cssi/SciSciGPT-SciSciNet huggingface dataset:
Forward indifference valuation of American options

We analyse the valuation of American options under the forward performance criterion introduced by Musiela and Zariphopoulou [Quant. Finance 9 (2008), pp. 161–170]. In this framework, the performance criterion evolves forward in time without reference to a specific future time horizon, and may depend on the stochastic market conditions. We examine two applications: the valuation of American options with stochastic volatility and the modelling of early exercises of American-style employee stock options. We work with the assumption that forward indifference prices have sufficient regularity to be solutions of variational inequalities, and provide a comparative analysis between the classical and forward indifference valuation approaches. In the case of exponential forward performance, we derive a duality formula for the forward indifference price. Furthermore, we study the marginal forward performance price, which is related to the classical marginal utility price introduced by Davis (Mathematics of Derivati...
Multivariate trend function testing with mixed stationary and integrated disturbances

Trend models are important in describing nonstationary behavior of a time series. In this paper we propose valid tests for the trend coefficients in a multivariate system with mixed stationary, integrated or nearly integrated errors. Cross-sectional and serial dependence in innovations are left unspecified beyond regularity assumptions. We consider two sets of tests based on OLS and SUR estimation of the transformed system. A modified SUR estimator corrected for serial correlation of unknown form is shown to be asymptotically efficient. The standard tests under stationarity are also analyzed and potential misleading inferences are demonstrated. The framework is general allowing for linear and nonlinear trend functions. Asymptotic theory, simulations and an empirical application are provided.
The predictive ability of several models of exchange rate volatility

Abstract We compare the out-of-sample forecasting performance of univariate homoskedastic, GARCH, autoregressive, and nonparametric models for conditional variances, using five bilateral weekly exchange rates for the dollar, 1973–1989. For a one-week horizon, GARCH models tend to make slightly more accurate forecasts. For longer horizons, it is difficult to find grounds for choosing between the various models. None of the models perform well in a conventional test of forecast efficiency.
The Myths and Truths that Ended the 2000 TMDL Program

Professor Linda Malone examines the total maximum daily load (TMDL) program of section 303(d) of the Clean Water Act in this article. The TMDL program presently seems further from implementation than it has in its thirty years of making. In the distant past, it has been met with political resistance and opposition, whereas in 1972 government powers insisted on the program. This article, will explore state criticisms of the TMDL program and it’s checkered past.
The Skeptical Shopper: A Metacognitive Account for the Effects of Default Options on Choice

A default option is the choice alternative a consumer receives if he/she does not explicitly specify otherwise. In this article we argue that defaults can invoke a consumer's “marketplace metacognition,” his/her social intelligence about marketplace behavior. This metacognitive account of defaults leads to different predictions than accounts based on cognitive limitations or endowment: in particular, it predicts the possibility of negative or “backfire” default effects. In two experiments, we demonstrate that the size and direction of the default effect depend on whether this social intelligence is invoked and how it changes the interpretation of the default.
Locked Up by a Lockup: Valuing Liquidity as a Real Option

Hedge funds often impose lockups and notice periods to limit the ability of investors to withdraw capital. We model the investor s decision to withdraw capital as a real option and treat lockups and notice periods as exercise restrictions. Our methodology incorporates time-varying probabilities of hedge fund failure and optimal early exercise. We estimate a two-year lockup with a threemonth notice period costs approximately 1% of the initial investment for an investor with constant relative risk aversion utility and risk aversion of three. The cost of illiquidity can easily exceed 10% if the hedge fund manager can arbitrarily suspend withdrawals. Hedge funds and funds-of-fiinds, along with many other alternative investment vehicles, place a variety of restrictions on the ability of investors to redeem their capital. A lockup requires an investor to wait a specified length of time after the initial deposit of capital, typically one to three years, before requesting a redemption. A notice period requires an investor to wait a specified length of time, typically one to three months, before a redemption request is processed. In addition, fund managers often have the authority to process only a fraction of a redemption request, known as a gate, or to suspend redemptions altogether. As argued by Aragon (2007), the advantage of redemption restrictions is that they allow fund managers to invest in illiquid assets and earn an associated return premium. Redemption restrictions can levy an important cost if they prevent investors from withdrawing capital before anticipated losses are realized.1 Our goal is to develop a methodology to estimate the implied cost of redemption restrictions, thereby allowing investors to more accurately tabulate hedge fund fees. We model the ability of a risk-averse investor to withdraw capital as a real option. Upon exercise, the investor gives up ownership in the fund and receives a cash payoff per share equal to the fund's net asset value (NAV). The investor exercises the option when the investor's own valuation of a share of ownership in the fund, expressed as a certainty equivalent, falls below the NAV We assume investors value the fund taking into account the probability of fund failure, liquidation costs, and the impact of future exercise decisions. These considerations are not completely captured in the fund's NAV Redemption restrictions, such as lockups and notice periods, constrain the investor's
Managed Care as Regulation: Functional Ethics for a Regulated Environment

