are preferences for fiscal discipline endogenous differences in voters fiscal preferencesare examined taking advantage of theexceptional swiss institutional setting empirical evidence suggests thatpreferences are determined by strictlycultural patterns cultural area measuredby language thus fiscal preferences canbe considered as being largely exogenous this implies that except for specialcases it is not possible to find simpleproxy variables for fiscal preferences anad hoc index of fiscal preferencesought to be built up when the introductionof this variable is required forcomprehensive explanatory models of fiscaldiscipline or for other related studies

behavioural development economics lessons from field labs in the developing world abstract explanations of poverty growth and development depend on the assumptions made about individual preferences and the willingness to engage in strategic behaviour economic experiments especially those conducted in the field have begun to paint a picture of economic agents in developing communities that is at variance with the traditional portrait we review this growing literature with an eye towards preference related experiments conducted in the field we also offer lessons on what development economists might learn from experiments we conclude by sharing our thoughts on how to conduct experiments in the field and then offer a few ideas for future research

the hyperbolic consumption model calibration simulation and empirical evaluation ur preferences for the long run tend to conflict with our short run behavior when planning for the long run we intend to meet our deadlines exercise regularly and eat healthfully but in the short run we have little interest in revising manuscripts jogging on the stairmaster and skipping the chocolate souffleala mode delay of gratification is a nice long term goal but instant gratification is disconcertingly tempting this gap between long run intentions and short run actions is apparent across a wide range of behaviors including saving choices a 1997 survey found that 76 percent of respondents believe they should be saving more for retirement looking only at respondents who believed they were at an age where you should be seriously saving already the survey found that 55 percent reported being behind in their savings and only 6 percent reported being ahead farkas and johnson 1997 the report on the survey concluded t he gaps between people s atti tudes intentions and behavior are troubling and threaten increased insecurity and dissatisfaction for people when they retire americans are simply not doing what logic and their own reasoning suggests they should be doing a 1993 luntz webber merrill lynch survey found similar answers when baby boomers were asked what percentage of your annual household income do you think you should save for retirement and what percentage of your annual

subjective discounting in an exchange economy this paper describes the equilibrium of a discrete time exchange economy in which consumers with arbitrary subjective discount factors and homothetic period utility functions follow linear markov consumption and portfolio strategies explicit expressions are given for state prices and consumption wealth ratios we provide an analytically convenient continuous time approximation and show how subjective rates of time preference affect risk free rates but not instantaneous risk return trade offs hyperbolic discount factors can be a source of return volatility but they cannot be used to address asset pricing puzzles related to high frequency sharpe ratios

do fiscal rules dampen the political business cycle this paper develops and tests the theory that fiscal rules limit politicians ability to manipulate the budget for electoral gain using panel data from the american states i find evidence suggesting that stringent balanced budget rules dampen the political business cycle that is while spending rises before and falls after elections in states that can carry deficits into the next fiscal year this pattern does not exist in states with strict no carry rules neither binding gubernatorial term limits nor the partisan composition of government appear to significantly affect the magnitude of the political business cycle

market institutions trust and norms exploring moral economies in nigerian food systems informal market institutions and small scale traders are responsible for feeding nigerian cities this study analyses a range of economic relationships and institutions that have evolved in the context of inadequate formal institutions such as banks and legal contracts through examining both personal relationships and institutional based trust the paper explores the role of moral norms trust is shown to be related to sanctions information on other parties and a range of norms that are drawn on both calculatively and habitually the perceived moralities of different forms of institution such as credit systems trader associations and commission agents are also examined

state responses to fiscal crises the effects of budgetary institutions and politics this paper explores the dynamics of state taxes and spending during the late 1980s when regional economic downturns and increased expenditure demands led to substantial state budget deficits more restrictive state fiscal institutions such as no deficit carryover rules and tax and expenditure limitations are correlated with more rapid fiscal adjustment to unexpected deficits political factors are also important when a single party controls the state house and the governorship deficit adjustment is much faster than when party control is divided in gubernatorial election years tax increases and spending cuts are both significantly smaller than at other times

