The Market for Quacks

A group of n "quacks" plays a price-competition game, facing a continuum of "patients" who recover with probability α , whether they acquire a quack's "treatment". If patients chose rationally, the market would be inactive. I assume, however, that patients choose according to a boundedly rational procedure, which reflects "anecdotal" reasoning. This element of bounded rationality has significant implications. The market for quacks is active, and patients suffer a welfare loss which behaves non-monotonically w.r.t. n and α . In an extended model that endogenizes the quacks' choice of "treatments", the quacks minimize the force of price competition by offering maximally differentiated treatments. The patients' welfare loss is robust to market interventions, which would crowd out low-quality firms in standard models. Thus, as long as the patients' quality of reasoning is not lifted above the anecdotal level, ordinary competition policies may be ineffective.     

殉教市场

虽然在所有的宗教传统中都存在着极端的自我牺牲现象，但要对它加以解释却并非易事。我们想当然地认为大多数自寻痛苦和自寻死路的人是精神不正常的。但某些研究驳斥了下面这种貌似明白无误的结论，即宗教中的自我牺牲也是由沮丧、痴迷或其他非理性所致。旨在伤害的牺牲可视为一种市场现象，是自愿牺牲的数目较少的人力供给和那些从牺牲行为中获益的数量较大的“需求者”之间的交换行为。与流行的看法相反，“殉教”市场不繁荣不是因为需求受限，而是因为供给受限。在招募、训练并指导潜在的殉教者方面训练有素的那些人，几乎从未从自杀式袭击中获益。但殉教市场一旦建立，就很难关闭。对供给的遏制很难奏效，抑制需求的效果会更长久。     

The market for preferences

Learning processes are widely held to be the mechanism by whichboundedly rational agents adapt to environmental changes. Weargue that this same outcome might also be achieved by a differentmechanism, namely specialisation and the division of knowledge,which we here extend to the consumer side of the economy. Wedistinguish between high-level preferences and low-level preferencesas nested systems of rules used to solve particular choice problems.We argue that agents, while sovereign in high-level preferences,may often find it expedient to acquire, in a pseudo-market,the low-level preferences in order to make good choices whenpurchasing complex commodities about which they have littleor no experience. A market for preferences arises when environmentalcomplexity overwhelms learning possibilities and leads agentsto make use of other people's specialised knowledge and decisionrules.     

The Market for Sweepstakes

This paper studies the market for monopolistically supplied sweepstakes. We derive equilibrium demands for fixed-prize and variable-prize sweepstakes and determine the profit-maximizing prize level and pay-out ratio respectively. It can be profitable to offer each type of sweepstake when there is a large enough number of weighted utility consumers who have constant absolute risk attitudes, are strictly averse to small as well as symmetric risks, and display longshot preference behaviour. Moreover, for the variable-prize sweepstake, the supplier will generally find it profitable to combine sweepstakes targeting two smaller populations, and offer a single sweepstake to the combined population. This implication is corroborated by the recent spate of mergers of smaller state lotteries into larger ones.     

The power of tests for equivalent ARMA models: The implications for practitioners

Analysts frequently find it convenient to use the same ARMA model to make forecasts for multiple time series. The trick is to know when it is safe to assume that multiple series are generated by the same underlying process. Although several authors have developed statistical procedures for testing whether two models are equivalent, no one has shown how to determine the power of these tests. This paper shows how to determine the power of the most general test for equivalent ARMA models. It also shows how to quantify the effect of model misspecification errors on the accuracy of the forecast. An illustrative example and flowchart are then used to show how calculating the power of the test can enable the practitioner to safeguard against a serious degradation in the accuracy of the forecast.Jel classification: C12, C22, C53First version received: March 2002/Final version received: December 2002     

The demand for casino gaming

In this study an econometric model is developed to examine the determinants of the demand for casino gaming, specifically the demand for slot machine wagering at riverboats and racinos. In addition to examining the effects of traditional demand variables, the effect on wagering of variables such as location of a wagering facility and of government restrictions, is examined. A unique measure of accessibility of market area customers to a facility and to competing facilities was developed. The demand for wagering at a facility was found to increase as access by customers in its market area increases and to decrease as access by its customers to competing riverboats, racinos or Indian casinos increases. Government restrictions were found to have an adverse effect on wagering at a riverboat. On the other hand, wagering at a riverboat was found to increase when such restrictions were imposed on competing riverboats. The presence of total loss limits and restrictions on boarding times at a riverboat were found to have reduced wagering by 36% and 35%, respectively. With respect to traditional demand variables, slot machine wagering demand was found to be price elastic at the beginning of the sample period declining to slightly below unit elasticity by the end of the period. Table games offered at a gaming facility were found to be substitutes for slot machines. Demand was found to be negatively related to per capita income at lower income levels and positively related at higher income levels. The proportion of income wagered was found to be greater at upper and lower income levels relative to middle income levels. Demand was found to be positively related to days of operation and number of slot machines.     

