allowance trading and energy consumption under a personal carbon trading scheme a dynamic programming approach abstract in response to the challenge of climate change personal carbon trading was put forward as a policy instrument to promote low carbon behavior in the household sector to evaluate the effectiveness of this scheme it is important to gain insight into the allowance trading and energy consumption behavior in a long emission commitment period this paper proposes a dynamic programming model to investigate allowance trading and energy consumption a main feature of the model is its consideration of allowance banking and borrowing activities ten simulated scenarios with different allowance prices price volatility and carbon emission rates are discussed the findings show that consumers would trade more actively when allowance price is volatile it is also found that energy consumption and allowance trading will decrease when the carbon emission rate increases overall the analysis in this paper implies that personal carbon trading scheme would be an effective policy measure to change consumers behavior therefore it would be valuable for decision makers to consider the introduction and implementation of this scheme

fiscal federalism and interstate risk sharing empirical evidence from germany abstract using an approach developed by asdrubali et al quarterly journal of economics 111 1996 1081 the paper estimates the extent of smoothing of state specific income shocks to west german states from 1970 to 1997 by federal fiscal institutions the results show that despite the existence of substantial interregional transfer mechanisms the share of shocks to state income absorbed by fiscal flows is roughly at the same level as in the us

reforming residential electricity tariff in china block tariffs pricing approach the chinese households that make up approximately a quarter of world households are facing a residential power tariff reform in which a rising block tariff structure will be implemented and this tariff mechanism is widely used around the world the basic principle of the structure is to assign a higher price for higher income consumers with low price elasticity of power demand to capture the non linear effects of price and income on elasticities we set up a translog demand model the empirical findings indicate that the higher income consumers are less sensitive than those with lower income to price changes we further put forward three proposals of chinese residential electricity tariffs compared to a flat tariff the reasonable block tariff structure generates more efficient allocation of cross subsidies better incentives for raising the efficiency of electricity usage and reducing emissions from power generation which also supports the living standards of low income households

decentralization and intra country transfers in the great recession the case of the european union empirical evidence is found supporting the assignment of the redistribution function to the central government viewing the great recession or recessions in general as a shock it is found that a

dual distribution channels the competition between rental agencies and dealers managerial decisions involving marketing channels are among the most critical that an organization must make part of the reason for this importance is that relationships between manufacturers and their intermediaries usually involve long term commitments that are difficult to change on the other hand in order to respond to the realities of the market place an organization must be ready to adapt its distribution practices sometimes under considerable uncertainty about the long term consequences such a problem faces the u s automobile industry which has led manufacturers to experiment with various channel structures when manufacturers first changed their distribution policies they were clear about the short term effect on sales but were unsure about its longer term impact on profitability in this article we develop a model to analyze the marketing of durable products through multiple channels our analysis suggests that even though it was not apparent at the time manufacturers were indeed behaving optimally when they changed their policies our model provides insights not only to automobile manufacturers but also to practitioners and academics who are interested in understanding the unique problems associated with marketing durable products through multiple channels we develop a two period model by assuming that a single manufacturer markets a durable product through two retailers a rental agency and a dealer the rental agency focuses mainly on renting the product in a daily rental market while the dealer focuses on selling the product to a different set of customers in the sales market to model the development of channels in the u s automobile industry we analyze three different channel structures the first structure a separate channel reflects the state of the industry through most of the 1980s when rental agencies were franchised solely to rent and dealers solely to sell the cars in response to a decrease in overall sales manufacturers encouraged rental agencies to sell their slightly used rental cars in the consumer market resulting in the second structure an overlapping channel dealers did not like this arrangement however and in the next experiment a buyback channel some manufacturers began buying back used rental cars and selling them through dealers in terms of the consumer side of the model we assume that consumers are heterogeneous and have product valuations that are distributed uniformly between a low and a high value in addition they recognize that as the durable depreciates with use its secondhand market value decreases while both sold and rented goods depreciate with use we assume based on an analysis of market prices that sold goods depreciate at a higher rate than rented goods given these different depreciation rates and consumers underlying utility functions we develop the market demand functions in the dealer s and rental agency s markets then for each of the channel structures we solve the intermediaries and manufacturer s problems the main contribution of this article is that it allows us to evaluate the profitability associated with various channel structures for all the players in our analysis the dealer the rental agency and the manufacturer in terms of the intermediaries we find that the overlapping channel is the most profitable structure for the rental agency on the other hand it is the least profitable for the dealer in terms of manufacturer profitability our model suggests that the separate channel is the least profitable and the overlapping channel is the most profitable it is interesting to note that the distribution structure in existence today is more akin to a buyback channel this strikes us as a compromise channel which alleviates dealer concerns with the overlapping channel and yet does not harm rental agencies as much as a separate channel these are surprising results because conventional wisdom has been that the overlapping channel was competing away profits for all players this suggests to us that automobile manufacturers were indeed on the right track when they began experimenting with the structure of their distribution channels

