If you,tourist, behave irrationally,I’ll find you!

When departures from rational behavior can potentially be expected, modeling should allow for their identification and their quantification. In this regard, prices in tourism might have effects that may not be as apparent as economic theory predicts. This article incorporates the sticker shock formulation into the mixed logit model without imposing consistency with consumer theory to accommodate any possible positive or negative price effects. By allowing the parameters of “price” and “sticker shock term” to take any value – negative or positive – we detect abnormal behaviors in the tourist demand: not only is the negative relationship between price and demand inverted for some people but also some tourists might be willing to accept higher-than-expected prices. The “non-well-behaved” groups' shares are estimated.     

PROMOTING INNOVATION IN THE ELECTRICITY INDUSTRY

Smart metering can bring significant benefits to electricity markets by allowing customers to reduce demand or increase supply when generation capacity is temporarily scarce. To reap the full efficiency and environmental benefits of this technology, regulators must allow price volatility and free entry into the market. The efficiency gains are enormous as both demand and supply will be affected by both temporary and longer‐lasting price changes. Experiments have shown the value of this approach.     

Multivariate risk aversion and uninsurable risks: Theory and applications

The objective of this paper is to develop conditions for global multivariate comparative risk aversion in the presence of uninsurable, or background, risks, and thus generalize Kihlstrom and Mirman [1974] and Karni [1979,1989]. We analyze von Neumann-Morgenstern (VNM) utility functionsas well as smooth preference functionals which are nonlinear in distribution but locally linear in probabilities. In each case we provide an economic application which illustrates how our theorems can be used. We analyze a risk sharing, a portfolio choice, and a labor supply problem for VNM utility functions, and the optimal allocation of effort to risky technologies in the presence of a random supply (or quality) of a public good for nonlinear preference functionals. We consider thecase where the random variables are mean-independent as well as the case where they are independent. In the labor supply application for VNM utility functions, we show that if the two risks are independent, the comparative statics effect of greater risk aversion on labor supply in the presence of a background non-wage income risk is determined by a monotonic relationship between labor supply and the wage rate under certainty. That is, we extend the applicability of the Diamond-Stiglitz [1974]-Kihlstrom-Mirman [1974]single-crossing property to the case where an independent background risk is present.     

Nonlinear models with panel data

Panel data play an important role in empirical economics. With panel data one can answer questions about microeconomic dynamic behavior that could not be answered with cross sectional data. Panel data techniques are also useful for analyzing cross sectional data with grouping. This paper discusses some issues related to specification and estimation of nonlinear models using panel data.JEL Classification: C230The research behind this paper was supported by the National Science Foundation, the Gregory C. Chow Econometric Research Program at Princeton University, and Danish National Research Foundation (through CAM at the University of Copenhagen). The author thanks Ekaterini Kyriazidou, Hong Li, Marina Sallustro, and the editors for helpful suggestions.     

Non-cooperative bargaining in apex games and the kernel

This paper studies non-cooperative bargaining with random proposers in apex games. Two different protocols are considered: the egalitarian protocol, which selects each player to be the proposer with equal probability, and the proportional protocol, which selects each player with a probability proportional to his number of votes. Expected equilibrium payoffs coincide with the kernel for the grand coalition regardless of the protocol. The equilibrium is in mixed strategies and the indifference conditions can be reinterpreted in the language of the kernel.     

Stationary measures for some Markov chain models in ecology and economics

Summary. Let continuous, exists in for x in . Let be an i.i.d. sequence from F and X₀ be a nonnegative random variable independent of . Let be the Markov chain generated by the iteration of random maps by . Such Markov chains arise in population ecology and growth models in economics. This paper studies the existence of nondegenerate stationary measures for {X_n}. A set of necessary conditions and two sets of sufficient conditions are provided. There are some convergence results also. The present paper is a generalization of the work on random logistics maps by Athreya and Dai (2000).Received: 20 March 2002, Revised: 4 December 2002, JEL Classification Numbers: C22, D9.The author wishes to thank Professor Mukul Majumdar and the referees for several useful suggestions.     

On the utility premium of Friedman and Savage

We re-examine the utility premium of Friedman–Savage [Friedman, Milton and Savage, Leonard J., “The Utility Analysis of Choices Involving Risk.” Journal of Political Economy 56, 1948, pp. 279–304.]. This measure is useful in understanding risky choices. For instance its reaction to an increased wealth equates to a precautionary demand for saving. We also analyze its two components.     

CEO Pay,Shareholder Returns,and Accounting Profits

We assess the impact on CEO pay (including salary, cash bonus, and benefits in kind) of changes in both accounting and shareholder returns in 99 British companies in the years 1972-89. After correcting for heterogeneity biases inherent in the standard specifications of the problem, we find a strong positive relationship between CEO pay and within-company changes in shareholder returns, and no statistically significant relationship between CEO pay and within-company changes in accounting returns. Differences between firms in long-term average profitability do appear to have a substantial effect on CEO pay, while differences between firms in shareholder returns add nothing to the within-firm pay dynamics.These findings call into question the rationale for explicitly share-based incentive schemes.     

中国开行地方政府债券的先决条件研究

是否允许地方政府发行债券是一个颇具争议的话题。本文通过运用宪政经济学和新公共管理理论的分析方法,对开行地方政府债券发行权利的先决条件进行了论述。结合目前中国实际,文章认为目前开行地方政府债券的条件尚不完全具备,并建议下一步推进政府债券的关键在于可行性建设。     

The accuracy of long-term earnings forecasts in the electric utility industry

This paper examines the accuracy of various methods of forecasting long-term earnings growth for firms in the electric utility industry. In addition to a number of extrapolative techniques, Value Line analyst forecasts are also evaluated. Value Line analyst forecasts for a five-year time horizon are found to be superior to many of the extrapolative models. Among the extrapolative models examined, implied growth and historical book value per share growth rate models performed best. These results provide strong support for using Value Line growth forecasts in cost of capital estimates for electric utilities in the context of utility rate cases. Value Line forecast errors could be explained by changes in dividend payout ratios, the firm's regulatory environment and bond rating changes.