Monotonizing empirical Bayes estimators for a class of of discrete distributions with monotone likelihood ratio

A procedure is given for the construction of a monotone estimator that dominates a given estimator for a class of discrete distributions with monotone likelihood ratio. This procedure is applied to some empirical Bayes estimators. Monte Carlo results are given that demonstrate the usefulness of monotonizing.     

Extraction of an Exhaustible Resource: The Effects on Investment of Several Parameters Being Subject to Uncertainty*

This article shows that the effect on investment of the introduction of uncertainty about the size of one parameter depends on what other parameters are simultaneously uncertain. Further, two parameters may be linked with positive or negative covariances. The covariances are here shown to have important effects on the investor, whether risk neutral or risk averse. Governments are advked to consider policies that affect the covariances of those parameters that are key influences on in vestment.     

Masculinity,Testosterone, and Financial Misreporting

We examine the relation between a measure of male CEOs’ facial masculinity and financial misreporting. Facial masculinity is associated with a complex of masculine behaviors (including aggression, egocentrism, riskseeking, and maintenance of social status) in males. One possible mechanism for this relation is that the hormone testosterone influences both behavior and the development of the face shape. We document a positive association between CEO facial masculinity and various misreporting proxies in a broad sample of S&P1500 firms during 1996–2010. We complement this evidence by documenting that a CEO's facial masculinity predicts his firm's likelihood of being subject to an SEC enforcement action. We also show that an executive's facial masculinity is associated with the likelihood of the SEC naming him as a perpetrator. We find that facial masculinity is not a measure of overconfidence. Finally, we demonstrate that facial masculinity also predicts the incidence of insider trading and option backdating.     

Identifying Price Reviews by Firms: An Econometric Approach

Price reviews are a potentially costly activity. A significant fraction of unchanged prices may stem from firms not reviewing prices, rather than from obstacles to changing prices per se, such as menu costs. In this paper, we disentangle these two causes of price stickiness by estimating an inflated ordered probit model on a panel of French manufacturing firms. The results point to a low frequency of price reviews, suggestive of the relevance of information costs as a determinant of the observed price stickiness. In view of the “inattentive producers” literature, pointing that the source of price rigidity matters, this is suggestive of a large real effect of monetary policy.     

SEQUENTIAL VOTING WHEN LONG ELECTIONS ARE COSTLY

This paper analyzes sequential voting in binary elections when voters are motivated by a desire both to elect their preferred candidate and to avoid a long and costly election. I find a unique equilibrium in which a voter's action depends both on the intensity of the voter's preferences as well as how well the candidates have done in earlier voting rounds. This equilibrium results in momentum in which voters are more likely to vote for the candidate currently in the lead. Furthermore, the probability a voter votes for a candidate is increasing in the size of the candidate's lead. As a consequence, a candidate is more likely to win the election if the candidate's stronger supporters vote earlier in the election.     

The rise and decline of European parliaments, 1188–17891

This article quantifies the activities of medieval and early modern parliaments. It traces the long‐term evolution of this European institution, and offers a first pass at analysing its impact on long‐term economic development. Starting in Spain in the twelfth century, parliaments gradually spread over the Latin west between 1200 and 1500. In the early modern period, parliaments declined in influence in southern and central Europe and further gained in importance in the Netherlands and Britain, resulting in an institutional ‘Little Divergence’ between 1500 and 1800. We discuss the background of this phenomenon in detail. Moreover, by analysing the effects of parliamentary activity on city growth we find that these differences in institutional development help to explain the economic divergence between north‐western and southern and central Europe.     

The Under-Exploitation of Natural Resources: A Model with Overlapping Generations*

It is well known that competitive markets may fail to generate an optimal rate of extraction of a natural resource-stock. The barrier to optimality may be uncertainty about tenure, commonality of property rights in the resource, or uncertainty about the extent of the resource. In all these cases, suboptimality takes the form of over-extraction. We draw attention to an additional source of suboptimality. In an economy with overlapping generations, the resource-stock plays the double role of repository of savings and source of productive inputs. The decline in the supply of the resource-stock may eventually force its price so high that it ceases to perform its second function. Extraction comes to an end even though the resource has a positive marginal productivity in producing consumption goods. This is inefficient, hence suboptimal. This time, however, suboptimality takes the form of under-extraction.     

Value Cores for Finite Agents*

The standard definition of the competitive equilibrium, at given prices, presents the difficulty that finite agents (i.e. agents with finite budget and production sets), and a fortiori coalitions of such agents, need not be price takers and will upset the equilibrium. Since 1963 an extensive literature has sprung up, which has dealt with the problem, essentially by considering infinite numbers of infinitesimal agents. The present article outlines two alternative approaches to deal with this problem, both of which, realistically, admit (a finite number of) finite agents and redefine the core in terms of the value structure of the economy, viz. prices in the presence of controls, and cost and revenue functions in their absence. It is shown that the notion of value core, here introduced, coincides with that of competitive equilibrium, which is formulated as a characteristic-function game.