voters as fiscal conservatives voters penalize federal and state spending growth this is the central result of my analysis of voting behavior in presidential senatorial and gubernatorial elections from 1950 1988 the composition of federal spending growth seems irrelevant the vote loss to the president s party from an extra dollar of defense or nondefense spending is the same however in gubernatorial elections expansion of state welfare spending exacts a disproportionate political price deficit financing of federal or state spending does not appear to matter politically i conclude by discussing the obvious question of why government budgets have grown in the face of this voter hostility

the perception of man and the conception of society two approaches to understanding society the social sciences offer two distinct approaches to understanding society one originated with the scottish moral philosophers and shaped the discipline of economics the other emerged from the french enlightenment and influenced the study of sociology the two approaches are based on radically different perceptions of man and man s relation to society this paper explores these alternative hypotheses and examines some major implications it concludes that the hypothesis reaching back to the scottish philosophers provides the basis for a unified approach in the social sciences

eliciting discount functions when baseline consumption changes over time abstract many empirical studies on intertemporal choice report preference reversals in the sense that a preference between a small reward to be received soon and a larger reward to be received later reverses as both rewards are equally delayed such preference reversals are commonly interpreted as contradicting constant discounting this interpretation is correct only if baseline consumption to which the outcomes are added remains constant over time the difficulty with measuring discounting when baseline consumption changes over time is that delaying an outcome has two effects 1 due to the change in baseline consumption it changes the utility from receiving the outcome and 2 it changes the factor by which this utility is discounted in this paper we propose a way to disentangle the two effects which allows us to draw conclusions about discounting even when baseline consumption changes over time

non hyperbolic time inconsistency the commonly used hyperbolic and quasi hyperbolic discount functions have been developed to accommodate decreasing impatience which is the prevailing empirical finding in intertemporal choice in particular for aggregate behavior however these discount functions do not have the flexibility to accommodate increasing impatience or strongly decreasing impatience this lack of flexibility is particularly disconcerting for fitting data at the individual level where various patterns of increasing impatience and strongly decreasing impatience will occur for a significant fraction of subjects this paper presents discount functions with constant absolute cadi or constant relative crdi decreasing impatience that can accommodate any degree of decreasing or increasing impatience in particular they are sufficiently flexible for analyses at the individual level the cadi and crdi discount functions are the analogs of the well known cara and crra utility functions for decision under risk

anomalies in intertemporal choice evidence and an interpretation research on decision making under uncertainly has been strongly influenced by the documentation of numerous expected utility eu anomalies behaviors that violate the expected utility axioms the relative lack of progress on the closely related topic of intertemporal choice is partly due to the absence of an analogous set of discounted utility du anomalies we enumerate a set of du anomalies analogous to the eu anomalies and propose a model that accounts for the anomalies as well as other intertemporal choice phenomena incompatible with du we discuss implications for savings behavior estimation of discount rates and choice framing effects

endogenous growth decline in social capital and expansion of market activities abstract we model in an endogenous growth set up the hypotheses that the expansion of market activities weakens social capital formation and that firms can invest in formal mechanisms of control and enforcement to substitute for social capital trust work ethics honesty the model shows that the economy tends to grow faster when it is relatively poorer in social capital and that perpetual growth can be consistent with the progressive erosion of social capital these results may help to reconcile putnam s claim that social capital has declined in the u s with the satisfactory growth performance of the u s over the same period

the fragility of time time insensitivity and valuation of the near and far future we propose that the temporal dimension is fragile in that choices are insufficiently sensitive to it and second such sensitivity as exists is exceptionally malleable unlike other dimensions such as money which are attended by default to test this we axiomatize a constant sensitivity discount function and in four studies we show that the degree of time sensitivity is inadequate relative to the compound discounting norm and strongly susceptible to manipulation time sensitivity is increased by a comparative within subject presentation experiment 1 direct instruction experiment 3 and provision of a visual cue for time duration experiment 4 time sensitivity is decreased using a time pressure manipulation experiment 2 in each study the sensitivity manipulation has an opposite effect on near future and far future valuations increased sensitivity decreases discounting in the near future and increases discounting in the far future in contrast such sensitivity manipulations have little effect on the money dimension

