cost allocation in rescheduling with machine unavailable period abstract we study a rescheduling problem faced by multiple job owners sharing a single machine where jobs need to be rescheduled when the machine becomes unavailable for a period of time the disruption caused by any new schedule is restricted such that the difference between the completion times in the initial and the new schedules of any job is no more than a given threshold a natural way to reschedule is to process the jobs in the initial sequence each as early as possible this defines a feasible schedule over which cost saving can potentially be achieved by optimal rescheduling as long as the cost saving can be fairly shared by job owners we define a cooperative game for job owners accordingly to share the cost saving given that the optimization problem is computationally intractable we find several optimal properties and develop an optimal pseudopolynomial time dynamic programming algorithm for rescheduling we provide a simple closed form core allocation of the total cost saving for all the jobs and also provide the shapley value of the game in a computable form then we computationally evaluate the extra cost caused by machine unavailability the cost saving from optimization relative to the naturally constructed schedule the likelihood for the shapley value to be a core allocation and how the shapley value allocates cost saving among job owners managerial insights are derived from the computational studies this work contributes to the literature by explicitly incorporating two classic scheduling topics sequencing game and rescheduling

the persistent effects of initial labor market conditions for young adults and their sources unlucky young workers entering the labor market in recessions suffer a range of medium to long term consequences this paper summarizes the findings of the growing empirical literature on this subject and uses it to assess economic models of career development the literature finds large initial effects on earnings labor supply and wages that tend to fade after ten to fifteen years in the labor market and that are accompanied by changes in occupation job mobility and employer characteristics adverse initial labor market entry also has persistent effects on a range of social outcomes including timing and completed fertility marriage and divorce criminal activities attitudes and risky alcohol consumption there is also evidence that early exposure to depressed labor market lowers health and raises mortality in middle age patterns accompanied by a reopening of earnings gaps

cores of inventory centralization games abstract consider a set of n stores with single item and single period demands assume an option of centralized ordering and inventory with holding and penalty costs only in this case a cooperative inventory centralization game defines allocations of the cost we examine the conditions under which such an inventory centralization game has a nonempty core we prove the existence of nonempty core for demands with symmetric distributions and the existence of nonempty core for joint multivariate normal demand distribution we establish the equivalency of four different nonempty core conditions for the newsboy problem and demonstrate their efficacy for discrete independent and identically distributed iid demands journal of economic literature classification numbers c44 c62 c71

technical note capacity allocation under retail competition uniform and competitive allocations when retailers orders exceed the supplier s available capacity the supplier allocates his capacity according to some allocation rule when retailers are local monopolists uniform allocation eliminates the gaming effect so that each retailer orders her ideal allocation however when two retailers engage in cournot competition under complete information a recent study has shown that uniform allocation fails to eliminate the gaming effect so that some retailer may inflate her order strategically by examining a more general situation in which two or more retailers engage in cournot competition under complete information we establish exact conditions under which uniform allocation fails to eliminate the gaming effect these exact conditions enable us to construct a new rule called competitive allocation that can eliminate the gaming effect without inflated orders from the retailers the supplier s profit could be lower under competitive allocation than under uniform allocation when certain restrictive conditions hold in contrast competitive allocation generates higher average profits for the retailers and for the supply chain hence it reduces the inefficiency of the decentralized supply chain

stability and endogenous formation of inventory transshipment networks this paper studies a cooperative game of inventory transshipment among multiple firms in this game firms first make their inventory decisions independently and then decide collectively how to transship excess inventories to satisfy unmet demands in modeling transshipment we use networks of firms as the primitive which offer a richer representation of relationships among firms by taking the coalitions used in all previous studies as special cases for any given cooperative network we construct a dual price allocation under which the network is stable for any residual demands and supplies in the sense that no firms find it more profitable to form subnetworks under the allocation based on the marginal contribution of each firm to its network called the mjw value we show that various network structures such as complete hub spoke and chain networks are stable only under certain conditions on residual amounts moreover these conditions differ across network structures implying that a network structure plays an important role in establishing the stability of a decentralized transshipment system finally we consider the case when firms establish networks endogenously and show that pairwise nash stable networks underperform the corresponding networks in centralized systems

the role of application assistance and information in college decisions results from the h r block fafsa experiment growing concerns about low awareness and take up rates for government support programs like college financial aid have spurred calls to simplify the application process and enhance visibility we present results from a randomized field experiment in which low income individuals receiving tax preparation help were also offered immediate assistance and a streamlined process to complete the free application for federal student aid fafsa for themselves or their children treated participants were also provided with aid estimates that were compared against tuition cost amounts for nearby colleges the combined assistance and information treatment substantially increased fafsa submissions and ultimately the likelihood of college attendance persistence and aid receipt in particular high school seniors whose parents received the treatment were 8 percentage points more likely to have completed two years of college going from 28 to 36 during the first three years following the experiment families who received aid information but no assistance with the fafsa did not experience improved outcomes the findings suggest many other opportunities for using personal assistance to increase participation in programs that require filling out forms to become eligible jel codes i2 h4 j24 copyright 2012 oxford university press

experimentation and job choice in this article we examine optimal job choices when jobs differ in the rate at which they reveal information about workers skills we then analyze how the optimal level of experimentation changes over a worker s career and characterize job transitions and wage growth over the life cycle using the dictionary of occupational titles merged with the national longitudinal survey of youth 1979 we then construct an index of how much information different occupations reveal about workers skills and document patterns of occupational choice and wage growth that are consistent with a trade off between information and wages

a major in science initial beliefs and final outcomes for college major and dropout taking advantage of unique longitudinal data we provide the first characterization of what college students believe at the time of entrance about their final major relate these beliefs to actual major outcomes and provide an understanding of why students hold the initial beliefs about majors that they do the data collection and analysis are based directly on a conceptual model in which a student s final major is best viewed as the end result of a learning process we find that students enter school quite optimistic about obtaining a science degree but that relatively few students end up graduating with a science degree the substantial overoptimism about completing a degree in science can be attributed largely to students beginning school with misperceptions about their ability to perform well academically in science copyright 2014 oxford university press

