Consistent collusion-proofness and correlation in exchange economies

We present a feasible strategic market mechanism with finitely many agents whose Nash, semi-strong Nash and coalition-proof Nash equilibria fully implement the Walrasian equilibria. We define a strategic equilibrium concept, called correlated semi-strong equilibrium, and show that the Walrasian equilibria can be implemented by these equilibria, and also by the coalition-proof correlated equilibria of our mechanism. We show that these two concepts, suitably modified with transfers, fully implement the Pareto optimal allocations.     

Joint Private Safety Standards and Vertical Relationships in Food Retailing

In recent years, it has become common for downstream firms to impose Joint Private Standards (JPSs) on upstream producers. In this paper, we present an original model of a vertical relationship, explaining the incentives for and the effects of such JPSs with an example concerning food safety. The risk of a food crisis is endogenously determined. Using the concept of cartel stability ( d’Aspremont et al., 1983 ), it is shown that liability rules are crucial for JPSs to emerge, that a JPS can become a minimum quality standard, and that a more stringent JPS does not necessarily reduce the market risk.     

First steps in developing an automated aerial surveillance approach

Partners in emerging risk representative application (ERRA) A3 ‘Emerging risks related to the industrial use of automated and un-manned surveillance of industrial infrastructure’ develop a set of new technologies to automate aerial surveillance by collecting images with a drone and automatically processing them to identify threats to buried oil and gas transmission pipelines. Progress on two aspects is presented, on one hand, technology development, and on the other hand, dealing with the emerging risks associated with these new technologies. Technology development covers three functions assembled in a workflow:

? Image collection via a light drone with an autonomous navigation system and image geographical positioning system (GPS) referencing capabilities.

? Image automated pre-processing: image assembly and georeferencing.

? Threat detection: image analysis by change detection is performed using Definiens software for identifying external interferences like construction work and excavations threatening the pipeline.

This set of technologies is perceived as an emerging risk that is appraised from several points of view:

? Technology: unmanned aerial vehicle (UAV), image georeferencing and assembly, change detection for threat identification.

? Human and Organisational and Communication: investigate the acceptance of this technology by the population and local authorities.

? Regulatory: check conditions that will ensure acceptance of operational use of light drones in some European countries.

? This general approach is needed to ensure both technology optimisation and the shortest path to reliable practical applications.     

Kirsten Schraeder-Frechette and Laura Westra. Technology and Values

Teaching Business Ethics -     

Inference on Self‐Exciting Jumps in Prices and Volatility Using High‐Frequency Measures

Dynamic jumps in the price and volatility of an asset are modelled using a joint Hawkes process in conjunction with a bivariate jump diffusion. A state‐space representation is used to link observed returns, plus nonparametric measures of integrated volatility and price jumps, to the specified model components, with Bayesian inference conducted using a Markov chain Monte Carlo algorithm. An evaluation of marginal likelihoods for the proposed model relative to a large number of alternative models, including some that have featured in the literature, is provided. An extensive empirical investigation is undertaken using data on the S&P 500 market index over the 1996–2014 period, with substantial support for dynamic jump intensities—including in terms of predictive accuracy—documented. Copyright © 2016 John Wiley & Sons, Ltd.     

Money matters: an axiomatic theory of the endowment effect

We develop a framework that allows us to state precisely the relationship between leading concepts of the theoretical and empirical research on reference-dependent preferences, namely the status quo bias, the endowment effect and the willingness to accept (WTA)/willingness to pay (WTP) gap. We show that a monetary version of the status quo bias is a necessary condition for the WTA/WTP gap, and show how to factor out the part of the gap due to income effects from the part of the gap due to the endowment effect. As a byproduct, we show that reference-dependent phenomena are generated by reference-independent factors, i.e., an underlying reference-independent preference relation the properties of which are discussed at length.     

Value‐based labels for fresh beef: an overview of French consumer behaviour in a BSE crises context

In the last decade, the French beef industry has been through two major health scares related to bovine spongiform encephalopathy. This paper describes and discusses changes in beef supply in France from the consumer's perspective. The authors review the initiatives implemented in each crisis and show that the immediate effects (slump in consumption), however spectacular, were not the most lasting effects. By contrast, responses from the industry and the authorities brought about a far‐reaching change in practices by requiring new instruments to be used (traceability). Yet the information conveyed by this innovation cannot readily be appropriated by consumers who are not conversant with the characteristics of beef production systems.     

The Diversification Puzzle: Revisiting the Value Impact of Diversification for UK Firms

Abstract:  The literature on value impact of diversification decisions has focused on US firms and has examined industrial rather than geographic diversification . This study exploits the Lang and Stulz (1994) , Berger and Ofek (1995) and Bodnar et al. (1999) methodologies and controls for form of diversification in assessing value impact for a sample of UK firms, for the period 1996-2000. Using an adjusted value metric that controls for industry effects, we report a significant and perverse geographic discount of 14%, and no systematic industrial value impact, suggesting that sector characteristics may be a significant driver of diversification choice for UK firms.