The multinomial option pricing model and its Brownian and Poisson limits

The Cox, Ross, and Rubinstein binomial model is generalizedto the multinomial case. Limits are investigated and shown toyield the Black-Scholes formula in the case of continuous samplepaths for a wide variety of complete market structures. In thediscontinuous case of Merton-type formula is shown to result,provided jump probabilities are replaced by their correspondingArrow-Debreu prices.     

The finite basis property and exact aggregation

An individual demand function is said to satisfy the finite basis property when its set of Engel curves has a finite spanning subset. In the present letter we discuss why this property underlies the theory of exact aggregation.     

On duality theory in intertemporal choice with uncertainty

We discuss here the implications that arise for the fundamental duality relationships given by Roy's Identity (1943) and Shephard's Lemma (1953) when the underlying consumer choice problem is dynamic and involves uncertainty.     

Explaining investor preference for cash dividends

The well-known tendency of investors to favor cash dividends emerges quite naturally in two new theories of choice behavior [the theory of self-control due to Thaler and Shefrin (1981), and the version of prospect theory set out by Kahneman and Tversky (1979)]. Although our treatment is novel when viewed from the perspective of standard financial theory, it provides explanations for a phenomenon that has long been described as perplexing.     

Canada's Contribution to Agricultural Foreign Aid1

Taking into account both bilateral and multilateral programs, Canada's contribution to external aid, which in 1967–68 amounted to 0.65 per cent of our national income, now compares favorably with most other donor countries and by the early 1970's is expected to reach the target of one per cent recommended by the United Nations Conference on Trade and Development. Initially concentrating on the Colombo Plan countries, in recent years Canada's bilateral aid program has been broadened to include the Commonwealth Caribbean countries and the Commonwealth and French-speaking African countries. Until recently Canada's principal approach to assisting developing countries to increase their food supplies has been indirect, through capital projects designed to develop the general economic infrastructure, as well as through food aid. Food aid, which has been devoted mainly to meeting emergency food shortages, has been the largest single item in the Canadian aid program. Recognition of the urgency of developing indigenous agricultural production, as an essential means of meeting the emerging food crisis and of stimulating overall economic growth, is being reflected to an increasing degree in Canada's current aid program by a greater emphasis on carefully planned integrated agricultural programs, involving both capital and technical assistance inputs. L'APPORT DU CANADA À L'AIDE AGRICOLE À l'ÉTRANGER: Si I'on tient compte des programmes bilatéraux et multilatéraux, la part du Canada à l'aide à l'étranger représentait, en 1967–1968, 0.65 p. 100 de notre revenu national, ce qui nous compare honorablement avec la plupart des autres pays donateurs. Vers le début des années 1970, on compte atteindre l'objectif d'un pour cent recommandé par la conférence des Nations Unies sur le commerce et le développement. Le Canada a commencé d'abord par concentrer son assistance sur les pays du Plan Colombo mais plus récemment le programme bilatéral d'assistance du Canada s'est élargi et embrasse les Antilles anglaises, de même que les pays africains du Commonwealth et l'Afrique francophone. Jusqu'à ces derniers temps, l'aide canadienne destinée à augmenter les ressources alimentaires des pays en voie de développement s'est manifestée autant de façon indirecte, par des plans d'aménagement visant à développer l'infrastructure économique générate, que par de l'assistance alimentaire directe. L'aide alimentaire, destinée surtout à pallier les situations urgentes de pénurie, occupe la principale place dans le programme canadien d'aide à l'étranger. On reconnaît aujourd'hui qu'un des moyens essentiels de fairs face à la crise alimentaire imminente et de stimuler la croissance économique globale est d'encourager le plus tôt possible le développement de la production agricole des pays en voie de développement. Cette prise de conscience se traduit de plus en plus, dans les programmes canadiens actuels d'assistance, par l'importance accrue qu'on accorde à la préparation méthodique de plans agricoles intégrés, combinant à la fois l'aide financière et technique.     

Bitcoin and sentiment

Baker and Wurgler identify high sentiment betas with small startup firms that have great growth potential. On the surface, cryptocurrencies share important features in common with high sentiment beta stocks. This paper investigates the degree to which, during the period July 18, 2010–February 26, 2018, the return to bitcoin displayed the characteristics of a high sentiment beta stock. Using a sentiment-dependent factor model, the analysis indicates that in large measure, bitcoin returns resembled returns to high sentiment beta stocks. Additionally, we show that bitcoin's expected returns are low when sentiment measured by Volatility Index is high while expected returns are high when sentiment is low.     

Credit card behavior,financial styles,and heuristics

The paper makes four contributions. First, the paper provides new data and findings about credit card usage segmentation in respect to spending and borrowing behavior. Second, it sets the new findings against the backdrop of the newly emerging literature on financial literacy. A great variability occurs in financial literacy across American consumers. Third, the paper describes fast and frugal heuristics aimed to help consumers make effective, and in some cases better, budgeting decisions when they use credit cards. Fourth, the paper describes the introduction of a new set of online financial tools, offered by a large credit card company, which consumers are now using to make decisions about their spending and borrowing, and links these tools to the heuristics under discussion. Fast and frugal heuristics are likely to be especially valuable to consumers with low confidence in their online skills. Notably, 25% of credit cardholders report that they have low confidence using online technology to manage their finances, with the corresponding figure being 44% for those most at risk.     

Interpreting α-rationality in hierarchical games

We discuss here the connection between the game-theoretic representation of the principal-agent problem and its representation in terms of standard production and consumption sets. In addition we consider the issue of α-rationality as it applies in this framework.