Production theory,uncertain prices and investment portfolios

This paper examines the allocative decisions of a competitive firm where input and output prices are uncertain and where the capital asset pricing model prevails. The firm behaves much as a profit maximizer under certainty, except that certainty equivalent prices formally replace the known prices. These certainty equivalent prices are composed of the expected price, the covariance of the price with the market (a measure of systematic risk) and a measure of risk aversion in the economy. Both static and comparative static propositions emerge in a natural way as extensions of standard, competitive and profit maximizing behavior. In addition, the model contains both the certainty case and the risk-neutral case as limiting examples.     

Demographic transition among the Negev Beduin in Israel and its planning implications

The sedentarization of Beduin in Israel made it necessary for the authorities to channel the process into planned semi-urbanization. A forecast of future Beduin population size, however, did not consider the demographic transition and response theories within the process of change among the nomads. The present study demonstrates that the Beduin underwent a process of fertility increase before fertility decline, both of which were preceded by the process of mortality decline between the mid-1950s and the late-1970s. While mortality decline and fertility increase were the outcomes of economic growth, fertility decline is the outcome of social modernization. Both processes lead to decline in population growth rate. This reinterpretation of demographic processes has important implications for planning towns for the Beduin society in terms of improvement in their social well-being on their path from nomadism to semi-urbanization.     

Optimal use of futures markets when input and output prices are uncertain

The purpose of this paper is to extend the analysis of the use of futures markets by a competitive firm facing an uncertain market price for its output to the case where both input and output prices are uncertain.     

The deterrence hypothesis revisited

This study explores the causes of crime and the differences in deterrent effects of policing on crimes among rural, suburban, and urban communities. We hypothesize that certain numbers of all crimes are unaffected by policing due to their high net return; policing deters only marginal crimes. That is, unlike other research efforts, we recognize that there is a level of crime indigenous to a given type of community about which little can be done, although a particular community can affect deviations from this level. By introducing this ‘natural rate' of crime we are able to empirically reveal the deterrence effect of police expenditures upon all types of property crimes except robberies. The study analyzes 230 communities in a system of six simultaneous equations, using police, crime, and other socio-economic variables. The model can be used by state and regional policy-makers to more effectively allocate resources to the different types of communities under their jurisdiction and among the various police functions designed to deter specific types of crime.     

Explaining investor preference for cash dividends

The well-known tendency of investors to favor cash dividends emerges quite naturally in two new theories of choice behavior [the theory of self-control due to Thaler and Shefrin (1981), and the version of prospect theory set out by Kahneman and Tversky (1979)]. Although our treatment is novel when viewed from the perspective of standard financial theory, it provides explanations for a phenomenon that has long been described as perplexing.     

MARKET TIMING IN REGRESSIONS AND REALITY

We compare price‐to‐earnings ratios and dividend yields, which are indirect measures of sentiment, with the bullish sentiment index, which is a direct measure. We find that the sentiment index does better as a market‐timing tool than do P/E ratios and dividend yields, but none is very reliable. We do not argue that market timing is impossible. Rather, we observe that stock prices reflect both sentiment and value, both of which are difficult to measure and neither of which is perfectly known in foresight. Successful market timing requires insights into future sentiment and value, insights beyond those that are reflected in widely available measures.     

The Cultures of Insider Trading

Paul Bond is a lawyer who overheard two other lawyers at his office discussing the proposed purchase of a company by one of their clients. He proceeds to buy shares of this company. Would you rate Bond’s behavior completely fair, acceptable, unfair, or very unfair? I posed this vignette to samples of university students in China, Taiwan, and the U.S. Most students in the U.S. and Taiwan samples rated Bond’s behavior unfair or very unfair while most students in the China rated Bond’s behavior completely fair or acceptable. Perceptions of fairness are part of the culture of a country and culture affects business practices. I discuss culture, perceptions of fairness, and business practices in China, Taiwan, and the U.S.