Inequality‐averse well‐being measurement

We construct individual well‐being measures that respect individual preferences and depend on the bundles of goods consumed by the individual. Building on previous work in which general families of well‐being measures are identified, we introduce basic transfer principles that apply either to bundles or directly to indifference sets, and we characterize specific well‐being measures that involve either the ray utility or the money‐metric utility.     

Nash equilibria of games when players’ preferences are quasi‐transitive

Much of game theory is founded on the assumption that individual players are endowed with preferences that can be represented by a real‐valued utility function. However, in reality human preferences are often not transitive. This is especially true for the indifference relation, which can lead an individual to make a series of choices which in their totality would be viewed by the same individual as erroneous. There is a substantial literature that raises intricate questions about individual liberty and the role of government intervention in such contexts. The aim of this paper is not to go into these ethical matters but to provide a formal structure for such analysis by characterizing games where individual preferences are quasi‐transitive. The paper identifies a set of axioms which are sufficient for the existence of Nash equilibria in such “games.”     

Impacts of Road Access on Subjective Well‐being in Timor‐Leste

The impacts of access to roads on subjective well‐being at the household level are empirically examined using Timor‐Leste's nationally representative surveys. This paper examines not only the quantity, but also the quality of road infrastructure and, thus, extends existing studies that only consider the benefits of road accessibility. It is found that proximity to main roads may not necessarily result in improved welfare. Instead, ensuring all‐weather access to roads appears to be a more significant factor in raising household well‐being. Specifically, road accessibility during the rainy season reduces the probability of households reporting a ‘less than adequate’ (low satisfaction) response by 13–25 percent. This suggests that in Timor‐Leste, and likely in other developing economies under similar conditions, maintenance of existing roads is more essential to well‐being than building more roads.     

Role of Information on Consumers’ Willingness‐to‐pay for Genetically‐modified Rice with Health Benefits: An Application to China

Despite their potential health benefits, the controversial nature surrounding the use of GM technology in biofortified crops remains a subject of discussion. This paper investigates the role of information on willingness‐to‐pay for folate‐biofortified rice in a Chinese folate‐deficient region. We conducted second price auctions with 252 women of childbearing age, split up into two target groups based on street (n = 132, non‐student sample) or school auctions (n = 120, student sample). Notwithstanding a general positive effect of folate‐related information (i.e. content, benefits and regional situation), evidence reveals that the non‐student sample is less concerned about GM technology. The results also provide insight into serial position effects in conflicting GM information. Whereas participants in the non‐student sample are more prone to a primacy bias when receiving both positive and negative information, an alarmist reaction is observed in the student sample. This study highlights the need for segmented, targeted communication strategies on biofortification.     

Interest Rate Pass‐through in Malawi: Implications for the Effectiveness of Monetary Policy

This study investigates the interest rate pass‐through in Malawi and its implications on monetary policy effectiveness. Using the cost‐of‐funds approach and monthly data from 2009 to 2015, an autoregressive distributed lag model is fitted. Results show that there is a near complete pass‐through to the lending rate but not the savings rate. The magnitude of the pass‐through is relatively higher under smaller banks. The results suggest that the structure of the banking industry matters. Market power is important in understanding the variation in lending and savings rates across banks. Overall, short‐term rates as operating targets are consistent with inflation targeting in Malawi.     

Re‐Examining the Role of Structural Change and Nonlinearities in a Phillips Curve Model for South Africa

Although studies generally find evidence of a Phillips curve‐type relationship in South Africa, uncertainty remains about the relevance of the model over a relatively long sample period, and whether conventional output gap measures are suitable proxies for demand pressure. This paper reviews research which shows that the Phillips curve model prevails over an extended sample, provided that the benchmark specifications include major structural changes in the balance‐of‐payments and labour market, and account for shifts in the root causes of inflation. When this is done, a linear specification with an output gap in levels correctly predicts the non‐trended inflation pattern over the period 1971(Q1)–1984(Q4), whereas a piecewise concave curve with an output gap in growth rates accurately forecasts the decelerating inflation pattern during 1986(Q1)–2001(Q2). A novel feature of the concave model is that it remains statistically robust and structurally stable when it is estimated until 2015(Q4). The concave model imparts a disinflationary bias, which suggests that monetary policy should be more expansionary during downswing phases of the business cycle and neutral during upswing phases. The analysis also considers how the shape of the Phillips curve might change if the balance‐of‐payments constraint on demand is relaxed in a significant way.     

Revisiting Cash Endowment and House Money Effects in an Experimental Auction of a Novel Agri‐food Product in the Philippines

This study explores the effect of varying cash endowments on bidding behavior in auction experiments conducted in a developing country. Our results suggest that cash endowment levels can have different effects on bidding behavior under second price auction and random nth price auction. In contrast to past studies conducted in developed countries, we generally do not see the presence of positive house money effect in our results. If behavior varies significantly as the cash endowment is varied, then care must be taken when designing auction experiments or when comparing results to other experimental results and theoretical predictions.