The Elite of St Petersburg as Seen by the City Inhabitants

This paper is based on a survey of St Petersburg's elite, carried out in October 1994 for a city daily, Nevskoe Vremia (a paper with approximately 100,000 subscribers). A representative sample of 800 city dwellers were interviewed by phone, responding to mainly open questions about the city elite. Eight main indicators provided data on the general composition of the elite and lists of names by categories of influence, authority and personal fortune. Of the 150 names nominated by our respondents, all but 12 were identified and characterized in terms of their current or recent formal status, political or social-cultural standing and/or reputation. Some general and specific problems of the study are considered: What is an elite? Is there a theoretical consensus on the nature of the ruling and non-ruling constituents of an elite? What are the dynamics of regional or city elites in modern Russia today? Has the emergence of an elite any relevance to the system of representative democracy and to other aspects of social life? What are the mechanisms determining the formation and reproduction of an elite in public space? Cet article est basé sur un sondage de l'élite de Saint Pétersbourg, fait en 1994 pour un quotidien de la ville, Nevskoe Vremia (un journal qui a environ 100,000 abonnés). Une section représentative de 800 citadins fut interviewée par téléphone, répondant à des questions, principalement des questions ouvertes, concernant l'élite de la ville. Huit indicateurs principaux offraient des informations sur la composition des élites et des listes de noms classés par catégories d'influence, d'autorité et de fortune personnelle. Des 150 noms cités par les personnes interrogées, tous sauf 12 furent identifiés et caractérisés par leur statut formel, leur rang et/ou réputation politique ou socio-culturel, actuels ou récents. Certains problèmes de cette étude, généraux ou spécifiques, sont examinés. Qu'est-ce qu'une élite? Y a-t-il un consensus quant à la nature des éléments qui constituent une élite dirigeante et non-dirigeante? Quelles sont les dynamiques des élites régionales ou citadines de la Russie moderne actuelle? Est-ce que l'apparition d'une élite a un rapport avec le système de democratie représentative et avec d'autres aspects de la vie sociale? Quels sont les processus qui déterminent la formation et la reproduction d'une élite dans l'espace public?     

Core equivalence with congested public goods

Summary This paper examines a model of an infinite production economy with a finite number of types of agents andsemi- public goods, which are subjected to crowding and exclusion. The utility of an agent depends not only on the vector of public commodities produced by the coalition to which she belongs, but also on the mass of agents of her type who are the members of this coalition. The main purpose of the paper is to derive necessary and sufficient conditions on the local degrees of congestion which would guarantee the equivalence between the core and the set of equal treatment Lindahl equilibria. We prove that this equivalence holdsif and only if there are constant returns to group size for each type of agents. It implies that linearity of each agent's congestion function with respect to the mass of the agents of her own type is necessary for the core equivalence to hold.The final version of this paper was written while Shlomo Weber was visiting the Technical University of Dresden as the Fellow of the Alexander von Humboldt Foundation, whose support is gratefully acknowledged. The authors are grateful to Peter Meyer, Nicholas Yannelis and the anonymous referees for useful remarks and suggestions.     

Household Portfolio Diversification: A Case for Rank-Dependent Preferences

The proliferation of novel preference theories in financialeconomics is hampered by a lack of non-experimental evidenceand by the theories’ additional complexity which has notbeen shown to be critical in applications. In this article Ipresent arguments in support of preferences with rank dependency.Using the Survey of Consumer Finances data, I document two widespreadpatterns inconsistent with expected utility: (i) many householdssimultaneously invest in well-deversified funds and in poorly-diversifiedportfolios of stocks; and (ii) some households with substantialsavings do not invest anything in equities. I show that portfoliochoice models with rank-dependent preferences, plausibly parameterizedand under fully rational assumptions, are quantitatively consistentwith the observed diversification. These results call for furtherefforts to integrate the models of rank-dependent preferencesin portfolio theory and asset pricing.     

Fairness in supply chain contracts: A laboratory study

Various contracts can be designed to coordinate a simple supplier–retailer channel, yet the contracts proposed in prior research and tested in a laboratory setting do not perform as standard theory predicts. The supplier, endowed with all bargaining power, can neither fully coordinate the channel nor extract all of the channel profit. We report on a sequence of laboratory experiments designed to separate possible causes of channel inefficiency. The three causes we consider are inequality aversion, bounded rationality, and incomplete information. It turns out that all three affect human behavior. Inequality aversion has by far the most explanatory power regarding retailers’ behavior. Incomplete information about the retailer's degree of inequality aversion has the most explanatory power in regards to the suppliers’ behavior. Bounded rationality affects both players, but is of secondary importance.     

