An institutional evaluation of sustainable forest management in Flanders

The aim of this paper is to evaluate the existing Flemish institutional framework of sustainable forest management (SFM). The evaluation was performed using criteria and indicators that were based on the four-dimensional structure (discourse, rules, power and actors) of the policy arrangement approach. The data collection and analysis were done using a single representative case. The conclusions of the evaluation are mixed. The introduction of sustainable forest management is hampered by different perspectives on SFM and a fragmented network of many different owners with a clear asymmetrical distribution of trust and power. It is, however, enabled by the way that the most powerful and trusted actors in the network – the forest group and the forest service – have the same perspective on SFM perspective as the government. We expect that SFM can be achieved in the near future, although it remains a vulnerable situation.     

Truth,Trust, and Sanctions: On Institutional Selection in Sender–Receiver Games*

We have conducted a laboratory experiment to investigate the impact of institutions and institutional choice on truth‐telling and trust in sender–receiver games. We find that in an institution with sanctioning opportunities, receivers sanction predominantly after having trusted lies. Individuals who sanction are responsible for truth‐telling beyond standard equilibrium predictions, and they are more likely to choose the sanctioning institution. Sanctioning and non‐sanctioning institutions coexist if their choice is endogenous, and the former shows a higher level of truth‐telling but lower material payoffs. Our experimental findings are consistent with logit agent quantal response equilibrium with two distinct groups of individuals: one consisting of subjects who experience non‐monetary lying costs as senders and non‐monetary costs when being lied to as receivers, and the other consisting of payoff maximizers.     

Stationary equilibria in stochastic games: structure, selection, and computation

This paper introduces an algorithm to compute stationary equilibria in stochastic games that is guaranteed to converge for almost all such games. Since in general the number of stationary equilibria is overwhelming, we pay attention to the issue of equilibrium selection. We do this by extending the linear tracing procedure to the class of stochastic games, called the stochastic tracing procedure. As a by-product of our results, we extend a recent result on the generic finiteness of stationary equilibria in stochastic games to oddness of equilibria.     

The index of dissimilarity as a measure of inequality

Quality & Quantity -     

Market skewness risk and the cross section of stock returns

The cross section of stock returns has substantial exposure to risk captured by higher moments of market returns. We estimate these moments from daily Standard & Poor's 500 index option data. The resulting time series of factors are genuinely conditional and forward-looking. Stocks with high exposure to innovations in implied market skewness exhibit low returns on average. The results are robust to various permutations of the empirical setup. The market skewness risk premium is statistically and economically significant and cannot be explained by other common risk factors such as the market excess return or the size, book-to-market, momentum, and market volatility factors, or by firm characteristics.     

Market incompleteness and the equity premium puzzle: Evidence from state-level data

This paper investigates the importance of market incompleteness by comparing the rates of risk aversion estimated from complete and incomplete markets environments. For the incomplete-markets case, we use consumption data for the 50 US states. We find that the rate of risk aversion under the incomplete-markets setup is much lower. Furthermore, including the second and third moments of the cross-sectional distribution of consumption growth in the pricing kernel lowers the estimate of risk aversion. These findings suggest that market incompleteness ought to be seen as an important component of solutions to the equity premium puzzle.     

The “Machine contribution” in the European scene

The long-term financing of social security faces considerable problems which give rise to the question whether wages can and should continue to serve as the only assessment basis for social security contributions. The calculation of, at least, the employers’ contributions on a broader value added based foundation seems to offer a plausible alternative: human labour is being replaced more and more by technology: its value added could be used for financing social security. What would be the economic effects of such a “machine contribution” on employment, competitiveness and growth?     

The Diversity of Industrial Experience: Cabinet and Furniture Manufacture in Late Nineteenth-Century Ontario

The diversity of paths to industrialization is illustrated bythe example of the cabinet- and furniture-manufacturing industryin Ontario, Canada. Complex and unpredictable demand combinedwith smaller markets and lower incomes than those in the UnitedStates and the relative abundance of wood to limit mechanizationand the size of enterprise in the Canadian industry. Small andunpowered workshops remained competitive throughout the nineteenthand into the twentieth century, creating a distinctive industrialexperience that reflects the unique interaction of local demandand supply.