions i introduction w hat is the price of protection this paper estimates the social costs in possibly lower employment and wages of common law protections designed to protect american workers from wrongful discharge economic the ory suggests that employment protection is a double edged sword it provides employment security to incumbent work ers but makes employers reluctant to hire leading to a less flexible labor market with potentially lower employment and wages it is frequently argued that the stagnant employment performance of many european economies during the 1980s and 1990s eurosclerosis can be attributed in part to the significant employment protection given european workers see lazear 1990 and blanchard and wolfers 1999 krueger and pischke 1998 provide a contrasting view among the obstacles to testing this hypothesis is the difficulty of making reliable inferences using cross country comparisons in this paper we study the effects of employment protec tion in the united states numerous scholars have examined the effects of american federal employment laws on em ployment and unemployment acemoglu and angrist 2001 deleire 2000 and jolls and prescott 2004 present evidence that the americans with disabilities act ada decreased employment of disabled persons oyer and schaefer 2000 2002 conclude that the federal civil rights act of 1991 increased the frequency of mass layoffs and raised the returns to experience for workers who have a downward sloping age litigation profile hahn todd and van der klaauw 2001 also evaluate the costs of federal antidiscrimination laws a major hurdle for each of these studies is that these federal statutes apply all at once to the entire country this makes it difficult to separate the effects of the statute from all other changes occurring simulta neously cf donohue 1998 donohue and heckman

the stability of uk risk measures and the problem of thin trading this paper examines the problems of estimating risk measures and their stability in thin markets it shows analytically that conventional approaches used in previous studies can lead to serious overestimates of the stability of risk measures when shares are subject to thin trading it then demonstrates using uk data that this is in fact a serious practical problem and that the resultant biases are of precisely the form predicted finally the paper presents reliable evidence on the stability of uk risk measures by using an estimation method designed to avoid thin trading bias using this approach risk measures are found to be as stable in the uk as they are in the usa this paper examines the stability of risk measures in the uk the focus is on providing reliable evidence in a market where many of the shares suffer from thin trading this is important because thin trading can seriously distort stability measures leading to incorrect conclusions indeed this is a problem which has almost certainly afflicted many previous studies of stability the paper makes four main contributions first it shows analytically that thin trading can lead to serious overstatements about stability second it uses uk data to illustrate that this is in fact a serious practical problem and that the biases are of precisely the form predicted this is important for anyone who wishes to interpret previous claims on beta stability in thin markets third the paper presents reliable evidence on the stability of uk betas by using an estimation method designed to avoid thin trading bias besides avoiding bias our

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

capital gains overhang with a dynamic reference point financial models incorporating a reference point such as the capital gains overhang cgo model typically assume it is fixed at the purchase price combining experimental and market data this pa

product category familiarity and preference construction marketers often base decisions about marketing strategies on the results of research designed to elicit information about consumers preferences a large body of research indicates however that preferences often are labile that is preferences can be reversed depending on factors such as how the preference is elicited in three studies we examine the effect of familiarity in two preference elicitation tasks choice and matching judgments we provide evidence of an interaction between familiarity and response mode choice or matching in each study in study 3 we test the explanation that preference reversals may occur when the interaction of response mode with product category familiarity leads to systematic changes in attribute weighting

production technology costs and multiproduct industry structure an application of the long run profit function to the new england fishing industry the long run multiproduct profit function is developed to provide a more general procedure than the static minimum cost function to examine the technological and cost determinants of multiproduct industry structure and the likely form of any market equilibrium in this approach outputs are endogenous and the long run equilibrium levels of quasi fixed factors are endogenously determined the multiproduct structure of the multispecies new england fishing industry and the likely multi

the provision of finance to innovation a survey conducted among italian technology based small firms financial constraints to the development of innovation are often considered one of the main impediments to high technology firms seeking to expand and grow in particular this is the case of small and medium size high tech firms in the u s and the u k a variety of sources of finance are available to the start ups of innovative firms in the other european countries and particularly in italy these means are still uncommon so that the development of technology is often prevented this paper based on an empirical analysis on a survey of 46 small high tech italian firms aims at exploring the problems experienced by small businesses in gaining access to debt and equity finance the results highlight that traditional financial sources are inadequate to finance innovative projects the questioned firms rely mainly on personal finance and secondly on short term bank debt they are truly involved in maintaining control over the firm activities and are willing to issue outside equity only if the new investors also provide non financial competencies among the 46 interviewed firms only 10 are willing to be listed in the future on small firms stock markets

the effects of fiscal stimulus evidence from the 2009 cash for clunkers program we evaluate the impact of the 2009 cash for clunkers program on short and medium run auto purchases our empirical strategy exploits variation across u s cities in ex ante exposure to the program as measured by the number of clunkers in the city as of summer 2008 we find that the program induced the purchase of an additional 370 000 cars in july and august 2009 however we find strong evidence of reversal high clunker counties bought fewer autos in the 10 months after the program expired which offset most of the initial purchases we find no evidence of an effect on employment house prices or household default rates in cities with higher exposure to the program jel codes h20 e62 copyright 2012 oxford university press

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

willingness to pay and compensation demanded experimental evidence of an unexpected disparity in measures of value aside from possible income effects measures of the maximum amounts people will pay to avoid a loss and the minimum compensation necessary for them to accept it are generally assumed to be equivalent unexpectedly wide variations between these sums however have been noted in survey responses to hypothetical options this paper reports the results of a series of experiments that confronted people with actual money payments and cash compensations the results indicate that the compensation measure of value seems to exceed significantly the willingness to pay measure which would appear to call into some question various rules of entitlement damage assessments and interpretations of indifference curves

the response of wages to protective labor legislation evidence from canada using micro data from the 1986 87 canadian labour market activity survey the author examines the wage effect of laws requiring advance notice of layoffs and in some cases also requiring severance payments to laid off workers the results suggest that incumbent workers protected by advance notice and severance pay laws were able to extract higher wages than were incumbent workers unprotected by such laws there is evidence however that the ultimate wage effect differed by workers union status starting wages of nonunion workers appear to have fallen to offset the subsequent wage increase indicating that nonunion workers may pay for advance notice and severance pay laws whereas union workers who were protected by such laws seem to have been able to exploit their bargaining position to increase their lifetime earnings