In Support of Trigger Strategies: Experimental Evidence from Two-Person Noncooperative Games

Cooperative equilibria can be supported in a repeated game when players use trigger strategies. This paper tests how well trigger strategies explain behavior in two-person experimental games. Reducing payoffs for choices larger than the Cournot level induces smaller average outputs, behavior generally consistent with trigger strategy models. Reducing payoffs for choices well above the Cournot level will not affect behavior if actions are consistent with a trigger strategy involving longer-lived, less intense punishment phases (the grim-reaper strategy), but would matter for trigger strategies with short-lived but intense punishment phases. Results show that behavior is most consistent with the former.     

Increasing Wealth and Increasing Instability: The Role of Collateral

In development economics, growth in credit is generally associated with faster long-run growth as financial intermediation improves the efficiency of channeling capital to productive investment. Yet, among developing countries high growth in credit almost always guarantees the outbreak of a financial crisis. The authors attempt to reconcile the two seemingly contradictory facts with an endogenous growth model in which entry to international borrowing entails some significant fixed cost. The poorest countries are excluded from international borrowing because of the fixed cost. The higher-income developing countries will find it optimal to sink the fixed cost to borrow internationally, growing faster as a result, but also become prone to fluctuations arising from shocks to the international financial market.     

Intangible Economy and its Implications for Statistics and Statisticians*

This paper presents an interpretation of major changes affecting the modern economy. Our postulate is that the defining trend is the shift to the intangible. The source of economic value and wealth is no longer the production of material goods but the creation and manipulation of dematerialised content. The logic of dematerialisation is pervasive and ubiquitous and affects all sectors and activities. It profoundly transforms economic relationships and interactions, the ways firms and markets are organised and transactions are carried out. It is also unsettling, to the extent that it runs squarely against some of the key tenets of the conventional logic of economics. The intangible economy raises a whde series of measurement issues. More fundamentally, it changes the role, the function, and the perception of economic measurement data. Official agencies no longer have the monopoly of economic data: a lively and diversified measurement and monitoring industry has emerged. Statisticians need to undertake a comprehensive appraisal of their business. Adaptingto the new environment will require major changes in three key areas: conceptual foundations, modus operandi and temporal outlook. If measurement systems are to capture the essence of the economy of today and tomorrow, intangibles have to move from the periphery to the core of these systems.     

The level of poverty in South Africa: Consideration of an experiential measure

Poverty is usually measured on a basis that is either subjective (respondent's perceptions) or objective (relating to some externally set standard). This article draws on an ‘experiential’ measure of poverty in which respondents with children report on whether or not they have had sufficient money to feed their children. Data from South Africa's 1994 October Household Survey showed that this and other measures revealed similar levels of poverty. However, the picture drawn of the social distribution of poverty suggests a higher incidence amongst those in squatter settlements and a lower incidence in rural areas.     

Disaggregating food consumption parameters : Designing targeted nutritional interventions

This article is concerned with a new nutritional intervention strategy, which is based on the belief that malnourished people eat different types of food to the well-nourished. The calculation of disaggregated food consumption parameters can identify ‘inferior’ food commodities; and the subsidization of these commodities will target intervention to those most in need. The effectiveness of this policy depends on the understanding of its theoretical basis. The author introduces the policy maker to this by reviewing the theoretical basis for consumption analysis, and then several key studies.     

Group incentive compatibility in a market with indivisible goods

In a market where each trader has one unit of an indivisible good, there are procedures for exchanging goods which result in competitive allocations. One of these procedures, the top trading cycle, has the property that it is in each trader's best interest to report his true preferences over the set of goods. This note shows that no subset of traders can misrepresent their preferences and improve the allocation for all members of the subset. Additionally, if there are no indifferences in the preferences, then some traders in a subset that misrepresents preferences do worse.     

MOMENTUM: DOES THE DATABASE MAKE A DIFFERENCE?

We examine discrepancies between the Center for Research in Security Prices (CRSP) and Trade and Quote (TAQ) databases by examining the returns of momentum strategies using each database. Momentum portfolios constructed from CRSP prices earn significant profits whereas similar portfolios using TAQ prices show losses. Adjusting TAQ prices with the TAQ dividends file or with the cumulative distribution factor provided by CRSP does not eliminate all differences. There are significant discrepancies in the way CRSP and TAQ record newly listed and delisted stocks. We document the residual (after all filters) price differences between the two databases and provide filters to adjust TAQ data for long sample periods and large sample sizes. Our filtering procedures allow for the possibility of examining intraday patterns in momentum profits.