order quantity and timing flexibility in supply chains the role of demand characteristics we study how differences in product demand characteristics affect the strategic value of different types of supply chain flexibility for accurate response we propose a single period inventory modelling framework with two ordering opportunities the second order reflects updated demand information and potentially capitalizes on supply chain flexibility we consider two complementary forms of flexibility quantity flexibility in production and timing flexibility in scheduling in this framework we analyze the total inventory cost of a firm for alternate demand types we model functional products through the standard assumption of independent demand over the period fashion driven innovative products through a bayesian model and innovative products with evolving demand through a martingale process the three demand processes exhibit very different behavior with respect to the value of the alternate forms of flexibility we observe that quantity flexibility is of moderate value for functional goods and of high value for fashion driven products for all lead times quantity flexibility is of low value for goods with evolving demand with long lead times but of high value for short lead times alternately we observe timing flexibility is of highest value for functional goods especially for cases of high holding cost and is of lesser value for fashion driven goods it is of least value for goods with evolving demand both quantity and timing flexibility capabilities are required to significantly reduce the relevant supply chain costs for evolving demand innovative goods when the lead times are long

formative experiences and portfolio choice evidence from the finnish great depression we trace the impact of formative experiences on portfolio choice plausibly exogenous variation in workers exposure to a depression allows us to identify the effects and a new estimation approach makes addressing wealth and income effects possible we find that adversely affected workers are less likely to invest in risky assets this result is robust to a number of control variables and it holds for individuals whose income employment and wealth were unaffected the effects travel through social networks individuals whose neighbors and family members experienced adverse circumstances also avoid risky investments

misinformed speculators and mispricing in the housing market this paper examines the contribution of out of town second house buyers to mispricing in the housing market we show that demand from out of town second house buyers during the mid 2000s predicted not only house price appreciation rates but also implied to actual rent ratio appreciation rates a proxy for mispricing we then apply a novel identification strategy to address the issue of reverse causality we give supporting evidence that out of town second house buyers behaved like misinformed speculators earning lower capital gains misinformed and consuming smaller dividends speculators

choosing the field of study in postsecondary education do expected earnings matter abstract this paper examines the determinants of the choice of the college major when the length of studies and future earnings are uncertain we estimate a three stage schooling decision model focusing on the effect of expected earnings on major choice we control for dynamic selection through the use of mixture distributions exploiting variations across the french business cycle in the relative returns to the majors our results yield a very low though significant elasticity of major choice to expected earnings this suggests that at least for the french university context nonpecuniary factors are a key determinant of schooling choices

social and spatial networks in labour markets social connections and referrals are ubiquitous in the labour market both on the job seeker side and on the employer side this article reviews recent developments in the study of referrals highlighting what we have learned regarding the use and impact of referrals on various labour market outcomes and pointing out the increasingly nuanced picture we are gaining on the effects of referrals it then discusses directions for future research emphasizing the importance of using newly available data and combinations of datasets and of making tighter connections with the burgeoning macro labour research that is based on a search and matching framework finally it evaluates the role of referrals from the point of view of policy makers discussing their social welfare implications and ways in which they could be explicitly incorporated into various labour market policies the importance of tighter collaboration between policy makers researchers employers and practitioners is stressed to conduct more rigorous experimentation and evaluation of potential referral based policies and programmes

comparative advantage learning and sectoral wage determination we develop a model in which a worker s skills determine the worker s current wage and sector the market and the worker are initially uncertain about some of the worker s skills endogenous wage changes and sector mobility occur as labor market participants learn about these unobserved skills we show how the model can be estimated using nonlinear instrumental variables techniques we apply our methodology to study wages and allocation of workers across occupations and industries using individual level panel data from the national longitudinal survey of youth we find that high wage sectors employ high skill workers and offer high returns to workers skills

characterizations of pareto efficient fair and strategy proof allocation rules in queueing problems a set of agents with possibly different waiting costs have to receive the same service one after the other efficiency requires to maximize total welfare fairness requires to treat equal agents equally one must form a queue set up monetary transfers to compensate agents having to wait and not a priori arbitrarily exclude agents from positions as one may not know agents waiting costs they may have no incentive to reveal them we identify the only rule satisfying pareto efficiency equal treatment of equals in welfare or symmetry and strategy proofness it satisfies stronger axioms as no envy and anonymity further its desirability extends to related problems to obtain these results we prove that a rule single valued or not satisfies queue efficiency and strategy proofness if and only if it always selects efficient queues and sets transfers a la groves groves t 1973 incentives in teams econometrica 41 617 631 this holds in other problems provided the domain of quasilinear preferences is rich enough

do people understand monetary policy abstract we combine questions from the michigan survey about future inflation unemployment and interest rates to investigate whether households are aware of the basic features of u s monetary policy our findings provide evidence that some households form their expectations in a way that is consistent with a taylor 1993 type rule we also document a large degree of variation in the pattern of responses over the business cycle in particular the negative relationship between unemployment and interest rates that is apparent in the data only shows up in households answers during periods of labor market weakness

extrapolation and bubbles abstract we present an extrapolative model of bubbles in the model many investors form their demand for a risky asset by weighing two signals an average of the asset s past price changes and the asset s degree of overvaluation and waver over time in the relative weight they put on them the model predicts that good news about fundamentals can trigger large price bubbles that bubbles will be accompanied by high trading volume and that volume increases with past asset returns we present empirical evidence that bears on some of the model s distinctive predictions

weakly monotonic solutions for cooperative games abstract the principle of weak monotonicity for cooperative games states that if a game changes so that the worth of the grand coalition and some player s marginal contribution to all coalitions increase or stay the same then this player s payoff should not decrease we investigate the class of values that satisfy efficiency symmetry and weak monotonicity it turns out that this class coincides with the class of egalitarian shapley values thus weak monotonicity reflects the nature of the egalitarian shapley values in the same vein as strong monotonicity reflects the nature of the shapley value an egalitarian shapley value redistributes the shapley payoffs as follows first the shapley payoffs are taxed proportionally at a fixed rate second the total tax revenue is distributed equally among all players

