the impact of national culture on software piracy this paper examines the impact of the level of economic development income inequality and five cultural variables on the rate of software piracy at the country level the study finds that software piracy is significantly correlated to gnp per capita income inequality and individualism implications for anti piracy programs and suggestions for future research are developed

models of inflation expectations formation a comparison of household and economist forecasts the recent appreciation of the critical role played by expectations of inflation in the behavior of macromodels has stimulated empirical studies of the formation of expectations by different groups time series survey data on expectations of inflation exist now for economists households and businesses these data have been used as independent variables in explaining wage behavior gordon 16 turnovsky and wachter 34 and de menil and bhatta 5 prices turnovsky and wachter 34 and wachtel 36 interest rates gibson 14 hendershott and van horne 19 pearce 30 and mishkin 27 and consumption wachtel 36 generally with a significant improvement in explanatory power they have also been used as dependent variables in attempts to determine how expectations are formed by gordon 15 mullineaux 28 jacobs and jones 20 and figlewski and wachtel 9 for the economist survey van duyne 35 for the household survey and leonard 23 and de leeuw and mckelvey 4 for businesses given their different levels of knowlege of economics and perspectives one might expect that the models used by the different groups to forecast inflation would

dynamic learning in a two person experimental game abstract we analyze learning in a two person simultaneous choice repeated game agents form beliefs about their rival s strategies which they revise as the game progresses we test this model using data from a series of experiments we obtain data on subjects expectations by asking them to predict their rival s choice in each period of the game subjects are paid for each correct prediction we analyze the data using the kalman filtering technique and find that learning is broadly consistent with bayesian updating the predicted equilibrium based on this learning process is indistinguishable from observed behavior for most subjects in later periods

aggregate demand contractions with nominal debt commitments is wage flexibility stabilizing when nominal debt payments commitments exist output losses following an aggregate demand contraction will be larger and more persistent paradoxically output can be less stable if wages are more flexible this occurs because falling wages and prices cause debtors cash flow to deteriorate relative to their debt commitments to reduce the chance of incurring bankruptcy costs debtors cut expenditure creditor s wealth increases from an unexpected deflation but their gain does not offset debtors loss because of the increased threat of bankruptcy and associated costs net wealth and aggregate demand fall magnifying the effect of the initial contraction

the mispricing of u s treasury bonds a case study this article documents an apparent pricing anomaly involving 94 percent 30 year treasury bonds during the months of may and june 1986 during this period the price of the 94s rose sharply relative to the prices of other long term treasury bonds and created a potential arbitrage opportunity in addition owners of the 94 bonds were able to borrow at a zero interest rate bypledging their bonds detailed examination reveals that this relative pricing anomaly cannot be attributed to changes in the level or term structure of interest rates or to differences between the bonds with respect to liquidity taxation or duration

the impact of tax deductible saving on dynamic efficiency abstract the simulations reported in this paper suggest that permitting unlimited tax deductivility for saving under a progressive personal income tax could have a more favourable impact on total personal saving and capital accumulation than even a switch to a progressive consumption tax

individual option prices for climate change mitigation abstract willingness to pay for climate change mitigation depends on people s perceptions about just how bad things will get if nothing is done individual subjective distributions for future climate conditions are combined with stated choices over alternative climate policies to estimate individual option prices the appropriate ex ante welfare measure in the face of uncertainty for climate change mitigation we find statistically significant sensitivity of estimated option prices to both expected future conditions and uncertainty about future conditions

an introduction to the law and economics of intellectual property although economists have written on topics of intellectual property for a long time the impact of economics on public policy in this area has been slight especially as compared to the influence of professional writings in areas such as antitrust and taxation we believe that too few of the profession s resources have been devoted to these issues and that of those resources that have been employed too few have been devoted to empirical analyses we hope that this introductory essay and the three papers that follow will stimulate interest in this subject this introductory essay first describes some of the basic economic tradeoffs involved in intellectual property law and then describes the framework of the law in the six areas described above patent copyright semiconductor protection trademark trade secret and misappropriation it is intended both to provide thumbnail descriptions of the various intellectual property regimes to economists working in this area and to indicate where additional economic research might be useful

