Market Dynamics,Programmed Traders and Futures Markets: Beginning the Laboratory Search for a Smoking Gun

Recent events have caused a re-examination of the role of programmed traders and futures markets in generating destabilizing price movements. Laboratory experiments provide an ideal environment to isolate their effects on behaviour. In a new series of experiments we find that program traders and futures markets can be crucial for ensuring the informational efficiency of the spot market, even when the former are active participants in bubbles and crashes     

RESTORATION-BASED COMPENSATION MEASURES IN NATURAL RESOURCE LIABILITY STATUTES

In the past two decades, the U.S. Congress has passed several major environmental statutes that designate natural resource management agencies as trustees of the resources on behalf of the public and that allow the trustees to recover damages for injuries to public resources from releases of hazardous substances and discharges of oil.
The standard measure of damages in the various statutes is the cost of restoring the resources to baseline conditions ("primary restoration") plus the interim loss in alue from the time of the incident until full recovery from the injuries. However, trustees are allowed to spend their damage recoveries only on enhancing or creating ("restoring, rehabilitating, replacing or acquiring the equivalent of") natural resources. The statutory restriction on the use of the recoveries has motivated the development of an alternative measure of damages for interim losses—the cost of "compensatory restoration" actions providing in-kind compensation—which the National Oceanic and Atmospheric Administration (NOAA) incorporated in its 1996 regulations implementing the natural resource liability provisions of the Oil Pollution Act (OPA).
This analysis first identifies the statutory measure of damages and the traditional framing of damages for interim losses (monetary compensation). It then defines an alternative utility-theoretic measure of resource compensation and identifies alter-native methods of implementation.     

Picking Winners? Investment Consultants’ Recommendations of Fund Managers

Investment consultants advise institutional investors on their choice of fund manager. Focusing on U.S. actively managed equity funds, we analyze the factors that drive consultants’ recommendations, what impact these recommendations have on flows, and how well the recommended funds perform. We find that investment consultants’ recommendations of funds are driven largely by soft factors, rather than the funds’ past performance, and that their recommendations have a significant effect on fund flows. However, we find no evidence that these recommendations add value, suggesting that the search for winners, encouraged and guided by investment consultants, is fruitless.