Institutional context plays a substantive role in ethical analysis. Accordingly, efforts to apply the principles of bioethics generally and without regard for institutional context may prove difficult. This article first addresses the aspects of two non-hospital settings - the managed care organization (MCO) and the nursing home - that make the application of hospital-derived principles of bioethics particularly difficult.The article then considers health care providers’ complaints that extensive MCO regulations impede ethical decisionmaking and adequate care. MCO standards and regulations are value-based. Thus after identifying four categories of providers’ MCO complaints, this article evaluates the complaints under ethical norms. First, a provider may be scapegoating regulations by claiming that the MCO plan prohibits good care. Scapegoating is clearly unethical, tantamount to a lie. Second, a provider’s understanding of MCO regulations may come from "the grapevine" - an honest misunderstanding. While misunderstandings of unclear regulations may be unavoidable, providers still have a duty to inquire into the standards of each patient’s plan. Third, the failure to provide adequate care may be attributed to incentives or disincentives built into the administration of the system rather than the actual regulations of the system. Both providers and MCO regulators have the ethical duty to respond more effectively to such failures. Finally, the MCO plan may have wrongly identified what standards are beneficial. It is important to continually balance empirical research and values in setting standards of coverage. Health care providers in managed care do face ethical challenges. However, the regulator who sets MCO standards is also engaged in a value-based effort. If MCO standards are correctly identified as value-based, the process for establishing such standards must broaden.
High yield spreads, real economic activity, and the financial accelerator

We study the leading properties of 30 US high yield spreads for economic growth between 1996 and 2012 and show that they disappeared in the second half of the 2000s. Our empirical findings demonstrate the unreliability of high yield spreads as leading indicators and cast doubts on the existence of a strong and functioning financial accelerator in recent years.
Extraneous Alternatives and Strategy-Proofness

It is well known that the Gibbard–Satterthwaite theorem cannot be circumvented by adding extraneous alternatives that are included in the individual preference information but are never selected. We generalize this by proving that, for any domain on which every strategy-proof rule is dictatorial, the addition of extraneous alternatives will not permit the construction of a non-dictatorial and strategy-proof rule if the new domain is a product set. We show how this result, and our other theorem, can be applied to seven families of social choice situations, including those in which more than one alternative is selected.
Congress and Genocide: They're not Going to Get Away with It

This short article demonstrates that genocide is prohibited under customary international law and is also a prohibition jus cogens, that the definition of genocide contained in Article II of the Genocide Convention is the customary definition of genocide, that the attempt by the United States to change the definitional reach when ratifying the Convention has failed, and that the attempt by Congress to change the definition in domestic legislation has left the United States in violation of its treaty-based obligation to enact adequate legislation. Particularly egregious is the attempt to limit genocide to an intent to destroy a “substantial” part of a listed group and the statutory definition of “substantial” part now contained in 18 U.S.C. § 1093(8).
The Contingent Effect of Management Practices

This article investigates how the success of a management practice depends on the underlying values articulated by the management. A large U.S. transportation company is in the process of fitting its trucks with an electronic on-board recorder (EOBR) to provide drivers with information on their driving performance. The company also has commenced a multi-year initiative to remake its internal operations, the first phase of which focuses exclusively on changing values toward a greater emphasis on teamwork and empowerment. In this setting, a natural question is whether the optimal managerial practice consists of: (1) letting each driver know his or her individual performance only; or also (2) providing drivers with information about their performance with respect to other drivers. Using the EOBR-provided driver performance data, we randomize these practices across sites. The main result of our experiment is that (2) leads to better performance than (1) in a particular site if and only if the site has not yet received the values intervention, and worse performance if it has. The result is consistent with the presence of a conflict between competition-based managerial practices and a shift to a cooperation-based value system. More broadly, it highlights the role of intangible factors in determining the optimal set of managerial practices.
The Effect of Statutory Rape Laws on Teen Birth Rates