uncertainty and hyperbolic discounting we propose an evolutionary explanation for the pattern of intertemporal preference reversals often ascribed to hyperbolic discounting we take the view that preferences manifested for example in urges cravings and inclinations are the outcome of evolutionary forces and so will induce animals or humans to make survival maximizing choices in typical decision problems we show that if the typical problem involves payoffs whose realization times are uncertain then optimal preferences give rise to relatively patient behavior when the time horizon is long but induce a switch to impatience when the horizon grows short such reversals do not entail dynamic inconsistency in typical decision problems behavior there is optimal however if a decision maker is confronted with a choice for which the realization time uncertainty falls outside the evolutionary norm her preferences may well prompt her to behave inconsistently we argue that if such a choice problem recurs her evolutionarily endowed aability to learn will lead her to make self commitments against these urges this abstract was borrowed from another version of this item

balanced budget rules distortionary taxes and aggregate instability a traditional argument against a balanced budget fiscal policy rule is that it amplifies business cycles by stimulating aggregate demand during booms via tax cuts and higher public expenditures and by reducing demand during recessions through a corresponding fiscal contraction this paper suggests an additional source of instability that may arise from this type of fiscal policy rule it shows that within the standard neoclassical growth model a balanced budget rule can make expectations of higher tax rates self fulfilling if the fiscal authority relies heavily on changes in labor income taxes to eliminate short run fiscal imbalances calibrated versions of the model show that indeterminacy occurs for income tax rates that are empirically plausible for the u s economy and other group of seven countries

market networks and corporate behavior data on market relations between a large population of corporations and investment banks are used to study the organization market interforce the pattern of direct market ties between a firm and its banks forms of interfaces range from a long term exclusive tie the relationship interface to many short lived episodic ties the transaction interface with hybrid forms between the two poles contrary to widespread belief the article finds that strong relationships still exist transactions interfaces are rare most firms use hybrid interfaces a firm s interface is conceptualized as the intentional result of its efforts to reduce dependence and exploit power advantages observed interfaces are shown to be related systematically to various power dependence concepts including resource intensity number of transactions and dollar amounts raised criticality the availability of resource alternatives power asymmetry between a firm and its main bank organization size standardization of exchange and

do state balanced budget requirements matter testing two explanatory frameworks balanced budget requirements bbrs affect all aspects of financial operations previous studies relied on characterizations that highlight a constitutional statutory distinction hou and smith public budgeting finance 26 3 22 45 2006 instead propose a political technical construct this article uses probit estimation six measures of balance and long panels to test which framework offers more explanatory power the findings suggest that bbrs matter to varying degrees technical requirements exert bigger effects than political ones the effects are more obvious on narrower than broader measures of balance and in the later phases of the budget cycle and the political technical construct offers more explanatory power than the constitutional statutory distinction

environmental economics an evolutionary critique and a plea for pluralism abstract environmental economics is a contradiction in terms the contradiction is intuitive to the puzzled lay person inquiring about the nature of our subdiscipline it is explicit to those who think of environmental systems in terms of complex evolving interconnectedness and identify the economic model with the atomistic and mechanistic assumptions of classical mechanics within the subdiscipline we try to resolve the contradiction by internalizing externalities by matching market feedbacks with environmental relations while acknowledging that insights can be drawn from the market view of environmental problems i argue in this essay that 1 the contradiction is nerver resolved 2 multiple incongruous perspectives are all we have for understanding the interface between economic and environmental systems and 3 environmental economics will thrive with a return to philosophical pluralism to the open acceptance of the contradiction

strotz meets allais diminishing impatience and the certainty effect abstract decision makers tend to exhibit a higher degree of impatience when considering a delay to an immediate reward than when contemplating an identical delay to an equal future reward this work argues that diminishing impatience originates from the distinction between the certain present and the risky future a simple functional representation of preferences exhibiting time inconsistency when the future is uncertain is derived experimental evidence which is inconsistent with other formulations that account for diminishing impatience supports the proposed approach the new theory uncovers a tight relation between diminishing impatience and well known behavioral regularities in choice under risk and uncertainty jel d12 d81

