State-contingent representations, strategic market games and systematic uncertainty

In this paper it is argued, in the context of a Walrasian market game, that the statecontingent representation of uncertainty is not compatible with the existence of what we call systematic uncertainty, that is, uncertainty that cannot be removed whatever the decision maker's conduct and past experience. The implications of this conclusion from the point of view of the foundations of decision theory are also drawn.     

Making Capitalism Work for Everyone

Capitalism–or, more precisely, the free enterprise system–is the most effective system for allocating resources and rewards. For this reason, most economists tend to believe that capitalism is bound to spread from the U.S. to all parts of the world. But the authors argue that the triumph of capitalism is far from certain. Part of the problem is that the forms of capitalism that are experienced in most countries are very far from the ideal. They are a corrupt version in which vested interests prevent competition from playing its socially bene. cial role. What's more, as many economists fail to recognize, and as has become clear from the experience of many countries in recent years, a market system cannot. ourish without the very visible hand of the government, which is needed to set up and maintain the infrastructure that enables participants to trade freely and with con. dence. But this in turn gives rise to a political, or collective action, problem: Even though we all bene. t from the better goods and services and the equality of access that competitive markets make possible, no one in particular makes huge pro. ts from keeping the system competitive and the playing. eld level; everyone has an incentive to take a free ride and let someone else defend the system. In this sense, a competitive market is a form of public good, one in need of collective action to maintain it. In all nations, the main political threat to free markets comes from two very different groups: (1) “incumbents,” who want to retain their positions and thus have a strong incentive to suppress any potential source of competition; and (2) those who have lost out and would be happy if the rules of the game that caused their troubles were changed. The longterm feasibility of free markets depends on reducing the incentives and limiting the ability of both of these groups to work against the market. This can be accomplished not by expanding the power of the state, but through policies –including a strengthening of the “safety net” as well as removal of barriers to the. ow of trade and capital–that end up limiting the state's ability to take inef. cient economic actions that favor the few at the expense of the majority.     

Optimal Decision-Making with Time Diversification

One of the most enduring topics in financial theory is thepersistence of investment risk across time. Traditional financelacks methods for considering and hedging non-diversifiablerisks. This paper is based on the general equilibrium model ofAllen and Gale (1997). We extend their model in variousdirections: the intermediary is a firm and not a planner,financial markets are assumed to be incomplete, and the mechanismof intergenerational risk-sharing is endogenously determined. Ourmodel allows for the analysis of optimal behavior of individualsand the intermediary together with the respective feedbackprocesses.     

Demand,innovation, and the dynamics of market structure: The role of experimental users and diverse preferences

The history of a number of industries is marked by a succession of eras, associated with different dominant technologies. Within any era, industry concentration tends to grow. Particular eras are broken by the introduction of a new technology which, while initially inferior to the established one in the prominent uses, has the potential to become competitive. In many case new entrants survive and grow, and the large established firms do not make the transition. In other cases, the established firms are able to switch over effectively, and compete in the new era. This paper explores a model which generates this pattern and has focused on the characteristics of the demand. We argue that the ability of the new firms exploring the new technology to survive long enough to get that technology effectively launched depends on the existence of fringe markets which the old technology does not serve well, or experimental users, or both. Established firms initially have little incentive to adopt the new technology, which initially is inferior to the technology they have mastered. New firms generally cannot survive in head-to-head conflict with established firms on the market well served by the latter. The new firms need to find a market that keeps them alive long enough so that they can develop the new technology to a point where it is competitive on the main market. Niche markets, or experimental users, can provide that space.

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Franco MalerbaEmail:

     

A Conceptual Regulatory Framework for the Design and Evaluation of Complex,Participative Cultural Planning Strategies

The current hype about culture‐led local development models is causing an increasing interest in cultural policies in the broader context of urban policy. This is not necessarily a transitory situation bound to fade once the hype is over. Under certain conditions, there is room to believe that culture may indeed become a main development driver of urban systems. For this to happen, however, it is necessary to abandon simple mono‐causal developmental schemes (such as the ‘creative class’ model) and look for more articulated approaches. This calls in turn for a complex systems‐based conceptual framework that is at the same time rich enough to capture the complexity of the interdependences among policy and state variables, and manageable enough to be of practical use, not only for policy design professionals but also for local stakeholders who want to take part in collective decision‐making processes. Inclusiveness and collective decision making are almost unavoidable in the case of cultural planning strategies, as the social sustainability of culture‐based value creation processes crucially depends on boosting the level of access to cultural opportunities by local residents. In this article we present an approach that may be a tentative first step in this direction.     

Time discounting for primary and monetary rewards

This paper reports a positive and statistically significant relation between short-term discount rates elicited with a monetary and a primary reward (chocolate). This finding suggests that high short-term discount rates are related to an underlying individual trait.     

The Effects of Extrinsic Cues on Olive Oil Price in Brazil

Over the past two decades, world olive oil consumption registered an impressive growth. Although olive oil consumption remains concentrated in the main producer countries surrounding the Mediterranean Sea (“traditional” markets), it is also growing rapidly in many other countries all over the world, where olive oil is still largely perceived as a novelty food (“nontraditional” markets). This study focuses on the Brazilian market of olive oil, which is one of the most important nontraditional markets in terms of both its dimension and growth rates. A hedonic price model has been used to evaluate whether, and to what extent, extrinsic cues impact on the retail price of olive oil. Data were collected via direct observation of several e-shops where Brazilian consumers could purchase olive oil. Results show that the retail price of olive oil is highly influenced by extrinsic cues such as branding, labeling, and packaging.     

Immigration,socio-economic conditions and crime: a cross-sectional versus cross-sectional time-series perspective

This study purpose is to verify if there is an association between foreign immigration and crime. In doing this, the study investigates also some satellite aspects revolving around this possible association: the range of offences affected by immigration, the relationship between immigrant and native crime, and whether the immigration impact on crime is direct or indirect. The present study has addressed these issues by both a cross-sectional and a longitudinal analysis, the latter including an instrument. The study is based on data of the Italian provinces. Italy represents a critical case for studying the migration–crime relationship, because in this country the rise in foreign immigration has been sudden and its pace feverish. The cross-sectional analysis findings show that crime intensities are affected by time-invariant factors and marginally by immigration. On the contrary, the longitudinal analysis shows that variations in immigration had a positive impact on both the most serious and the most common offences, on property crimes as well as on crimes of violence. There is no evidence of indirect effects of immigration on crime or of a link with native crime. In contrast to previous literature regarding the U.S., Canada, and Australia, these results suggest that a spiralling immigration can affect crime. In terms of methods, these findings show that the standard synchronic analysis models can be biased by non-observed factors and that therefore cross-sectional time-series models can offer significant advantages.