depressing dependence transfers and economic growth in the german states 1975 2005 abstractdepressing dependence transfers and economic growth in the german states 1975 2005 regional studies most countries pay substantial intergovernmental transfers to poor regions with the aim of achieving regional convergence consequently transfers should have a positive effect on economic growth however it is equally possible that transfers perpetuate underdevelopment this paper studies empirically the effect of intergovernmental transfers on economic growth with a panel of west german states over the period 1975 2005 the findings suggest that transfers do not foster economic growth presumably because the recipients use them to subsidize declining industries

risk aversion and incentive effects new data without order effects holt and laury 2002 used a menu of ordered lottery choices to make inferences about risk aversion under various payment conditions the main results of that paper were a subjects are risk averse even for relatively small payments of less than 5 b risk aversion increases sharply with large increases in the scale of cash payoffs and c there is no significant effect from increasing the scale of hypothetical payment with a few exceptions noted in the paper all treatments began with a low payment choice followed by a choice with hypothetical payments that had been scaled up by 20 50 or 90 followed by a real cash decision with the same high payment scale 20 50 or 90 followed by a single final low 1 real payment choice those in the 90 treatment could earn amounts ranging from 9 00 to 346 50 in this task as glenn w harrison et al 2004 correctly note this design confounds order and treatment effects since the high real payment choice was always completed after the low real and high hypothetical payment tasks in a new experiment reported below we first seek to replicate harrison et al s finding that the order effect participating in a low payment choice before making a high payment choice magnifies the scale effect in a second treatment each subject completes the menu of lottery choices under just one payment condition 1 or 20 real or hypothetical thereby eliminating any order effects i new data

channels of interstate risk sharing united states 1963 1990 we develop a framework for quantifying the amount of risk sharing among states in the united states and construct data that allow us to decompose the cross sectional variance in gross state product into several components which we refer to as levels of smoothing we find that 39 percent of shocks to gross state product are smoothed by capital markets 13 percent are smoothed by the federal government and 23 percent are smoothed by credit markets the remaining 25 percent are not smoothed we also decompose the federal government smoothing into subcategories taxes transfers and grants to states

unraveling reduces mobility in a labor market gastroenterology with and without a centralized match the entry level market for american gastroenterologists was organized by a centralized clearinghouse from 1986 to 1996 before and since it has been conducted via a decentralized market in which appointment dates have unraveled to well over a year before the start of employment we find that both before and after the years in which the centralized clearinghouse was used gastroenterologists are less mobile and more likely to be employed at the same hospital in which they were internal medicine residents than when the clearinghouse was in use this suggests that the clearinghouse not only coordinates the timing of appointments but also increases the scope of the market compared to a decentralized market with early appointments

fiscal flows and financial markets to what extent do they provide risk sharing within sweden andersson l fiscal flows and financial markets to what extent do they provide risk sharing within sweden regional studies the objective of this paper is to analyse the amount of risk sharing that takes place between regions in sweden it is found that the capital market is the largest source of risk sharing of an exogenous change in gross regional product in sweden still roughly 20 of a change in regional output is smoothed among the regions through the fiscal system there is also some evidence that there are regional differences in the sense that regions located in the south rely more on the capital market as a source of insurance against shocks in output while the tax and transfer systems provide a larger extent of risk sharing for regions located in the north andersson l flux fiscaux et marches financiers dans quelle mesure assurent ils le partage de risques en suede regional studies l objet de cette communication est d analyser l importance du partage de risques entre regions suedoises

