A leximin characterization of strategy-proof and non-resolute social choice procedures

Summary. We characterize strategy-proof social choice procedures when choice sets need not be singletons. Sets are compared by leximin. For a strategy-proof rule g, there is a positive integer k such that either (i) the choice sets g(r) for all profiles r have the same cardinality k and there is an individual i such that g(r) is the set of alternatives that are the k highest ranking in i's preference ordering, or (ii) all sets of cardinality 1 to k are chosen and there is a coalition L of cardinality k such that g(r) is the union of the tops for the individuals in L. There do not exist any strategy-proof rules such that the choice sets are all of cardinality to k where . Received: November 8, 1999; revised version: September 18, 2001     

On the dynamics of U.S. consumer sentiment and economic policy assessment

We utilize the Michigan Surveys of Consumers data to first investigate the dynamic relationship between consumers’ assessment of current and future economic conditions (Index of Current Economic Conditions (ICC) and Index of Consumer Expectations (ICE)), and then examine how these assessments are influenced by deterioration/improvement in consumers’ appraisal of economic policies of the government (GP). We further assess how deterioration/improvement in ICC and ICE influences GP. For 1978–2015, our findings first indicate that ICC and ICE are cointegrated and both respond to disequilibrium to restore the long-run equilibrium relationship. Second, deterioration in GP results in deterioration in both ICC and ICE. Improvement in GP, however, results in improvement in ICE with no impact on ICC. Third, deterioration in both ICC and ICE results in deterioration in GP. Improvement in ICE results in improvement in GP, but improvement in ICC has no impact on GP. The observed asymmetries are in line with ‘negativity bias’, whereby people tend to give more weight to negative events than to positive ones.     

Validity of sustainability framework for China’s mining cities – a structural equation modelling approach

Many studies developed their framework for sustainability through indicator systems, but the interactions and relationships within these indicators have not been studied yet. In this article, based on indicator systems, we use a sample of 78 mining cities in China and employ structural equation modelling (SEM) method to explore the validity of sustainability framework. Our empirical results show that resources abundance positively affects urbanization level significantly but negatively affects cleaner production level and environmental protection level significantly; economic strength positively affects urbanization level significantly; cleaner production level has a significant effect on economic strength and non-mineral resources conversion efficiency. We also find that when economic strength is low, resources abundance might weaken the positive effect of economy on urbanization.     

Facilitating Consumer Learning in Insurance Markets: What Are the Welfare Effects?

We model a monopoly insurance market in which consumers can learn their accident risks at a cost c . We then examine the welfare effects of a policy that reduces c . If c is sufficiently small (c  < c ^*), the optimal contract is such that the consumer gathers information. For c  < c ^*, both the insurer and the consumer benefit from a policy that reduces c further. For c   >  c ^*, marginally reducing c hurts the insurer and weakly benefits the consumer. Finally, a reduction in c that is successful, meaning that the consumer gathers information after the reduction but not before it, can hurt both parties.     

A class of multiattribute utility functions

A function u(z) is a utility function if u′(z) > 0. It is called risk averse if we also have u′′(z) < 0. Some authors, however, require that u ⁽ⁱ⁾(z) > 0 if i is odd and u ⁽ⁱ⁾(z) < 0 if i is even. The notion of a multiattribute utility function can be defined by requiring that it is increasing in each variable and concave as an s-variate function. A stronger condition, similar to the one in case of a univariate utility function, requires that, in addition, all partial derivatives of total order m should be positive if m is odd and negative if m is even. In this paper, we present a class of functions in analytic form such that each of them satisfies this stronger condition. We also give sharp lower and upper bounds for E[u(X ₁,... , X _s )] under moment information with respect to the joint probability distribution of the random variables X ₁,... , X _s assumed to be discrete and representing wealths. Partially supported by OTKA grants F-046309 and T-047340 in Hungary.     

Non-causality: The role of the omitted variables

In this paper a proof is offered that if a variable Y₃ does not cause a variable Y₁ in the bivariate system (Y₁, Y₃) and Y₃ causes a variable Y₁ in higher-order system (Y₁, Y₂, Y₃), then the omitted variable Y₂ must cause the variable Y₁ in the bivariate system (Y₁, Y₂) and in the trivariate system (Y₁, Y₂, Y₃).     

