corporate conservatism and relative compensation this paper demonstrates that in a simple setting with managerial concern for reputation and asymmetric information on ability most managers may refrain from undertaking innovations that stochastically dominate an industry standard common components of uncertainty lead to market inferences of managerial ability based on relative performance managers who undertake the industry standard are consequently evaluated with a more accurate benchmark than those innovating discontinuities in compensation when performance is low because of firings lead managers to have differing valuations of an accurate benchmark depending on type in particular very high and very low ability managers are more likely to undertake superior innovations than those of average ability

statistical efficiency of double bounded dichotomous choice contingent valuation the statistical efficiency of conventional dichotomous choice contingent valuation surveys can be improved by asking each respondent a second dichotomous choice question which depends on the response to the first question if the first response is yes the second bid is some amount greater than the first bid while if the first response is no the second bid is some amount smaller this double bounded approach is shown to be asymptotically more efficient than the conventional singlebounded approach using data from a survey of californians regarding their willingness to pay for wetlands in the san joaquin valley we show that in a finite sample the gain in efficiency can be very substantial

analyst forecasts and herding behavior the use of analyst forecasts as proxies for investors earnings expectations is commonplace in empirical research an implicit assumption behind their use is that they reflect analysts private information in an unbiased manner as demonstrated here this assumption is not necessarily valid there is shown to be a tendency for analysts to release forecasts closer to prior earnings expectations than is appropriate given their information further analysts exhibit herding behavior whereby they release forecasts similar to those previously announced by other analysts even when this is not justified by their information these results are shown to have interesting empirical implications article published by oxford university press on behalf of the society for financial studies in its journal the review of financial studies

genetically modified crops corporate pricing strategies and farmers adoption the case of bt cotton in argentina this article analyzes adoption and impacts of bt cotton in argentina against the background of monopoly pricing based on survey data it is shown that the technology significantly reduces insecticide applications and increases yields however these advantages are curbed by the high price charged for genetically modified seeds using the contingent valuation method it is shown that farmers average willingness to pay is less than half the actual technology price a lower price would not only increase benefits for growers but could also multiply company profits thus resulting in a pareto improvement implications of the sub optimal pricing strategy are discussed recently genetically modified gm crops have brought about important changes in the global market for agricultural technologies especially seeds prospects of high economic returns and tightened intellectual property rights iprs have provided new incentives for the private sector to invest in crop improvement and extend its business to nontraditional markets the increasingly proprietary nature of seed technologies has implications for farmers adoption and benefit distribution private innovators endowed with a patent on a technology will attempt to capture the gains from their innovation through monopoly pricing moschini and lapan recent studies have looked into the partitioning of welfare created by gm crops among agricultural producers consumers and innovating input firms e g moschini lapan and sobolevsky falckzepeda traxler and nelson in these studies however the market price of the technology is

the relationship between the level of capital expenditures and firm value when a firm s management needs to raise external capital in order to finance an invest ment project it is likely to have better information about the project s future return than do potential investors in such a case as has been shown in the literature management may be able to signal its information through the use of certain financial variables how ever the possibility that management may be able to use the level of investment in the project itself to signal their information has not been considered the purpose of this paper is to examine this possibility it is shown here that the level of capital investment may be able to perfectly reveal management s information with a higher input level signalling more favorable information it is further demonstrated that even in this equilibrium finan cial variables still play an important role among other results it is shown in contrast to a conclusion of a study by leland and pyle that in this setting the number of shares held by management may be negatively correlated with the favorableness of their information

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

a real effects perspective to accounting measurement and disclosure implications and insights for future research accounting measurement and disclosure rules have a significant impact on the real decisions that firms make in this essay we provide an analytical framework to illustrate how such real effects arise using this framework we examine three specific measurement issues that remain controversial 1 how does the measurement of investments affect a firm s investment efficiency 2 how does the measurement and disclosure of a firm s derivative transactions affect a firm s choice of intrinsic risk exposures risk management strategy and the incentive to speculate 3 how could marking to market the asset portfolios of financial institutions generate procyclical real effects we draw upon these real effects studies to generate sharper and novel insights that we believe are useful not only for the development of accounting standards but also for guiding future empirical research

