AN ARBITRAGE INTERPRETATION OF CLASSICAL OPTIMIZATION

The paper mathematically develops the heuristic idea that the first-order necessary conditions for a classical constrained optimization problem are equivalent to a market being arbitrage-free - with the Lagrange multipliers being the arbitrage-free market prices. The arbitrage notions start with the multiplicative Kirchhoff's Voltage Law and then generalize to matrix algebra. The basic result shows the normalized arbitrage-free «market prices» (the Lagrange multipliers) resulting from a classical constrained optimizaton problem can always be obtained as a ratio of cofactors. The machinery also gives an economic interpretation of Cramer's Rule as a competitive equilibrium condition.     

A Test of Consumer Awareness for Adults

The purpose of this study was to develop an instrument to measure adult awareness of consumer product/service information sources, consumer protection laws and channels of recourse. The process included identification of prevalent consumer problems, development of test items based on the identified problems, and assessments of the content validity and the reliability of the instrument. The process of construct validity was initiated by developing and testing hypotheses concerning the relationships between scores on the instrument and selected socio-economic characteristics of consumers. Low consumer awareness scores were predominant, supporting the need for consumer education for adults.     

HYBRID LOG-LINEAR MODELS FOR SPATIAL INTERACTION AND STABILITY ANALYSIS(*)

This paper discusses the relevance of hybrid log-linear models for applied research based on categorial data. Such models may lead to statistically significant results based on a reduced number of parameters. The use of long-linear modeling is illustrated by means of spatial interaction analysis with categorial data. Special attention is given to the problem of so-called structural zeros and of stability of spatial interaction patterns. Various constraints on the set of interaction parameters emerging from the off-diagonal elements of a spatial interaction matrix are taken into account by means of an entropy function. The analysis is illustrated by means of an empirical application to migration flows in Dutch housing market areas.