risk averse behavior in generalized matching pennies games in experimental studies of behavior in 2 2 games with unique mixed strategy equilibria observed choice frequencies are systematically different from mixed strategy nash predictions this paper examines experimental results for a variety of such games and shows that a structural econometric model which incorporates risk aversion into a quantal response equilibrium explains the data very well moreover risk aversion estimates are stable across the different games and are close to those obtained from laboratory and field auction data as well as from individual lottery choice experiments

the sound of silence observational learning in the u s kidney market mere observation of others choices can be informative about product quality this paper develops an individual level dynamic model of observational learning and applies it to a novel data set from the u s kidney market where transplant candidates on a waiting list sequentially decide whether to accept a kidney offer we find strong evidence of observational learning patients draw negative quality inferences from earlier refusals in the queue thus becoming more inclined towards refusal themselves this self reinforcing chain of inferences leads to poor kidney utilization despite the continual shortage in kidney supply counterfactual policy simulations show that patients would have made more efficient use of kidneys had the concerns behind earlier refusals been shared this study yields a set of marketing implications in particular we show that observational learning and information sharing shape consumer choices in markedly different ways optimal marketing strategies should take into account how consumers learn from others

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

tiered gasoline pricing a personal carbon trading perspective abstract this paper proffers a tiered gasoline pricing method from a personal carbon trading perspective an optimization model of personal carbon trading is proposed and then an equilibrium carbon price is derived according to the market clearing condition based on the derived equilibrium carbon price this paper proposes a calculation method of tiered gasoline pricing then sensitivity analyses and consumers surplus analyses are conducted it can be shown that a rise in gasoline price or a more generous allowance allocation would incur a decrease in the equilibrium carbon price making the first tiered price higher but the second tiered price lower it is further verified that the proposed tiered pricing method is progressive because it would relieve the pressure of the low income groups who consume less gasoline while imposing a greater burden on the high income groups who consume more gasoline based on these results implications limitations and suggestions for future studies are provided

modeling the psychology of consumer and firm behavior with behavioral economics abstract marketing is an applied science that tries to explain and influence how firms and consumers behave in markets marketing models are usually applications of standard economic theories which rely on strong assumptions of rationality of consumers and firms behavioral economics explores the implications of the limits of rationality with the goal of making economic theories more plausible by explaining and predicting behavior more accurately while maintaining formal power this article reviews six behavioral economics models that are useful to marketing three models generalize standard preference structures to allow for sensitivity to reference points and loss aversion social preferences toward outcomes of others and preference for instant gratification the other three models generalize the concept of game theoretic equilibrium allowing decision makers to make mistakes encounter limits on the depth of strategic thinking and equilibrate by learning from feedback the authors also discuss a sp

