are women more risk averse we find that single women exhibit relatively more risk aversion in financial decision making than single men using u s sample data we examine household holdings of risky assets to determine whether there are gender differences in financial risk taking as wealth increases the proportion of wealth held as risky assets is estimated to increase by a smaller amount for single women than for single men gender differences in financial risk taking are also influenced by age race and number of children greater financial risk aversion may provide an explanation for women s lower levels of wealth compared with men s jel j16 d81 g11

reputation and imperfect information abstract a common observation in the informal literature of economics and elsewhere is that is multistage games players may seek early in the game to acquire a reputation for being tough or benevolent or something else but this phenomenon is not observed in some formal game theoretic analyses of finite games such as selten s finitely repeated chain store game or in the finitely repeated prisoners dilemma we reexamine selten s model adding to it a small amount of imperfect or incomplete information about players payoffs and we find that this addition is sufficient to give rise to the reputation effect that one intuitively expects

overlapping free trade agreements and international trade a network approach in our work we have analysed the effect of the hub and spoke nature of free trade agreements ftas on trade contrary to previous analyses we have considered the effects of the country s position in the fta network on the bilateral trade of the hub country we have conducted an in depth analysis of the global network of ftas focusing particularly on its evolution in the last 15 years we have utilised a panel data set covering the period 1960 2010 to investigate the effects of the hub and spoke on trade our results show that the countries that are more connected to ftas export more than those that are less involved although not all the partner countries you can connect with are the same an increase in the number of spokes that have no link between them has on average a negative effect on the trade of the hub which indicates that signing ftas with every country is not the optimal strategy for increasing trade however if we consider the way new ftas change the relative position of a country we can see that if new ftas make the country more central or less constrained in the network these new agreements have a strongly positive and significant pro trade effect

entry deterrence and the free rider problem the public good aspect of entry prevention is examined in an industry characterized by an established oligopoly facing a potential entrant although incumbent firms act noncooperatively underinvestment in entry deterrence does not occur and in fact incumbents may find themselves in a pareto dominated arrangement in terms of profits by preventing entry

a framework for analyzing efficiency risks costs and innovations in the payments system the market for payment instruments such as cash checks and electronic funds transfers is one of the largest most important and economically interesting markets in the economic system virtually every economic transaction requires the use of a payment instrument therefore on a value basis the demand for payment instruments equals the demand for all other goods services assets and other financial instruments traded in the economy combined in a monetary economy the buyers and sellers of any commodity must not only agree on the price and quantity to be exchanged but must also concur on the payment method that will be employed in the exchange that is every commodity buyer takes on the role of a payor and every commodity seller takes on the role of a payee and they jointly demand a payment instrument of equal value to the commodities exchanged the size of payments markets is illustrated in table 1 which shows transactions

the demand for large bank notes in many countries the high share of the largest bank note denomination in the total currency circulation contrasts sharply with its limited use in payment transfers this somewhat puzzling phenomenon has been discussed more than once for the u s 100 bill which has a value share of nearly 50 percent see anderson 1977 kimball 1981 porter and bayer 1984 however the phenomenon is the more remarkable for countries like switzerland germany and the netherlands that issue a denomination at the upper end of the bank note range whose face value is five to fifteen times as high as the 100 note in the netherlands this is the fl 1 000 note with a face value at end 1990 of more than u s 500 1 the circulation of this fl 1 000 note has grown dramatically see table 1 at year end 1987 fl 1 000 notes accounted for almost 45 percent of the value of bank notes in circulation and this was thus the most important denomination in terms of value at that time there were approximately fifteen million fl 1 000 notes in circulation this works out at an average of one of these notes per head of the population and over 2 5 notes per household compared with less than one note per household just ten years earlier nevertheless fl 1 000 notes are seldom encountered in the course of everyday payment transactions analysis of the development of macroeconomic variables reveals that the remarkable increase in the importance of the fl 1 000 note since 1980 cannot be solely

a theory of market structure with sequential entry this article sets out a theory of market structure with sequential entry we characterize the perfect nash equilibrium to the entry game in several propositions first equilibria never involve excess capacity second a sufficient statistic for the entry of any firm is that its profits are positive when computed myopically i e with no further entry third the equilibrium number of firms is the smallest number that can deter entry fourth aggregate output in equilibrium is no smaller than the limit output we calculate some explicit solutions to the model and examine comparative static properties

noncooperative entry deterrence uncertainty and the free rider problem previous authors who have considered the issue of noncooperative entry deterrence have not found the free rider problem to be a significant factor these authors however have only considered models in which the exact investment needed to deter entry is known with certainty in this paper i add uncertainty to the models investigated by these previous authors and demonstrate that the free rider problem can be significant but is not so in all cases that is for certain types of entry deterring investments the introduction of uncertainty causes the oligopoly to underinvest in entry deterrence however for other types no underinvestment result arises

oligopoly limit pricing strategic substitutes strategic complements abstract conditions are outlined under which it is a sequential equilibrium for firms to forgo current profit to reduce the likelihood of entry if firms are uncertain about rivals costs the assumptions about out of equilibrium beliefs that sustain such equilibria are more plausible if firms produce strategic substitutes than if firms produce strategic complements

