Climate Forecasts and Flood Mitigation

There is growing evidence that flood mitigation is often inefficient because individuals misestimate flood risk. The propensity to misestimate flood risk is expected to rise because climate change ensures the past will be a poor predictor of the future. Greater reliance on downscaled climatological and hydrological forecasts has been suggested to address these information failures. This article combines stochastic dynamic programming with historical data and climate‐driven streamflow projections to determine how changes in flood risk forecasts influence optimal investments in flood mitigation infrastructure. Using upgrades in California's levee system as an example, we show that climate change is causing benefit–cost analysis to become increasingly biased in favor of flood mitigation infrastructure projects. We also show that using downscaled hydroclimate forecasts to achieve more accurate estimates of flood risk can decrease the efficiency of flood mitigation infrastructure investments, if flood risk is currently overestimated. JEL Classification: D81 Q25 Q54     

Beliefs and (in)stability in normal-form games

Experimental Economics - In this paper, we use experimental data to study players’ stability in normal-form games where subjects have to report beliefs and choose actions. Subjects saw each...     

Collusion and Price Rigidity

We consider an infinitely repeated Bertrand game, in which prices are publicly observed and each firm receives a privately observed, i.i.d. cost shock in each period. We focus on symmetric perfect public equilibria, wherein any "punishments" are borne equally by all firms. We identify a tradeoff that is associated with collusive pricing schemes in which the price to be charged by each firm is strictly increasing in its cost level: such "fully sorting" schemes offer efficiency benefits, as they ensure that the lowest-cost firm makes the current sale, but they also imply an informational cost (distorted pricing and/or equilibrium-path price wars), since a higher-cost firm must be deterred from mimicking a lower-cost firm by charging a lower price. A rigid-pricing scheme, where a firm's collusive price is independent of its current cost position, sacrifices efficiency benefits but also diminishes the informational cost. For a wide range of settings, the optimal symmetric collusive scheme requires (i) the absence of equilibrium-path price wars and (ii) a rigid price. If firms are sufficiently impatient, however, the rigid-pricing scheme cannot be enforced, and the collusive price of lower-cost firms may be distorted downward in order to diminish the incentive to cheat. When the model is modified to include i.i.d. public demand shocks, the downward pricing distortion that accompanies a firm's lower-cost realization may occur only when current demand is high.     

Prospect theory and liquidation decisions

We solve a liquidation problem for an agent with preferences consistent with the prospect theory of Kahneman and Tversky [Econometrica 47 (1979) 263-291]. We find that the agent is willing to hold a risky project with a relatively inferior Sharpe ratio if the project is currently making losses, and intends to liquidate it when it breaks even. On the other hand, the agent may liquidate a project with a relatively superior Sharpe ratio if its current profits rise or drop to the break-even point. Our results capture the spirit of the disposition effect and the break-even effect documented in empirical and experimental studies.     

Time preferences and commitment devices: evidence from ROSCAs and funeral groups in Benin

Drawing on first-hand data collected from a household survey in urban Benin, we examine membership in two types of informal groups that display the characteristics of a commitment device: Rotating Savings and Credit Associations (ROSCAs) and funeral groups. We investigate whether agents displaying time preferences with a present bias are more likely to commit themselves through participation in such groups. Our results provide evidence indicating that women who display such preferences are more likely to join funeral groups, but not ROSCAs, and to save more through them. These results hold for women but not for men. We also ensure that our results cannot be explained by intra-household conflict issues.     

The future of food demand: understanding differences in global economic models

Understanding the capacity of agricultural systems to feed the world population under climate change requires projecting future food demand. This article reviews demand modeling approaches from 10 global economic models participating in the Agricultural Model Intercomparison and Improvement Project (AgMIP). We compare food demand projections in 2050 for various regions and agricultural products under harmonized scenarios of socioeconomic development, climate change, and bioenergy expansion. In the reference scenario (SSP2), food demand increases by 59–98% between 2005 and 2050, slightly higher than the most recent FAO projection of 54% from 2005/2007. The range of results is large, in particular for animal calories (between 61% and 144%), caused by differences in demand systems specifications, and in income and price elasticities. The results are more sensitive to socioeconomic assumptions than to climate change or bioenergy scenarios. When considering a world with higher population and lower economic growth (SSP3), consumption per capita drops on average by 9% for crops and 18% for livestock. The maximum effect of climate change on calorie availability is ?6% at the global level, and the effect of biofuel production on calorie availability is even smaller.     

The prospects for OPEC: A critical survey of models of the world oil market

The paper critically surveys seven recent models of the world oil market and their evaluations of the prospects for OPEC: Blitzer-Meeraus-Stoutjesdijk, Bohi-Russell, the U.S. Federal Energy Administration, Kennedy, Kalymon, Levy and Nordhaus. After a brief discussion of the basic approaches to the problem, we examine the model specifications in some detail. The principal contributions and conclusions are summarized, as are the main limitations of these models. We conclude with some suggestions of the most promising areas for future research.     

INDIGENOUS URBANISMS

Indigenous urbanism is an analytic and vital experience that captures everyday life and extreme moments of conflict in settler colonies. While highly localized, Indigenous urbanism/s are comparable across time and space. Delivered from different parts of the world, the essays in this collection highlight that Indigenous urbanism is politically, socially and culturally significant not only for Indigenous peoples in cities, but also for urban settlers and non-Indigenous people of color. While Indigenous urbanisms are foregrounded by settler-colonial structures and processes, they also underscore the unresolved nature of social relations in cities, and indeed, the unsettled character of the city itself. This introduction briefly sketches the themes and scope of each essay and draws them into conversation. Taken together, this collection illustrates the relational—rather than reactionary—character of Indigenous urbanisms as structure, in and of the (settler) city. Indigenous urbanisms shape cities by engaging with broader categories of human relations, intimate connections, conflict and resistance.     

PLANETARY URBANIZATION AND IMPERIALISM: A View from Guåhan/Guam

Through this article I contribute to debates about planetary urbanization by specifying how imperialism, defined as states restricting the self-determination of other states or peoples, intersects with urbanization. While recent urban theory has explored how urbanization unfolds at scales beyond the city and in relation to global capital accumulation, it has not fully extended these insights to incorporate the central role of states and imperialism. First, I argue that doing so develops a more expansive account of extended urbanization by revealing how networks of military bases are themselves enmeshed in the production of urban networks via state policies, and that militarized sites safeguard the global capitalist economy that sustains urbanization. Secondly, I argue that imperialism changes concentrated urbanization by restricting self-determination, fomenting spatial formations that prioritize militarism, and shifting urban politics to a larger scale. I show these dynamics through a historical analysis of the US military's strategic interest in the island of Guåhan/Guam at the end of the second world war, and then generalize from this case to consider variegated outcomes at the intersections of urbanization and imperialism. In the article I aim to more adequately explain the heterogenous ways urbanization unfolds across the contemporary world.