portfolio choice and risk attitudes an experiment i introduction suppose an investor is faced with a decision concerning how to allocate financial resources between a risky lottery asset with a higher expected return and an asset with a fixed and guaranteed lower return is the choice of portfolio independent of preferences outside the standard neoclassical model in experiments with financial incentives we study how portfolio choice depends on three well documented behavioral phenomena ambiguity aversion the illusion of control and myopic loss aversion we also investigate whether participants are willing to explicitly pay a small sum of money to indulge such preferences pay for more perceived control less ambiguity or more frequent opportunities to change the portfolio based on feedback about its performance while standard finance theory presumes that investors successfully identify and process information relevant to reaching optimal decisions in recent years a body of empirical evidence suggests that there are systematic departures from this behavior behavioral finance is concerned with psychological influences in financial decision making and markets investors make decisions while trying to stay afloat in a sea of uncertainty when predictability is low people may be prone to unjustified beliefs that may survive and even flourish in such an environment 1 people may resort to rules of thumb on a conscious or subconscious level to the extent that psychological influences are present it is economically important to consider which of these actually affect risk attitudes and portfolio choice a key issue is whether any such influences disappear when monetary incentives are present we pursue a systematic experimental comparison of three of the most prominent behavioral phenomena documented in the literature the illusion of control langer 1975 is concerned with greater confidence in one s predictive ability or in a favorable outcome when one has a higher degree of personal involvement even when one s involvement is not actually relevant ambiguity aversion ellsberg 1961 is the desire to avoid unclear circumstances even when this will not increase the expected utility myopic loss aversion benartzi and thaler 1995 combines loss aversion kahneman and tversky 1979 tversky and kahneman 1992 and a tendency to evaluate outcomes frequently this combination leads investors to be more willing to invest a greater proportion of their portfolio in risky assets if they evaluate their investments less frequently we show that these phenomena are present with monetary incentives and also investigate whether people are willing to pay money to accommodate such preferences or whether they are closer to the rational model when incentives are present with the procedure we chose the willingness to actually pa for such preferences depends on the preference the great majority of investors pay for less ambiguity or more frequent feedback investment opportunities but fewer than 10 pay to roll a determinative die themselves 2 we then examine how the preferences between lotteries in the different treatments affect portfolio choice we have participants allocate their investment capital between an asset with a sure return and a risky asset with a higher expected rate of return in fact there is very little variation in investment behavior across any of the illusion of control or ambiguity aversion treatments in contrast the results found in previous experimental studies of myopic loss aversion suggest that participants invest less in their preferred option the main conclusion we draw from these findings is that the relation between which procedure or lottery people prefer and how much they are willing to actually invest in this lottery is not trivial at all people are generally unwilling to pay even small amounts of money to indulge the illusion of control and it does not influence their portfolio choice people are generally willing to pay money for less ambiguity but having less ambiguity does not influence their portfolio choice finally in some cases people are willing to pay money for more frequent feedback and opportunities to change their portfolio but again previous studies have shown that people invest less with this additional information and greater flexibility

subnational fiscal balance interregional redistribution and risk sharing in italy abstractthis paper provides new estimates of redistribution and risk sharing across regional territories accomplished by the italian public sector for the first time subnational governments fisc

the collapse of a medical labor clearinghouse and why such failures are rare the collapse of the clearinghouse for the entry level gastroenterology labor market offers a unique opportunity to study the failures that sometimes afflict such markets to explore the reasons for the failure of the clearinghouse we conduct an experimental investigation of demand shocks of the kind that occurred in the gastroenterology market we find that a reduction in demand for positions leads to the collapse of the match only when it is detectable by firms before being detected by workers as in the unexpected shock that took place in 1996 which could be seen by firms in their reduced applicant pools simple demand and supply imbalances do not seem to interfere with the operation of the centralized match our results suggest that the market failed when applicants lost their ability to discern when they should reject an early exploding offer this suggests that the failure of the gastroenterology clearinghouse is related to the unraveling also seen in a number of decentralized markets

borrowing constraints and international risk sharing evidence from asymmetric error correction we analyse the adjustment process of consumption growth after disequilibrating output shocks in a sample of organization for economic cooperation and development oecd countries in particular we test the hypothesis that consumption is smoothed to a lesser degree after negative shocks whereas the impact of a positive shock is delayed for a longer period of time our analysis is based on an error correction framework that allows for asymmetric adjustment we find that the mean adjustment lag after a negative shock is significantly shorter than after a positive shock especially since the beginning of the 1980s this result is consistent with the interpretation that borrowing constraints limit the degree to which the impact of negative shocks on consumption can be smoothed

the distributional implications of a carbon tax in ireland we study the effects of carbon tax and revenue recycling across the income distribution in the republic of ireland in absolute terms a carbon tax of 20 tco2 would cost the poorest households less than 3 week and the richest households more than 4 week a carbon tax is regressive therefore however if the tax revenue is used to increase social benefits and tax credits households across the income distribution can be made better off without exhausting the total carbon tax revenue