four score and seven years from now the date delay effect in temporal discounting we describe a new anomaly in intertemporal choice the date delay effect discount rates that are imputed when time is described using calendar dates e g on october 17 are markedly lower than those revealed when future outcomes are described in terms of the corresponding delay e g in six months date descriptions not only reduce discount rates but also affect the implied shape of the discount function when inferred from intertemporal choices between options referenced by calendar dates the discount function appears markedly less hyperbolic we discuss potential psychological bases of the date delay effect its implications and other modes of temporal reference

the virtual aquarium commodity fiction and cod fishing abstract this article deals with the commoditization and pricing of environmental goods in particular the practice and social theory of individual transferable quotas itqs in fisheries emphasizing ethnographic material related to the management system introduced in iceland in 1984 icelandic fisheries discourse i argue is increasingly textual and hegemonic dominated by marine scientists resource economists and state officials at the same time the allocation and exchange of quotas are matters of an ongoing moral debate this debate i suggest reflects the politics of independence and equity in icelandic history as well as a deeper concern in western society with the status of money and monetary exchange a concern that has a number of parallels in other parts of the world

a cultural theory of expenditure growth and un balanced budgets abstract why does public spending grow because the literature tells us nations are rich because they are poor because their economies are open because their economies are closed because there is consensus because there is conflict if all roads lead to rome i suggest that may be because it is the destination not the detours that matter so i ask a different question which political cultures shared values legitimating social practices would reject ever greater governmental growth and which ones would perpetuate it my hypothesis is that the size of government in any given society is a function consequence if you prefer of its combination of political cultures the theory also explains the tendencies of political regimes to balance or unbalance their budgets

discounting the distant future an experimental investigation we use a laboratory experiment to elicit discount rates over a 20 year time horizon using government savings bonds as a payment vehicle when using a constant exponential discount rate function we find an implied average discount rate of 4 9 which is much lower than has been found in previous experimental studies that used time horizons of days or months however we also find strong support for non constant declining discount rates for longer time horizons with an extrapolated implied annual discount rate approaching 0 5 in 100 years there is heterogeneity in discount rates and risk preferences in that people with more optimistic beliefs about technological progress have higher discount rates these findings contribute to the debate over the appropriate discount rate to use in comparing the long term benefits of climate change mitigation to the more immediate costs

rationality ethnicity and institutions a survey of issues and results this paper focuses on the relationship between institutions and ethnocentrism as discussed in the rational choice literature the institutional environment can influence both the formation and the expression of ethnic tastes by rational individuals ethnocentrism is likely to be mitigated by on the one hand a private sector characterized by a wide and competitive market with effective property right and antitrust law enforcement provided by non ethnic institutions and on the other hand a public sector which is characterized by institutional restrictions on the differential fiscal or regulatory treatment on the basis of ethnicity a redistributive system based on non ethnic criteria and finally the possibility for decentralized collective decision making these insights may be of particular utility when designing the institutions of potentially divided multi ethnic states copyright blackwell publishers ltd 2005

homeward bound interest identity and investor behavior in a third world export platform1 are indigenous investors in third world export platforms more stable than their allegedly footloose foreign rivals while mainstream economists hold that investor behavior is independent of investor identity and therefore call for the parallel treatment of domestic and foreign firms their critics hold that indigenous investors are more dedicated than their foreign counterparts and therefore call for industrial policies designed to cultivate and defend native entrepreneurs who is correct the author uses a unique combination of qualitative and quantitative data to document and account for the relative stability and dynamism of indigenous investors in the dominican republic s largest export processing zone and thereby brings economic sociology back from the margins of development theory and development theory back into the heartland of sociology

reciprocity as a foundation of financial economics this paper argues that the subsistence of the fundamental theorem of contemporary financial mathematics is the ethical concept reciprocity the argument is based on identifying an equivalence between the contemporary and ostensibly value neutral fundamental theory of asset pricing with theories of mathematical probability that emerged in the seventeenth century in the context of the ethical assessment of commercial contracts in a framework of aristotelian ethics this observation the main claim of the paper is justified on the basis of results from the ultimatum game and is analysed within a framework of pragmatic philosophy the analysis leads to the explanatory hypothesis that markets are centres of communicative action with reciprocity as a rule of discourse the purpose of the paper is to reorientate financial economics to emphasise the objectives of cooperation and social cohesion and to this end we offer specific policy advice