Policymakers have often been explicit in expanding statutory rape laws to reduce teenage pregnancies and live births by teenage mothers, often with the goal of reducing associated welfare outlays. In this paper, we explore whether expansions in such laws are indeed associated with reductions in teen birth rates. In order to codify statutory-rape-law expansions, we use a national micro-level sample of sexual encounters to simulate the degree to which such encounters generally implicate the relevant laws. By codifying statutory rape laws in terms of their potential reach into sexual encounters, as opposed to using crude binary treatment variables, this simulation approach facilitates the use of multi-state difference-in-difference designs in the face of highly heterogeneous legal structures. Our results suggest that live birth rates for teenage mothers fall by roughly 4.5% (or 0.1 percentage points) upon a 1 standard-deviation increase in the share of sexual activity among a given age group that triggers a felony for the elder party to the encounter. This response, however, is highly heterogeneous across ages and weakens notably in the case of the older teen years. Furthermore, we do not find strong results suggesting a further decline in birth rates upon increases in punishment severities.
Shareholder wealth effects of pooling-of-interests accounting: evidence from the SEC's restriction on share repurchases following pooling transactions

Abstract This paper examines the shareholders’ perceptions of the costs and benefits associated with the use of pooling-of-interests. The paper focuses on the market's reaction to the SEC's adoption of SAB 96. This regulation-forced firms to chose between using pooling-of-interests and maintaining their share repurchase programs. Overall, the results suggest shareholders perceive there to be a net cost when managers choose to use pooling-of-interests. These findings should be of particular interest to regulators, practitioners and researchers.
High-Yield Bond Mutual Funds: Performance, January Effects, and Other Surprises

Here is insight into the investment performance of low-grade light-yield corporate bond mutual funds during 1980 - 1995, which includes the period the high-yield market was recovering from weak performance. There is evidence that low-grade bond mutual funds have both superior and inferior managers and that their portfolio systematic risk is considerably below a commonly used high-yield index.. Total risk for the average high-yield fund exceeds the total risk of the high-yield index, and is not compensated by extra returns. The results also indicate that a January effect holds for high-yield bond funds as well as low-grade bonds, which appears to extend as well to a "first six months" effect.
Protocol Layering and Internet Policy

An architectural principle known as protocol layering is widely recognized as one of the foundations of the Internet’s success. In addition, some scholars and industry participants have urged using the layers model as a central organizing principle for regulatory policy. Despite its importance as a concept, a comprehensive analysis of protocol layering and its implications for Internet policy has yet to appear in the literature. This Article attempts to correct this omission. It begins with a detailed description of the way the five-layer model developed, introducing protocol layering’s central features, such as the division of functions across layers, information hiding, peer communication, and encapsulation. It then discusses the model’s implications for whether particular functions are performed at the edge or in the core of the network, contrasts the model with the way that layering has been depicted in the legal commentary, and analyzes attempts to use layering as a basis for competition policy. Next the Article identifies certain emerging features of the Internet that are placing pressure on the layered model, including WiFi routers, network-based security, modern routing protocols, and wireless broadband. These developments illustrate how every architecture inevitably limits functionality as well as the architecture’s ability to evolve over time in response to changes in the technological and economic environment. Together these considerations support adopting a more dynamic perspective on layering and caution against using layers as a basis for a regulatory mandate for fear of cementing the existing technology into place in a way that prevents the network from innovating and evolving in response to shifts in the underlying technology and consumer demand.
Dynamic programming with Hermite approximation

Numerical dynamic programming algorithms typically use Lagrange data to approximate value functions over continuous states. Hermite data can be easily obtained from solving the Bellman equation and used to approximate the value functions. We illustrate the use of Hermite data with one-, three-, and six-dimensional examples. We find that Hermite approximation improves the accuracy in value function iteration (VFI) by one to three digits using little extra computing time. Moreover, VFI with Hermite approximation is significantly faster than VFI with Lagrange approximation for the same accuracy, and this advantage increases with the dimension of the continuous states.
Attack-Resilient Observer Pruning for Path-Tracking Control of Wheeled Mobile Robot

Path-tracking control of wheeled mobile robot (WMR) has gained a lot of research attention, primarily because of its wide applicability -- for example intelligent wheelchairs, exploration-assistant remote WMR. Recent increase in remote and autonomous operations\requirements for WMR has led to more and more use of IoT devices within the control loop. Consequently, providing interfaces for malicious interactions through false data injection attacks (FDIA). Moreover, optimization-based FDIAs have been shown to cause catastrophic consequences in feedback control systems while by-passing any residual-based monitoring system. Since these attacks target system measurement process, this paper focuses on the problem of improving the resiliency of dynamical observers against FDIA. Specifically, we propose an attack-resilient pruning algorithm which attempts to exclude compromised channels from being processed by the observer. The proposed pruning algorithm improves attack-localization precision to $100\%$ with high probability, which correspondingly improves the resiliency of the underlying UKF to FDIA. The improvements due to the developed resilient pruning-based observer is validated through a numerical simulation of a two-layer path-tracking control platform of differential-driven wheeled mobile robot (DDWMR) under FDIA.
The trouble with voluntary emissions trading: Uncertainty and adverse selection in sectoral crediting programs☆

