Risk attitude in lotteries offering real products and monetary outcomes

Using two auction mechanisms, the second price auction and the Becker, DeGroot, and Marschak mechanism, we examined individuals’ buying and selling bidding patterns in three types of binary lotteries: a lottery offering only real products, a lottery offering only monetary outcomes and mixed lotteries offering both real products and monetary value outcomes. Participants’ willingness to pay and willingness to accept for the product lottery suggest risk neutrality. In contrast, participants’ bidding prices for the monetary and mixed lotteries suggest risk aversion. These findings suggest that an individual's risk attitude depends upon the type of lottery, perhaps indicating a “product illusion.”     

On defining geographic markets

A number of different approaches for empirically defining a geograhic market are explored in this paper. It is demonstrated that the rest proposed by Horowitz, and even a generalization of it,provide conflicting and inconsistent results. Correlation analysis, while appealing in its simplicity, has the potential for providing misleading results. Finally, the notion of causality as applied here, seems to be a promising approach to the issue.     

Government policy and the development and use of biopesticides

Biopesticides developed and used in the future will emerge against the backdrop of the environmental effects associated with the use of conventional pesticides and government policies designed to control these effects. In the final analysis, farmers' choices on pesticides will be influenced by the prevailing costs and benefits of conventional pesticides and their alternatives including biopesticides. The outlook for pesticide use is complicated, though some directions can be perceived. There are a number of factors that will serve potentially to impact pesticide use which in turn will affect the development of biopesticides. These include pesticide regulation, the FAIR Act, the crops planted, the management of ecologically-based systems, and consumer demand for ‘green' products.     

A tourist's “vision quest” in an African game reserve

This essay deals with the role of guides in the Moremi Wildlife Reserve of Botswana and the frictions that arise between them and visitors to the reserve. The guides' role as “interpreters” is juxtaposed with the tourists' desire for first-hand “communion” with nature, which is here treated as similar to a “vision quest.” The essay analyzes the interactions between the Tswana guides on the one hand and South African tourists on the other, focusing on the relegation of the former by the latter to the (basically menial) role of pathfinders and assistants that most Africans fill in the tourists' home culture. Attention is drawn to a possible crisis brewing in tourist-guide relationships, due to the fact that guides are unsuccessful, or even redundant, mediators in “vision quest” tourism.     

Valuation of assets on a markov state space

In the absence of opportunities for arbitrage, a very general valuation equation is derived for risky assets. This derivation exploits the linear operators associated with the transition probabilities of the state process.     

Stability of the market for electrical energy

Summary The objective of this paper has been to develop a model of the demand and supply of electrical energy at the individual utility level. Using the model developed, the stability of the market was then investigated. An attempt has been made to incorporate the technological and institutional rigidities that result in a lag in the adjustment between the actual price in a period and an expected normal price which plays a central role in determining the quantity of electrical energy supplied. The model is estimated using data for two different utilities, one located in the western United States and another located in the eastern United States. It is found that expected normal price adjusts rather slowly to actual price, that the elasticity of supply with respect to expected normal price is negative, and most importantly, for the two utilities the market is stable. The views expressed are those of the author and do not necessarily represent the policies of the Federal Energy Administration or the views of other Federal Energy Administration staff members.     

The nature and extent of the market for soybeans and soybean products

Summary This paper addresses the question of whether soybeans, soybean meal, and soybean oil produced in the United States and exported were part of a single, world geographic market during the decade of the 1980s. An answer to this question is sought using an approach to defining a geographic market based on the notion of instantaneous causality. The empirical results, based on prices for soybeans, soybean meal, and soybean oil for three spatially diffuse locations, suggest that there was but a single identifiable world market for these commodities over the period of study.The authors are with the Economic Research Service, U.S. Department of Agriculture, Washington D.C. The views expressed are those of the authors and do not necessarily represent the policies of the U.S. Department of Agriculture or the views of other U.S. Department of Agriculture staff members. Senior authorship is not assigned. The authors would like to thank an anonymous referee for helpful suggestions.     

Earnings Variability and Disclosure of R&D: Evidence from Press Releases

This study explores press releases in the pharmaceutical industry to expand our understanding of how investments in R&D outlays influence uncertainty of future earnings. The findings make two contributions to the literature. First, they provide evidence that equal investments in different R&D ventures are associated with differential variability of future earnings. This result suggests that non‐financial information contained in press releases captures attributes of firm‐specific R&D investments that are not revealed through R&D expenditures reported in financial statements. Second, prior studies have indicated that investments in pharmaceutical R&D are associated with the highest variability of future earnings among all industries. The results, however, suggest that for a large class of low‐risk pharmaceutical R&D investments, the relative variability of future earnings is low and similar to that generated by capital expenditures. The findings hold when we control for endogeneity in voluntary disclosure of press releases.     

The Change in Productive Efficiency in Telecommunications in the United States

The question addressed here is whether the adoption of incentive regulation, which has become an important regulatory tool in the telecommunications industry in the USA, has resulted in a change in the technical efficiency of local exchange carriers in the USA. After providing an overview of the nature of incentive regulation, a methodology for measuring technical efficiency and its change is introduced. This is a multiple-output/multiple-input distance function approach to measuring technical efficiency. The results of implementing this approach for 19 local exchange carriers for the 1988–2001 period indicate that in the production of local service, intrastate toll/access service, and interstate access to local loops, there was no change in technical efficiency between the 1988–1990 period and the 1991–2001 period, something that incentive regulation was specifically designed to promote.     

The pattern of demand in the United States.

The objective of this paper is to examine the demand for goods and services in the United States using the Almost Ideal Demand System (AIDS). The focus is on testing the theoretical properties of demand. The model fits the data well. The suggestion is that food, clothing, housing and transportation are necessities while medical care and recreation are luxuries. The notion of homogeneity is generally accepted while symmetry is soundly rejected. Finally, negativity is shown to hold.