networks markets and inequality julien gagnon thanks the gates cambridge trust for financial support sanjeev goyal is grateful to the keynes fellowship and the cambridge inet institute for financial support

behind the market stage where real societies exist part i the role of public and private order institutions this two part article is an attempt to clarify the social conditions upon which the viability and efficiency of the market system rest it strives to show that the embeddedness thesis that is an explanation based upon the existence of long run personal ties involving the use of reputation mechanisms among transactors cannot fully elucidate the question as to how the problem of trust is solved in market societies as explained in part i there are difficulties of both theoretical and empirical historical kinds and these explain why the market order needs to be sustained by private and public order institutions in part ii the role of generalised morality in backing or supplementing such institutions is discussed in the light of game theory and particular emphasis is put on the ability of moral norms to sustain honest behaviour by generating the right kind of preferences and establishing trust the vexed problem of the dynamics of norm emergence and erosion is then addressed with a view to showing

consumption savings decisions with quasi geometric discounting we study the consumption savings problem of an infinitely lived rational consumer who has time inconsistent preferences in the form of quasi geometric discounting the consumer operates a weakly concave production function and must simply divide current resources into current consumption and savings there is no uncertainty a solution to the consumer s problem is a subgame perfect equilibrium of a dynamic game between the consumer s successive selves we show that this game has a continuum of equilibria in stationary markov strategies not only is the stationary point of the consumer s asset holdings indeterminate but each stationary point has a continuum of dynamic paths converging to it the savings policy rules underlying these dynamic paths are step functions

law focal points and fiscal discipline in the united states and the european union many studies suggest that strict balanced budget rules can restrain sovereign debt and lower sovereign borrowing costs even if those rules are never enforced in court why might public officials adhere to a rule that is practically never enforced in court existing literature points to a legal deterrence logic in which the threat of judicial enforcement deters sovereigns from violating the rules in the first place by contrast we argue that balanced budget rules work by coordinating decentralized punishment of sovereigns by bond markets rather than by posing a credible threat of judicial enforcement therefore the clarity of the focal point provided by the rule rather than the strength of its judicial enforcement mechanisms determines its effectiveness we develop a formal model that captures the logic of our argument and we assess this model using data on u s states we then consider implications of our argument for the impact of the balanced budget rules recently imposed on eurozone states in the fiscal compact treaty

embeddedness in the making of financial capital how social relations and networks benefit firms seeking financing i investigate how social embeddedness affects an organization s acquisition and cost of financial capital in middle market banking a lucrative but understudied financial sector using existing theory and original fieldwork i develop a framework to explain how embeddedness can influence which firms get capital and at what cost i then statistically examine my claims using national data on small business lending at the level of dyadic ties i find that firms that embed their commercial transactions with their lender in social attachments receive lower interest rates on loans at the network level firms are more likely to get loans and to receive lower interest rates on loans if their network of bank ties has a mix of embedded ties and arm s length ties these network effects arise because embedded ties motivate network partners to share private resources while arm s length ties facilitate access to public information on market prices and loan opportunities so that the benefits of different types of ties are optimized within one network i conclude with a discussion of how the value produced by a network is at a premium when it creates a bridge that links the public information of markets with the private resources of relationships

on the role of social norms in a market economy given that the discussion in section 2 focuses on but two potential sources of norms and on only a pair of variables affecting the activities of these sources it may appear premature to attempt to generalize about the supply of netn norms in a market economy however based on the above discussion it is nevertheless quite reasonable to hypothesize that the norms market will not operate in such a way as to ensure the proper supply of netn norms the failures found by economic theory in the economic marketplace and by petp in the political market have their analogue in the norms market that this can be said with some assurance even though the investigation has been so limited is due to the importance of the variables and group activities investigated the specific structural characteristics the high degree of specialization in society and the specific cluster of values those related to individualism examined above and found to be inhibitory to the supply of netn norms are of considerable importance and their negative impact on the norms market cannot readily be altered in the first place these variables are significantly and synergistically related to one another but secondly and more importantly these variables are so closely associated with the market economy itself that short of replacing the market little can be done to diminish the negative effect that these variables have on the supply of netn norms