Abstract Sectoral crediting has been proposed as a way to scale up project-level carbon offset programs, and provide sector-wide incentives for developing countries to reduce greenhouse gas emissions. However, simulations presented here suggest that information asymmetries and large uncertainties in predicting counterfactual business-as-usual (BAU) emissions are likely to render sectoral crediting an extremely unattractive mechanism in practice, at least for the transportation sector. The regulator faces a tradeoff between efficiency and transfers/environmental damage when setting the crediting baseline in relation to uncertain BAU emissions. A generous baseline promotes efficiency, as more developing countries participate and implement abatement measures. However, a generous baseline also produces large volumes of non-additional offsets, which lead to either increased global emissions, or transfers between developed and developing countries if developed country emission reduction targets are made more stringent in order to leave global emissions unchanged. I show that any crediting baseline that encourages a non-negligible number of countries to participate in a sectoral crediting mechanism results in environmental damage or transfers that are likely to be too high to be politically feasible.
The Future of the Law of Armed Conflict: Ostriches, Butterflies, and Nanobots

The law has consistently lagged behind technological developments. This is particularly true in armed conflict, where the 1907 Hague Conventions and the 1949 Geneva Conventions form the basis for regulating emerging technologies in the 21st century. However, the law of armed conflict, or LOAC, serves an important signaling function to states about the development of new weapons. As advancing technology opens the possibility of not only new developments in weapons, but also new genres of weapons, nations will look to the LOAC for guidance on how to manage these new technological advances. Because many of these technologies are in the very early stages of development or conception, the international community is at a point in time where we can see into the future of armed conflict and discern some obvious points where future technologies and developments are going to stress the current LOAC. While the current LOAC will be sufficient to regulate the majority of future conflicts, we must respond to these discernible issues by anticipating how to evolve the LOAC in an effort to bring these future weapons under control of the law, rather than have them used with devastating effect before the lagging law can react. This paper analyzes potential future advances in weapons and tactics and highlights the LOAC principles that will struggle to apply as currently understood. The paper will then suggest potential evolutions of the LOAC to ensure it continuing efficacy in future armed conflicts.
Bubbles and Broad Monetary Aggregates: Toward a Consensus Approach to Business Cycles

A challenge for quantity-theoretic explanations of business cycles is that recessions manifest despite central banks’ scrupulousness to avoid falls in monetary aggregates, a fact which would seem to indicate a structural explanation. This paper argues that a broader and theoretically richer Divisia aggregate—which reflects changes in financial market liquidity even without changes in the quantity of any particular asset—can reconcile these two approaches. Liquidity shocks such as the rise and collapse of asset bubbles can drive excess supply of and demand for money, respectively, that quantity theorists point to as determinative of short-run economic fluctuations.
Sale-Backs in Bankruptcy

When bankrupt firms are sold, they are often repurchased by their former owner or manager. These insiders are by default better informed than outsiders about the true value of the firm or its assets, so other potential buyers must worry about overpaying if they win. The presence of insiders may thus have a chilling effect on the bidding. We ask how insiders should be treated in bankruptcy sales: Should they be allowed to submit bids? If so, under what conditions? We derive properties of an optimal sale procedure and show that it must be biased against insiders. Specifically, it should be harder for insiders to win with low bids than for outsiders. We show that the “market tests” that are routinely required in bankruptcy sales are suboptimal since they treat all potential buyers alike and forgo the benefits of biasing the procedure against insiders.
Price-Matching Guarantees with Endogenous Search: A Market Experiment Approach

Abstract Price-matching guarantees are commonly used by sellers as promises to match the lowest price for an item that a customer can find elsewhere. In this paper, we use a market experiment approach to examine buyer search as well as sellers’ pricing decisions in the presence versus absence of Price-Matching Guarantees. We use student subjects as well as real consumers in an interactive laboratory setting to trade with each other, acting as buyers and sellers. Our findings from two experiments indicate that when searchers’ demand is more elastic than non-searchers, PMGs can result in more intense price competition, even when sellers are symmetric. Price-Matching sellers benefit from converting more consumers into searchers who buy a larger quantity at a lower price. The lower (average) market prices also benefit buyers. These implications should be of great interest to researchers, practitioners, and public policymakers.
Equilibrium Underdiversification and the Preference for Skewness