inflation expectations in turkey learning to be rational turkey implemented an ambitious restructuring of the economy in the past several years including the adoption of inflation targeting along with a floating exchange rate regime inflation came down from almost triple digits to single digits between 2001 and 2005 this particular episode of the turkish economy sets a genuine case study for investigating the possible changes in the behaviour of inflation expectations upon a regime shift accordingly this study analyses inflation expectations in turkey focusing especially on the post 2001 transition phase we first conduct classical tests of unbiasedness and efficiency using aggregate survey data between august 2001 and october 2007 to get a statistical benchmark for rationality we find that classical tests reject full rationality hypothesis for all series except next month s consumer price index cpi inflation expectations then we carry out time varying parameter tvp estimates based on a kalman filter to see how the coefficients in the classical tes

analysis of uncertainty as opposed to risk an experimental approach the paper illustrates the scope for enhancing the conceptual apparatus used by agricultural economists to analyse decision making under conditions of uncertainty selected empirical results from experiments on student subjects from three universities are reported three issues are considered first the reasons for choice and the understanding of a choice problem are examined second attitudes towards different levels of uncertainty are measured third the possibility that apparently non normative psychological factors influence choice is explored the paper serves to illustrate and support a number of methodological points the major points are that a risk uncertainty distinction is useful contrary to the aging conventional wisdom of economic theory that laboratory experiments can potentially provide data of use to agricultural economists and that predictive models of choice under uncertainty may be more accurate if they take account of psychological variables which influence the decision making processes of human subjects

inflation forecast errors and time variation in term premia the expectations theory of the term strueture is well known to give wrong signals as to the future course of long term interest rates one explanation involves rational time varying term premia however the anomaly may also be due to inflation forecast errors we study survey forecasts of inflation it seems that the respondents forecasts are insufficiently adaptive interest rates reflect expectations similar to the inflation forecasts as a result past survey forecast errors reliably predict premia on u s government bonds

positive feedback trading and diffusion of asset price changes evidence from housing transactions the positive feedback hypothesis states that good news bad news engenders positive negative attitudes that accentuate the impact of the news on asset prices it is a special case of the representativeness heuristic which states that there is a general tendency to overemphasize the most recent evidence this paper tests a form of the positive feedback hypothesis where recent rates of change in asset prices become important information used by decision makers if this is the case housing price changes will tend to diffuse throughout a metropolitan area evidence from hartford connecticut supports this hypothesis and the evidence is inconsistent with alternative explanations

general deterrence between enduring rivals testing three competing models general deterrence unlike immediate deterrence has rarely been analyzed in a systematic comparative manner we outline a research design for doing so by studying the circumstances under which in a set of enduring rivalries challengers are likely to initiate militarized disputes we indicate the conceptual and operational steps necessary to make and empirically compare predictions stemming from three often competing theoretical frameworks rational deterrence a general model of rational conflict initiation and a cognitive psychological model of behavior emphasizing risk orientation and misperception the results of probit analysis on a pooled time series of enduring rivalries since 1945 provide support for hypotheses from each of the different theoretical models

effective use of survey information in estimating the evolution of expected inflation the evolution of the term structure of expected u s inflation is modeled using survey data to provide timely information on structural change not contained in lagged inflation data to capture shifts in subjective perceptions the model is adaptive to long horizon survey expectations however even short horizon survey expectations inform shifting endpoint estimates that capture the lag between inflation and the perceived inflation target which anchors inflation expectations results show movements of the perceived target are an important source of inflation persistence and suggest historical u s monetary policy was not fully credible for much of the postwar sample

forecasting efficiency concepts and applications this article introduces the concept of forecast efficiency in which the forecast contains all information available at the time of the forecast empirical tests investigate weak efficiency where the information set is all past forecasts and where all forecast revisions and errors should be uncorrelated with past forecast revisions tests of macroeconomic energy consumption and oil price forecasts find a significant autocorrelation of forecast revisions with fifty of fifty one tests showing positive correlation of forecast revisions as opposed to zero correlation consistent with forecast efficiency copyright 1987 by mit press