DISCRIMINATING SHORT AND LONG MEMORY IN FINITE SAMPLES USING SENSITIVITY ANALYSIS: AN APPLICATION TO GROWTH CONVERGENCE

The standard linear model where u_t is generated from an ARFIMA process, is considered. The sensitivity of the predictor and sensitivity of variance estimates of the linear model to long memory are investigated by constructing the statistical measures B_L/S and D_L/S , respectively. B_L/S and D_L/S is interpreted as a sensitivity measure for the long‐memory process without the short‐memory effects. As an application, the memory characteristics of per capita GDP of 30 countries are investigated from the Maddison GDP dataset. It is found that per‐capita GDP exhibits long memory characteristics, and the long‐run growth estimates are sensitive to the long memory characteristics.     

The political business cycle: An extension of Nordhaus's model

Summary Nordhaus's (1975) model of the political business cycle is extended in this paper by explicitly formulating the link between the economic sphere (represented by the Phillips curve) and fiscal policy. This extended model yields the hypothesis that during an electoral period the budgetary policy is contractionary in the first half and expansionary in the second half with the consequences of a reduction in unemployment (increase in inflation) before elections and a rise in unemployment (decrease in inflation) after elections. This hypothesis is tested against the data of the Austrian economy by a non-parametric test (which leads to a rejection of our hypothesis for Austria). The extent of the political business cycle bias is demonstrated by policy simulations within a macroeconomic model.

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Zusammenfassung Das Modell vonNordhaus (1975) über den Politischen Konjunkturzyklus wird in diesem Artikel erweitert, indem explizit die Beziehung zwischen dem ökonomischen Bereich (repräsentiert durch die Phillips-Kurve) und der Fiskalpolitik hergestellt wird. Dieses erweiterte Modell führt zu der Hypothese, daß während einer Legislaturperiode die Budgetpolitik in der ersten Hälfte restriktiv und in der zweiten Hälfte expansiv ist. Als Konsequenz dieser Politik kommt es zu einer Verringerung der Arbeitslosigkeit (einem Anstieg der Inflation) vor Wahlen und einem Anstieg der Arbeitslosigkeit (einer Verringerung der Inflation) nach den Wahlen. Diese Hypothese wird an Hand österreichischer Daten mit Hilfe eines nichtparametrischen Tests geprüft (was zu einer Ablehnung unserer Hypothese für Österreich führt). Das quantitative Ausmaß des durch den Politischen Konjunkturzyklus entstehenden bias wird dann mit Hilfe von politischen Simulationen im Rahmen eines makroökonomischen Modells demonstriert.