We develop a one-period model of investor asset holdings where investors have heterogeneous preference for skewness. Introducing heterogeneous preference for skewness allows the model's investors, in equilibrium, to underdiversify. We find support for our model's three key implications using a dataset of 60,000 individual investor accounts. First, we document that the portfolio returns of underdiversified investors are substantially more positively skewed than those of diversified investors. Second, we show that the apparent mean-variance inefficiency of underdiversified investors can be largely explained by the fact that investors sacrifice mean-variance efficiency for higher skewness exposure. Furthermore, we show that idiosyncratic skewness, and not just coskewness, can impact equilibrium prices. Third, the underdiversification of investors does not appear to be coincidentally related to skewness. Stocks most often selected by underdiversified investors have substantially higher average skewness--especially idiosyncratic skewness--than stocks most often selected by diversified investors. , Oxford University Press.
Maximum Likelihood Estimation for a First-Order Bifurcating Autoregressive Process with Exponential Errors

. Exact and asymptotic distributions of the maximum likelihood estimator of the autoregressive parameter in a first-order bifurcating autoregressive process with exponential innovations are derived. The limit distributions for the stationary, critical and explosive cases are unified via a single pivot using a random normalization. The pivot is shown to be asymptotically exponential for all values of the autoregressive parameter.
Privacy Torts: Unreliable Remedies for LGBT Plaintiffs

In the United States, both constitutional law and tort law recognize the right to privacy, understood as legal entitlement to an intimate life of one’s own free from undue interference by others and the state. Lesbian, gay, bisexual, and transgender ("LGBT") persons have defended their interests in dignity, equality, autonomy, and intimate relationships in the courts by appealing to that right. In the constitutional arena, LGBT Americans have claimed the protection of state and federal privacy rights with a modicum of well-known success. Holding that homosexuals have the same right to sexual privacy as heterosexuals, Lawrence v. Texas symbolizes the possibility of victory in the courts for LGBT Americans seeking privacy in intimate life. In the U.S. tort arena, LGBT plaintiffs have claimed violations of their privacy rights and have sometimes won. As detailed throughout this Article, LGBT plaintiffs have accused such defendants of prying, spying, insulting or harassing them, or disclosing their birth sex, sexual orientation, or medical information without authorization. Lawsuits have framed the violations experienced by LGBT claimants as one or more of the four privacy torts Dean William L. Prosser distinguished and enshrined in the Second Restatement of Torts. LGBT plaintiffs relying on Prosser’s common law tort remedies have not been as successful as some would have predicted based on a general understanding of the torts and their superficial appeal. The common law of torts has yet to generate its Goodridge or Lawrence. In this Article I analyze cases in which LGBT plaintiffs have alleged one or more of Prosser’s four common law privacy tort offenses on facts that expressly involve their sexual orientations or gender identities. I argue that plaintiffs’ lawyers in LGBT issues-related cases implicitly challenge the integrity of Prosser’s formal taxonomy. LGBT issues-related cases may not strain Prosser’s taxonomy any more than other privacy tort cases, but this body of cases exposes the limitations of Prosser’s distinctions on particularly poignant and compelling facts. I argue further that the theoretically promising invasion of privacy torts have not been especially useful to LGBT plaintiffs seeking relief in cases related to their sexual orientations or identities. For example, the invasion of privacy tort has not reliably vindicated the complex interest LGBT plaintiffs understandably assert in what I term “selective disclosure” of their sexual orientations or identities. I suggest that recent success in the LGBT population’s historic quest for equality and inclusion potentially undercuts the already tenuous practical utility of the invasion of privacy tort. Courts may fail to discern that sexual orientation and sexual identity-related privacy protection is warranted for LGBT individuals if, they believe there has been a significant reduction in violence, social stigma, and discrimination associated with open LGBT status.
The Incest Horrible: Delimiting the Lawrence v. Texas Right to Sexual Autonomy