imperfect information and dynamic conjectural variations this article analyzes oligopoly interaction in an environment where firms are imperfectly informed about the evolution of the market demand curve the analysis develops a two period cournot framework under the assumptions that demand shifts are positively serially correlated that firms never directly observe the demand curve and that firms never observe the previous quantity decisions of rivals firms do draw inferences about the position of the demand curve from past observations on prices consequently the current output of a firm will influence the current market price which will then influence rivals inferences about future demand the future output decisions of rivals will respond accordingly the theory predicts negative dynamic conjectural variations essentially a firm perceives that an increase in its output will lower the current market clearing price which will cause rival firms to think that the demand curve has shifted down and hence induce them to lower their outputs in the future

subjective versus technical risk estimates do risk communication policies increase consistency abstract this paper reports the first comparison of subjective and technical risk estimates for a real source of risk exposure to radon the analysis also considers the effects of the information framing for this comparison of risk estimates the results suggest that the framing of the risk explanations does affect how individuals adjusted their subjective risk perceptions in response to differences in the amount and duration of their radon exposures thus our findings support the need to describe the role of cognitive factors involved in processing risk information within economic models of the formation of risk perceptions

estimating willingness to pay for improved drinking water quality using averting behavior method with perception measure this paper suggests an application of an averting behaviormethod to reconcile inconsistent public activity with objectiveenvironmental risk in korea an historically polluted watersupply has created citizen resistance to using tap water koreansperceive low quality levels for tap water although objectivelymeasured data show that the pollution levels are lower than theacceptable risk we hypothesized that the irrational aversion tousing tap water is a consequence of inconsistencies between theobjectively measured and perceived pollution levels we introducethe perception averting behavior method in which we add aperception measure unit to the conventional averting behaviormethod we found that the perception measure provided a validexplanation for citizens aversion to using tap water in korea

mutual forbearance in experimental conglomerate markets we conduct economic experiments to gauge the level of cooperation between conglomerate rivals first we run control experiments to observe cooperation between subjects acting as duopolists in one of two markets in the control experiments subject pairs choose a quantity xi or yi from a payoff matrix in a repeated game relatively less cooperation is observed in the y market than in the x market a second series of experiments then combines the two payoff matrices to create a conglomerate setting facing each other in two markets opponents now choose an xi yi pair each period we find that conglomeration encourages more coperation in the y market but less cooperation in the x market time series analysis of our conglomerate subjects choices strongly supports the recent game theoretic propositions in bernheim and whinston 1990

risk perception in psychology and economics abstract the concept of rationality has been basic to most economic analysis its content has been successively refined over the generations as applied to the static world of certainty it has turned out to be a weak hypothesis not easily refuted and therefore not very useful as an explanation though not literally a tautology but recent decades have seen the development of stronger versions applied to a world in which time and uncertainty are real among its most important manifestations have been criteria for consistency in allocation over time the expected utility hypothesis of behavior under uncertainty and what may be termed the bayesian hypothesis for learning that is the consistent use of conditional probabilities for changing beliefs on the basis of new information these hypotheses have been used widely in offering explanations of empirically observed behavior though as not infrequently in economics the theoretical development has gone much further than the empirical implementation these hypotheses have also been used increasingly in normative analysis as a component of benefit cost studies therefore frequently referred to as benefit risk studies the value of reducing mortality rates from diseases for example has been studied by assuming that choice of occupations is made inter alia by comparing wage differences with mortality differences

life cycle consumption under social interactions abstract in this paper we examine how social interactions affect consumption decisions at various levels of aggregation in a life cycle economy made up of peer groups for this purpose we consider two analytically solvable life cycle models one under certainty equivalent behavior and one under prudence and explicitly allow for three different forms of social interactions in peer groups namely conformism altruism and jealousy we show that whether social interactions have any effects on individuals optimal consumption decisions critically depends on intertemporal rather than static considerations this is true regardless of whether individuals preferences are time separable or exhibit habit formation and whether information within peer groups is homogeneous or disparate it implies that analyzing the effects of social interactions in static rather than intertemporal settings is likely to be misleading we also show that social interactions when coupled with either habit formation or prudence can significantly strengthen the effects of habit formation or prudence in the direction of resolving two well known puzzles in the literature on the permanent income hypothesis namely excess smoothness and excess sensitivity

