Some Insights on Religion from Public Goods Economics

This paper provides a theoretical discussion on what analytical insight is gained by viewing religion as both a pure and impure public good. It suggests that organized religion converts a public good into an excludable club good and can be viewed as providing both an access regime for this club good as well as acting as an intermediary. Interestingly, this drives a wedge between the ardent and moderate adherents of a religion. It also presents an analysis of trust in social relationships when organized religion works to provide a credible signal of trustworthiness.     

Improving portfolio diversification: Identifying the right baskets for putting your eggs

We measure the economic value of diversification for international multiasset investment strategies. This study implements five existing diversification measures and proposes a novel measure of diversification, the unsystematic risk ratio (URR). Only the URR and the effective number of bets measures predict the future risk‐adjusted performance. These relations are robust to the choice of investment horizon and degree of relative risk aversion. The diversification benefits are larger for the frontier and emerging markets than for the developed markets, for multiasset strategies than for single asset class strategies, and for the pre‐crisis and post‐crisis periods than for the financial crisis period.     

Economic benefits of using realized covariance forecasts in risk-based portfolios

This article examines the economic benefit of using the realized covariance matrix forecasts, for constructing the risk-based portfolios. We use the two-scale realized covariance estimator (TSC), the jump robust two-scale realized covariance estimator (RTSC) and the realized bipower covariance estimator (BPC), to forecast the daily realized covariance matrix. Using these covariance matrix forecasts, we implement three risk-based portfolios: the global minimum variance portfolio, the equal risk contribution portfolio and the most diversified portfolio. There is evidence that the portfolio performance improves by using TSC or RTSC estimators as compared to the daily-returns-based estimator. The performance gains are robust to the choice of risk-based portfolio strategy, the degree of investor’s relative risk-aversion, the market conditions and the choice of time intervals.     

Some Insights on Religion from Public Goods Economics

This paper provides a theoretical discussion on what analytical insight is gained by viewing religion as both a pure and impure public good. It suggests that organized religion converts a public good into an excludable club good and can be viewed as providing both an access regime for this club good as well as acting as an intermediary. Interestingly, this drives a wedge between the ardent and moderate adherents of a religion. It also presents an analysis of trust in social relationships when organized religion works to provide a credible signal of trustworthiness.     

See No Evil: The Effect of Communication Medium and Motivation on Deception Detection

The present study reports an experiment that examines the role of communication medium and liar motivation on deception detection. Participants were randomly assigned to one of two dyadic communication conditions, text-based, computer-mediated environment or face-to-face, and to one of two motivation conditions, high or low. Participants engaged in a discussion of four topics, in which one participant was deceptive during two topics and truthful during the other two. No main effect of communication medium or motivation level was observed. However, an interaction effect suggests that highly motivated liars interacting in a text-based, computer- mediated environment were the most successful in deceiving their partners. The implications of these results are discussed both in terms of the elimination of non- verbal cues, as well as the potential advantages to the motivated liar offered by text-based media.