Is the criminalization of consensual sex between close relatives constitutional in the wake of Lawrence v. Texas and Obergefell v. Hodges? Justice Scalia thought not. The substantive due process landscape has changed dramatically in response to the LGBTQ movement. Yet, when a girl in a sexual relationship with her father recently revealed in an anonymous interview with New York Magazine that they were planning to move to New Jersey, one of the only two states where incest was legal, the New Jersey legislature introduced with unprecedented speed a bill criminalizing incest. But who has the couple harmed? The very mention of incest conjures fears of deformed babies, yet when people think about sex in most other contexts, procreation is the last thing on their minds. Steeped in a nearuniversal incest taboo, judges are unlikely to strike down incest legislation any time soon. But they must still respond to any constitutional challenge in the language of the law. This Article evaluates the constitutionality of criminalizing sexual relationships between first-degree relatives. First, the Article situates incest statutes within the sociological incest taboo and the biological mechanism known as the Westermarck Effect. It asserts that incest laws are counter-natural exercises in socio-biological engineering. Second, it argues that incest cannot be excluded from the fundamental rights to sexual intimacy and reproduction. Third, it questions the constitutional sufficiency of a range of possible government interests, and the tailoring of existing laws to those interests. Fourth, it proposes revised statutory language that would prohibit certain incestuous relationships without violating the constitution. The Article concludes by suggesting that norms against incest, like norms against same-sex relationships, can change and may already be changing. * I offer my sincerest and deepest gratitude to Professors Michael Klarman and Laurence Tribe. Without their teaching, guidance, and invaluable comments, this paper would not have been possible. An early draft of this Article was awarded Harvard Law School’s prize for best paper on an LGBTQ legal issue for 2015. ** Disclaimer: the views and opinions expressed in this Article are solely the author’s own, and do not reflect, and are not in any way associated with, any institutions, organizations, or business entities with which the author has been, is currently, or will be affiliated.
Maturity Rationing and Collective Short-Termism

Financing terms and investment decisions are jointly determined. This interdependence links firms’ asset and liability sides and can lead to short-termism in investment. In our model, asymmetric information frictions increase with the investment horizon, such that financing for long-term projects is relatively expensive or even rationed. In response, firms whose first-best investment opportunities are long-term may distort their investment towards second-best projects of shorter maturities. This worsens financing terms for firms with shorter maturity projects, inducing them to distort their investment as well. In equilibrium, investment is ineciently short-term. Moreover, equilibrium asset-side adjustments by firms amplify shocks and, while privately optimal, may be socially undesirable.
Measuring Financial Literacy

Financial literacy (or financial knowledge) is typically an input to model the need for financial education and explain variation in financial outcomes. Defining and appropriately measuring financial literacy is essential to understand educational impact as well as barriers to effective financial choice. This article summarizes the broad range of financial literacy measures used in research over the last decade. An overview of the meaning and measurement of financial literacy is presented to highlight current limitations and assist researchers in establishing standardized, commonly accepted financial literacy instruments.
The Dynamics of Immigration and Wages

Presents a new approach to the analysis of the relationship between immigration and wages based on a panel vector autoregression.
Estimating the effects of democratization in African countries: A simultaneous equations approach

Abstract This paper analyzes impacts of democratization in Africa, including effects of improved, property rights on economic growth and of greater political participation on civil violence. Democracy is endogenous to economic growth and other outcomes, which hampers most, empirical analysis. This paper uses a minimum distance simultaneous equations estimation to, account for all endogenous variables while including time and country fixed effects. The method yields a test of fit of the model, which is strong. Results indicate a positive significant effect of property rights institutions on economic growth in the presence of time and country fixed effects. Estimates also show a negative significant effect of political participation on civil violence and, strong effects of aid per capita on both economic growth and civil violence.
Sex Discrimination in Restaurant Hiring: An Audit Study

In an audit study of sex discrimination in hiring, comparably matched pairs of men and women applied for jobs as waiters and waitresses at restaurants in Philadelphia. In high-price restaurants (where earnings are higher), job applications from women had an estimated probability of receiving a job offer that was lower by about 0.4, and an estimated probability of receiving an interview that was lower by about 0.35. Both estimated differentials are statistically significant. Additional evidence suggests that customer discrimination partly underlies the hiring discrimination.
Municipal electric utilities’ role in telecommunications services

Abstract Municipal electric utilities (MEUs) are increasingly expanding into telecommunications services. Such entry is interesting in several respects. First, MEUs marry two potential pathways for the growth of telecommunications access infrastructure and services: public ownership of last-mile facilities and electric power company expansion into telecommunications. Second, municipalities are key early adopters of next generation access technology in the form of both fiber-to-the-home (FTTH) and broadband wireless (e.g., WiMax) systems. Third, MEUs are at the nexus of the debate over the proper role for local government in promoting broadband Internet access. Most homes in the United States are served by investor-owned local telephone and cable television providers, using company-owned wireline infrastructure. These providers have generally opposed municipal entry, arguing that it will crowd out private investment and represents an unfair and less efficient form of competition. A number of states have acted to limit—or in some cases—to promote such entry. Before engaging in this debate, it is necessary to have a clearer picture of the current state of municipal entry and the local demographic, cost, industry, and policy factors that influence its evolution. To address this need, this paper reports the results of an empirical analysis of MEUs that provide communications services to the public. This analysis shows that MEUs are more likely to offer such services if they also provide internal communication services to support their electric utility operations (scope economies); are relatively close to metropolitan areas (lower backhaul costs); are in markets with fewer competitive alternatives (cable modem and DSL service availability limited); and which are less encumbered by regulatory barriers to entry (in communities in states which do not restrict municipal entry into telecommunication services). Of these results, the competitive impacts are the least straight-forward to interpret, suggesting richer dynamics and avenues for further research.
What (Really) Accounts for the Fall in Hours After a Technology Shock

