A STATISTICAL THEORY OF EQUILIBRIUM IN GAMES*

This paper describes a statistical model of equiliobrium behaviour in games, which we call Quantal Response Equilibrium (QRE). The key feature of the equilibrium is that individuals do not always play responses to the strategies of their opponents, but play better strategies with higher probability than worse strategies. we illustrate several different applications of this approach, and establish a number of theoretical properties of this equilibrium concept. We also demonstrate an equililance between this equilibrium notion and Bayesian games derived from games of complete information with perturbed payoffs     

Product Liability in the European Community: The Legislative History

This article analyzes the complex history of the important new product liability directive of the European Community. The member countries must amend their laws and meet the directive's proconsumer standards and spirit. The lengthy political evolution of this policy involved many aggressive constituencies, including nations, parts of the European Community governance structure, business federations, consumer organizations, and other functional interest groups.     

Risk-Benefit Analysis of Cigarette Smoking: Public Policy Implications

The objective of this study is to investigate the internal risks and benefits from smoking over the lifetime of a male individual. It differs from many earlier studies in that it focuses on the costs borne by the individual, as opposed to external or societal costs. It also includes the benefits from smoking which play an important role in the individual's smoking decision. Risk-benefit ratios range from 0.25 to 3.67 depending on the tar and nicotine content of cigarettes, the discount or time preference rate, the value of a life year, and the price elasticity of demand for cigarettes.     

Consumer Reaction to a Risk/Benefit/Option Message about Agricultural Chemicals in the Food Supply

Audience segmentation and focus group methods were used to evaluate consumer reactions to a risk/benefit/option message about agricultural chemicals in the food supply. The approach was well-received and showed potential for raising consumers' concerns regarding health and environmental risks associated with pesticides, along with confidence in their ability to minimize exposure to residues. Concern and confidence increased most among consumers who already were concerned and who were most removed from agriculture.     

Commitment Approach to Motivating Community Recycling: New Zealand Curbside Trial

An urban community in New Zealand was the site of a field experiment designed to assess different approaches to increasing household participation in a cnrbside recycling program. Two different commitment interventions were delivered using a 2 × 2 factorial design, and weekly participation data were collected over 12 weeks. Half of the households were asked to make an explicit verbal commitment to participate in the program, while half were not. Half of the households were also requested to pay for their recycling bins, while half received bins free of charge. All households received the same educational and promotional information, specifically designed to maximize participation, regarding program details. The verbal commitment intervention significantly increased participation relative to the no commitment intervention, while difficulties in the operationalization of the financial commitment intervention made it difficult to assess its validity as a construct. Notably, differences in participation rates between the control group, who received only educational and promotional materials, and the experimental treatment groups were not statistically significant. The discussion focuses oh the increasing importance of well-designed educational materials for encouraging voluntary curb-side recycling.     

HOT WATER CONSUMPTION IN THE HOME

A survey of 376 households was undertaken to determine how hot water was used in the domestic environment within the time brackets 7:00–12:00, 12:01–16:00 and 16:01–24:00. The results show that most hot water is used during the evening. This is mainly because bathing and washing up are more frequent per person at this time. Washing machine use was consistently more frequent during lunchtime. The results are laid out so that designers can use the data for prediction of water consumption.     

Accounting-Based Stock Price Anomalies: Separating Market Inefficiencies from Risk*

Abstract. We examine six accounting-based stock price anomalies using two sets of tests to determine the extent to which the anomalies (1) represent market mispricing or (2) reflect premia for unidentified risks. Market mispricing is indicated if the anomalous returns are concentrated around subsequent earnings announcements in patterns suggesting that the earnings information causes traders to re-examine their prior (incorrect) beliefs. Mispricing is also indicated if anomalous returns on zero-investment portfolios are positive, period after period. Our results indicate that an anomaly based on earnings momentum probably reflects market mispricing, but that two value-glamour anomalies (based on the book-market ratio and the earnings-price ratio), and two anomalies based on computerized fundamental analyses (from Ou and Penman 1989 and Holthausen and Larcker 1992) are more likely to reflect risk premia than indicated by prior research. Evidence on a sixth anomaly, based on price momentum, is mixed.     

Autonomy and Political Strategy: Building the Other Superpower

Recently, from 21–25 October 2004, I participated in the Norway Social Forum (NSF). It was the most successful regional social forum that I have attended. The forum expressed what I call an autonomist electoral politics. Such a politics combines short‐term electoral tactics with long‐term social movement autonomy. Autonomist electoral politics outlines the direction that forthcoming local, regional and national forums should take. I use the example of the NSF to respond to Peter Marcuse’s article on social forums and social movements. Le Forum social norvégien (FSN) s’est tenu du 21 au 25 octobre 2004, et ce fut le forum social régional le plus réussi auquel j’ai participé. Il a exprimé ce que j’appelle une politique électorale autonomiste. Une telle politique allie des tactiques électorales à court terme et une autonomie des mouvements sociaux à long terme. Elle définit l’orientation que devrait prendre les forums locaux, régionaux et nationaux à venir. J’utilise ici l’exemple du Forum social norvégien pour répondre à l’article de Peter Marcuse sur les forums et mouvements sociaux.     

WAGE DETERMINATION UNDER NON-LINEAR TAXES: ESTIMATION AND AN APPLICATION TO PANEL DATA

This paper studies wage determination under piecewise lineartaxes in a unionised labour market. The purposes of the paperare to model how piecewise linear taxation affects the choiceset of the union, and to take this information into accountin the estimation. The empirical application is based on paneldata. Piecewise linear taxes necessitates formal assumptionsabout the sources of randomness, and we find that both unobservedheterogeneity and measurement errors in the wage rate are importantto consider in the estimation. We also find that taxes are likelyto have a non-negligible impact on the (pre-tax) wage rate.