biased perceptions of income distribution and preferences for redistribution evidence from a survey experiment abstract individual perceptions of income distribution play a vital role in political economy and public finance models yet there is little evidence regarding their origins or accuracy this study examines how individuals form these perceptions and explores their potential impact on preferences for redistribution a tailored household survey provides original evidence on systematic biases in individuals evaluations of their own relative position in the income distribution the study discusses one of the mechanisms that may generate such biases based on the extrapolation of information from endogenous reference groups and presents some suggestive evidence that this mechanism has significant explanatory power the impact of these biased perceptions on attitudes toward redistributive policies is studied by means of an experimental design that was incorporated into the survey which provided consistent information on the own ranking within the income distribution to a randomly selected group of respondents the evidence suggests that those who had overestimated their relative position and thought that they were relatively richer than they were tend to demand higher levels of redistribution when informed of their true ranking

monetary policy and stagflation in the uk the volatile behavior of inflation output and interest rates in the united kingdom prior to the 1990s helps discriminate between rival explanations for the outbreak of stagflation we examine alternative hypotheses with a new keynesian model of aggregate demand and inflation determination estimated on quarterly uk data for 1959 2000 our model features is and phillips curves based on optimizing behavior and fully incorporates the distinction between detrended output and the output gap stressed by optimizing analysis using simulations of our model as well as information on the real time views of policymakers we test alternative explanations for the outbreak of inflation in the united kingdom in the 1960s and 1970s we find that inaccurate estimates of the degree of excess demand in the economy contributed significantly to the outbreak but we also find a major role for the failure at the time to recognize the importance of monetary policy as opposed to nonmonetary devices in controlling inflation

expectation formation in a new environment evidence from the german reunification abstract exploiting the german reunification we study how households adapt to a new environment in their macroeconomic forecasting east germans expect higher inflation than west germans decades after reunification these differences are likely driven by the persistent effect of the inflation shock after reunification which contrasted strongly with experiences of zero inflation in the gdr east germans higher inflation expectations are reflected in higher consumer debt and lower bond holdings our findings suggest that large changes in the environment can permanently impede people s ability to form expectations with an important role for the interaction of experiences before and after the event

a welfare criterion for models with distorted beliefs this paper proposes a welfare criterion for economies in which agents have heterogeneously distorted beliefs instead of taking a stand on whose belief is correct our criterion asserts an allocation to be belief neutral ine cient if it is ine cient under any convex combination of agents beliefs while this criterion gives an incomplete ranking of social allocations it can identify negative sum speculation in a broad range of prominent models with distorted beliefs

an application of the shapley value to fair division with money the author considers fair division when monetary compensations are feasible and utilities are quasi linear four axioms are discussed individual rationality resource monotonicity population solidarity and the stand alone test the latter views the utility from consuming all the goods as an upper bound on every coalition s actual joint utility under efficiency the four axioms show little compatibility however when the goods have enough substitutability in everyone s preferences the shapley value of the surplus sharing game satisfies all four axioms an example is the optimal assignment of indivisible goods when every agent consumes only one good copyright 1992 by the econometric society

cooperation in service systems we consider a number of servers that may improve the efficiency of the system by pooling their service capacities to serve the union of the individual streams of customers this economies of scope phenomenon is due to the reduction in the steady state mean total number of customers in the system the question we pose is how the servers should split among themselves the cost of the pooled system when the individual incoming streams of customers form poisson processes and individual service times are exponential we define a transferable utility cooperative game in which the cost of a coalition is the mean number of customers or jobs in the pooled system we show that despite the characteristic function is neither monotone nor concave the game and its subgames possess nonempty cores in other words for any subset of servers there exist cost sharing allocations under which no partial subset can take advantage by breaking away and forming a separate coalition we give an explicit expression for all infinitely many nonnegative core cost allocations of this game finally we show that except for the case where all individual servers have the same cost there exist infinitely many core allocations with negative entries and we show how to construct a convex subset of the core where at least one server is being paid to join the grand coalition

the cost allocation problem for the first order interaction joint replenishment model we consider an infinite horizon deterministic joint replenishment problem with first order interaction under this model the setup transportation reorder cost associated with a group of retailers placing an order at the same time equals some group independent major setup cost plus retailer dependent minor setup costs in addition each retailer is associated with a retailer dependent holding cost rate the structure of optimal replenishment policies is not known thus research has focused on optimal power of two pot policies following this convention we consider the cost allocation problem of an optimal pot policy among the various retailers for this sake we define a characteristic function that assigns to any subset of retailers the average time total cost of an optimal pot policy for replenishing the retailers in the subset under the assumption that these are the only existing retailers we show that the resulting transferable utility cooperative game with this characteristic function is concave in particular it is a totally balanced game namely this game and any of its subgames have nonempty core sets finally we give an example for a core allocation and prove that there are infinitely many core allocations

what has been learned about labor supply in the past twenty years the main advance in the study of labor supply in the past 20 years has come in recognizing and interpreting the variety of different labor supply functions that coexist in the empirical literature a crucial theoretical distinction with important empirical payoff is that between labor supply choices at the extensive margin i e labor force participation and employment choices and choices at the intensive margin i e choices about hours of work or weeks of work for workers another important distinction is the one between a descriptive labor supply function and a structural supply function that can be the basis for out of sample policy investigations concerning responses to tax and welfare programs and evaluations of welfare losses a full understanding of the participation hours dichotomy leads to an appreciation of the importance of the problem of selection bias what is the wage to impute to a nonworking person these distinctions are a legacy of the research conducted on labor supply over the past 20 years many important empirical questions have been addressed i how strong are the effects of taxes welfare and transfer programs on labor supply ii how important is intertemporal substitution can life cycle labor supply models explain business cycle labor supply behavior iii has the consensus view of the 1960 s of high labor supply elasticities for married women and low labor supply elasticities for married men held up all of the empirical evidence assembled on labor supply must be called into question in the light of important research on the basic quality of the data conducted by analysts at the university of michigan i discuss this evidence in a concluding section except for my discussion of measurement issues i focus only on the major discoveries about which a general consensus has emerged