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Definitions AK Public purchases of goods and services + public investment (A.S.) - AT Unemployed persons, in total (in 1.000) - AZA Worked hours per worker (in hours) - BAU Central government's expenditures (outlays) in total (A.S.) - BEI Central government's revenues (receipts) in total (A.S.) - BS Budget deficit of the Central government (A.S.) - CB Labour supply (in 1.000) - CH Unemployment rate (%) - CON Public consumption (A.S.) - COR Public consumption (A.S. 1964) - CPN Private consumption (A.S.) - CPR Private consumption (A.S. 1964) - CUB Current balance (A.S.) - DS Direct taxes + public income from property-transfers to households + transfers from households (A.S.) - DX DS-public income from property (A.S.) - D7273 Dummy for monetary policy and Dummy for change from gross turnover tax to VAT (1972+1; 1973–1; other 0) - D7278 Dummy for investment tax (1972+1; 1973–1; 1977+1; 1978–1; other 0) - D73US Dummy for shift of employers to employees (1973+1; other 0) - D7375 Dummy for incomes tax reform (1973–1; 1975–1; other 0) - D7778 Dummy for extra VAT (1977+1; 1978–1; other 0) - EBE Population in total (in 1.000) - EET Employment in total + unemployed (total labour supply; in 1.000) - ESE Employers (in 1.000) - EUS Employees (in 1.000) - FBN Monetary base (A.S.) - FGN Money M1 (A.S.) - FG Money M1 (A.S. 1964) - GDN Gross domestic product (A.S.) - GDR Gross domestic product (A.S. 1964) - GER Energy (1.000 t/TCE) - GIR Industry output (A.S. 1964) - GE Profits in total (A.S.) - GV Profits in total (A.S. 1964) - IS Indirect taxes—transfers to firms (A.S.) - ITN Gross fixed investment (A.S.) - ITR Gross fixed investment (A.S. 1964) - JR Final domestic demand (A.S. 1964) - LA Stocks and statistical discrepancies; National account basis (A.S.) - LEAD Difference of one major party over the other in parliament in percentage points - LB Foreign balance (A.S.) - LKV Long term capital transactions (A.S.) - MA Money M1 + profits (A.S. 1964) - MMN Imports of goods and services (A.S.) - MMR Imports of goods and services (A.S. 1964) - OIN Public investment (A.S.) - OKG Public purchases of goods and services (A.S.) - PC Private consumption deflator (1964=100) - PEN Energy prices (1964=100) - PI Gross fixed investment deflator (1964=100) - PK Imports of goods and services deflator (1964=100) - PL Exports of goods and services deflator (1964=100) - PT Gross domestic product deflator (1964=100) - RES Value change in balance of payments reserves (A.S.) - RIR Interest rate for long term bonds (%) - SD Stocks and statistical discrepancies; National account basis (A.S. 1964) - ST Overall indirect taxes—subsidies; National account basis (A.S.) - STD Direct taxes (A.S.) - STI Indirect taxes (A.S.) - TAH Transfers to households (A.S.) - TBB Trade balance (A.S.) - TTT Time (1960, 1961,..., 1979) - TUN Transfers to firms (A.S.) - TVH Transfers from households (A.S.) - VW Gross fixed investment plus exports of goods and services (A.S. 1964) - WON Changes in foreign currency reserves of the National Bank (A.S.) - WKU Changes in foreign currency reserves of all commercial banks (A.S.) - WW Changes in balance of payments' official reserves (A.S.) - XB Relative energy prices (1964=100) - XXN Exports of goods and services (A.S.) - XXR Exports of goods and services (A.S. 1964) - YLN Wages and salaries (compensation of employees; A.S.) - YOB Public income from property (A.S.) - YVN Net disposable income (A.S.) - YY Net disposable income (A.S.) - YYN National income (A.S.) - ZST Statistical discrepancies in balance of payments (A.S.) - A.S billion Austrian Schilling at current prices - A.S. 1964 billion Austrian Schilling at constant prices (basis 1964)     

Population-monotonicity and separability for economies with single-dipped preferences and the assignment of an indivisible object

We study two allocation models. In the first model, we consider the problem of allocating an infinitely divisible commodity among agents with single-dipped preferences. In the second model, a degenerate case of the first one, we study the allocation of an indivisible object to a group of agents. We consider rules that satisfy Pareto efficiency, strategy-proofness, and in addition either the consistency property separability or the solidarity property population-monotonicity. We show that the class of rules that satisfy Pareto efficiency, strategy-proofness, and separability equals the class of rules that satisfy Pareto efficiency, strategy-proofness, and non-bossiness. We also provide characterizations of all rules satisfying Pareto efficiency, strategy-proofness, and either separability or population-monotonicity. Since any such rule consists for the largest part of serial-dictatorship components, we can interpret the characterizations as impossibility results. Received: September 29, 1999; revised version: March 22, 2000     

Markov regime-switching Beta-t-EGARCH

We suggest a Markov regime-switching (MS) Beta-t-EGARCH (exponential generalized autoregressive conditional heteroscedasticity) model for U.S. stock returns. We compare the in-sample statistical performance of the MS Beta-t-EGARCH model with that of the single-regime Beta-t-EGARCH model. For both models we consider leverage effects for conditional volatility. We use data from the Standard Poor’s 500 (S&P 500) index and also a random sample that includes 50 components of the S&P 500. We study the outlier-discounting property of the single-regime Beta-t-EGARCH and MS Beta-t-EGARCH models. For the S&P 500, we show that for the MS Beta-t-EGARCH model extreme observations are discounted more for the low-volatility regime than for the high-volatility regime. The conditions of consistency and asymptotic normality of the maximum likelihood estimator are satisfied for both the single-regime and MS Beta-t-EGARCH models. All likelihood-based in-sample statistical performance metrics suggest that the MS Beta-t-EGARCH model is superior to the single-regime Beta-t-EGARCH model. We present an application to the out-of-sample density forecast performance of both models. The results show that the density forecast performance of the MS Beta-t-EGARCH model is superior to that of the single-regime Beta-t-EGARCH model.     

