Optimal Forestry Contracts under Asymmetry of Information

In this paper, I analyze optimal royalty contracts in forestry when the harvesting firm has private information on the cost of harvesting. This infinite horizon forest rotation model with asymmetry of information on the cost parameter results in a dynamic incentive problem. Depending on whether the costs are correlated over time or not, the firm either receives rent or receives no rent, associated with the continuation part of the rotation choice. I characterize the optimal contract explicitly in both cases. I also examine the loss in expected welfare surplus resulting from the use of a linear contract instead of the more general non‐linear contract.     

Sur l'intervention de l'état dans le financement du logement

Magri, S. 1972: Politique du logement et besoins en main d'?uvre. Pinçon, M. 1976: Les HLM. Structure sociale de la population logée, agglomération de Paris. Harvey, D. 1973: Social justice and the city Roberts, J. T. 1976: General improvement areas. Farnborough: National Community Development Project 1975: The poverty of the improvement programme. Lindberg, L. N., Alford, R., Crouch, C. and Offe, C. , editors, 1975: Stress and contradiction in modern capitalism. Perlman, J. E. 1976: The myth of marginality: urban poverty and politics in Rio de Janeiro. Granelle, J-J. 1975: La valeur du sol urbain et la propriété foncière: le marché des terrains à Paris.     

The sources of protectionist drift in representative democracies

We analyze a two country-two good model of international trade in which citizens in each country differ by their specific factor endowments. The trade policy in each country is set by the politician who has been elected by the citizens in a previous stage. Due to a delegation effect citizens generally favor candidates who are more protectionist than they are. The one-candidate-per-country equilibria exhibit a “protectionist drift” owing to this delegation effect. In addition, we find an additional source of protectionist drift that we call the “abstention effect”. Not only do candidates wish to delegate to more protectionist colleagues, but these more protectionist colleagues who can win election, prefer still more protectionist candidates than themselves. Therefore, they have an incentive to abstain, that is, not run for election. We show that because of this abstention effect there exists a range of electable citizens all of whom are more protectionist than the median voter's most preferred candidate. We extend the analysis allowing two-candidate equilibria and the possibility that there are costs and benefits of holding office.     

Is firm-sponsored training a palliative? A common agency approach

We analyse the issue of firm-sponsored training under product market imperfections. In this setting, qualification becomes a public good for firms when their profits are increasing in the stock of skilled workers but remains a private good to students/workers. Students have to pay a tuition fee but at the same time firms sponsor education: universities sell training to both. We prove that the proportion of skilled workers is larger in more competitive economies/industries while the share of firms in the financing of training is a monotonically decreasing function of the degree of competition. An increase of the latter indeed increases the equilibrium skilled wage while reducing its sensitivity to an increase of the supply of skilled workers. The firms’ aggregate expenditures on training per worker are nevertheless a nonmonotonic function of the competitiveness of the economy.     

Quantitative determination of the level of cooperation in the presence of punishment in three public good experiments

Strong reciprocity is a fundamental human characteristic associated with our extraordinary sociality and cooperation. Laboratory experiments on social dilemma games and many field studies have quantified well-defined levels of cooperation and propensity to punish/reward. The level of cooperation is observed to be strongly dependent on the availability of punishments and/or rewards. Here, we propose an operational approach based on the evolutionary selection of prosocial behaviors to explain the quantitative level of the propensity to punish in three experimental set-ups. A simple cost/benefit analysis at the level of a single agent, who anticipates the action of her fellows, determines an optimal level of altruistic punishment, which explains quantitatively experimental results on a third-party punishment game, the ultimatum game and an altruistic punishment game. We also report numerical simulations of an evolutionary agent-based model of repeated agent interactions with feedback by punishments, which confirms that the propensity to punish is a robust emergent property selected by the evolutionary rules of the model. The cost-benefit reasoning is not to be taken literally but rather to embody the result of the selection pressure of co-evolving agents that have make them converge to their preferences (which can be seen as either hard-wired and/or culturally selected). In this view, the prosocial preference of humans is a collective emergent process, robustly selected by adaptation and selection. Our main contribution is to use evolutionary feedback selection to quantify the value of the prosocial propensity to punish, and test this prediction on three different experimental set-ups.     

Inferring fundamental value and crash nonlinearity from bubble calibration

Identifying unambiguously the presence of a bubble in an asset price remains an unsolved problem in standard econometric and financial economic approaches. A large part of the problem is that the fundamental value of an asset is, in general, not directly observable and it is poorly constrained to calculate. Further, it is not possible to distinguish between an exponentially growing fundamental price and an exponentially growing bubble price. In this paper, we present a series of new models based on the Johansen–Ledoit–Sornette (JLS) model, which is a flexible tool to detect bubbles and predict changes of regime in financial markets. Our new models identify the fundamental value of an asset price and a crash nonlinearity from a bubble calibration. In addition to forecasting the time of the end of a bubble, the new models can also estimate the fundamental value and the crash nonlinearity, meaning that identifying the presence of a bubble is enabled by these models. In addition, the crash nonlinearity obtained in the new models presents a new approach to possibly identify the dynamics of a crash after a bubble. We test the models using data from three historical bubbles ending in crashes from different markets. They are the Hong Kong Hang Seng index 1997 crash, the S&P 500 index 1987 crash (Black Monday) and the Shanghai Composite index 2009 crash. All results suggest that the new models perform very well in describing bubbles, forecasting their ending times and estimating fundamental value and the crash nonlinearity. The performance of the new models is tested under both the Gaussian residual assumption and non-Gaussian residual assumption. Under the Gaussian residual assumption, nested hypotheses with the Wilks' statistics are used and the p-values suggest that models with more parameters are necessary. Under the non-Gaussian residual assumption, we use a bootstrap method to obtain type I and II errors of the hypotheses. All tests confirm that the generalized JLS models provide useful improvements over the standard JLS model.     

Why do low-educated workers invest less in further training?

Several studies document that low-educated workers participate less often in further training than high-educated workers. This article investigates two possible explanations: low-educated workers invest less in training because of (1) the lower economic returns to these investments or (2) their lower willingness to participate in training. Controlling for unobserved heterogeneity, we find that the economic returns to training for low-educated workers are positive and not significantly different from those for high-educated workers. However, low-educated workers are significantly less willing to participate in training. We show that this lesser willingness to train is driven by economic preferences, and personality traits.