trips trade and technology transfer a north south model of unintentional technology transfer is developed where the stringency of southern patent protection provides the institutional backdrop for a strategic game in a high tech goods market the appropriability regime is set endogenously and combines elements of imperfect southern patent protection with the protection afforded by market made northern technology masking less stringent protection of northern intellectual property can work much like other strategic trade policies therefore developed countries appear to be right in demanding discussion of intellectual property rights in gatt

uncertain effects of money and the link between the inflation rate and inflation uncertainty in the postwar period high rates of inflation are associated with high levels of inflation uncertainty in this paper i argue that the inflation rate and inflation uncertainty are linked by forecasters uncertainty about the impact of money growth on the price level and i present evidence indicating that this has been the case as long as the impact of money growth on the price level remains unpredictable then even predictable money growth will cause inflation uncertainty with its accompanying adverse effects on employment and output

modelling the general public s inflation expectations using the michigan survey data in this article we discuss a few models developed to explain the general public s inflation expectations formation and provide some relevant estimation results furthermore we suggest a simple bayesian learning model which could explain the expectations formation process on the individual level when the model is aggregated to the population level it could explain not only the mean values but also the variance of the public s inflation expectations the estimation results of the mean and variance equations seem to be consistent with the results of the questionnaire studies in which the respondents were asked to report their thoughts and opinions about inflation

an investigation of the rationality of consumer valuations of multiple health risks after developing a conceptual analysis of consumer valuation of multiple risks we explore both economic and cognitive hypotheses regarding individual risk taking using a sample of over 1 500 consumers our study ascertains risk dollar tradeoffs for the risks associated with using an insecticide and a toilet bowl cleaner we observe the expected positive valuation of risk reductions and find empirical support for a diminishing in the valuation of risk reduction as the extent of the risk reduction increases we also find evidence of certainty premiums for the total elimination of one risk but no strong evidence of additional certainty premiums for the elimination of multiple risks strong reference risk effects are evident as increases in risk were valued much more greatly than were decreases

convergence an experimental study of teaching and learning in repeated games nash equilibrium can be interpreted as a steady state where players hold correct beliefs about the other players behavior and act rationally we experimentally examine the process that leads to this steady state our results indicate that some players emerge as teachers those subjects who by their actions try to influence the beliefs of their opponent and lead the way to a more favorable outcome and that the presence of teachers appears to facilitate convergence to nash equilibrium in addition to our experiments we examine games with different properties from other experiments and show that teaching plays an important role in these games we also report results from treatments in which teaching is made more difficult in these treatments convergence rates go down and any convergence that does occur is delayed jel c70 c91 d83 d84

currency fluctuations in the post bretton woods era the international monetary landscape that has emerged since the felling of bretton woods is characterized by a hybrid exchange rate system that lies somewhere between the textbook polar cases of a gold standard and a pure float this system has relatively flexible exchange rates between major countries active central bank intervention in the market for the major currencies and predominantly fixed exchange rates relative to the dollar or to some basket of currencies for less developed countries and newly industrializing nations the majority of research on currency markets since the early 1970s has focused on the characteristics of flexible exchange rates under this hybrid regime my thesis is that this research has been unsuccessful the proportion of monthly or quarterly exchange rate changes that current models can explain is essentially zero even after the fact forecasts that use actual values instead of forecasted values of the explanatory variables cannot explain major currency movements over the post bretton woods era this result is quite surprising since exchange rate changes would be entirely unpredictable only in very special cases of the theoretical models discussed as the discussion below will argue it is not a general implication of market efficiency that exchange rates follow a random walk process 1

designing a non distortionary personal tax system for canada abstract this paper discusses the design of a graduated personal tax system that does not distort the path of an individual s lifetime consumption it is shown that such a tax system requires the existence of both tax deductible and non tax deductible saving it is also argued that the mechanisms are already in place that would permit the transformation of canada s existing personal tax system into one similar to those proposed by blueprints and the meade committee