capacity allocation and scheduling in supply chains we consider a multiple product supply chain where a manufacturer receives orders from several distributors if the orders cannot all be met from available production capacity then the manufacturer allocates that capacity and a set of resubmittable orders among the distributors the distributors may share their allocated capacity among themselves before submitting revised orders finally the manufacturer schedules the revised orders to minimize its cost we consider three practical coordination issues first we estimate the benefit to the manufacturer from considering scheduling costs and constraints in making capacity and order allocation decisions second we estimate the additional profit that the distributors achieve when they share their allocated capacity third we estimate the value of coordination between the manufacturer and the distributors our work is among the first to consider all three issues simultaneously we model scheduling costs and constraints within the manufacturer s capacity allocation problem we model the distributors capacity sharing problem as a cooperative game that has properties that are unique within cooperative game theory finally we develop optimal algorithms for all the models defined by the three coordination issues our exact evaluation of decisions about the appropriate coordination level improves managers ability to make those decisions

socioeconomic status and macroeconomic expectations we show that individuals macroeconomic expectations are influenced by their socioeconomic status ses people with higher income or higher education are more optimistic about future macroeconomic developments including business conditions the national unemployment rate and stock market returns the spread in beliefs between high and low ses individuals diminishes significantly during recessions a comparison with professional forecasters and historical data reveals that the beliefs wedge reflects excessive pessimism on the part of low ses individuals ses driven expectations help explain why higher ses individuals are more inclined to invest in the stock market and more likely to consider purchasing homes durable goods or cars received november 13 2017 editorial decision february 12 2019 by editor wei jiang authors have furnished an internet appendix which is available on the oxford university press web site next to the link to the final published paper online

investment over the business cycle insights from college major choice this paper examines the relationship between individuals personal exposure to economic conditions and their investment choices in the context of human capital focusing on bachelor s degree recipients we find that birth cohorts exposed to higher unemployment rates during typical schooling years select majors that earn higher wages that have better employment prospects and that more often lead to work in a related field much of this switching behavior can be considered a rational response to di erences in particular majors labor market prospects during a recession however higher unemployment leads to other meaningful changes in the distribution of majors conditional on changes in lifetime expected earnings recessions encourage women to enter male dominated fields and students of both genders pursue more dicult majors such as stem fields these findings imply that the economic environment changes how students select majors possibly by encouraging them to consider a broader range of possible degree fields finally in the absence of this compensating behavior we estimate that the average estimated costs of graduating in a recession would be roughly ten percent larger jel e32 i23 j22 j24

coalitional games monotonicity and core abstract we characterize a monotonic core solution defined on the class of veto balanced games we also discuss what restricted versions of monotonicity are possible when selecting core allocations we introduce a family of monotonic core solutions for veto balanced games and we show that in general the per capita nucleolus is not monotonic

a sparsity based model of bounded rationality this article defines and analyzes a sparse max operator which is a less than fully attentive and rational version of the traditional max operator the agent builds as economists do a simplified model of the world which is sparse considering only the variables of first order importance his stylized model and his resulting choices both derive from constrained optimization still the sparse max remains tractable to compute moreover the induced outcomes reflect basic psychological forces governing limited attention the sparse max yields a behavioral version of basic chapters of the microeconomics textbook consumer demand and competitive equilibrium i obtain a behavioral version of marshallian and hicksian demand arrow debreu competitive equilibrium the slutsky matrix the edgeworth box roy s identity and so on the slutsky matrix is no longer symmetric nonsalient prices are associated with anomalously small demand elasticities because the consumer exhibits nominal illusion in the edgeworth box the offer curve is a two dimensional surface rather than a one dimensional curve as a result different aggregate price levels correspond to materially distinct competitive equilibria in a similar spirit to a phillips curve the arrow debreu welfare theorems typically do not hold this framework provides a way to assess which parts of basic microeconomics are robust and which are not to the assumption of perfect maximization jel codes d01 d03 d11 d51

job matching and occupational choice this paper presents a model of job matching the generalizes the existing literature by allowing for different jobs types or occupations such differences affect the value of job specific experience inducing a career profile where certain types are sampled before others more specifically the analysis shows that it is optimal for the young and inexperienced to gravitate toward jobs exhibiting a certain kind of risk then after deriving the equilibrium job turnover rate for an economy in which people do not switch occupations panel data are used to estimate its underlying parameters the hypothesis that people do not switch occupations is rejected against the alternative that they do thus providing empirical support for the theoretical extension undertaken here

initial labor market conditions and long term outcomes for economists each year graduate students entering the academic job market worry that they will suffer due to uncontrollable macroeconomic risk given the importance of general human capital and the relative ease of publicly observing productivity in academia one might expect that long term labor market outcomes for students graduating in unfavorable climates will resemble long term outcomes for those graduating in favorable climates in this paper i analyze the relationship between macroeconomic conditions at graduation initial job placement and long term outcomes for ph d economists from seven programs using macroeconomic conditions as an instrument for initial placement i show that a quality and type of initial job have a causal effect on long term job characteristics i also show that better initial placement increases research productivity which helps to limit the set of economic models that can explain the effect of initial placement on long term jobs

information distortion in a supply chain the bullwhip effect this article originally appeared in management science april 1997 volume 43 number 4 pp 546 558 published by the institute of management sciences consider a series of companies in a supply chain each of whom orders from its immediate upstream member in this setting inbound orders from a downstream member serve as a valuable informational input to upstream production and inventory decisions this paper claims that the information transferred in the form of orders tends to be distorted and can misguide upstream members in their inventory and production decisions in particular the variance of orders may be larger than that of sales and distortion tends to increase as one moves upstream a phenomenon termed bullwhip effect this paper analyzes four sources of the bullwhip effect demand signal processing rationing game order batching and price variations actions that can be taken to mitigate the detrimental impact of this distortion are also discussed