potential impacts of bt eggplant on economic surplus and farmers health in india in this article the potential impacts of bt eggplant technology in indian agriculture are analyzed several proprietary bt hybrids are likely to be commercialized in the near future based on field trial data it is shown that the technology can significantly reduce insecticide applications and increase effective yields comprehensive farm survey data are used to project farm level effects and future adoption rates simulations show that the aggregate economic surplus gains of bt hybrids could be around us 108 million per year consumers will capture a large share of these gains but farmers and the innovating company will benefit too as the company has also shared its technology with the public sector bt open pollinated varieties might become available with a certain time lag this would make the technology more accessible especially for resource poor farmers entailing further improvements in welfare and distribution effects the wider implications of the private public technology transfer are discussed furthermore the potential benefits for farmers health resulting from reduced insecticide applications are examined using an econometric model and a cost of illness approach these benefits are worth an additional 3 4 million per year yet they constitute only a small fraction of the technology s environmental and health externalities more research is needed for comprehensive impact analysis

the strategic determinants of u s human rights reporting evidence from the cold war this paper uses a country level panel data set to test the hypothesis that the united states biases its human rights reports of countries based on the latters strategic value we use the differenc

reputation concerned policy makers and institutional status quo bias abstract we study the policy choice of an office holding politician who is concerned with the public s perception of his capabilities the politician decides whether to maintain the status quo or to conduct a risky reform the reform s success depends critically on the politician s capabilities which are privately known to the politician the public observes both his policy choice and the outcome of the reform and assesses his competence we show that the politician may engage in socially detrimental reform in order to be perceived as more capable we investigate the institutional remedy that balances the gains and costs when the policy maker is subject to reputation concerns conservative institutions that thwart beneficial reform may potentially improve social welfare

do short term objectives lead to under or overinvestment in long term projects we examine managerial investment decisions in the presence of imperfect information and short term managerial objectives prior research has argued that such an environment induces managers to underinvest in long run projects we show that short term objectives and imperfect information may also lead to overinvestment and we identify how the direction of the distortion depends upon the type of informational imperfection present when investors cannot observe the level of investment in the long run project suboptimal investment will be induced when investors can observe investment but not its productivity however overinvestment will occur there has been in recent years substantial public debate on the question of whether the long run investment decisions of the managers of publicly traded companies may be distorted by market pressures recent work by economists has tried to identify the potential source and nature of such distortions research has naturally focused on situations that are characterized by i short term managerial objectives the managers are concerned not only with the firm s long run stock price but also with the firm s short run stock price due to incentive schemes or the fear of losing control and ii imperfect information the market has less information than the firm s managers about the firm s long run projects the results of this research have indicated that in some situations short term objectives and imperfect information may lead to underinvestment in long run projects this paper seeks to extend prior work on the effects of short term objectives and imperfect information on long run investment decisions we demonstrate that imperfect information together with an emphasis on a firm s short run valuation may lead not only to underinvestment but also to overinvestment in long run projects the direction of the distortion depends

estimating the adoption of bt eggplant in india who benefits from public private partnership the study analyzes ex ante the adoption of insect resistant bt eggplant technology in india farmers willingness to pay wtp is estimated using the contingent valuation method given the economic importance of insect pests in eggplant cultivation the average wtp for bt hybrids is more than four times the current price of conventional hybrid seeds since the private innovating firm has also shared its technology with the public sector proprietary hybrids will likely get competition through public open pollinated bt varieties after a small time lag this will reduce farmers wtp for bt hybrids by about 35 thus decreasing the scope for corporate pricing policies nonetheless ample private profit potential remains analysis of factors influencing farmers adoption decisions demonstrates that public bt varieties will particularly improve technology access for resource poor eggplant producers the results suggest that public private partnership can be beneficial for all parties involved 2006 published by elsevier ltd

hiding information in electoral competition abstract we model a two candidate electoral competition in which there is uncertainty about a policy relevant state of the world the candidates receive private signals about the true state which are imperfectly correlated we study whether the candidates are able to credibly communicate their information to voters through their choice of policy platforms our results show that the fact that private information is dispersed between the candidates creates a strong incentive for them to bias their messages toward the electorate s prior information transmission becomes more difficult the less correlated are the candidates signals the lower is the signals quality and the stronger is the electorate s prior indeed for weak priors welfare decreases as the prior becomes stronger and welfare always decreases as the signals become less correlated

when managers cover their posteriors making the decisions the market wants to see the stock market has opinions as to what choices firms should make we show that concern for current share prices may lead managers to make these choices rather than those suggested by their own superior information even when arbitrarily many privately informed firms have to make a similar decision the market s prejudices may still prevail we compare the distortions that arise from share price maximization with those due to herd behavior among profit maximizing firms and show that the former results in strictly less efficient use of information

