Sport and common‐sense racial science

This paper confronts the salience of arguments that identify the racial basis of athletic ability. It is argued that these notions of racial athleticism are developed through the interaction between ideas and ways of thinking about human beings and racial groups, reflecting Gramsci's concept of ‘common sense’ that explores the complex correspondence between the presentation of fact and opinion, science and myth. The paper suggests that the mobilization of objective scientific method and subjective plural multiculturalist values within racial athleticism help reinforce its claims to logical validity and moral legitimacy. In response, it is argued that the presentation of the biological basis of race and integrity of cultural difference and particularity within a scientific, intuitive, and principled framework constitutes racial athleticism as a powerful common‐sense idea that cannot be easily dismantled by the simple counter‐presentation of alternative facts. Rather, it is suggested that a progressive response requires building an ethical critique that does not use the mantra of social constructionism to evade corporeality and understandings of embodied difference. It is asserted that the iniquitous applications and palatable racism that lurk beneath the reasonable façade of racial athleticism can only be uncovered through interrogating its common‐sense configuration and analytical weaknesses.     

Voluntary Contributions to a Mutual Insurance Pool

We study mutual‐aid games in which individuals choose to contribute to an informal mutual insurance pool. Individual coverage is determined by the aggregate level of contributions and a sharing rule. We analyze theoretically and experimentally the (ex ante) efficiency of equal and contribution‐based coverage. The equal coverage mechanism leads to a unique no‐insurance equilibrium while contribution‐based coverage develops multiple equilibria and improves efficiency. Experimentally, the latter treatment reduces the amount of transfers from high contributors to low contributors and generates a “dual interior equilibrium.” That dual equilibrium is consistent with the co‐existence of different prior norms which correspond to notable equilibria derived in the theory. This results in asymmetric outcomes with a majority of high contributors less than fully reimbursing the global losses and a significant minority of low contributors less than fully defecting. Such behavioral heterogeneity may be attributed to risk attitudes (risk tolerance vs risk aversion) which is natural in a risky context.     

A Re-Examination of the Market Reaction to Failed Mergers

This study examines the revaluation of shares surrounding the cancellation of mergers over the years 1976–1985. The results are first categorized according to the party cancelling the merger and then by subsequent merger activity. The results are as expected: target firms that become involved in merger activity, subsequent to the cancellation, experience positive cumulative prediction errors (CPEs). Targets that do not become involved in subsequent merger activity have CPEs that return to pre-merger announcement levels. These results do not vary when bidders or targets cancel the merger.     

Breaking Collusion in Auctions through Speculation: An Experiment on CO2 Emission Permit Markets

The European Emission Trading Scheme (EU‐ETS) has chosen to adopt an auctioning procedure to initially allocate CO₂ emission permits. Free allocation of permits will become an exception for the third phase (2013–2020) and most firms will have to buy all their permits on the market or via auctions. The ability of bidders to collude is a key concern about the design of the auction format. To counter collusion, the auction can be open to bidders without compliance obligations (speculators). This paper aims at studying experimentally speculation as a collusion‐breaking device in two different auction mechanisms: the uniform‐price sealed‐bid auction and the ascending clock auction. Our results suggest that a uniform sealed‐bid auction open to speculators should be chosen from a revenue maximization point of view. In this mechanism, compliance agents adopt an aggressive strategy toward speculators. This strategy significantly increases the seller's revenue, compared to the more collusive clock auction. In the latter, on the contrary, bidders accommodate speculators, letting them buy permits in the auction and buying their necessary permits on the secondary market. However, as opening the auction to speculators deteriorates efficiency, the regulator faces a trade‐off between these two objectives.     

Long‐Run Inflation and the Distorting Effects of Sticky Wages and Technical Change

We show that the Calvo price‐setting model is not necessarily inconsistent with evidence of a weak relation between positive trend inflation and price dispersion. We identify the interaction between sticky wages and technical change as factors disrupting the allocative role of the wage system under positive trend inflation. In turn, this interaction generates inefficient wage dispersion, as opposed to price dispersion, which fuels inflation costs. We conclude that it is too early to dismiss the New Keynesian model as a useful vehicle to assess the costs of inflation.     

Interest Rates and the Market for New Light Vehicles

We study the impact of interest rate changes on the demand and supply of new light vehicles in an environment where consumers and manufacturers face their own interest rates. Interest rate changes impact the auto market through both households and manufacturers. For the impact of rate changes on price and output growth, the household channel is quantitatively more important. A 100 basis‐point increase in both interest rates causes annual growth rates of production to fall from 1.0% to ?11.0% and sales to fall from 1.0% to ?2.9% in the short run.