sharing a river among satiable agents abstract we consider the problem of efficiently sharing water from a river among a group of satiable agents since each agent s benefit function exhibits a satiation point the environment can be described as a cooperative game with externalities we show that the downstream incremental distribution is the unique distribution which both is fair according to the aspiration welfare principle and satisfies the non cooperative core lower bounds on the other hand the cooperative core may be empty furthermore the downstream incremental distribution satisfies all core lower bounds for all connected coalitions if and only if each agent s individual rationality constraint is independent of the behavior of the other agents

supplier commitment and production decisions under a forecast commitment contract manufacturing firms in capital intensive industries face inherent demand volatility for their products and the inability to change their capacity quickly to cope with these challenges manufacturers often enter into contracts with their customers that offer greater certainty of supply in return for more predictable orders in this paper we study a forecast commitment contract in which the customer provides a forecast the supplier makes a production commitment to the customer based on the forecast and the customers minimum order quantity is a function of the forecast and committed quantities we provide a complete analysis of the suppliers decisions when there is a single customer facing uncertain demand we first show that the supplier has two dominant commitment strategies committing to the forecast or committing to the production quantity we then characterize the jointly optimal commitment and production strategy for the supplier and extend the results to consider a capacity constraint we show that the proposed contract can moderate the suppliers motivation to underproduce and due to the structure of the contract and the form of the suppliers optimal strategy also limits the customers incentive to overforecast we also provide results for a capacitated two customer example which show that the suppliers choice of production quantity for each customer is not necessarily nondecreasing in the total available capacity

auctioning and selling positions a non cooperative approach to queueing conflicts abstract complementary to the axiomatic and mechanism design studies on queueing problems this paper proposes a strategic bargaining approach to resolve queueing conflicts given a situation where players with different waiting costs have to form a queue in order to be served they firstly compete with each other for a specific position in the queue then the winner can decide to take up the position or sell it to the others in the former case the rest of the players will proceed to compete for the remaining positions in the same manner whereas for the latter case the seller can propose a queue with corresponding payments to the others which can be accepted or rejected in this paper we show that when the players are competing for the first position in the queue then the subgame perfect equilibrium outcome of the corresponding mechanism coincides with the well known maximal transfer rule while an efficient queue is always formed in equilibrium we also argue that changing the mechanism so that the players compete for the last position implements the minimal transfer rule the analysis discovers a striking relationship between pessimism and optimism in this type of decision making

who suffers during recessions in this paper we examine how business cycles affect labor market outcomes in the united states we conduct a detailed analysis of how cycles affect outcomes differentially across persons of differing age education race and gender and we compare the cyclical sensitivity during the great recession to that in the early 1980s recession we present raw tabulations and estimate a state panel data model that leverages variation across u s states in the timing and severity of business cycles we find that the impacts of the great recession are not uniform across demographic groups and have been felt most strongly for men black and hispanic workers youth and low education workers these dramatic differences in the cyclicality across demographic groups are remarkably stable across three decades of time and throughout recessionary periods and expansionary periods for the 2007 recession these differences are largely explained by differences in exposure to cycles across industry occupation employment

allocating production capacity among multiple products we consider the problem of allocating production capacity among multiple items assuming that a fixed proportion of overall capacity can be dedicated exclusively to the production of each item given a capacity allocation production of each item follows a base stock policy i e each demand triggers a replenishment order to restore safety stocks to target levels we present procedures for choosing base stock levels and capacity allocations that are asymptotically optimal our objective is to minimize holding and backorder costs or to minimize holding costs subject to a service level constraint asymptotic optimality refers to large backorder penalties or stringent service level constraints numerical results indicate that our rules perform very well even far from the asymptotic regime a further approximation step results in allocation rules based on heavy traffic limits these too perform well

ex ante returns and occupational choice using data from duke university undergraduates we make three main contributions to the literature first we show that data on earnings beliefs and probabilities of choosing particular occupations

on the cooperation of recycling operations abstract this paper addresses two important issues that may affect the operations efficiency in the recycling industry first the industry contains many small scale and inefficient recycling firms especially in developing countries second the output from recycling a waste product often yields multiple recycled products that cannot all be sold efficiently by a single firm to address these two issues this paper examines how different firms can cooperate in their recycling and pricing decisions using cooperative game theory recycling operations under both joint and individual productions with different cost structures are considered decisions include the quantity of waste product to recycle and the price at which to sell each recycled product on each firm s market these decisions can be made jointly by multiple cooperating firms to maximize total profit we design allocation schemes for maximized total profit to encourage cooperation among all firms managerial insights are provided from both environmental and economic perspectives

managing flexible capacity in a make to order environment flexible capacity has been shown to be very effective to hedge against forecast errors at the investment stage in a make to order environment this flexibility can also be used to hedge against variability in customer orders in the short term for that purpose production levels must be adjusted each period to match current demands to give priority to the higher margin product or to satisfy the closest customer however this will result in swings in production inducing larger order variability at upstream suppliers and significantly higher component inventory levels at the manufacturer through a stylized two plant two product capacitated manufacturing setting we show that the performance of the system depends heavily on the allocation mechanism used to assign products to the available capacity although managers would be inclined to give priority to higher margin products or to satisfy customers from their closest production site these practices lead to greater swings in production result in higher operational costs and may reduce profits

knowledge of future job loss and implications for unemployment insurance this paper studies the implications of individuals knowledge of future job loss for the existence of an unemployment insurance ui market learning about job loss leads to consumption decreases and spousal labor supply increases this suggests existing willingness to pay estimates for ui understate its value but it yields new estimation methodologies that account for and exploit responses to learning about future job loss although the new willingness to pay estimates exceed previous estimates i estimate much larger frictions imposed by private information this suggests privately traded ui policies would be too adversely selected to be profitable at any price