Stochastic stability in a double auction

In a k-double auction, a buyer and a seller must simultaneously announce a bid and an ask price respectively. Exchange of the indivisible good takes place if and only if the bid is at least as high as the ask, the trading price being the bid price with probability k and the ask price with probability (1−k). We show that the stable equilibria of a complete information k-double approximate an asymmetric Nash bargaining solution with the seller's bargaining power decreasing in k.Note that ceteris paribus, the payoffs of the seller of the one-shot game increase in k. Nevertheless, as the stochastically stable equilibrium price decreases in k, choosing the seller's favorite price with a relatively higher probability in individual encounters makes him worse off in the long run.     

Comparative persistence and adherence with newer anti-hyperglycemic agents to treat patients with type 2 diabetes in the United States

Objectives: Non-adherence and non-persistence to anti-hyperglycemic agents are associated with worse clinical and economic outcomes in patients with type 2 diabetes. This study evaluated treatment persistence and adherence across newer anti-hyperglycemic agents (canagliflozin, dapagliflozin, sitagliptin, saxagliptin, linagliptin, liraglutide, or exenatide).

Methods: This retrospective cohort study of Truven Health Analytics Marketscan databases included adult patients with type 2 diabetes whose first pharmacy claim for a newer anti-hyperglycemic agent was between February 1, 2014 and July 31, 2014. Treatment persistence and adherence were assessed for 12 months after the first claim (post-index). Persistence was defined as no gap ≥90 days between the end of one pharmacy claim and the start of the next pharmacy claim post-index. Adherence used two definitions: proportion of days covered (PDC) and medication possession ratio (MPR). Multivariable analyses of non-persistence (hazard ratios) and adherence (odds ratios) were adjusted for baseline demographics, drug cost, clinical characteristics, and other anti-hyperglycemic agents.

Results: A total of 11,961 patients met all study selection criteria. Persistence rates at 12 months were significantly greater (p?p?=?0.83; PDC?=?0.79) and canagliflozin 300?mg (MPR?=?0.92; PDC?=?0.81) were greater than for the other index anti-hyperglycemic agents (MPR?=?0.33–0.75; PDC?=?0.33–0.72). Consistent results for treatment persistence and adherence were observed in multivariable analyses that were adjusted baseline characteristics.

Conclusions: Canagliflozin was associated with better treatment persistence and treatment adherence compared with other anti-hyperglycemic agents in real-world settings.     

Reciprocity and Giving in a Consecutive Three‐Person Dictator Game with Social Interaction

We study pure indirect reciprocity by setting up a modified dictator game with three players A, B, and C acting sequentially. Subject A takes a share of a pie and passes the rest to subject B, while B divides the rest between herself and C. We find that this consecutive three‐person dictator game increases generosity compared with the traditional two‐person dictator game. We analyze the influence of social interaction and uncertainty. In treatments with certainty we observe pure indirect reciprocity: B indirectly reciprocates for A's behavior in the decision on how generous to be to C.     

Uniqueness of Positive Fixed Points for Increasing Concave Functions on : An Elementary Result

The square root function has a unique positive fixed point. This function has the following properties: it is strictly increasing and strictly concave, with f(0) = 0, and there are points a ≥ 0 and b ≥ 0 such that f(a) ≥ a and f(b) ≤ b. It is shown that any function from ⁿ to ⁿ satisfying these properties has a unique positive fixed point. Journal of Economic Literature Classification Number: C62.     

