Population,agriculture, and the environment in Africa

An overview is provided of the World Bank study about the interaction between rapid population growth, poor agricultural performance, and environmental degradation. The links between these 3 phenomena are identified as traditional methods of crop and livestock production, land tenure systems, women's responsibilities, and methods of forest use. When land was abundant and capital limited, pastoralism, shifting cultivation, and setting aside fallow land was possible. Mobility and allowances for natural regeneration of vegetation could not continue with rapid population growth. Permanent settlements developed but cultivation methods remained the same; the result was deterioration of soil fertility, low yields, and erosion of soil as occurred in Rwanda, Burkina Faso, and parts of Nigeria. Technological innovation has been slow and poor roads have interfered with a market oriented economy. Inappropriate pricing, exchange rates, and fiscal policies also prevent productivity gains. A heavy demand is placed on women's time. Demand for children is high and is stimulated by environmental degradation, food insecurity, land tenure systems, and cultural traditions. Child labor is needed. The demand for contraception is 30-50% in North Africa, 36-55% in Asia, and 40-60% in South America. Land ownership problems have arisen under community ownership and between herders and settlers. Solutions have ranged from land nationalization and arbitrary designation of individual ownership. Open access situations have developed and lent themselves to exploitation. Fuelwood needs have exacerbated the destruction of forests. Commercial logging accounted for 10-20% of the forest loss. New approaches are needed to link cross-sectionally population, the environment, an agriculture. Emphasis should be on resource conservation, family planning, and environmentally benign intensive farming. Agricultural production needs to grow at 4%/year, fertility lowered by 50% over 30 years, and deforestation slowed. Women's time constraints should b alleviated and productivity improved. Open access and state ownership should be stopped.     

Reinforcement-Based Adaptive Learning in Asymmetric Two-Person Bargaining with Incomplete Information

The sealed bidk-double auction is a mechanism used to structure bilateral bargaining under two-sided incomplete information. This mechanism is tested in two experiments in which subjects are asked to bargain repeatedly for 50 rounds with the same partner under conditions of information disparity favoring either the buyer (Condition BA) or seller (Condition SA). Qualitatively, the observed bid and offer functions are in agreement with the Bayesian linear equilibrium solution (LES) constructed by Chatterjee and Samuelson (1983). A trader favored by the information disparity, whether buyer or seller, receives a larger share of the realized gain from trade than the other trader. Comparison with previous results reported by Daniel, Seale, and Rapoport (1998), who used randomly matched rather than fixed pairs, shows that when reputation effects are present this advantage is significantly enhanced. A reinforcement-based learning model captures the major features of the offer and bid functions, accounting for most of the variability in the round-to-round individual decisions.     

Provision of Step-Level Public Goods with Uncertain Provision Threshold and Continuous Contribution

Common to most theoretical and empirical research on public goods is the assumption that the parameters of the game are common knowledge. Recent theoretical and empirical studies have questioned this assumption by arguing that many public goods situations are characterized by uncertainty regarding various aspects of the situation. In particular, Suleiman (1997) argued that members of production groups of step-level public goods are often uncertain about the value of the provision threshold. For this type of uncertainty he proposed three distinct models to account for the individual's contribution.The present study reports the results of an experiment designed primarily to test and contrast the predictions derived from two of these models – a subjective expected utility model and a cooperative model – regarding the effects of threshold uncertainty on contribution for the provision of step-level public goods. Other goals of the study were to test the joint effect of the threshold uncertainty level, and its mean (low vs. high), on contribution, and to examine the effect of threshold uncertainty on the individuals' estimates regarding the contributions of other group members.The results show that the effect of threshold uncertainty is moderated by the threshold mean: Contribution to the public good increased as a function of uncertainty for the lower threshold mean, and decreased (though not significantly) for the higher threshold mean. In contrast, for the two threshold means the subjects' estimates of the mean and variability of others' contribution increased with threshold uncertainty.The models' comparison revealed that the cooperative model was superior to the subjective expected utility model. This result adds to a substantial body of research on social dilemmas showing that under conditions of social (strategic) uncertainty, group members tacitly coordinate their choice behavior by anchoring their decisions on rules of fairness.     

An integrative analysis of business bankruptcy in Australia

This paper proposes an integrative and dynamic approach for analyzing business failure. The simultaneous estimation results obtained with Australian data indicate significant associations between bankruptcy rates in different industries. Most of these associations are positive and hence implying that bankruptcy in one industry can inflict a ‘domino’ effect on other industries. The estimated significant negative association between current and lagged bankruptcy rates in the industries under consideration lend support to the survival of the fittest hypothesis. The estimation results also highlight the important effects of industry, domestic and international economic conditions on bankruptcy rates.     

A pareto optimal collaboration period: The role of financial,industrial and macroeconomic conditions in liquidation decision and timing

In this paper, the author highlights the nexus of interactions among financial, industrial and macroeconomic factors determining the Pareto optimal date on which the firm’s claimants stop collaborating and force the firm into liquidation. The condition for optimal liquidation time summarizes the effects of volatility of the aggregate consumer income and the overall price level, demand elasticity, the industry’s concentration level and depreciation on the firm’s going-concern value. It also takes into account the effects of the firm’s level of indebtedness, foregone interest on alternative usages of the financial resources extended to the firm and the costs of risk bearing perceived by the firm’s claimants from continued collaboration.     

Joining a Queue or Staying Out: Effects of Information Structure and Service Time on Arrival and Staying Out Decisions

We study a class of single-server queueing systems with a finite population size, FIFO queue discipline, and no balking or reneging. In contrast to the predominant assumptions of queueing theory of exogenously determined arrivals and steady state behavior, we investigate queueing systems with endogenously determined arrival times and focus on transient rather than steady state behavior. When arrival times are endogenous, the resulting interactive decision process is modeled as a non-cooperative n-person game with complete information. Assuming discrete strategy spaces, the mixed-strategy equilibrium solution for groups of n = 20 agents is computed using a Markov chain method. Using a 2 × 2 between-subject design (private vs. public information by short vs. long service time), arrival and staying out decisions are presented and compared to the equilibrium predictions. The results indicate that players generate replicable patterns of behavior that are accounted for remarkably well on the aggregate, but not individual, level by the mixed-strategy equilibrium solution unless congestion is unavoidable and information about group behavior is not provided.JEL Classification: C71, C92, D81     

Internal monitoring, regulation, and compensation of top executives in banks

This paper examines the relation between incentive pay, monitoring, and regulatory requirements in banks. Using a one-period model with asymmetrical information between the bank owner and the top management team, as well as within the team itself, we show that (1) incentive pay increases the mutual-monitoring activity among top executives; (2) senior executives, especially the CEO, collect more incentive pay than their subordinates; and (3) bank regulations, such as capital adequacy (CAD) requirements, reduce the absolute amount of incentive pay granted to executives.