oligopolistic entry deterrence under incomplete information recent work has investigated the effects of asymmetric information between an incumbent firm and a potential entrant this study extends the analysis to allow the initial market structure to be a noncooperative oligopoly we show that there is a bayesian nash equilibrium in which the incumbent firms although unable to collude strategically deter entry that would have occurred under complete information in contrast to the past limit pricing literature it is a high price that deters entry as it signals to the potential entrant that this is a high cost industry extending the model to allow for multiple potential entrants we find that increasing the degree of potential competition raises the preentry price and reduces the likelihood of entry

forecasting the demand for banknotes some empirical results for the netherlands abstract the desired production of banknotes is the product of the demand for banknotes at any particular time and the average lifetime while the latter might be relatively constant the first shows a steady increase over time various techniques are available to generate forecasts of banknote demand they have in common that they are extrapolative methods which assume that the future may be derived from the pattern of the past one major class of forecasting methods of this type are time series models which are particularly useful in a limited information environment causal or regression models provide another class of forecasting methods and are particularly valuable for annual or medium term prediction and in cases where explanatory variables are controlled by the policy maker contrary to these quantitative models qualitative forecasting methods do not require as many data but are sometimes very beneficial in guiding intuitive thinking about future developments the present paper presents some examples of forecasting models studied at the netherlands bank as well as some results obtained from qualitative research undertaken in the recent past

tiers in one sided matching markets theory and experimental investigation the design of a matching market may affect behavior in prematch stages in some settings forward looking agents might purchase low priced properties with the intention of trading up from a design standpoint such behavior is undesirable we investigate a tiered structure as a potential solution using a model that endogenizes prematch acquisition decisions we show that tiers promote exchange while protecting the primary market in the laboratory we find that both firm revenue and total social surplus are improved by tiered matching and the amount of improvement depends on the exchange mechanism the firm uses we focus on two popular mechanisms deposit first and request first we find that subjects are less likely to take advantage of the match under tier free deposit first mechanism possibly because of risk aversion thus a tiered approach is more critical under the request first mechanism we confirm that risk aversion partly explains deviations from theory this paper was accepted by uri gneezy

predation reputation and entry deterrence abstract economists often argue that predatory practices are irrational since there exist cheaper or more certain means to gain or maintain a monopoly our gametheoretic equilibrium analysis suggests that if a firm is threatened by several potential entrants then predation may be rational against early entrants even if it is costly when viewed in isolation because it yields a reputation which deters other entrants asymmetric information plays a crucial role in our analysis since it provides the rationale for entrants to base their expectations of the firm s future behavior on its past actions the analysis also suggests methods to treat general reputational phenomena

who chooses annuities an experimental investigation of the role of gender framing and defaults research suggests that women are more risk averse and less financially literate than men as evidenced by their choice of less risky asset investments we contribute to the literature by focusing on the role of gender in an increasingly important financial decision facing individuals at retirement the choice between purchasing an annuity in this case a fixed immediate lifetime annuity or investing their savings on their own by using a controlled experiment we eliminate the role of adverse selection and unfair annu ity pricing and are able to focus specifically on gender we also explore the role of defaults and framing and whether women react differently to these features we find that women are more likely to choose the annuity and this is only partly explained by differences in risk aversion and financial literacy furthermore biases in a five minute presentation of information signifi cantly affect choices in ways that differ across men and women

are women more predictable than men during the ncaa basketball tournaments from 2002 to 2005 men s games produced 27 more upsets than women s games to test whether these unpredictable results were due to gender differences we conduct logit analysis to explain upsets by gender and other potentially significant variables including differences in competing teams i rpi scores ii percentage of freshmen iii percentage of seniors iv top scorer s total points and v top three scorers total points these analyses suggest that gender plays a significant role in explaining predictability

the role of multiple potential entrants sequential entry in noncooperative entry deterrence a number of authors have recently considered whether the free rider problem is exhibited in models characterized by multiple potential entrants sequential entry bernheim 1984 and eaton and ware 1987 find that the free rider problem is not an important factor while mclean and riordan 1989 find that it is in this article i identify a general property whose presence is important for whether a model of noncooperative entry deterrence exhibits a free rider problem and in this way help clarify why the above mentioned authors reach these diverse conclusions the article also demonstrates that quite plausible changes in the specifications of both bernheim and eaton and ware lead to incumbent firms underinvesting in entry deterrence

strategic deterrence of sequential entry into an industry industrial entry deterrence is typically studied in a setting where an established firm or firms confront and attempt to deter a single potential competitor during the evolution of most industries however a sequence of firms enters or attempts to enter at distinct points in time consideration of issues arising from sequential entry fundamentally alters the qualitative nature of the deterrence decision undertaken by incumbent firms within a sequential setting counterintuitive behavior may be observed specifically numerous government policies designed to decrease industrial concentration penalties for anticompetitive practices subsidization of entry consent decrees restructuring industries may have the opposite effect