No-envy in queueing problems

We explore the implications of no-envy(Foley 1967) in the context of queueing problems. We identify an easy way of checking whether a rule satisfies efficiencyand no-envy. The existence of such a rule can easily be established. Next, we ask whether there is a rule satisfying efficiency and no-envytogether with an additional solidarity requirement how agents should be affected as a consequence of changes in the waiting costs. However, there is no rule satisfying efficiency, noenvy, and either one of two cost monotonicity axioms. To remedy the situation, we propose modifications of no-envy, adjusted no-envyand backward/forward no-envy. Finally, we discuss whether three fairness requirements, no-envy, the identical preferences lower bound, and egalitarian equivalence, are compatible in this context.     

Promotion and Coevolutionary Dynamics in Contemporary Capitalism

We characterize the dynamics of contemporary capitalist societies as emerging from the coevolution of five different subsystems: the intimate realm of individuals, the market, the state, civil society, and nature. We highlight a specific coevolution mechanism between some of these subsystems, which we call promotion. The insights from this coevolution approach are twofold. On one hand, from the ontological and heuristic perspectives, we argue that our proposal opens the possibility for constructing a general, interpretative framework in evolutionary economics. On the other hand, from a theoretical-explanatory perspective, we detect certain coevolution paths that may engender global pathologies in capitalist societies. We also suggest that future research may explore some normative implications of this approach, as well as alternative methodological strategies to develop it.     

Numerical Computation of Equilibrium Bid Functions in a First-Price Auction with Heterogeneous Risk Attitudes

We use numerical methods to compute Nash equilibrium (NE) bid functions for four agents bidding in a first-price auction. Each bidderi is randomly assigned:r _i [0,r _max], where 1 –r _i is the Arrow-Pratt measure of constant relative risk aversion. Eachr _i is independently drawn from the cumulative distribution function (·), a beta distribution on [0,r _max]. For various values of the maximum propensity to seek risk,r _max, the expected value of any bidder's risk characteristic,E (r _i ), and the probability that any bidder is risk seeking,P (r _i > 1), we determine the nonlinear characteristics of the (NE) bid functions.     

Designer path independent choice functions

Summary. This paper provides an algorithm for the construction of all PICFs on a finite set of alternatives, V, designed by an a priori given set I of initial choices as well as the determination of whether the initial set I is consistent with path independence. The algorithm is based on a new characterization result for path independent choice functions (PICF) on finite domains and uses that characterization as the basis of the algorithm. The characterization result identifies two properties of a partition of the Boolean algebra as necessary and sufficient for a choice function C to be a PICF: (i): For every subset A of V the set is an interval in the Boolean algebra 2 ^V . (ii): If A/B is an interval in the Boolean algebra such that C(A) = C(B) and if M/N is an upper transpose of A/B then C(M) = C(N). The algorithm proceeds by expanding on the implications of these two properties.Received: 5 November 2003, Revised: 20 July 2004, JEL Classification Numbers: D00, D70.     

World Human Development: 1870–2007

How has wellbeing evolved over time and across regions? How does the West compare to the Rest? What explains their differences? These questions are addressed using a historical index of human development. A sustained improvement in world wellbeing has taken place since 1870. The absolute gap between OECD and the Rest widened over time, but an incomplete catching up—largely explained by education—occurred between 1913 and 1970. As the health transition was achieved in the Rest, the contribution of life expectancy to human development improvement declined and the Rest fell behind in terms of longevity. Meanwhile, in the OECD, as longevity increased, healthy years expanded. A large variance in human development is noticeable in the Rest since 1970, with East Asia, Latin America, and North Africa catching up to the OECD, and Central and Eastern Europe and Sub‐Saharan Africa falling behind.     

Identification of house price bubbles using user cost in a state space model

This article studies how much variation in house prices results from nonfundamental factors. We propose a relative valuation approach to quantifying a bubble in housing by incorporating the housing User Cost into a state space model. We find that UK house prices were undervalued from January 1995 to May 2001 and subsequently moved into a bubble over the period to October 2012. Our results support the bounded rationality hypothesis in the long run. However, we also find that the irrational and the rational expectation hypotheses can coexist in the short run when explosive bubbles are driven by price dynamics.