Cost monotonicity, consistency and minimum cost spanning tree games

We propose a new cost allocation rule for minimum cost spanning tree games. The new rule is a core selection and also satisfies cost monotonicity. We also give characterisation theorems for the new rule as well as the much-studied Bird allocation. We show that the principal difference between these two rules is in terms of their consistency properties.     

Markovian equilibrium in a class of stochastic games: existence theorems for discounted and undiscounted models

Summary We study a strategic version of the neoclassical growth model under possible production uncertainty. For a general specification of the problem, we establish (i) the existence of stationary Markov equilibria in pure strategies for the discounted game, and (ii) the convergence, under a boundedness condition, of discounted equilibrium strategies to a pure strategy stationary Markovian equilibrium of the undiscounted game as the discount factor tends to unity. The same techniques can be used to prove that such convergence also obtains in all finitestate, finite-action stochastic games satisfying a certain full communicability condition. These results are of special interest since there are well known examples in the literature in which the limit of discounted equilibria fails to be an equilibrium of the undiscounted game.We are grateful to Marcus Berliant, M. Ali Khan, Mukul Majumdar, and an anonymous referee for helpful suggestions, and to Bonnie Huck for technical assistance. The first author acknowledges research support from the Columbia University Council for the Social Sciences.     

A characterization of egalitarian equivalence

Summary Consider a solution (an allocation rule) for an economy which satisfies the following criteria: (1) Pareto efficiency, (2) monotonicity, in the sense that if the set of attainable allocations of the economy becomes larger then the solution makes no consumer worse-off, (3) a weak and primitive notion of fairness with respect to some commodity, say commodityh, in the sense that in an exchange economy in which the aggregate endowment consists only of commodityh, the solution is equal division. We show that in the class of economies which includes non-convex technologies the only such solution is egalitarian equivalence with respect to commodityh. It is also shown that this characterization of egalitarian equivalence holds in convex exchange economies if we add a weak version of a positive association requirement.We are grateful to William Thomson and three anonymous referees for extensive comments on an earlier version. We also acknowledge helpful comments of the participants of the Social Choice and Welfare Conference held in Caen, June 1992.     

Farsighted network formation

This paper studies a model of dynamic network formation when individuals are farsighted: players evaluate the desirability of a “current” move in terms of its consequences on the entire discounted stream of payoffs. We define a concept of equilibrium which takes into account farsighted behavior of agents and allows for limited cooperation amongst agents. We show that an equilibrium process of network formation exists. We also show that there are valuation structures in which no equilibrium strategy profile can sustain efficient networks. We then provide sufficient conditions under which the equilibrium process will yield efficient outcomes.     

The Managerial Lineages of Neoliberalism

Managerialism is often depicted as a key practice of neoliberalism yet relatively little has been written by scholars of neoliberalism about the actual relationship between managerialism and neoliberalism. Usually subsumed under a functional reading of neoliberalism, managerialism has too often been understood simply as a means for neoliberal ends (i.e. to promote market rule or competition). This paper challenges this perspective on the grounds that it conflates practices that stem from two different historical lineages. As we show, managerial governance not only has a very different history than neoliberal theory, but it also rests on different principles. Its development can be traced back to the US defence sector in the 1950s and the pivotal role of the RAND Corporation. On the basis of this historical perspective, we argue for the need to analyse managerialism on its own terms and make the case for considering the rise of managerial science as a paradigmatic shift in governance. In doing so, we show how managerial governance represented a radical rupture from previous management practices and show how it profoundly reshaped how we have come to understand governance.     

The information content of implied volatility in developed versus developing FX markets

This article predicts the daily movement of monthly foreign exchange (FX) rate volatility using a linear combination of a time-series model and implied volatilities from options. The focus is on analysing the FX volatilities in three developing economies (the Brazilian real (BRL), the Indian rupee (INR) and the Russian ruble (RUB)) against the US dollar (USD). The empirical exercise utilizes two time-series models, mixed data sampling (MIDAS) and GARCH. The analysis indicates that for both developed and developing economies the predictive power of MIDAS and that of GARCH is comparable. Further on in this article, we will ascertain whether the relationship between realized and implied volatility is fundamentally different in the case of developing economies from that among developed economies. Thus, we compare the pairs USD/BRL, USD/INR and USD/RUB against EURO/USD and USD/Japanese yen to determine the information content and predictive power of implied volatilities. Plots of the MIDAS coefficients show that the volatility is more persistent in developing economies than in developed economies.     

Do Potential Skilled Emigrants Care about Political Stability at Home?

In this paper, we consider the role of political stability in the source country as a potential reason for skilled emigration. We control for all prospective source country characteristics, and yet skilled emigration is seen to be driven by a relatively better situation of political stability in the home country. Our research clearly shows that government stability, socioeconomic conditions, investment profiles, democratic accountability, internal conflict, and ethnic tensions in source nations have significant impacts on the rate of skilled emigration for a sample of developed and developing countries. The results retain robustness even for a subset of only developing nations.     

Media,Education and Corruption: Investigating the Associations

We study the interactive association of press freedom, access to media and education with a nation's corruption levels. A free press generates unbiased information that greater access to the media helps propagate; and a greater degree of education, in the same context, helps individuals apply that information. This entire process generates a vigilant and corruption‐free economy. It is therefore important to consider these factors in conjunction.     

Fostering entrepreneurship: impact of specialization and diversity in education

The present research aims to enhance our understanding of how prospective entrepreneurs benefit from specialized entrepreneurship education combined with a diversified educational experience. We find intriguing evidence that depth or specialization of entrepreneurship education is not enough for wealth creation from future entrepreneurial activities. Instead, it is breadth or diversity of educational experiences that positively influences future wealth creation, in terms of both the entrepreneur’s personal income as well as personal net worth. The results of the study have important implications for entrepreneurship educators and their students, researchers, policy makers, as well as nascent entrepreneurs.     

Bargaining with revoking costs

A simple two stage bilateral bargaining game is analyzed. The players simultaneously demand shares of a unit size pie. If the demands add up to more than one, the players simultaneously choose whether to stick to their demand or accept the other?s offer. While both parties sticking to their offers leads to an impasse, accepting a lower share than the original demand is costly for each party. The set of pure strategy subgame perfect equilibria of the game is characterized for continuously differentiable payoff and cost functions, strictly increasing in the pie share and the amount conceded, respectively. Higher cost functions are shown to improve bargaining power. The limit equilibrium prediction of the model, as the cost functions are made arbitrarily high, selects a unique equilibrium in the Nash Demand Game that corresponds to a Proportional Bargaining Solution of Kalai (1977).