Heterogeneity of consumer preferences and trade patterns in a monopolistically competitive setting

The paper considers a two-sector two-country trade model of monopolistic competition featuring the heterogeneity of consumer preferences and incomes within and across countries. The incorporation of heterogeneity into a monopolistic competition setting is achieved by assuming a nested Cobb–Douglas and CES utility function exhibiting both country and sector-specific consumer tastes and expenditure shares on manufacturing and traditional goods. The key question analyzed in the paper is how consumer heterogeneity affects the home bias of trade in different countries. The key finding here is that the heterogeneity in tastes and incomes of consumers can provide a substantial influence on degree of home bias in trade but only in combination with high transportation costs.     

Does quality management improve the internalization of environmental practices? An empirical study in Africa

This article analyzes the role of quality management in the internalization of environmental practices. A qualitative study based on interviews with 35 practitioners was conducted in three African countries (Cameroon, Senegal, and Ivory Coast). The results highlight the contrasting roles played by the main reference model for quality management—International Organization for Standardization (ISO) 9001—in the internalization of the international standard for corporate environmental management—ISO 14001—with positive points related to formal and documentary aspects and perverse effects such as increased bureaucracy and a focus on quality at the expense of the environment. The results also point to four configurations of integration of environmental practices according to the level of quality management internalization and the level of institutional pressure to adopt corporate environmental management: poor integration, partial integration, substantial integration, and sustainable integration.     

Human capital and the private equity premium

When capital market is imperfect, an entrepreneur has to invest substantial personal funds to start a firm and has to bear large firm-specific risk. Furthermore, if a typical entrepreneur is risk averse, private equity should earn a premium for idiosyncratic risk. In this paper I explore the interaction of human capital with the decision to become an entrepreneur. I calibrate a model of entrepreneurial choice to illustrate a significant attenuating effect of human capital on the premium for firm-specific risk. When an entrepreneur can quit the business and work for hire, the firm-specific risk premium is order of magnitude lower than without this option. While an entrepreneur puts at risk a substantial fraction of financial wealth, she does not commit all human capital to the current business. At stake is only the labor income forgone while managing the firm and the rest of human capital is unaffected by the business risk. Empirical evidence suggests that private equity does not earn any significant premium over publicly traded equity. The model with human capital is consistent with this observation, assuming typical entrepreneur forgoes a small expected return (1.5%) in lieu of intangible benefits of entrepreneurship.     

Probability weighting functions implied in options prices

The empirical pricing kernels estimated from index options are non-monotone (Rosenberg and Engle, 2002, Bakshi et al., 2010) and the corresponding risk-aversion functions can be negative (Aït-Sahalia and Lo, 2000, Jackwerth, 2000). We show theoretically that these and several other properties of empirical pricing kernels are consistent with rank-dependent utility model with probability weighting function, which overweights tail events. We also estimate the pricing kernels nonparametrically from the Standard & Poor's 500 index options and construct empirical probability weighting functions. The estimated probability weights typically have the inverse-S shape, which overweights tail events and is widely supported by the experimental decision theory.     

Life-Cycle Portfolio Choice with Additive Habit Formation Preferences and Uninsurable Labor Income Risk

This article explores the implications of additive and endogenoushabit formation preferences in the context of a life-cycle modelof an investor who has stochastic uninsurable labor income.To solve the model, I analytically derive the habit-wealth feasibilityconstraints and show that they depend on the worst possiblepath of future labor income and on the habit strength, but noton the probability of the worst income. When there is only aslim chance of a severe income shock, the model implies muchmore conservative portfolios. The model also predicts that forsome low to moderately wealthy households, the portfolio shareallocated to stocks increases with wealth. Because of this feature,the model can generate more conservative portfolios for youngerthan for middle-aged households. The effects of habits on portfoliochoice are robust to income smoothing through borrowing or flexiblelabor supply. One controversial finding is that for high valuesof the habit strength parameter, usually required for the resolutionof asset pricing puzzles in general equilibrium, the life-cyclemodel predicts counterfactually high wealth accumulation. (JEL:G11, G12)