herding and anti herding a model of reputational differentiation abstract we analyze a model related to the strategic herding literature where a second expert maximizes his expected second period value by conforming with a first expert herding in contrast to the herding literature we assume that an agent is most valuable if he is the only smart agent if the value of being the only smart agent is sufficiently large the second expert always opposes its predecessor s report otherwise herding may result

parametric and semi nonparametric estimation of willingness to pay in the dichotomous choice contingent valuation framework standard procedures for extractingwillingness to pay wtp from dichotomouschoice cv questionnaires rely heavily uponparametric assumptions regarding thedistribution and form of wtp in the sampledpopulation however theory provides littleguidance regarding which parametricspecification to use and the resulting wtpestimates can be sensitive to the selectionsmade here we compare and contrast severalparametric and semi nonparametric estimatorsthat have been proposed in the literature examining the sensitivity of the resulting wtpestimates to the underlying distribution ofpreferences and the estimation procedureemployed

news droughts news floods and u s disaster relief this paper studies the influence of mass media on u s government response to approximately 5 000 natural disasters occurring between 1968 and 2002 these disasters took nearly 63 000 lives and affected 125 million people per year we show that u s relief depends on whether the disaster occurs at the same time as other newsworthy events such as the olympic games which are obviously unrelated to need we argue that the only plausible explanation of this is that relief decisions are driven by news coverage of disasters and that the other newsworthy material crowds out this news coverage

willingness to pay estimates using the double bounded dichotomous choice contingent valuation format a test for validity and precision in a bayesian framework the double bounded dichotomous choice db dc contingent valuation format is thought to yield more precise welfare estimates questions remain about its validity the initial bid may represent information with which respondents update their willingness to pay a bayesian model of respondent decision making is estimated for two data sets the results indicate updating or shifts in respondent willingness to pay between iterated valuations nonparametric testing of the welfare estimates reveals that the model incorporating updating yields different values from the standard model the expected increases in the precision of the db dc welfare estimates are lost when updating occurs

addressing negative willingness to pay in dichotomous choice contingent valuation this paper has four purposes first we outline the controversy surroundingthe issue of negative willingness to pay wtp in contingent valuation cv studies second we use monte carlo simulation to examine theperformance of alternative distributionalassumptions in estimating wtp in the presenceof varying proportions of the populationholding negative wtp values we focus ondichotomous choice cv dc cv where negativewtp values may be especially difficult todetect third we extend the simulation toinvestigate the performance of the mixturemodels that have recently been proposed forhandling identifying non positive wtp values fourth we extend the simulation to investigatethe performance of the nonparametric lowerbound turnbull approach results indicate thatthe relative performance of the dc cv modelingalternatives evaluated here which assumepositive wtp varies across the simulationsetting e g proportion of negative wtp butnone can be said to reasonably solve theproblem ex post this underscores theimportance of ex ante efforts to identify ifnegative wtp is likely to be prominent in agiven valuation setting in such cases appropriately handling negative wtp must beaddressed through ex ante survey design andmodeling choices that allow negative wtp

material power and normative conflict in global and local agrifood governance the lessons of golden rice in india abstract this special section aims to investigate the interaction of global and local forces in shaping agrifood governance it starts from the recognition that a multitude of actors and norms shape today s agrifood system the resulting opaqueness of the systems makes it extremely difficult to understand and explain processes and outcomes of agrifood governance given the sustainability challenges facing the agrifood system improvements in our understanding of what the interaction of global and local actors and norms means on the ground are urgently needed however the section therefore analyses agrifood governance in india across a selected group of cases it does so by employing a systematic framework emphasizing the material and ideational dimensions of power and their interaction the section has chosen india as the setting in which to analyze this interaction due to the crucial role the food demand and supply of this rising power plays in today s agrifood system this article provides the special sections analytical framework which uses the interplay of material and ideational dimensions of power as a focal lens in addition the article applies this framework to an empirical study of the political conflict around gmo foods in india specifically the case of golden rice

pandering to persuade a principal chooses one of multiple projects or an outside option an agent is privately informed about the projects benets and shares the principal s preferences except for not internalizing her value from the outside option we show that for moderate outside option values strategic communication is characterized by pandering the agent biases his recommendation toward conditionally better looking projects even when both parties would be better o with some other project a project that has lower expected value can be conditionally better looking we develop some comparative statics of pandering pandering is also induced by an optimal mechanism without transfers

rational frenzies and crashes most markets clear through a sequence of sales rather than through a walrasian auctioneer because buyers can decide whether to buy now or later rather than only now or never their current willingness to pay is much more sensitive to price than the demand curve is a consequence is that markets will be extremely sensitive to new information leading to both frenzies in which demand feeds on itself and crashes in which price drops discontinuously the paper also shows how a result from static auction theory the revenue equivalence theorem can be applied to solve for a dynamic price path