discount rates inferred from decisions an experimental study two hundred and four students of economics and finance participated in an intertemporal choice experiment which manipulated three dimensions in a 4 4 4 factorial design scenario postponing a receipt postponing a payment expediting a receipt expediting a payment time delay 0 5 1 2 and 4 years and size of cashflow 40 200 1000 and 5000 individual discount rates were inferred from the responses and then used to test competitively four hypotheses regarding the behavior of discount rates the classical hypothesis asserting that the discount rate is uniform across scenarios time delays and sums of cashflow was flatly rejected a market segmentation approach was found lacking the results support an implicit risk hypothesis according to which delayed consequences are associated with an implicit risk value and an added compensation hypothesis which asserts that individuals require compensation for a change in their financial position

hyperbolic discounting and the standard model eliciting discount functions abstract experiments on static intertemporal choice find evidence of particularly extreme impatience toward immediate rewards while this is often taken as support for hyperbolic discounting it could also arise because the most likely participants in experiments may be those with the most immediate need for money we conduct a calibration exercise and find that the extreme impatience observed in experiments can be accommodated by a standard exponential discounting model with no discounting and expectation of a small increase in the base consumption level the calibration uses existing estimates of curvature of utility

changes in background risk and risk taking behaviour economic decision making under uncertainty often takes place in the presence of multiple risks and in markets that are less than complete as a consequence choices about endogenous risks sometimes must be made while simultaneously facing one or more immutable exogenous background risks that are not under the control of the agent and that are independent of endogenous risks it is somehow natural to assume that an exogenous deterioration in background wealth will cause an individual to take more care elsewhere if we define a deterioration for example as making the individual poorer by removing a fixed amount of initial wealth we know from pratt 1964 that decreasing absolute risk aversion dara of an individual s von neumann morgenstern utility function yields this natural result if on the other hand background wealth becomes riskier due to the addition of a zero mean risk that is also statistically independent of all other risks behavior will be more risk averse if and only if preferences are risk vulnerable as defined by gollier and pratt 1996 risk vulnerability described below in section 4 is a stronger notion than dara and includes proper risk aversion pratt and zeckhauser 1987 and standard risk aversion eeckhoudt and kimball 1992 kimball 1993 as particular cases but a deterioration in background wealth may encompass more complicated distribution changes than the introduction of another statistically independent risk in this paper we examine background wealth deteriorations that take the form of both general firstand second degree stochastic dominance changes in risk fsd and ssd respectively in particular we determine conditions that are both necessary and sufficient for each of these two types of background risk changes to imply more risk averse behavior on the part of the individual for the case of fsd changes this condition turns out to be ross stronger characterization of decreasing absolute risk aversion in the case of general ssd changes in the distribution of background wealth the condition derived is a stronger version in ross sense of the conditions characterizing preferences that are locally risk vulnerable in the sense of gollier and pratt the necessary and sufficient conditions derived are fairly restrictive upon preferences however if we take as positive behavior that individuals act in a more risk averse manner whenever the distribution of background wealth deteriorates these conditions place canonical limits upon appropriate utility representations at the very least they

decreasing impatience a criterion for non stationary time preference and hyperbolic discounting despite recent interest in hyperbolic discounting there has been little discussion of exactly what property of time preferences is instantiated by hyperbolic or quasi hyperbolic functional forms the paper revives an earlier proposal in prelec 1989 that the key property is prattarrow convexity of the log of the discount function which corresponds to decreasing impatience di at the level of preferences di provides a natural criterion for assessing the severity of departure from stationarity in that greater di is equivalent to more choices of dominated options in two stage decision problems as well as greater convexity of the log of the discount function inefficient choices may arise as intentional precommitments or as unintended reversals of preference by naive agents

