Conditional ordering extensions

We produce a solution to the problem of extending a quasiordering conditional on a finite list of ex-ante comparisons between pairs. This constitutes yet another extension of the classical Szpilrajn’s theorem. Some examples of use of our result follow.     

A simple proof of Blackwell's “comparison of experiments” theorem

This note presents a simple proof of Blackwell's well-known theorem on the equivalence of two orderings of experiments, one based on the statistical concept of sufficiency, and the other on the economic concept of the value to the decision makers.     

Asymmetry, realised volatility and stock return risk estimates

In this paper we estimate minimum capital risk requirements for short and long positions with three investment horizons, using the traditional GARCH model and two other GARCH-type models that incorporate the possibility of asymmetric responses of volatility to price changes. We also address the problem of the extremely high estimated persistence of the GARCH model to generate observed volatility patterns by including realised volatility as an explanatory variable into the model??s variance equation. The results suggest that the inclusion of realised volatility improves the GARCH forecastability as well as its ability to calculate accurate minimum capital risk requirements and makes it quite competitive when compared with asymmetric conditional heteroscedastic models such as the GJR and the EGARCH.     

Assessing the Impact of Formal and Informal Regulations on Environmental and Economic Performance of Brazilian Manufacturing Firms

This study investigates the impact of formal and informal regulations on environmental and economic performance of Brazilian manufacturing firms. We adopt a dual approach where production technology is represented by a cost function, approximated by a translog form. Pollution is considered as a negative by-product that can be modified trough using either formal regulation (inspections or sanctions) or informal regulation (community pressure). A simultaneous equation model is estimated by three-stage least squares on a sample of 404 industrial establishments located in the state of S?o Paulo, Brazil. We show that pollution abatement costs for the Brazilian manufacturing sector are different from zero which suggests that pollution emissions are affected by environmental regulation. We also demonstrate that environmental performance of firms is jointly affected by formal and informal regulation. Lastly, formal regulation is largely influenced by informal regulation and more specifically by community pressure.     

Why do people tell the truth? Experimental evidence for pure lie aversion

A recent experimental literature shows that truth-telling is not always motivated by pecuniary motives, and several alternative motivations have been proposed. However, their relative importance in any given context is still not totally clear. This paper investigates the relevance of pure lie aversion, that is, a dislike for lies independent of their consequences. We propose a very simple design where other motives considered in the literature predict zero truth-telling, whereas pure lie aversion predicts a non-zero rate. Thus we interpret the finding that more than a third of the subjects tell the truth as evidence for pure lie aversion. Our design also prevents confounds with another motivation (a desire to act as others expect us to act) not frequently considered but consistent with much existing evidence. We also observe that subjects who tell the truth are more likely to believe that others will tell the truth as well.