Political intergenerational risk sharing

In a stochastic two-period OLG model, featuring an aggregate shock to the economy, ex-ante optimality requires intergenerational risk sharing. We compare the level of intergenerational risk sharing chosen by a benevolent government and by an office-seeking politician. In our political system, the transfer of resources across generations is determined as a Markov equilibrium of a probabilistic voting game. Low realized returns on the risky asset induce politicians to compensate the old through a PAYG system. This political system typically generates an intergenerational risk sharing scheme that is (i) larger, (ii) more persistent, and (iii) less responsive to the realization of the shock than the social optimum. This is because the current politician anticipates her transfers to the elderly to be compensated by future politicians through offsetting transfers, and hence overspends.     

Knightian Uncertainty in Financial Markets: An Assessment

If information is too vague and imprecise to be summarized by a unique additive probability measure, an agent faces Knightian uncertainty or ambiguity rather than risk. Under Knightian uncertainty, an agent's beliefs may be represented by a capacity or a set of additive probabilities. It is proved that an agent's attitude towards ambiguity has a crucial role in asset price determination and portfolio choice. Knightian uncertainty attitude provides an alternative explanation of financial market failures and enables puzzles to be solved, such as market breakdowns, price indeterminacy and volatility, bid and ask spreads, portfolio inertia, violation of call and put parity.
(J.E.L.: D81, G11, G12).     

Patient selection in a mixed oligopoly market for health care: the role of the soft budget constraint

Competition in hospital care is often implemented through mixed markets where public and private hospitals compete for patients. The optimality of this market form has long been debated in the literature. In this paper, we investigate the role of soft budget constraint in affecting patient selection within a mixed market. Patient selection is the undesired effect of hospital competition when three conditions are met: asymmetry in hospitals’ objectives, presence of hospital’s private information and inability to enforce hard budget constraint. The paper shows that soft budget is a pre-condition for the existence of patient selection. Our paper adds an important dimension to the existing literature which considers asymmetry of information as the only cause for this market failure. The understanding of the mechanisms leading to patient selection makes it possible for the regulator to design measures to reduce such undesirable effect.     

Managerial Ownership and Corporate Hedging

Abstract:  Using information on 443 UK non-financial companies, this work provides evidence supporting the hypothesis that managerial risk aversion is an incentive to deviate from the optimal hedging position. Conflicts of interest between shareholders and managers are at the centre of the decision about the firm's risk profile but are not relevant as determinants of the decision to hedge. This is rather associated with factors enhancing the firm's expected value (underinvestment, scale economies, tax savings).     

Work–home enrichment and health: an analysis of the mediating role of persistence in goal striving and vulnerability to stress

Extant research has shown that work–home enrichment (WHE) generates favorable effects on individuals' work-related and nonwork-related outcomes because of the synergistic combinations realized between work and home lives. In this paper, I explore the link between WHE and self-reported health. Despite this relationship has been already investigated in prior research, scholars have mostly adopted a simplistic approach that directly linked WHE to health, resulting in a limited understanding of what factors are conducive of such positive effects. In this paper, I test a more sophisticated model that link WHE to self-rated health indirectly, through the mediating role of persistence in goal striving and vulnerability to stress. By using data collected through the second follow-up of the National Survey of Midlife Development in the United States (MIDUS II; 2004–2006) and involving a large national sample of working adults, the results show that individuals experiencing high levels of WHE report a better health status because of an enhanced determination to persist in goal striving even when facing difficulties and a lower vulnerability to stress. Implications of these findings for research and practice are discussed.     

The Economy of Music Programs and Organizations. A Micro Analysis and Typology

The paper presents a model for understanding the inner economy of live music programs and organisations at a micro level, according to a management and accounting perspective. The complexity and variety of situations and solutions in organizing live music is described with reference to a number of real events. As a way of handling such a complexity and variety in organising, a typology is proposed based on three distinct features that can be found, to a different extent, inside music entities: the preparation of the Premiere; the running of performances after the Premiere; and the management of a portfolio of music programmes. The typology is a tool to understand possible implications on the economy of music programs arising from different solutions to the issue of organising and related cost behaviour.