trust networks and norms the creation of social capital in agricultural economies in ghana this paper contributes to the continuing debate over the multifaceted concept of trust and its ability to provide a richer explanation of processes of economic activity using case studies of agricultural production marketing and financing systems in brong ahafo region of ghana the analysis documents the means by which trust is created among farmers traders and agricultural input suppliers the mechanisms include formal and informal networks of working relations customer friendships pre existing networks and intermediaries the study shows that trust is necessary for the development of a vibrant private sector based on microenterprises in conditions where actors cannot rely on formal legal institutions at present

what makes rational peasants revolutionary dilemma paradox and irony in peasant collective action peasant upheavals are studied from the perspective offered by the selective incentives solution to olson s collective action problem this article presents much evidence from three different forms of peasant struggles everyday forms of peasant resistance unorganized rural movements and organized peasant rebellions that demonstrates the widespread existence of selective incentives questions about the causes and consequences of selective incentives are then examined first what are the conditions under which peasant struggles emphasize material selective incentives rather than nonmaterial altruistic appeals the level of selective incentives in any peasant upheaval is a function of demand and supply considerations peasants demand selective incentives the suppliers include one or more dissident peasant organizations the authorities and the allies of both a political struggle ensues as the suppliers compete and attempt to monopolize the market second what are the conditions under which the pursuit of material self interest hurts rather than helps the peasantry s collective cause selective incentives supplemented by ideology can be effective selective incentives alone are counterproductive these questions and answers lead to the conclusion that the selective incentives solution reveals much more about peasant upheavals than simply that peasants will often be concerned with their own material self interest it is therefore important to study the following three aspects of peasant collective action the dilemma peasants face or how peasant resistance is in the interest of all peasants but in the self interest of none the paradox peasants face or that rational peasants do solve their dilemma for example with selective incentives and participate in collective action and the irony peasants face or that self interest is both at the root of their dilemma and at the foundation of a solution to their paradox

bohn s test of fiscal sustainability of the american state governments the dramatic fall in state revenues during the great recession and the resultant large budget deficits accentuated concerns about state fiscal sustainability i employ a model based approach proposed by bohn 1998 to test for sustainability in this approach a positive and significant reaction of the ratio of primary surplus ratio s to lagged debt constitutes a sufficient condition for sustainability based on a panel of 48 contiguous states 1961 2008 and several model specifications i find robust evidence in favor of sustainability further analysis suggests that the adjustment of the components of s to debt is asymmetric with the revenue side bearing a heavier burden than the spending side the response of s is also found to be asymmetric with respect to the level of debt finally the magnitude of the response is larger in states with a higher degree of fiscal stringency in general and own revenue and no deficit carryover provisions in particular

a road to trust the authors explore the relationship between transaction costs and generalized trust using panel data from 2 100 households in 135 rural communities of the philippines the paper shows that where transaction costs are reduced proxied by road construction there is an increase in generalized trust consistent with the argument that generalized trust is built through repeated interactions the authors find that the individuals most likely to engage in exchange exhibit an increase in trust after road construction these results suggest that rather than being an input to economic growth trust might be a product of reduced transaction costs which also favors growth

ramsey meets laibson in the neoclassical growth model the neoclassical growth model is modified to include a variable rate of time preference with no commitment ability and log utility the equilibrium features a constant effective rate of time preference and is observationally equivalent to the standard model the extended framework yields testable linkages between the extent of commitment ability and the rates of saving and growth the model also has welfare implications including the optimal design of institutions that facilitate household commitments steady state results are obtained for general concave utility functions and some properties of the transitional dynamics are characterized for isoelastic utility

efficiency and equilibrium when preferences are time inconsistent abstract we consider an exchange economy with time inconsistent consumers whose preferences are additively separable if consumers have identical discount factors then allocations that are pareto efficient at the initial date are also renegotiation proof in an economy with a sequence of markets competitive equilibria are pareto efficient in this sense and for generic endowments only if preferences are locally homothetic

incentives for procrastinators we examine how principals should design incentives to induce time inconsistent procrastinating agents to complete tasks efficiently delay is costly to the principal but the agent faces stochastic costs of completing the task and efficiency requires waiting when costs are high if the principal knows the task cost distribution she can always achieve first best efficiency if the agent has private information the principal can induce first best efficiency for time consistent agents but often cannot for procrastinators we show that second best optimal incentives for procrastinators typically involve an increasing punishment for delay as time passes