electronic tickets smart cards and online prepayments when and how to advance sell advance selling occurs when sellers allow buyers to purchase at a time preceding consumption shugan and xie 2000 electronic tickets smart cards online prepayments and other technological advances make advance selling possible for many if not all service providers these technologies lower the cost of making complex transactions at a greater distance from the seller s site they also give sellers more control over advance selling by decreasing arbitrage as technology enhances the capability to advance sell more academic attention is vital this paper strives to exploit these technologies by developing advance selling strategies until recently advance selling research focused on the airline industry and specific characteristics of that industry these characteristics included the price insensitivity of late arrivals e g business travelers compared with early arrivals e g leisure travelers demand uncertainty across flights on the same day and capacity constraints recent findings by shugan and xie 2000 show that advance selling is a far more general marketing tool than previously thought it does not require these industry specific characteristics it only requires the existence of buyer uncertainty about future valuations moreover sellers without the ability to price discriminate can use advance selling to improve profits to the level of first degree price discrimination this finding is important because buyers are nearly always uncertain about their future valuations for most services e g the utility of next year s vacation or a future college education in this paper we take the next step from shugan and xie 2000 we show that advance selling profits do not come from buyer surplus but from more buyers being able to purchase we determine when and how to advance sell in a variety of situations including situations with limited capacity second period arrivals refunds buyer risk aversion exogenous credibility continuous preference distributions and premium pricing we determine when advance selling improves profits and when it does how to set advance prices we ask and answer seven questions first when should sellers advance sell second how much can advance selling improve profits compared with only spot selling third what factors impact the profitability of advance selling and how fourth should advance prices be higher or lower or the same as spot prices fifth how do capacity constraints impact advance selling strategies sixth should sellers limit the number of advance sales finally what is the possible impact of buyer risk aversion first we provide precise conditions when sellers should advance sell for example without capacity constraints we show that sellers should advance sell when marginal costs are sufficiently low to make it profitable to sell to buyers with low valuations and sufficiently high to convince buyers that the spot price will be higher than the advance price second we find that advance selling can almost double the profits from optimal spot selling to early arrivals we also show that advance selling has no impact on consumer surplus in markets with homogenous consumers and no capacity constraints therefore advance selling can increase social welfare because seller profits increase third we find that two very important factors impacting the profitability of advance selling are seller credibility and marginal costs buyers only advance buy when they expect an advantage from advance buying over spot buying without capacity constraints sellers must credibly convince buyers that the advance price is at a discount to the spot price we show that this condition is met under different circumstances for example large marginal costs can create credibility because buyers believe that these costs will lead to high spot prices fourth we find although optimal advance prices can be at a discount to the spot price that sometimes a premium is optimal premiums are optimal when capacity is large but limited and marginal costs are not too large buyers advance purchase at a premium to spot prices when capacity is limited and spot prices are low note that this is not a risk premium and risk aversion is not required no prior research has suggested this strategy because that research relies on the assumption that early arrivals are more price sensitive than later ones without that assumption premium advance pricing is sometimes optimal fifth we find that binding capacity constraints can impact the profitability of advance selling in opposite ways on one hand capacity constraints create seller credibility buyers believe that spot prices will be high when they know spot capacity is limited and perhaps more limited by advance sales on the other hand when capacity is limited the need to increase sales from discounted advance prices diminishes sixth consistent with desiraju and shugan 1999 we find that limiting advance sales can be profitable but only under restrictive conditions these conditions are 1 selling to all early arrivals would leave insufficient capacity in the spot period to sell to all second period arrivals with high valuations 2 the optimal spot price is high and 3 marginal costs are sufficiently small to make advance selling profitable finally we find that buyer risk aversion can sometimes increase the profitability of advance selling our findings provide precise guidelines for a large number of service providers that will have the technical capability to advance sell for those service providers advance selling provides a creative pricing strategy that can potentially provide substantial improvements in profits

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

an experimental study of house allocation mechanisms we report an experiment on three house allocation mechanisms under complete information random serial dictatorship with squatting rights and two variants of the top trading cycles mechanism results show that the latter two are significantly more efficient than the former d 2004 elsevier b v all rights reserved

social loss aversion and optimal contest design when managers are designing a contest to motivate effort by salespeople service employees franchisees or product development teams a key question is what should the optimal proportion of winne