Abstract The paper asks how state of the art DSGE models that account for the conditional response of hours following a positive neutral technology shock compare in a marginal likelihood race. To that end we construct and estimate several competing small-scale DSGE models that extend the standard real business cycle model. In particular, we identify from the literature six different hypotheses that generate the empirically observed decline in hours worked after a positive technology shock. These models alternatively exhibit (i) sticky prices; (ii) firm entry and exit with time to build; (iii) habit in consumption and costly adjustment of investment; (iv) persistence in the permanent technology shocks; (v) labor market friction with procyclical hiring costs; and (vi) Leontief production function with labor-saving technology shocks. In terms of model posterior probabilities, impulse responses, and autocorrelations, the model favored is the one that exhibits habit formation in consumption and investment adjustment costs. A robustness test shows that the sticky price model becomes as competitive as the habit formation and costly adjustment of investment model when sticky wages are included.
Credit Rating Agencies in Capital Markets: A Review of Research Evidence on Selected Criticisms of the Agencies:

This study assesses the validity of widespread criticisms of the large, “nationally recognized” credit rating agencies (CRAs). The accounting scandals of 2000-02, in particular the highly publicized failure of Enron in December 2001, led many to question their competence and the value of their ratings. This paper evaluates important criticisms of the CRAs discussed in a recent Securities and Exchange Commission (SEC) staff report by using evidence from empirical research studies, and suggests many promising subjects for future research. The analysis given in this paper, and the results of the suggested research (when available), should be of particular interest to lawmakers and regulators who are responsible for determining whether and to what extent the credit rating industry should be subject to statutory and regulatory oversight. Although little rigorously gathered empirical evidence supports the criticisms, many issues remain unresolved. Powerful tests related to potential conflicts of interest and al...
Urban Growth in Uzbekistan during the 1990s

(2001). Urban Growth in Uzbekistan during the 1990s. Post-Soviet Geography and Economics: Vol. 42, No. 4, pp. 266-304.
Interfirm Relationships and Informal Credit in Vietnam

Trading relations in Vietnam's emerging private sector are shaped by two market frictions: the difficulty of locating trading partners and the absence of legal enforcement of contracts. Examining relational contracting, we find that a firm trusts its customer enough to offer credit when the customer finds it hard to locate an alternative supplier. A longer duration of trading relationship is associated with larger credit, as is prior information gathering. Customers identified through business networks receive more credit. These network effects are enduring, suggesting that networks are used to sanction defaulting customers.
The Elaboration of a French Court Doctrine on International Commercial Arbitration: A Study in Liberal Civilian Judicial Creativity

The task of the present article is to examine the historical evolution and current status of the French judicial doctrine on international commercial arbitration. It endeavors to compare the international doctrine with the French domestic law on arbitration and to illustrate briefly its conformity to the provisions of the international conventions on arbitration to which France is a party. Its chief design, however, is to concentrate upon the court decisions themselves, underscoring their progressive quality and pointing to their systemic implications.
Risk aversion and expected-utility theory: A calibration exercise

Rabin (Econometrica 68(5):1281–1292, 2000) argues that, under expected-utility, observed risk aversion over modest stakes implies extremely high risk aversion over large stakes. Cox and Sadiraj (Games Econom. Behav. 56(1):45–60, 2006) have replied that this is a problem of expected-utility of wealth, but that expected-utility of income does not share that problem. We combine experimental data on moderate-scale risky choices with survey data on income to estimate coefficients of relative risk aversion using expected-utility of consumption. Assuming individuals cannot save implies an average coefficient of relative risk aversion of 1.92. Assuming they can decide between consuming today and saving for the future, a realistic assumption, implies quadruple-digit coefficients. This gives empirical evidence for narrow bracketing.
Financial Development and the Cash Flow Sensitivity of Cash

Prior research posits that market imperfections and the lack of institutions that protect in vestor interests create a divergence between the cost of internal and external funds, thereby constraining firms' ability to fund investment projects through external financing. Finan cial constraints force firms to manage their cash flows to finance potentially profitable projects. A related stream of research documents that financial constraints due to costly external financing are more pronounced in underdeveloped financial markets. We exam ine the influence of financial development on the demand for liquidity by focusing on how financial development affects the sensitivity of firms' cash holdings to their cash flows. Us ing firm-level data for 35 countries covering about 12,782 firms for the years 1994-2002, we find the sensitivity of cash holdings to cash flows decreases with financial development. We also consider additional implications of firms' cash flow sensitivity of cash with respect to firm size and business cycles. Overall, we provide new cross-country evidence of the role of financial development on financial constraints.
Physicians' conflicts of interest. The limitations of disclosure.