employment hysteresis from the great recession this paper uses us local areas as a laboratory to test for long term impacts of the great recession in administrative longitudinal data i estimate that exposure to a 1 percentage point larger 200

what can survey forecasts tell us about information rigidities a lot we derive common and conflicting predictions from models in which agents face information constraints and then assess their validity using surveys of consumers firms central bankers and professional forecasters we document that mean forecasts fail to completely adjust on impact to shocks leading to statistically and economically significant deviations from the null of full information the dynamics of forecast errors after shocks are consistent with the predictions of models with information rigidities the conditional responses of forecast errors and disagreement among agents can also be used to differentiate between some of the most prominent models of information rigidities

time varying consumer disagreement and future inflation abstract the inflation expectations of over 285 thousand consumers are used to develop model free estimates of the monthly cross sectional mean dispersion asymmetry and extremeness of inflation expectations from 1995 to 2016 the moments provide a novel and direct measure of time varying consumer disagreement about prices i find that the higher order cross sectional moments of inflation expectations are highly informative about future inflation in contrast to popular assumptions these moments do not appear to be noise even after accounting for historical economic data the unanticipated components of the higher order moments are significantly associated with future inflation in effect the higher order moments are neither noise nor conventional economic news the results have significant implications for the widespread practice of trimming inflation expectations data the results also have implications for the study of information rigidities indicating that consumer inflation expectations broadly reflect two types of consumers the first type update their information set at a much faster rate than is typically estimated or assumed the second type have very high information rigidities and only update their information set in response to major economic events

a postponement model for demand management in this paper we analyze demand postponement as a strategy to handle potential demand surges under demand postponement a fraction of the demands from the regular period are postponed and satisfied during a postponement period this permits capacity to be procured to satisfy the postponed demands a reimbursement per unit is paid to customers whose demands are postponed the basic idea is that by preempting stockouts through demand postponement we can reduce overall stockout costs we formulate and solve a two stage capacity planning problem under demand postponement we propose a power range class of distributions to capture the nature of demand surges we establish the scalability and conjugate properties of the power range distributions under demand postponement which leads to a tractable analysis of the problem we analytically solve the problem of determining the optimal regular and postponement period capacities and the demand splitting rule to minimize the supplier s expected cost we show that a the value of postponement may be significant depending on cost and demand parameters b a postponement strategy may lead to reduced investment in initial capacity and c it may be optimal to do no demand postponement over a range of demands even after observing a higher demand signal we then relax several model assumptions and provide results for these extensions we conclude with managerial insights

speculation and risk sharing with new financial assets while the traditional view of nancial innovation emphasizes the risk sharing role of new nancial assets belief disagreements about these assets naturally lead to speculation which represents a powerful economic force in the opposite direction this paper investigates the eect of nancial innovation on portfolio risks in an economy when both the risk sharing and the speculation forces are present financial assets provide hedging services but they are also subject to speculation because traders do not necessarily agree about their payos i de ne the average variance of traders net worths as a measure of portfolio risks for this economy and i decompose it into two components the uninsurable variance de ned as the average variance that would obtain if there were no belief disagreements and the speculative variance de ned as the residual variance that results from speculative trades based on belief disagreements financial innovation always decreases the uninsurable variance because new assets increase the possibilities for risk sharing my main result shows that nancial innovation also always increases the speculative variance this is true even if traders completely agree about the payos of new assets the intuition behind this result is the hedge more bet more eect traders use new assets to hedge their bets on existing assets which in turn enables them to place larger bets and take on greater risks my second set of results concern endogenous nancial innovation when belief disagreements are su ciently large a pro t seeking market maker introduces assets that maximize the average variance among all possible choices completely disregarding the risk sharing motive for nancial innovation my third set of results concern a calibration of the model in the context of the gdp indexed assets proposed by athanasoulis and shiller 2001 when traders have reasonable amounts of belief disagreements these assets would have the unintended consequence of increasing their consumption risks

fair allocation of indivisible goods and criteria of justice a set of n objects and an amount m of money is to be distributed among m people example the objects are tasks and the money is compensation from a fixed budget an elementary argument via constrained optimization shows that for m sufficiently large the set of efficient envy free allocations is nonempty and has a nice structure in particular various criteria of justice lead to unique best fair allocations that are well behaved with respect to changes of m this is in sharp contrast to the usual fair division theory with divisible goods

coordinating supply chains with competition capacity allocation in semiconductor manufacturing abstract this paper motivated by the experiences of a major us based semiconductor manufacturer presents an integrated model of incentive problems arising in forecasting and capacity allocation our model involves multiple product managers and multiple manufacturing managers who forecast the means of their respective demand and capacity distributions a central coordinator is responsible for allocating capacities to product lines when these distributions are unknown to the central coordinator and capacity is scarce the managers misrepresent their forecasts a product manager inflates his forecast to gain a greater allocation of the capacity a manufacturing manager deflates his forecast to cover for the uncertainties in production we propose a game theoretic model and design a mechanism a bonus scheme for all managers and an allocation rule to allocate realized capacity to the product managers that elicits truthful reporting by all managers the results herein show that the structure of the truth eliciting bonus schemes is rather simple with easily calculable parameters we also show that large classes of allocation rules including the current allocation practice of the firm are manipulable a bonus is often required for elicitation of truthful information we synthesize the implications of our results for the practitioners