comments on arrow and on lucas such a number of interesting and provocative things are put forward in lucas and in arrow in this issue that i would like to be able to dissect them in detail for example lucas states that the problem of controlling inflation has been successfully solved in a scientific sense p s405 i am tempted to explore the limits of the set of problems that might be said to be scientifically solved in the lucas sense but i fear that this would take up a good deal of space arrow deplores the use of homogeneity assumptions as a device for adding content to otherwise inconclusive economic theories but presumably he does not believe that the sonnenschien mantel debreu theorem is the ultimate conclusion regarding the useful content of the propositions of general equilibrium theory some restrictions of intermediate strength are presumably called for and i would like to make the case that strong empirical generalizations about the nature of human actors such as those describing the biological requirements for survival are available and relevant in this connection this too would take some space to develop in detail though not as much as the first subject given the constraints i must choose a focus i will focus on what i take to be the main message that lucas has put forward regarding the relationship between adaptive behavior and the rationality assumptions employed in standard economic theory this message is recognizable as the intellectual descendant of similar discussions by friedman and machlup in the 1940s and 1950s and the ideas involved remain extremely influential in the discipline today i will present and comment on my own statement of this position which i following blaug 1980 will call the classic defense of the rationality as

an institutional approach to the rationality of expectations the issue of expectations is an important one to modern macroeconomic theory despite considerable efforts in recent times the process by which economic expectations are actually formed is still not well understood there are several possible explanations for this one of the more important is that an investigation of the forecasting industry which contributes in a major way to expectations formation has never been carried out as a result and because it is after all an industry like any other a study of the aggregate economic forecasting in canada was undertaken using the now familiar scp paradigm such a relatively careful institutional examination of the uses and production of one of the most important elements going to make up economic expectations gives strong evidence of rational economic processes at work economic theory is therefore correct to treat expectations as rational

the role of registered retirement savings plans in a life cycle model in this paper a distinction is made between two types of personal saving one of which is tax deductible and another which is not and the role of each is examined within the framework of a life cycle model more precisely the model shows how tax deductible rrsp saving enables the individual to do his own lifetime income averaging for tax purposes in order to generate the lifetime profile of taxable income which minimizes the discounted value of tax payments the use of rrsps for this purpose however does not usually result in income averaging in the conventional sense since it is not necessarily optimal for a person to equalize taxable income over each period of his lifetime by contrast non tax deductible saving permits the individual to choose his optimal lifetime consumption path and bequests le ro le des regimes enregistres d epargne retraite dans un modele d optimisation sur tout le cycle de vie dans ce m6moire l auteur distingue deux types d 6pargne personnelle l une d6ductible aux fins de l impot sur le revenu et l autre non le role de chacune est analyse dans le contexte d un modele d optimisation sur tout le cycle de vie plus pr6cis6ment le modele montre comment l 6pargne via les r6gimes enregistr6s d 6pargne retraite permet a l individu d 6taler son revenu total dans le temps aux fins d imp6t afin de construire un profil de revenu imposable qui minimise la valeur pr6sente des impots pay6s l utilisation des r6gimes enregistr6s d 6pargne retraite h cette fin n engendre pas necessairement un 6talement conventionnel du revenu puisqu il se peut fort bien qu il ne soit pas optimal pour l individu d 6galiser son revenu imposable pour chaque p6riode de sa vie d autre part l 6pargne qui n est pas d6ductible aux fins d impot sur le revenu permet h l individu de choisir le sentier optimal de consommation et de legs sur tout le cycle de vie

learning about monetary regime shifts in an overlapping wage contract model abstract this paper uses stochastic simulations to explore the finite sample effects of learning during the transition to convergence in an overlapping wage contract economy the model used is a variant of the taylor 1980 model that includes a reaction function for the monetary authority the contracting agents do not know the true parameters of the reaction function although they know the rest of the model structure and parameters they update their estimates of the reaction function parameters with each observation and re solve the model using rational expectations we perform pseudo monte carlo simulations of this model allowing for different classes of regime shifts and different learning mechanisms and explore the rates of convergence of parameter estimates and the effects on real and nominal variables

another look at the rationality of the livingston price expectations data 1990 another look at the rationality of the livingston price expectations data applied economics vol 22 no 4 pp 477 485

predictability in financial analyst forecast errors learning or irrationality in this paper we propose a rational learning based explanation for the predictability in financial analysts earnings forecast errors documented in prior literature in particular we argue that the serial correlation pattern in analysts quarterly earnings forecast errors is consistent with an environment in which analysts face parameter uncertainty and learn rationally about the parameters over time using simulations and real data we show that the predictability evidence is more consistent with rational learning than with irrationality fixation on a seasonal random walk model or some other dogmatic belief