the gender effect in risky asset holdings abstract we study the relation between gender and stock holdings in finland a particularly gender equal country we show that it is crucial to control for risk aversion using a measure of subjective risk taking rather than measures derived from abstract gambles controls related to financial knowledge and resources also explain the gender difference the residual effect of the male gender on the conditional equity share after all appropriate controls is 3 percentage points and statistically significant the effect on stock market participation on the other hand is close to zero or negative so men contribute more to the nonparticipation puzzle conditional on covariates the gender difference mainly works through women s higher risk aversion which we find extends to finance professionals and wealthy private banking customers

gender differences in revealed risk taking evidence from mutual fund investors abstract using data from a national survey of nearly 2000 mutual fund investors we investigate whether investor gender is related to risk taking as revealed in mutual fund investment decisions consonant with the received literature we find that women exhibit less risk taking than men in their most recent largest and riskiest mutual fund investment decisions more importantly we find that the impact of gender on risk taking is significantly weakened when investor knowledge of financial markets and investments is controlled in the regression equation this result suggests that the greater level of risk aversion among women that is frequently documented in the literature can be substantially but not completely explained by knowledge disparities

value of reputation in the chain store game with multiple incumbents abstract we extend the basic chain store game to the two incumbent case a highly stylized model is developed to analyze incentives of incumbent firms to maintain reputation for toughness entry deterrence has a public good property since maintaining reputation is costly each incumbent has an incentive to free ride on the entry deterring activities of its counterpart as a result of these incentives both incumbents accommodate when they both have a relatively high initial reputation for toughness this extreme form of underinvestment in entry deterrence becomes less likely as the number of markets with potential entry increases we also demonstrate that an incumbent s payoff is a decreasing function of its reputation over a large range of parameters this result stands in sharp contrast to the existing versions of the chain store game where high reputation for toughness always benefits a weak incumbent

monetary aggregation and the demand for assets in this paper we consider and illustrate a solution to the inter related problems of monetary aggregation and estimation of money demand the problem with the definition of money is that the relative prices of the monetary components fluctuate over time rendering simple sum aggregates inefficient the authors apply revealed preference tests to the u s monthly data to determine admissible and separable components these components are then aggregated using the divisia technique to deal with the problem of money demand the dynamic fourier expenditure system is used to provide estimates of the elasticities of substitution these while showing general substitution among the liquid assets studied are quite variable over time this finding underscores the inefficiency of both simple sum aggregation and single equation log linear money demand estimation copyright 1997 by ohio state university press

how should central banks determine and control their bank note inventory abstract this paper looks at a relatively unresearched but important area in money and banking namely the provision of currency by the central bank one of the most important functions of central banking is the provision of liquidity to the economy however in fulfilling this function central banks have to be prepared for unexpected money demand shocks as well as production transportation and cost of capital constraints the paper develops a dynamic cost minimizing note inventory model that solves for the central bank s optimal note order size and frequency as part of the modeling exercise a value at risk model is used to solve for an inventory cushion

reputation and equilibrium selection in games with a patient player a single long run player plays a simultaneous move stage game against a sequence of opponents who play only once but observe all previous play let the stackelberg strategy be the pure strategy to which the long run player would most like to commit himself if there is positive prior probability that the long run player will always play the stackelberg strategy then his payoff in any nash equilibrium exceeds a bound that converges to the stackelberg payoff as his discount factor approaches one when the stage game is not simultaneous move this result must be modified to account for the possibility that distinct strategies of the long run player are observationally equivalent

dynamic version of the economic lot size model this article originally appeared in management science october 1958 volume 5 number 1 pp 89 96 published by the institute of management sciences a forward algorithm for a solution to the following dynamic version of the economic lot size model is given allowing the possibility of demands for a single item inventory holding charges and setup costs to vary over n periods we desire a minimum total cost inventory management scheme which satisfies known demand in every period disjoint planning horizons are shown to be possible which eliminate the necessity of having data for the full n periods

industry structure with sequential technology choice abstract noncooperative entry deterrence arises in a market where firms enter sequentially and irreversibly choose a technology in the case of delegated entry deterrence the earliest firms enter with a normal technology and pass on entry deterrence responsibilities to subsequent entrants in the case of partial entry deterrence the earlliest firms choose an inferior technology that allows some but not full entry of later firms with a normal technology in both cases entry is deterred in that the equilibrium number of firms is smaller than would prevail if all firms were to choose a normal technology

the effects of perceived and actual financial literacy on financial behaviors a combined measure of financial literacy that includes both a test score of actual financial literacy and a self rating of overall financial literacy is used in this study we find that the combined measure appears to provide greater understanding about how financial literacy affects financial behaviors a large national survey of u s adults and households n 28 146 was used to investigate how this overall financial literacy is likely to change financial behaviors across five financial topics credit cards investments loans insurance and financial advice for each topic we include 4 5 financial behaviors 22 in total to demonstrate the consistency of the findings within and across topics although we are unable to identify a causal relationship the results from the probit analysis show that both actual and perceived financial literacy appear to influence financial behaviors and that perceived financial literacy may be as important as actual financial literacy jel d14 g00