mrs thatcher s economic policies 1979 1987 mrs thatcher s economic policies 1979 87 kent matthews and patrick minford mrs thatcher inherited a weak economy whose poor performance she attributed to policies of cosy consensus lax discipline high inflation and pervasive inefficiency these she sought to banish forever the authors stress the astuteness with which this radical programme was pursued rather than launching an immediate and grand assault on all fronts mrs thatcher picked off enemies one by one each victory consolidating her position for the next attack only when inflation was clearly under control could more radical supply side measures be introduced matthews and minford argue that the recession of 1980 81 was caused not by tight domestic demand but by external and supply side shocks subsequently tight monetary and fiscal policy did have powerful effects both in achieving rapid inflation reduction and in holding unemployment above its equilibrium level once serious supply side policies were introduced they had a significant effect on productivity growth and on the equilibrium rate of unemployment matthews and minford conclude that the latter was halved between 1981 and 1986 by which date it stood at 1 6 million or roughly half of actual unemployment whilst unemployment may slowly fall towards its equilibrium level the authors do not recommend fiscal or monetary expansion to accelerate this adjustment rather they advocate further supply side measures and deregulation to help markets achieve this transition

heterogeneous inflation expectations and learning using the panel component of the michigan survey of consumers we estimate a learning model of inflation expectations allowing for heterogeneous use of private information and lifetime inflation experience life experience inflation has a significant impact on individual expectations but only for 1 year ahead inflation public information is substantially more relevant for longer horizon expectations even controlling for life experience inflation and public information idiosyncratic information explains a nontrivial proportion of the inflation forecasts of agents women ethnic minorities and less educated agents have a higher degree of heterogeneity in their idiosyncratic information and give less importance to recent movements in inflation

leverage and beliefs personal experience and risk taking in margin lending what determines risk bearing capacity and the amount of leverage in financial markets using unique archival data on collateralized lending we show that personal experience can affect individual risk taking and aggregate leverage when an investor syndicate speculating in amsterdam in 1772 went bankrupt many lenders were exposed in the end none of them actually lost money nonetheless only those at risk of losing money changed their behavior markedly they lent with much higher haircuts the rest continued as before the differential change is remarkable since the distress was public knowledge overall leverage in the amsterdam stock market declined as a result

university choice the role of expected earnings nonpecuniary outcomes and financial constraints we investigate the determinants of students university choice in pakistan with a focus on monetary returns nonpecuniary factors enjoyed at school and financial constraints to mitigate the iden

capacity allocation using past sales when to turn and earn consider a supplier selling to multiple retailers demand varies across periods but the supplier s capacity and wholesale price are fixed if demand is high the retailers needs exceed capacity and the supplier must implement an allocation mechanism to dole out production we examine how the choice of mechanism impacts retailer actions and supply chain performance in particular we analyze turn and earn allocation a method commonly used in the automobile industry this scheme bases current allocations on past sales and thus enables retailers to influence their future allocations they compete for scarce capacity even if they do not compete for customers we show that turn and earn induces the retailers to increase their sales when demand is low and the supplier s capacity is otherwise underutilized supplier profits thus increase the impact on the supply chain depends on how restrictive capacity is with mildly tight capacity the retailers higher sales rate does not significantly lower their profits but does reduce the cost of idle capacity supply chain performance improves with extremely tight capacity the retailers intense competition dissipates more profits than the supplier gains and supply chain performance suffers consequently turn and earn does not generally coordinate the system it is best characterized as a means for the supplier to increase her profits at the expense of the retailers and potentially even the supply chain furthermore these results hold even if the retailers can hold inventory in anticipation of scarce capacity

testing the rationality of price forecasts new evidence from panel data this paper tests the rationality of individual price forecasts in a panel of professional forecasters here unlike in most previous studies rationality is not rejected the results here differ because 1 using individual forecasts avoids aggregation bias 2 comparison of forecasts to initial data avoids bias due to data revision 3 the professional forecasters have economic incentives to state their expectations accurately and 4 a new covariance matrix estimator consistent when forecast errors are correlated across individuals is used copyright 1990 by american economic association

the impact of covid 19 on student experiences and expectations evidence from a survey abstract in order to understand the impact of the covid 19 pandemic on higher education we surveyed approximately 1500 students at one of the largest public institutions in the united states using an instrument designed to recover the causal impact of the pandemic on students current and expected outcomes results show large negative effects across many dimensions due to covid 19 13 of students have delayed graduation 40 have lost a job internship or job offer and 29 expect to earn less at age 35 moreover these effects have been highly heterogeneous one quarter of students increased their study time by more than 4 hours per week due to covid 19 while another quarter decreased their study time by more than 5 hours per week this heterogeneity often followed existing socioeconomic divides lower income students are 55 more likely than their higher income peers to have delayed graduation due to covid 19 finally we show that the economic and health related shocks induced by covid 19 vary systematically by socioeconomic factors and constitute key mediators in explaining the large and heterogeneous effects of the pandemic

equality of resources implies equality of welfare if one is an egalitarian should one try to equalize resources available to agents or to equalize their welfares with a suitably general conception of what resources are these two conceptions cannot be distinguished an allocation mechanism is defined on a space of economies and is required to satisfy various axioms that are necessary conditions for equalizing resources among a population the unique mechanism satisfying these axioms on a large domain of economies is the one that allocates commodities so as to equalize utilities of the agents methodologically the theorem is a generalization of bargaining theory because the mechanisms are defined on commodity space

welfare bounds in the fair division problem to any anonymous division method corresponds a lower and an upper bound function they measure the impact on a given agent s utility of the other agents preferences the highest lower bound is the equal split utility the lowest upper bound is the indirect utility from equal split at a canonical price these two bounds are compatible yet any method with the elqual split lower bound exhibits the growth paradox and any method with the lowest upper bound generates envy we criticize competitive equilibrium from equal split because it puts no finite upper bound on any agent s welfare

self selection and the distribution of hourly wages this article formulates and estimates alternative equilibrium models of industrial wage determination and self selection in explaining industrial wage differentials we find that it is important to account for heterogeneous sector specific skills and self selection decisions by agents concerning their sector of employment the classical roy model is rejected so is an efficiency units model of the labor market a revised roy model that accounts for comparative advantage in the choice of industrial sectors and choice between market and nonmarket work is much more successful in explaining cross section wage distributions and their evolution over time