out of equilibrium bids in first price auctions wrong expectations or wrong bids deviations from risk neutral equilibrium bids in auctions can be related to inconsistent expectations with correct best replies or correct expectations but deviant best replies e g because of risk aversion regret quantal response mistakes to distinguish between these two explanations we use a novel experimental procedure and study expectations together with best replies in symmetric and asymmetric auctions we extensively test the internal validity of this setup we find that deviations from equilibrium bids do not seem to be because of to wrong expectations but because of deviations from a risk neutral best reply

earnings expectations revisions and realizations during the spring and the fall of 1993 respondents to a national household survey were asked to report expectations of spring 1994 weekly earnings elicited in the form of subjective probabilities these data are potentially much more informative than are typical reports of economic expectations subjective probability distributions of future weekly earnings are estimated for each respondent based on his or her reports of a series of subjective probabilities this paper analyzes the cross sectional variation in expectations revisions of expectations between the spring and the fall of 1993 and the relationship between 1993 expectations and the distribution of spring 1994 earnings realizations generally positive findings on the validity of the data bode well for the prospects of eliciting expectations in future surveys

iii some causes and consequences of dependence and independence in the stock market abstract the fact that there are times when market movement is random and times when it is not is interpreted in terms of the hypothesis that the price of a stock is an aggregate opinion the resultant of the opinions and decisions of a community of investors price like any other opinion will be most vulnerable to social and other sources of influence during times of uncertainty an aggregate psychological state which can generate the kind of statistical dependence characteristic of non random walks ramifications of this hypothesis are explored in a variety of stock market behaviors such as the effect of tips the impact of runs on trading volume during rising and falling markets and the like

price expectations in the united states 1947 75 it is common to assume that expectations about future inflation influence economic behavior the behavior of an economic system over time is determined in part by the manner in which these expectations are formed theoretical and empirical investigations frequently utilize a hypothesis that agents forecast future inflation rates primarily on the basis of past inflation rates static adaptive extrapolative and regressive expectations adjustment schemes are examples of such forecasting rules 1 but such rules generally ignore the fact that individuals observe prices not inflation rates a change in observed prices can result from general price inflation but it may also result from transitory shocks to the price level or observation error similarly apparent changes in the general inflation rate may be purely transitory in nature or may signify the beginning of a trend a model of inflation expectations should admit the possibility of these different sources of price change and embody the natural human tendency to extrapolate seeming trends this paper examines the extent to which agents reported price expectations are consistent with such naive forecasting a multilevel adaptive expectations model is developed that takes observed prices as the information available to agents on the basis of these prices individuals revise their beliefs about not only the price level but also the underlying inflation rate and trend in the inflation rate when fitted to the livingston survey data the model appears to provide a unified explanation of price expectations in the united states from 1947 to 1975 this is contrasted with earlier investigations suggesting that expectations formation differed significantly in the periods before and after 1960

the north s intellectual property rights standard for the south abstract we build a multi sectoral north south trade model to analyze international intellectual property rights ipr protection by comparing the nash equilibrium ipr protection standard of the south the developing countries with that of the north the developed countries we find that the former is naturally weaker than the latter moreover we show that both regions can gain from an agreement that requires the south to harmonize its ipr standards with those of the north and the north to liberalize its traditional goods market this demonstrates the merits of multi sectoral negotiations in the gatt wto

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

u s money demand instability a flexible least squares approach this paper uses a jle rrhle leust squares fls time varying linear regression technique to investiaate coefficient stabilitv for the goldfeld u s money demand model over the period 1959 62 to 19x5 q3 time paths traced out by the fls coefficient estimates exhibit shifts in 1974 and 1983 but these shifts are small relative to a persistent downward trend in the estimated coefficient for the inflation rate indicating potential model misspecitication the fls estimates also indicate that the unit root nonstationarity problem reported by ols money demand studies disappears if the coefficient estimates are allowed to exhibit even small amounts of time variation