us food aid and civil conflict we study the effect of us food aid on conflict in recipient countries our analysis exploits time variation in food aid shipments due to changes in us wheat production and cross sectional variation in a country s tendency to receive any us food aid according to our estimates an increase in us food aid increases the incidence and duration of civil conflicts but has no robust effect on interstate conflicts or the onset of civil conflicts we also provide suggestive evidence that the effects are most pronounced in countries with a recent history of civil conflict jel d74 f35 o17 o19 q11 q18 we are unable to determine whether our aid helps or hinders one or more parties to the conflict it is clear that the losses particularly looted assets constitutes a serious barrier to the efficient and effective provision of assistance and can contribute to the war economy this raises a serious challenge for the humanitarian community can humanitarians be accused of fueling or prolonging the conflict in these two countries medecins sans frontieres amsterdam 1

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

conflicting interests in information disclosure and short term orientation of firms abstract this paper explains why firms might be excessively short term oriented even when they are able to inform the capital market about the true quality of their assets the information a firm reveals to the capital market can be used by competitors to the firm s detriment in this case the future profitability of the firm s assets is no longer exogenous but is influenced by the strategic actions of its competitors which in turn depend on the information the firm discloses this motivates the firm to switch resources from future prospects to short term profits the results have policy implications and may help explain the empirical observation that u s firms tend to be more short term oriented than japanese firms

public private alliances in biotechnology can they narrow the knowledge gaps between rich and poor abstract in the area of science and technology the knowledge gap between rich and poor countries is wide and increasing in the area of biotechnology research a second gap has recently emerged between private life science companies and public research institutions as a result a gap is rapidly widening between cutting edge research in the developed world and publicly sponsored research being undertaken in the developing world an obvious strategy for narrowing this gap is to form public private research alliances to overcome intervening obstacles public research institutions in the developing world need to adopt creative new approaches to the process of negotiating with their potential private partners these approaches must focus on leveraging the complementarities and potential synergies between their knowledge assets and those of the private sector concurrently institutional arrangements must be set in place that are geared toward managing the risks and dangers of greatest concern to their constituencies

a regional dynamic general equilibrium model of alternative climate change strategies outcomes and noncooperative equilibria this study finds that cooperative policies show much higher levels of emissions reductions than do noncooperative strategies that there are substantial differences in the levels of controls in both the cooperative and the noncooperative policies among different countries and that high income countries may be the major losers from cooperation jel h41 q4 q2 q20

sunflower management and capital budgeting in organizations ideas are often delegated for evaluation as a means of efficiently aggregating multiple information signals however those who delegate often find it impossible to separate the evaluation of the ideas they delegate from the evaluation of abilities of those delegated the task of assessing these ideas this commingling of the assessment of the idea with that of the individual agent generates a tendency for the agent to ignore his or her own information and instead attempt to confirm the superior s prior belief we refer to this as sunflower management and examine its effects on capital budgeting practices

impact of bt cotton on pesticide poisoning in smallholder agriculture a panel data analysis while substantial research on the productivity and profit effects of bt cotton has been carried out recently the economic evaluation of positive and negative externalities has received much less attention here we focus on farmer health impacts resulting from bt related changes in chemical pesticide use previous studies have documented that bt cotton has reduced the problem of pesticide poisoning in developing countries but they have failed to account for unobserved heterogeneity between technology adopters and non adopters we use unique panel survey data from india to estimate unbiased effects and their developments over time bt cotton has reduced pesticide applications by 50 with the largest reductions of 70 occurring in the most toxic types of chemicals results of fixed effects poisson models confirm that bt has notably reduced the incidence of acute pesticide poisoning among cotton growers these effects have become more pronounced with increasing technology adoption rates bt cotton now helps to avoid several million cases of pesticide poisoning in india every year which also entails sizeable health cost savings

out of the ashes into the fire the consequences of u s weapons sales for political violence abstract we examine the effect of u s weapons purchases on political violence in 191 countries during the period 1970 2008 our identification strategy exploits exogenous shifts in the cost of purchasing u s commercial weapons through a combination of time variation in u s inflation and cross sectional variation in a country s historical frequency of purchases we find that weapons purchases reduce the likelihood of political repression but increase the likelihood of onset of civil war in purchasing countries the results suggest that state investment in military capability incites civil war in countries where state repression of an aggrieved opposition would have otherwise prevailed