Incentive Effects of Rate-of-Return Regulation in Hong Kong: Reply

Journal of Regulatory Economics -     

The measurement of Poverty: An experimental questionnaire investigation

We re-examine some of the standard axioms used in the literature on poverty measurement. Using a sample of 486 students from Australia, Israel and the USA we investigate the extent to which individuals' perceptions of poverty correspond to the axioms. We find that axioms such as anonymity, growth of the poor and monotonicity are resonably well supported. However there is very little support for the focus axiom and the principle of transfers was the least well supported of the eight specific criteria for poverty measurement that we examined.     

A Bayesian Approach to Uncertainty Aversion

The Ellsberg paradox demonstrates that people's beliefs over uncertain events might not be representable by subjective probability. We show that if a risk averse decision maker, who has a well defined Bayesian prior, perceives an Ellsberg type decision problem as possibly composed of a bundle of several positively correlated problems, she will be uncertainty averse. We generalize this argument and derive sufficient conditions for uncertainty aversion.     

Three cheers (sort of) for carbon taxes: a review of recent books on climate change economics and policy

Business Economics -     

Analysis of travel behavior in Arab communities in Israel: a comparison of household surveys

This paper analyzes the main characteristics of travel behavior by the Arab minority community in Israel and discusses two issues related to household travel surveys: data collection among minorities and under-reporting of mid-day trips.Household travel surveys are generally designed and conducted for the majority population and, therefore, lack a proper accounting of minorities and miss many of their less-frequent trips. An alternative approach to conducting household surveys is presented, with the aim of improving data quality for transportation planning. The survey was designed for and conducted in three Arab towns in Israel. The main improvement of the survey involves better interaction between interviewer and interviewee, which should materialize into a relaxed environment that allows for obtaining detailed, reliable results within a reasonable amount of time.The results of the survey employing the alternative approach were compared to a sub-sample of the same towns taken from a regional survey conducted by the regional planning agency at the same time. The paper presents simple statistics on the main variables for each survey. Significant differences are found in the two data sets, mostly regarding the frequency of less frequent, non-home-based trips. A plausible explanation for these differences relates to the more detailed and improved data collected in the new survey.     

Evolution of Corporate Law and the Transplant Effect: Lessons from Six Countries

The pattern of legal change in countries that have their legalsystems transplanted from abroad differs markedly from countriesthat develop their own systems, irrespective of the legal familyfrom which their laws come. In "transplant" countries, law oftenstagnates for long periods of time; when change takes place,it tends to be radical, if not erratic. External models remaindominant even years after the law was transplanted. Althoughthere is some evidence that transplant countries have engagedin comprehensive legal reforms in response to the pressuresof globalization, it is still too early to judge whether thesenew changes can be taken as a sign that the legal systems inthese countries have started a process of endogenous legal evolution.      

Values as determinants of motivation: Tourism and other career choices

Neuman, Yoram, Abraham Pizam and Arie Reichel, Values as Determinants of Motivation: Tourism and Other Career Choices. Annals of Tourism Research 1980, VII (3): 428–442. This study examined the predictive validity of work values in explaining motivational patterns of three groups of career preparation differing in their occupational specificity: Tourism/Hospitality, Management, and Liberal Arts. It was found that the higher the occupational specificity of a career preparation the higher is the predictive validity of work values in explaining work motivations. As predicted, the best relationships between values and motivation was found in the maximally specified occupation, namely: tourism/hospitality students, followed by management students with the liberal arts students — the most flexible occupational group — having the lowest relationship between values and motivation. The implications of the findings for employee selection and motivation prediction in the tourism/hospitality industry are discussed.     

Alternative Solutions to Underinvestment, Under Equity and Credit Rationing

We compare alternative solutions to underinvestment (UI) problems in firms subject to limited access to equity markets, interest ceilings, and constraints on the volume of debt. Collaterals (assets or compensating balances) and credit insurance ('regular' or 'outcome' insurance whereby the premium is paid at the end of the insurance period) are compared on the basis to their costs and their effective use of financial sources. It is shown that when there is no moral hazard problem, credit insurance is the most effective instrument. Otherwise, 'outcome' insurance program is the most effective one.     

On-Line Portfolio Selection Using Multiplicative Updates

We present an on-line investment algorithm that achieves almost the same wealth as the best constant-rebalanced portfolio determined in hindsight from the actual market outcomes. The algorithm employs a multiplicative update rule derived using a framework introduced by Kivinen and Warmuth. Our algorithm is very simple to implement and requires only constant storage and computing time per stock in each trading period. We tested the performance of our algorithm on real stock data from the New York Stock Exchange accumulated during a 22-year period. On these data, our algorithm clearly outperforms the best single stock as well as Cover's universal portfolio selection algorithm. We also present results for the situation in which the investor has access to additional "side information."