intellectual property rights and the world trade organization retrospect and prospects this paper analyzes the main economic issues of intellectual property rights iprs protection in the context of the world trade organization wto a retrospective view on the establishment of the trips trade related aspects of intellectual property rights agreement a still controversial accomplishment of the uruguay round of trade liberalization is provided the paper reviews the economic rationale for the harmonization of iprs drawing both on economic theory considerations as well as emerging empirical evidence the logic of linking ipr protection and trade in the context of the wto is also re examined some specific attention is devoted to the implications of trips for agricultural and biotechnology innovations the impact that ipr protection can have in promoting growth and development and the relation of iprs with other economic policies is discussed the paper concludes with an analysis of the prospects for more or less iprs related consensus in the current round of wto negotiations

the treatment of registered retirement savings plans at maturity abstract in recent years we have witnessed a dramatic rise in the popularity of tax deductible registered retirement savings plans as an increasing number of canadians have taken advantage of the tax saving associated with these do it yourself pension schemes as a quid pro quo the income tax act restricts the manner in which the proceeds of an rrsp can be used to generate a retirement income this note examines the annuity aspect of rrsps and how the imposition of such a constraint on withdrawals affects the optimal control solution to the individual planholder s utility maximization problem

experimental economics reply more than in any particular method of inquiry i think the hallmark of science is to be found in a constructively skeptical attitude toward knowledge the more fundamental are the concepts and assumptions of a science the easier it is to take them for granted and to abandon this skepticism in this spirit ronald heiner 1985 is correct in emphasizing that the knowledge obtained from the study of the performance of experimental markets is only as secure as the classical preference model used to induce prespecified value structures on the agents in such markets if the purpose of an experiment is to test a theory for example supply and demand and the theory is not falsified by the test this in no way supports any premise of the theory which was also a premise of the experimental design when we falsify a theory the implication is that one or more of its assumptions about the behavior of economic agents maximization of expected utility commonly shared homogeneous expectations risk aversion zero subjective costs of transacting etc is in question and the immediate task is to modify the suspected behavioral assumptions of the original theory other assumptions such as that agents have well defined preferences or know the probability distribution from which other agent values were drawn are not brought into question by the experiment because the experimental design reproduced or should have the environment posited by the theory being tested when testing formal market theories in this way we should always be aware of the fact that we are studying behavior within the context of our representations of the economic environment if any of these representations is wrong then our studies have only increased our self knowledge not our knowledge of things natural economic processes if we are to increase our knowledge of things then our ultimate aim should aspire to more than discovering that the behavioral department of economics university of arizona tucson az 85721 1 the principal contribution of popper s falsificationist methodology is i believe the influential attempt to develop a formal logic of skeptical inquiry that the attempt has failed in the sense that it has produced no defensible codified set of procedures that yield a science of scientific method happily it would appear that all such attempts will fail should not detract from the disciplinary value of the falsificationist perspective in approaching scientific questions its value to the experimentalist is to force him to ask how can i design an experiment with the property that the set of potentially observable outcomes can be partitioned into those that are consistent with one or a given theory and those that are consistent with other theory ies or inconsistent with the given theory that experimental life is such that his effort is about as likely to fail as to succeed by no means detracts from the value of the exercise its value to the theorist if he will just forgo the career advancing primeval incentive to publish yet another technically tractable extension of the existing theory literature is to force him to ask how can i model this question so as to suggest as martin shubik would say a do able experiment and so as to yield observable implications that do not exhaust the set of possible outcomes that this effort will often fail does not detract from the value of the exercise having said this i would not want to leave the impression that experiments that are fishing expeditions in the laboratory to see what will happen are of no value seeing what happens can be essential in defining an analyticalempirical research program similarly when a theorist builds as buz brock would say castles in the air this is not necessarily useless for it may lead to more operational forms of theory we should impute some nonzero probability to the proposition that feyerabend s anything goes posture is right but at this stage i think it has become pretty obvious where our professional weaknesses are concentrated economists while spouting the rhetoric donald mcclosky 1983 of the falsificationist are in fact verificationist to the core we all do it we take a proposition conjecture or theory then search for supportive historical or empirical examples as everyone ought to know seek and ye are likely to find whether one is a keynesian or a supply sider what is not sufficiently appreciated is that this verificationist grubbing is a prescientific exercise in which one asks whether there is any supporting evidence and how difficult it is to find if there is none or if it is pretty hard to uncover it suggests abandonment in the prescientific womb