Conflicts between physicians' personal financial interests and those of their patients are now becoming a prominent issue in U.S. health care policy and medical ethics. Physicians' conflicts of int...
A House Divided: Same-Sex Marriage and Dangers to Civil Rights

At present, the United States is divided on the issue of same-sex marriage: some states have permitted it while others have prohibited it. This article asks whether or not the country can continue to be divided on the issue and concludes that it cannot. The article reviews the efforts that have been made around the world both to legalize and to prohibit same-sex marriage. The debate over same-sex marriage is compared to the “house divided” metaphor and slavery, discussing how recent events illustrate this conflict and the incompatibility of the two sides. Highlighted in particular are examples that demonstrate how religious liberty is in jeopardy. The article argues for protecting marriage between a man and a woman as a fundamental civil and human right in order to protect human dignity and establish a foundation of virtue upon which to base individual rights and liberties as well as uphold the separation of powers inherent in the American constitutional form of government. The article concludes that dual-gender and same-sex marriages will inevitably clash and cannot coexist for any significant amount of time. Efforts to mitigate this conflict should be taken now, and the institution of marriage should be shored up.
The long-run equity risk premium

Abstract Based on a survey of US Chief Financial Officers (CFOs), we present expectations of the equity risk premium measured over a 10-year horizon relative to a 10-year US Treasury bond. This multi-year survey has been conducted each quarter from June 2000 to June 2005. Each quarter the survey also provides measures of cross-sectional disagreement about the risk premium, skewness, and a measure of individual uncertainty. The individual uncertainty is deduced from the 80% confidence interval that each respondent provides for his or her risk premium assessment. We also present evidence on the determinants of the long-run risk premium. Our analysis suggests there is a positive correlation between the ex ante risk premium and real interest rates as reflected in Treasury Inflation Indexed Notes.
Catching Up in Industrialized Countries: A Disaggregated Study *

In this study we test whether catching up, the hypothesis that there is technological spillover from leaders to followers, is still important among industrialized countries. Since the USA is no longer the technological leader in many industries and since catching up, if it still exists, may not operate uniformly across different industries, a disaggregated study is more appropriate. A testable model is developed and a number of tests for the existence of catching up are performed. A major improvement on previous tests is that the level of technology is measured in terms of total factor productivity. The two major conclusions, which are quite robust, are that after 1970 there is no catching-up effect left in the tradables sector, while catching up is found for industries in the nontradables sector.
Are you my parent? Are you my child? The role of genetics and race in defining relationships after reproductive technological mistakes.

New reproductive technologies have blurred the line between traditional definitions of genetic parents and parents as caretakers; but as with most new technologies the law has not adequately evolved to take into account these new definitions and their consequences. The lack of clearly defined parents leaves adults with ambiguous roles when the child produced to have has different genetic ties than intended. Racial differences between parents and children further confuses traditional perceptions of parenthood. This paper will discusses the issues confronting families whose attempts to use new reproductive technologies to have genetic children have been thwarted by errors, leading to children being born to the "wrong" parents. I argue that parenting is more than a genetic connection to a child, yet should be a starting point for determining parenthood, considering the emotional consequences for those that consider themselves to be "parents." I include background information on reproductive technologies, the Supreme Court's views on the rights of parents and who is considered to be a "parent," and on the impact of race on new reproductive technologies and the definitions of parent. I discuss case studies about "wrong" genetic material, both gametes and embryos, being used to create children, and how this affects all of the people who wish to be considered parents, especially when there are racialized aspects to the "wrongness". Also, I discuss policy implications, stating how issues of conflicting parents such as in the case studies could be resolved.
To Make a Difference: Dean as Producer

As I look at my fifth year as Dean of Hamline University School of Law, I am often struck by the dissonance between my professional life, as a lawyer and law professor, and my administrative life, as a dean within a small university. In both roles, I remain driven to make a difference for the individuals I serve and the broader community in which we live. But these roles have never sat comfortably, one with the other. I am a product of my unique practice and academic experience. An entertainment lawyer by disposition, my field includes a broad array of intellectual property law and the arts or business organizations which exploit these rights. Perhaps blinded by my professional background, I believe that to make a difference, we must learn from these fields to make a difference for our schools, students, institutions, and communities. As I prepare for my last year as Dean of Hamline, this essay allows me the opportunity to reflect on how to make that difference for both our students and our institutions.