A finite mixture analysis of beauty-contest data using generalized beta distributions

This paper introduces a mixture model based on the beta distribution, without pre-established means and variances, to analyze a large set of Beauty-Contest data obtained from diverse groups of experiments (Bosch-Domènech et al. 2002). This model gives a better fit of the experimental data, and more precision to the hypothesis that a large proportion of individuals follow a common pattern of reasoning, described as Iterated Best Reply (degenerate), than mixture models based on the normal distribution. The analysis shows that the means of the distributions across the groups of experiments are pretty stable, while the proportions of choices at different levels of reasoning vary across groups.     

The role of frames,numbers and risk in the frequency of cooperation

We report on a simple experiment that addresses three factors in the frequency of cooperation: (1) framing, (2) the number of players and (3) the perceived risk of cooperating. We work with a (two-player) Prisoner’s Dilemma and with a three-player, two-strategy Public Good Game. We also consider a payoff schedule isomorphic with the latter but in a nonsocial setup. These themes have been separately studied by a large number of experimental papers, using diverse methodologies. Our experiment targets them in a common, clear-cut framework that minimizes confusion. We find three strong effects (a) framing; (b) the number of players (there is less cooperation in the three-person games than in the two-person ones); (c) the neutralization of risk (about 50% of participants cooperate when risk is neutralized). Both (a) and (c) go in the expected direction, but, in all three cases, the strength of the effect is surprising. Cooperators appear to be more motivated by efficiency or by Kantian reasoning than by altruism.     

Upskilling y cambios distributivos en la cadena global de valor de la industria electrónica

La cadena global de valor de la industria electrónica es una de las más complejas de la economía internacional. Utilizando las tablas input‐output internacionales de 2000‐2014, se infieren las contribuciones individuales a dicha cadena para observar cómo la crisis de 2007–2008 afectó a su evolución y cartografiar las interacciones internacionales. Se observa un aumento de la deslocalización hasta el estallido de la crisis y después China y otras economías de Asia oriental se convierten en un epicentro de creación de valor. También se observa una profunda transformación de las tecnologías de producción, acompañada de un proceso de mejora del perfil de la cualificación (upskilling).     

Underground land values

Very often, underground land values appear to be a missing factor in land economics and planning, both at academic and practitioner level. In general, ignoring such a variable and potentially valuable resource may seriously delay any underground land policy to be undertaken. It can lead the public as well as the private sector to a short-sighted over-consumption of shallow subsurface space and under-consumption of deep underground space. Considering subsurface land values in economic studies of underground projects increases their reliability for the decision-making process. This paper shows a theoretical and empirical way to estimate underground land values, with applications.     

Job contact networks

Many workers hear about or obtain their jobs through friends and relatives. The aim of this paper is twofold. First, we relate both individual and aggregate labor market outcomes to the network structure of personal contacts. Second, we study strategic network formation. To this purpose, we develop a model specifying at the individual level both the decision to form contacts with other agents, and the process by which information about jobs is obtained and transmitted. We show that equilibrium networks always exist and that only moderate levels of network asymmetry can be sustained at equilibrium. Also, we establish a general non-monotonicity result on information flow and unemployment with respect to network size in symmetric networks.     

Partially revocable commitments in a negotiation with a deadline

[Fershtman, C., Seidmann, D., 1993. Deadline effects and inefficient delay in bargaining with endogenous commitment. Journal of Economic Theory 60, 306–321] showed that the presence of an irrevocable endogenous commitment with a fixed deadline results in the so called deadline effect. In this paper we analyse the effects of partially revocable endogenous commitments of a seller in an infinite horizon negotiation in which a deadline can arise with positive probability. We obtain that when the commitment possesses a sufficiently large revocable part not only the inefficient delays disappear and an immediate agreement is reached but also the commitment has a value. On the other hand, when the commitment possesses a minimum amount of irrevocability, there exist inefficient delays in equilibrium and the commitment continues to having a value.     

The auctioneerless economics of Axel Leijonhufvud: the 'dark forces of time and ignorance' and the coordination of economic activity

Leijonhufvud focuses his analysis on the coordination of economicactivities. In a world tossed and torn by ever new episodesof instability, macroeconomic theory must finally admit andproperly analyse the limits of collective and individual rationality.Starting from the system's coordination, Leijonhufvud underlinesthe crucial role of information, learning and institutions.Coming to individual choice, he unremittingly rejects unboundedrationality. Methodologically, however, his use of general equilibriumas a benchmark seems to have conditioned his analysis. In bringingto light the ‘dark forces of time and ignorance’,Leijonhufvud himself seems to have fallen under the influenceof the siren represented by general equilibrium theory.     

Estimating the aggregate value of forest recreation in a regional context

Public goods and services supplied by nature require active government intervention to ensure their provision. Nevertheless, prior to the implementation of any policy, planners should compare the costs and benefits caused by their decisions, a difficult task when policies and regulations are developed at a regional or national level (i.e. fire and pest control policies included in forests national plans), and their impacts spread out across a large number of people and ecosystems. In this context, although environmental economics has provided the necessary information for decision-making guidance related to site-specific interventions, little attention has been given to the information requirements of policies affecting large geographical areas, that is, to the estimation of an aggregate value for a specific region. The purpose of this paper is to improve current applications, inferring the recreational value of forests through the implementation of a discrete-count linked model including all the forest areas in the region of Mallorca (Spain).     

A contingent grouping approach for stated preferences

This paper introduces the theoretical and statistical foundations of contingent grouping, a variant of attribute-based stated preference methods, and checks for its implementation difficulty. Respondents are asked to simply group a number of alternatives as better or worse than a baseline or the status quo situation. A Monte Carlo approach shows that it performs statistically better than contingent choice according to the MSE criterion, and worse than contingent ranking, while a case study suggests that contingent grouping is less difficult to answer than contingent ranking. Furthermore, contingent choice shows a greater consistency in preferences with contingent grouping than with contingent ranking.     

Credibility for Severity Revisited

Abstract

It is basic actuarial knowledge that the pure premium of an insurance contract can be written as the product of the expected claim number and the expected claim amount. Actuaries use credibility theory to incorporate the contract’s individual experience into this calculation in a statistically optimal way. For many years, however, the use of credibility was limited to the frequency component. Starting with the paper by Hewitt (1971), there have been various suggestions as to how credibility theory also can be applied to the severity component of the pure premium. The latest such suggestion, Frees (2003), revived the interest in the problem.

In this paper, we review four different formulas incorporating frequency and severity into credibility calculations. We then compare by simulation which one is most accurate at predicting a contract’s next-year outcome. It is found that the classical formula of Bühlmann (1967) is as good as the other ones in many cases. Alternatives, however, may offer easier analysis of the separate effects of frequency and severity on the premium.

We also show that all the formulas reviewed in this paper stem from the same minimization problem, and we present a general, integrated, solution. At the same time, we complete Gerber (1972) by providing a proof to the main result of this paper and by stating required additional assumptions.