is competition good for trust cross country evidence using micro data abstract this paper empirically analyzes implications of market competition for generalized trust of about 80 000 individuals in about 60 countries we find that competition amplifies the trust generating effect of market integration for highly integrated individuals

the costs and benefits of balanced budget rules lessons from a political economy model of fiscal policy this paper analyzes the impact of a balanced budget rule that requires that legislators do not run deficits in the political economy model of battaglini and coate 2008 the main finding is that the rule leads to a gradual reduction in the level of public debt legislators reduce debt in periods when the demand for public goods is relatively low they do so because the rule by restricting future fiscal policies raises the expected costs of carrying debt whether the rule increases citizen welfare depends on a comparison of the benefits of a lower debt burden with the costs of greater volatility in taxes and less responsive public good provision a quantitative version of the model is developed in which costs and benefits can be evaluated a welfare loss results if the debt level when the rule is imposed lies in the support of the long run distribution associated with the unconstrained equilibrium

embeddedness and price formation in the corporate law market the determination of prices is a key function of markets yet sociologists are just beginning to study it most theorists view prices as a consequence of economic processes by contrast we consider how social structure shapes prices building on embeddedness arguments and original fieldwork at large law firms we propose that a firm s embedded relationships influence prices by prompting private information flows and informal governance arrangements that add unique value to goods and services we test our arguments with a separate longitudinal dataset on the pricing of legal services by law firms that represent corporate america we find that embeddedness can significantly increase and decrease prices net of standard variables and in markets for both complex and routine legal services moreover results show that three forms of embeddedness embedded ties board memberships and status affect prices in different directions and have different magnitudes of effects that depend on the complexity of the legal

understanding conditions for co management a framed field experiment amongst the tsimane bolivia we experimentally assess the willingness to self enforce restricted resource use by playing a common pool resource extraction game in four tsimane indigenous communities in the bolivian amazon we analyse the role of trust in participant s willingness to self restrict resource use and collaborate with the authorities contrary to game behaviour in the industrialized world we find that amongst the tsimane extractions decrease across rounds we also find that participants who trust a non tsimane and b the authorities extract less than other participants but findings are not robust across rounds using the economic and anthropological literature we interpret the findings arguing that trust in non tsimane which is strongly correlated with market access may capture generalized trust levels and that people with higher levels of generalized trust interact more easily in non personal transactions like the situation presented in the game as co management also entails non personal interactions with and trust in the authorities our findings seem relevant for community based conservation and co management

uncertain lifetime and intertemporal choice risk aversion as a rationale for time discounting this article makes explicit the links between preferences over lotteries on length of life and intertemporal choice it shows that the approach used by traditional life cycle models to account for uncertain survival corresponds to a strong assumption of risk neutrality with respect to length of life relaxing such an assumption leads us to develop a more general formulation of lifetime utility in which time discounting is directly related to preferences over length of life exponential and hyperbolic discounting are found to result in a first approximation from constant and hyperbolic risk aversion with respect to length of life

technology in a world of national frontiers abstract the accumulation of scientific knowledge and its application to production are accelerating the institutionalization of research in universities and corporate bodies was the first accelerator early in the century nationalism and the intensification of international competition are the current accelerators at the century s end nationalism increasingly drives r d through three mechanisms military rivalry trade rivalry and prestige rivalry the resultant steady rise in oecd countries r d spending as a percentage of gnp is by no means to be automatically applauded in particular it intensifies the problem of the developing countries for technology transfer remains for all the siren talk of alternatives a matter of hard slog learning and the task gets harder and harder

risk and preference reversals in intertemporal choice abstract this paper argues that observations of non stationary choice behavior need not necessarily imply specific properties of the individual s discount function as we show the observed preference reversals in intertemporal choice are consistent with constant discounting and can alternatively be explained by decreasing absolute risk aversion together with the individual s risk perception this risk may concern the size of the actual outcome or the endowment consumption stream to which the outcome is added both types of uncertainty naturally appear in the context of intertemporal choice we show how relative degrees of changes in risk over time can determine choices