Financial instruments with sports betting components: Marketing gimmick or a domain for behavioral finance?

We examine theoretically and experimentally a certain class of new financial instruments which are designed as lotteries on the outcome of prominent sports events like the Soccer World Cup 2006. From a theoretical point of view, sports betting products may be superior to a fixed rate investment because of heterogeneous expectations, risk-loving behavior of investors or additional non-monetary utility components. In comparison to the direct placement of bets at bookmakers’, sports betting products may be preferable in cases of hedonic framing. Our experimental section, however, reveals the limited practical relevance of these theoretical arguments for “average” decision makers. Despite this, financial instruments with sports betting components offer a certain profit potential due to the diversity of preferences across individuals. Summarizing, the issuance of sports betting products may actually be mainly driven by marketing aspects, nevertheless sports betting products may be considered to be “viable” niche products with low cost of capital for banks.     

Substitutability and Complementarity of Urban Amenities: External Effects of Built Heritage in Berlin

This article analyzes the impact of designated landmarks on condominium transaction prices in Berlin, Germany. We test for price differentials between listed and nonlisted properties and study their impact on surrounding property prices. The proximity to built heritage is captured by the distance to listed houses and heritage potentiality indicators. Impact is assessed by applying a hedonic model to microlevel data, and this process also addresses spatial dependency. While our findings suggest that designated landmarks do not sell at a premium or discount, landmarks are found to have positive external effects on surrounding property prices within a distance of approximately 600 m.     

Can inefficient public production promote welfare?

Conclusion Politicians believe in an old fashioned conjecture. They all think welfare must always be increased if one only reduce inefficiency. But this intuition is wrong. If we look at piecemeal price changes, temporarily decreasing efficiency can be necessary for improving welfare.This conclusion shows that the usual argument of political administrations to advise the management of public enterprises to reduce the inefficiency of production can, under the above mentioned circumstances, lead to welfare losses. On this account the efficiency rule of thumb must be supported by welfare considerations, otherwise misleading results can occur.But we should not be too concerned. If the starting point of the piecemeal policy path is located not too far from the welfare optimum, the usual efficiency argument leads to satisfactory results.Last not least we mentioned the economic duality of decreasing efficiency and instability; here our results fit into the usual conception of the economists' world.This research was supported by Deutsche Forschungsgemeinschaft, Sonderforschungsbereich 303. I am grateful to Dieter Bös, Udo Ebert, and Hans-Dieter Stolper as well as the anonymous referees of this journal for extensive comments on previous drafts of this paper.     

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The economics of harvesting predator-prey systems

The economics of harvesting a renewable natural resource is well-developed in a framework where environmental conditions of the species looked at are kept constant. For the case of two interacting species as a prey-predator relationship the economics of harvesting one of the two species is analyzed. Questions of existence, uniqueness, and stability are looked at. Applying optimal control theory, a modified golden rule of harvesting is derived.     

The “pipeline” problem in bilateral financial cooperation

It has been observed since about 1976 that financial commitments to developing countries have been disbursed more slowly than in the past. At the same time there have been increasing complaints from recipients that the commitment, appraisal and disbursement procedures of the donor countries were excessively complicated, resulting in a delay of disbursements. The Western industrialized countries, both individually and jointly in the Development Assistance Committee of the OECD, therefore initiated investigations into the importance to be assigned to this phenomenon as well as into the question of whether there are any possible ways of simplifying the administrative procedures. The following article sums up the results of such a study by the German Institute for Development Policy in respect of the Federal Republic of Germany.     

Alternativen der Verbraucherorganisation

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