no envy and consistency in economies with indivisible goods we consider the problem of fair allocation in economies with indivisible goods our main objective is to identify appealing subsolutions of the no envy solution we formulate desirable properties of solutions and look for solutions satisfying them given an allocation chosen by a solution for some economy and given a subgroup of the agents consider the problem of fairly distributing among its members the resources that this group has collectively received the solution is consistent if it recommends that the same bundle be attributed to each of these agents as initially we show that there is no proper subsolution of the no envy solution that satisfies consistency however many subsolutions satisfy bilateral consistency or the converse of consistency but again there is no proper subsolution satisfying these two properties together

a characterization of the shapley value in queueing problems a set of agents stand to receive a service no two agents can be served simultaneously a queue has been organized and agents having to wait should receive monetary compensations we characterize the rule assigning positions in the queue and compensations corresponding to the payoffs recommended by the shapley value of the associated cooperative game

safe port in a storm the impact of labor market conditions on community college enrollments the paper examines the impact of the business cycle on enrollments and finances at individual community colleges between the late 1960s and the mid 1980s we find that 1 percent increases in the unemployment rates of recent high school graduates and of all adults are associated with rises in full time attendance of about 0 5 percent and 4 percent respectively part time enrollment exhibits similar anticyclical patterns this link carries over in large part to degrees obtained in contrast state and local appropriations per student are procyclical we interpret this funding pattern as a failure to integrate education policy sufficiently closely with labor market policy

changes in college skills and the rise in the college wage premium the college wage premium for new labor market entrants rose sharply during the 1980s we ask how much of this change arose from changes in the skill level of the typical college graduate we find that skills attained prior to college as measured by standardized test scores and high school grades had no effect on the change in the college wage premium for men in contrast the returns to math ability rose considerably for women failing to account for math skills thus substantially overstates the growth in the female college wage premium skills acquired in college as reflected in the distribution of students across majors had important effects on the relative wages of men the trend away from low skill subjects such as education and toward high skill subjects such as engineering accounts for one fourth of the rise in the male college wage premium

decomposing trends in inequality in earnings into forecastable and uncertain components a substantial empirical literature documents the rise in wage inequality in the american economy it is silent on whether the increase in inequality is due to components of earnings that are predictable by agents or whether it is due to greater uncertainty facing them these two sources of variability have different consequences for both aggregate and individual welfare using data on two cohorts of american males we find that a large component of the rise in inequality for less skilled workers is due to uncertainty for skilled workers the rise is less pronounced

on the use of expectations data in estimating structural dynamic choice models despite the importance of expectations in models of decision behavior under uncertainty few empirical economists have made use of subjective expectations data in estimating such models assuming that expectations about future behavior accurately portray optimal future behavior conditional on current information it is shown that such data can provide similar information about the decision process as can data on current or retrospective behavior the value of self reported choice expectations is illustrated by using information on respondents expected future occupation in the estimation of a structural dynamic model of teacher career decisions under uncertainty

optimal pricing and lot sizing under conditions of perishability and partial backordering we formulate a generalized model of dynamic pricing and lot sizing by a reseller who sells a perishable good we assume that when it is economic to backlog demand the reseller can plan for periods of shortage during which demand can be partially backordered when the good is highly perishable the reseller may need to backlog demand in order to market the good at a reasonable price we present a simple solution procedure for solving the optimization problem the procedure entails solving first a single nonlinear equation and then if required two nonlinear equations

british inflation and unemployment in the 1970s a model based decomposition the uks stagflation in the 1970s is decomposed into its causative factors using the liverpool rational expectations model it is found that there was a large rise in the natural rate of unemployment mainly due to rising union density that fiscal and monetary shocks had little effect on the resulting rise in unemployment and the high inflation of the period was due to persistent and large fiscal deficits with their accompanying monetization mrs thatcher inherited an inflation induced by an ongoing deficit and a natural rate of over 2 million unemployed

predicted future earnings and choice of college major using data from the national longitudinal survey of young men the author of this paper examines the relationship between predicted future earnings for five broad fields of study and college students choice of major conditional logit models of major choice that incorporate alternative predicted earnings variables are specified and estimated the results indicate that holding family background characteristics constant individuals are likely to choose majors offering greater streams of future earnings rather than as some have argued majors with higher beginning earnings at the time of the choice it is also found that earnings profiles corrected for self selection bias have flattened for more recent graduates in business liberal arts and education the life cycle earnings in these disciplines appear to be more severely depressed than those in science and engineering

implications of rational inattention abstract a constraint that actions can depend on observations only through a communication channel with finite shannon capacity is shown to be able to play a role very similar to that of a signal extraction problem or an adjustment cost in standard control problems the resulting theory looks enough like familiar dynamic rational expectations theories to suggest that it might be useful and practical while the implications for policy are different enough to be interesting

the pure compensation problem egalitarianism versus laissez fairism a binary choice problem with side payments and quasi linear utilities is considered we study two compensation rules called social choice functions the egalitarian rule divides equally the surplus above the average utility level the laissez faire rule chooses an efficient decision but performs no transfer egalitarianism is characterized by a monotonicity axiom called agreement no two agents ever disagree in comparing two distinct preferences of a third one laissez fairism is characterized by the no subsidy axiom a coalition would not be worse off if the other agents were not present

personal experiences and expectations about aggregate outcomes using novel survey data we document that individuals extrapolate from recent personal experiences when forming expectations about aggregate economic outcomes recent locally experienced house price movements affect expectations about future u s house price changes and higher experienced house price volatility causes respondents to report a wider distribution over expected u s house price movements when we exploit within individual variation in employment status we find that individuals who personally experience unemployment become more pessimistic about future nationwide unemployment the extent of extrapolation is unrelated to how informative personal experiences are is inconsistent with risk adjustment and is more pronounced for less sophisticated individuals

unlucky cohorts estimating the long term effects of entering the labor market in a recession in large cross sectional data sets this paper studies the differential persistent effects of initial economic conditions for labor market entrants in the united states from 1976 to 2015 by education gender and race using labor for