determinants of investor expectations and satisfaction a study with financial professionals abstract we investigate determinants of price expectations and satisfaction levels of financial professionals and students in experiments with 150 professionals and 576 students we systematically vary price paths according to the final return positive or negative and the way in which the final return is achieved upswing followed by downswing or vice versa professionals show the most optimistic price expectations and are most satisfied if assets fall in price first and then recover in addition professionals price expectations are highest after positive returns among students qualitatively similar patterns emerge but professionals price expectations are less prone to framing effects

choice under uncertainty problems solved and unsolved ffifteen years ago the theory of choice under uncertainty could be considered one of the success stories of economic analysis it rested on solid axiomatic foundations it had seen important breakthroughs in the analytics of risk risk aversion and their applications to economic issues and it stood ready to provide the theoretical underpinnings for the newly emerging information revolution in economics 1 today choice under uncertainty is a field in flux the standard theory is being challenged on several grounds from both within and outside economics the nature of these challenges and of our profession s responses to them is the topic of this paper

the ubiquity of habits and rules under what circumstances is it necessary or convenient for an agent to rely on habits or rules this paper focuses on the types of decision situations giving rise to their use even optimization requires the deployment of rules and for this reason mainstream economics cannot legitimately ignore these questions the argument is that habits and rules are ubiquitous in human activity in a new taxonomy seven types of decision situations are considered classified according to the type of information problem involved neither neoclassical nor behavioral economics can provide a complete account of the bases of habits or rules in these cases copyright 1997 by oxford university press

are individuals bayesian decision makers there has been increasing interest in whether normative models of individual choice under uncertainty accord with actual behavior these concerns have been much greater than in other economic contexts because of the particularly severe demands such decisions place on the rationality of the decision maker the limitations of these decisions have widespread consequences as they provide the rationale for many governmental efforts to regulate the risks people face here i explore the issues raised by a bayesian decision framework focusing particularly on my analyses of worker and consumer behavior

respondent uncertainty and ordering effect on willingness to pay for salt marsh conservation in the brest roadstead france abstract this paper explores the potential link between the sensitivity of willingness to pay wtp to the order of presenting bid amounts in contingent valuation questions ordering effect and respondent uncertainty the resource being valued is a public project to protect salt marshes against the spread of an invasive aquatic plant in the brest roadstead france valuation uncertainty is captured through a variant of payment card format where respondents are given the opportunity to report their wtp as either a single value option a or an interval of values option b the ordering effect is tested using both parametric models that ignore and control for the potential sample selection bias related to the choice between option a and option b as well as non parametric models the results suggest that 1 respondents place substantial wtp values on salt marsh conservation and 2 the ordering effect is linked to respondent uncertainty since only uncertain respondents react differently to changes in the order of presenting bid amounts specifically for uncertain respondents putting bid amounts in ascending order yields lower welfare estimates than putting bid amounts in descending order or random order policy recommendations and options to deal with ordering effect are discussed

are revisions to usda crop production forecasts smoothed this article uses nordhaus framework to determine the efficiency of the revision process for usda corn and soybean production forecasts over the 1970 1971 through 2004 2005 marketing years positive autocorrelation and consistency of directional changes in forecast revisions suggest these forecasts are smoothed evidence is provided that the loss in forecast accuracy due to smoothing is statistically and economically significant in several cases a conservative bias in farm operators assessments of yield potential and in the procedure for translating enumerator s information about plant fruit counts into objective yield estimates are identified as plausible sources of smoothing

the elementary economics of social dilemmas a social dilemma is in essence a prisoners dilemma in a continuous strategy space i discuss a number of social dilemmas that have caught my attention offer an elementary diagrammatic synthesis of them and discuss some of the economic insights that the diagrams capture including incentives for pre commitment finally i model pre commitment via delegation and link results to the literature on the evolution of preferences l economie elementaire des dilemmes sociaux un dilemme social est essentiellement un dilemme du prisonnier dans un espace continu de strategie l auteur discute d un certain nombre de dilemmes sociaux qui ont retenu son attention il en propose une synthese graphique elementaire et discute certaines des suggestions economiques qui decoulent de ces diagrammes comme par exemple les incitations a se pre engager finalement l auteur construit un modele de pre engagement par delegation et relie ses resultats a la litterature sur l evolution des references