Cheating in markets: A laboratory experiment

We develop a two-market model under three conditions: autarky, frictionless free trade, and free trade with cheating. With cheating, buyers can underpay by π% in cross-market trades and sellers can deliver π% of full value. We solve for competitive equilibrium with cheating and obtain novel testable predictions on price, volume and surplus. We test these in a laboratory experiment using parameters intended to challenge the theory. The results are generally consistent with competitive equilibrium. We find evidence of price unification, market segmentation, a cross-market volume of trade lower under cheating than in frictionless free trade, but a higher overall volume.     

Explaining co-movements between stock markets: The case of US and Germany

We explain co-movements between stock markets by explicitly considering the distinction between interdependence and contagion. We propose and implement a full-information approach on data for US and Germany to provide answers to the following questions:

(i) Is there long-term interdependence between US and German stock markets?

(ii) Is there short-term interdependence and contagion between US and German stock markets, i.e. do short-term fluctuations of the US share prices spill over to German share prices and is such co-movement unstable over high-volatility episodes?

Our answers are, respectively, no to the first question and yes to the second one.     

Voluntary Contributions to Personal Pension Plans: Evidence from the British Household Panel Survey

In this paper, we use data from the British Household Panel Survey (BHPS) for the years 1992 to 1998 to study the determinants of saving in the form of voluntary contributions to personal pension plans (PPPs). We first estimate a probit model with selection for the probability of making these voluntary contributions. We then estimate a random‐effects tobit regression for the amounts contributed and compare the results with those of a similar regression for conventional saving. Our findings suggest that voluntary contributions to PPPs are made essentially for retirement purposes, whereas conventional saving is undertaken for precautionary motives. The former type of saving is thus unlikely to offset the latter completely.     

FINANCIAL CONSTRAINTS, GLOBAL ENGAGEMENT, AND FIRM SURVIVAL IN THE UNITED KINGDOM: EVIDENCE FROM MICRO DATA

Financial constraints have been found to play an important role on various aspects of firm behavior. Yet, their effects on firm survival have been largely neglected. We use a panel of 61,496 UK firms over the period 1997–2002 to study the effects of financial variables on firms' failure probabilities, differentiating firms into globally engaged and purely domestic. Estimating a wide range of specifications, we find that lower collateral and higher leverage result in higher failure probabilities for purely domestic than for globally engaged firms. This can be seen as evidence that global engagement shields firms from financial constraints.     

Legacies of violence: trust and market development

We study the effect of individual exposure to civil conflict on trust and preferences for market participation. We conducted behavioral experiments and surveys among 426 randomly selected individuals more than a decade after the end of the Tajik civil war. We find that exposure to violence undermines trust within localities, decreases the willingness to engage in impersonal exchange, and reinforces kinship-based norms of morality. The effect is strongest where infighting was most severe and where political polarization is high. Robustness of the results to the use of pre-war controls, village fixed effects, and alternative samples suggest that selection into victimization is unlikely to explain the results.     

Storable votes

Motivated by the need for more flexible decision-making mechanisms in the European Union, the paper proposes a simple but novel voting scheme for binary decisions taken by committees that meet regularly over time. At each meeting, committee members are allowed to store their vote for future use; the decision is then taken according to the majority of votes cast. The possibility of shifting votes intertemporally allows agents to concentrate their votes when preferences are more intense, and although the scheme will not achieve full efficiency, storable votes typically lead to ex ante welfare gains over non-storable votes. Welfare gains can be proven rigorously in the case of 2 voters. With more voters, counterexamples can be found, but the analysis suggests that the welfare improvements should continue to hold if one of the following conditions is satisfied: (i) the number of voters is above a minimum threshold; (ii) preferences are not too polarized; (iii) the horizon is long enough.     

Underpricing of venture backed IPOs: a meta-analysis approach

ABSTRACT

Listing firms are subject to underpricing mainly because of asymmetries of information, but IPOs backed by a venture capitalist are generally found to be subject to less underpricing. Although this condition is commonly verified by the empirical evidence, a consistent number of studies finds contrasting results. This paper aims to answer to the question: do venture capitalists effectively reduce underpricing at IPO? Evidence provides a negative answer, with venture-backed IPOs having higher underpricing especially in US markets. Meta-regression results confirm the different effect of VC between US and European IPOs. Results overall suggest that other explanations on underpricing might hold in US markets.     

The socio-economic value of satellite earth observations: huge,yet to be measured

ABSTRACT

Earth-observing satellites provide regular and accurate data that can support evidence-based decisions and public policies in a wide range of domains, potentially bringing huge socio-economic benefits. However, obstacles to effective data exploitation and poor awareness about their impacts risk hindering this potentiality and threaten the investments. Leveraging on the case of the Copernicus Programme, we review the challenges related to the full exploitation of free environmental space data and to the measurement of the related impacts. We then discuss the need for empirical approaches based on value-chain analysis with the objective to stimulate further societal and economic research.     

Conceptualization and measurement of disability in studies on subjective well-being: a critical review and evidence from the Italian Health Surveys

The main aim of this study is to assess, through a wide literature review, whether the concept of “disability,” as variously formulated, can be considered a good foundation for scientific research on happiness and subjective well-being, as well as the effect of some conceptualizations on the understanding of the relationship between happiness and disability. The literature review includes longitudinal population studies, cross-sectional surveys and longitudinal clinical researches. The empirical part of the study, based on the 2013 Italian Health Interview Survey, shows some examples of the impact of different definitions of disability on the subjective well-being variability. The Italian Health Interview Survey is conducted every 5 years and carried out on a sample of about 60,000 households and 162,000 respondents distributed in 1456 municipalities. Some suggestions for future research, based on a vision of the multifaceted nature of disability, are proposed.     

The persistence of firms’ knowledge base: a quantile approach to Italian data

The paper investigates the patterns of persistence of innovation and of the properties of firms’ knowledge base (KB) across a sample of Italian firms in the period 1998–2006. The analysis draws upon a theoretical representation of knowledge as a collective good, stemming from the recombination of knowledge bits that are fragmented and dispersed across economic agents. On this basis, we derived properties of the KB like the coherence, the cognitive distance and the variety, and investigated their patterns of persistence over time. The empirical analysis is implemented by exploring the autocorrelation structure of such properties within a quantile regression framework. The results suggest that the properties of knowledge are featured by somewhat peculiar patterns as compared with knowledge stock, and that such evidence is also heterogeneous across firms in different quantiles.