The supercore for normal-form games

This paper analyzes the supercore of a system derived from a normal-form game. For the case of a finite game with pure strategies, we define a sequence of games and show that the supercore coincides with the set of Nash equilibria of the last game in that sequence. This result is illustrated with the characterization of the supercore for the n-person prisoner's dilemma. With regard to the mixed extension of a normal-form game, we show that the set of Nash equilibrium profiles coincides with the supercore for games with a finite number of Nash equilibria.     

The case for global governance

This article looks at the concepts of government, governance and sovereignty. The author traces the origins of various systems of order to Westphalia (1648) and highlights how they affect our world today through the Multilateral System, the post-WWII heir to the Westphalian System. Drawing upon his experience as a professor and former ambassador to the OECD, he suggests that exploring better ways of managing our world and seeking alternative methods of global governance may be overdue given the current social, economic and environmental problems. The article closes with a futurist's wagering on the imminence of global governance.     

The Macroeconomic Requirements for Prosperity

This article presents a macroeconomic manifesto for prosperity. The main macroeconomic obstacles to prosperity are rent-seeking and policy variability and uncertainty. The main proposals for overcoming these obstacles are the creation of three new independent and publicly accountable economic policy institutions: an Independent Monetary Authority, a National Externalities Board, and an Economic Policy Audit Authority. Working with parliament, these institutions would provide an incentive system of checks and balances in which the principles of free trade, price stability, and policy stability would moderate rent-seeking and provide an environment in which markets could function to deliver a high level of prosperity. A related proposal is the replacement of all existing taxes with just two taxes: a flat rate Consumption Tax to cover government purchases; and a National Dividend Tax to pay for a fixed benefit to all, the rate of which would be determined by a novel method of direct democracy.     

The case for an actuary

The author describes the role of the actuary, the need for qualified actuaries and how to find them. Qualified actuarial help, in the form of a Fellow of the Society of Actuaries (FSA), is necessary to ensure the best outcome when setting annual premium rates and realistic budgets for self-funded group benefit plans.     

The reason for ‘The Reason of Rules’

This paper is an attempt to locate the writing of the book, The Reason of Rules, in its intellectual and temporal setting. The object is to capture something of the ambitions of the book and to assess its limitations as perceived three decades after its writing. It includes some personal reflections on the experience of Buchanan as a co-author.     

The case for fiscal rules

This paper estimates the effects of fiscal institutions on fiscal policy outcomes, addressing issues related to measurement and endogeneity in a novel way. Recently developed indices, based on partially ordered set theory, are used to quantify the stringency of fiscal rules. Identification of their effects is achieved by exploiting the exogeneity of institutional variables (checks and balances, government fragmentation, inflation targeting), which are found to be relevant determinants of fiscal rules. Our two-stage least squares estimates for (up to) 74 countries over the period 1985–2012 provide strong evidence that countries with more stringent fiscal rules have higher fiscal balances (lower deficits), lower interest rate spreads on government bonds, and lower output volatility.     

农村生态环境危机中的博弈

近年来,农村生态环境污染问题越来越突出,农民成为最大的环境受害群体,他们不得不为自己的生存而抗争,环保问题已经开始成为影响社会稳定的新诱因。中国现行的"政治经济一体化"格局,使得农民在与政府、企业的博弈过程中存在资源和力量的不均衡。广泛开展并且行之有效的环境运动是遏制农村生态环境污染的重要途径。     

The Demand for Constitutional Law

A growing concern in transition economies is the gap between the law on the books and the law in practice. The existence of such a gap has long been recognized even in countries with a long legal tradition and where, by and large, the formal law seems to be observed. In transition economies as well as in many emerging markets and developing countries, this gap appears to be especially pronounced. This paper argues that an explanation for this phenomenon can be found in the process of law development in these countries. They have extensively imported law from other countries in an attempt to stage a catch-up in legal development. This was facilitated by foreign legal advisors preaching the existence and transferability of best practice in other parts of the world. The missing link in this equation has been the demand for law. This paper seeks to explain the meaning of the demand for law in the context of evolving Russian constitutional law drawing extensively from research on legal transplants and the lack of demand for law in other areas of the law.     

The UK demand for steel

The paper suggests a short-run model of the demand for steel that may be used for forecasting future trends. The paper commences with consideration of a long-run model which is estimated using cointegration analysis. An error correction model is then developed to depict the short-run movements to equilibrium. This can be used for the purpose of ex-post forecasting.