The conservative equal costs rule, the serial cost sharing rule and the pivotal mechanism: asymptotic welfare loss comparisons for the case of an excludable public project

We examine the asymptotic behavior of two strategyproof mechanisms discussed by Moulin for public goods – the conservative equal costs rule (CER) and the serial cost sharing rule (SCSR) – and compare their performance to that of the pivotal mechanism (PM) from the Clarke–Groves family. Allowing the individuals’ valuations for an excludable public project to be random variables, we show under very general assumptions that expected welfare loss generated by the CER, as the size of the population increases, becomes arbitrarily large. However, all moments of the SCSR’s random welfare loss asymptotically converge to zero. The PM does better than the SCSR, with its welfare loss converging even more rapidly to zero.     

Optimal prepayment and default rules for mortgage-backed securities

We study the optimal stopping problems embedded in a typical mortgage. Despite a possible non-rational behaviour of the typical borrower of a mortgage, such problems are worth to be solved for the lender to hedge against the prepayment risk, and because many mortgage-backed securities pricing models incorporate this suboptimality via a so-called prepayment function which can depend, at time t, on whether the prepayment is optimal or not. We state the prepayment problem in the context of the optimal stopping theory and present an algorithm to solve the problem via weak convergence of computationally simple trees. Numerical results in the case of the Vasicek model and of the CIR model are also presented. The procedure is extended to the case when both the prepayment as well as the default are possible: in this case, we present a new method of building two-dimensional computationally simple trees, and we apply it to the optimal stopping problem.     

Taking,giving, and impure altruism in dictator games

We show that, if giving is equivalent to not taking, impure altruism could account for List’s (in Journal of Political Economy 115(3):482–493, 2007) finding that the payoff to recipients in a dictator game decreases when the dictator has the option to take. We examine behavior in dictator games with different taking options but equivalent final payoff possibilities. We find that recipients tend to earn more as the amount the dictator must take to achieve a given final payoff increases, a result consistent with the hypothesis that the cold prickle of taking is stronger than the warm glow of giving. We conclude that not taking is not equivalent to giving and agree with List (in Journal of Political Economy 115(3):482–493, 2007) that the current social preference models fail to rationalize the observed data.     

Optimal installation of renewable electricity sources: the case of Italy

Decisions in Economics and Finance - Starting from the model in Koch and Vargiolu (SIAM J Control Optim 59(4): 3068–3095, 2021), we test the real impact of current renewable installed power...     

The wage and non-wage costs of displacement in boom times: Evidence from Russia

This paper analyzes the costs of job loss over the years of a booming economy, 2003–2008, using unique data from the Russian Longitudinal Monitoring Survey. In addition to analyzing standard labor market outcomes, such as forgone earnings, employment, hours worked and wage penalties, our unique data set allows us to investigate additional non-wage costs of displacement, in particular, fringe benefits, the propensity to have an informal employment relationship or a temporary contract. We find that displaced individuals face large foregone earnings following displacement, which are heterogeneous across education and ownership type of firm from which the worker separated. There is no evidence of wage penalties for re-employed displaced workers. However, we find an increased probability of working in informal or temporary jobs if previously displaced and a reduction in the number of benefits.     

Null models of economic networks: the case of the world trade web

In all empirical-network studies, the observed properties of economic networks are informative only if compared with a well-defined null model that can quantitatively predict the behavior of such properties in constrained graphs. However, predictions of the available null-model methods can be derived analytically only under assumptions (e.g., sparseness of the network) that are unrealistic for most economic networks like the world trade web (WTW). In this paper we study the evolution of the WTW using a recently-proposed family of null network models. The method allows to analytically obtain the expected value of any network statistic across the ensemble of networks that preserve on average some local properties, and are otherwise fully random. We compare expected and observed properties of the WTW in the period 1950–2000, when either the expected number of trade partners or total country trade is kept fixed and equal to observed quantities. We show that, in the binary WTW, node-degree sequences are sufficient to explain higher-order network properties such as disassortativity and clustering-degree correlation, especially in the last part of the sample. Conversely, in the weighted WTW, the observed sequence of total country imports and exports are not sufficient to predict higher-order patterns of the WTW. We discuss some important implications of these findings for international-trade models.