http://www.recercat.cat:80/handle/2072/191 Wed, 19 Jun 2013 13:59:31 GMT 2013-06-19T13:59:31Z http://www.recercat.cat:80/handle/2072/208013 Entry regulation and intersectoral reallocation Antonio Ciccone; Elias Papaioannou We study how restrictions on firm entry affect intersectoral factor reallocation when open economies experience global economic shocks. In our theoretical framework, countries trade freely in a range of differentiated sectors that are subject to country-specific and global shocks. Entry restrictions are modeled as an upper bound on the introduction of new differentiated goods following shocks. Prices and quantities adjust to clear international goods markets, and wages adjust to clear national labor markets. We show that in general equilibrium, countries with tighter entry restrictions see less factor reallocation compared to the frictionless benchmark. In our empirical work, we compare sectoral employment reallocation across countries in the 1980s and 1990s with proxies for frictionless benchmark reallocation. Our results indicate that the gap between actual and frictionless reallocation is greater in countries where it takes longer to start a firm. Sun, 01 Jun 2008 00:00:00 GMT http://www.recercat.cat:80/handle/2072/208013 2008-06-01T00:00:00Z http://www.recercat.cat:80/handle/2072/208015 Money doctors Nicola Gennaioli; Andrei Shleifer; Robert Vishny We present a new model of money management, in which investors delegate portfolio management to professionals based not only on performance, but also on trust. Trust in the manager reduces an investor's perception of the riskiness of a given investment, and allows managers to charge higher fees to investors who trust them more. Money managers compete for investor funds by setting their fees, but because of trust the fees do not fall to costs. In the model, 1) managers consistently underperform the market net of fees but investors still prefer to delegate money management to taking risk on their own, 2) fees involve sharing of expected returns between managers and investors, with higher fees in riskier products, 3) managers pander to investors when investors exhibit biases in their beliefs, and do not correct misperceptions, and 4) despite long run benefits from better performance, the profits from pandering to trusting investors discourage managers from pursuing contrarian strategies relative to the case with no trust. We show how trust-mediated money management renders arbitrage less effective, and may help destabilize financial markets. Fri, 01 Jun 2012 00:00:00 GMT http://www.recercat.cat:80/handle/2072/208015 2012-06-01T00:00:00Z http://www.recercat.cat:80/handle/2072/208014 Married to intolerance: Attitudes towards intermarriage in Germany, 1900-2006 Nico Voigtländer; Joachim Voth Marriage is amongst the biggest decisions in life. In general, there is a tendency towards assortative matching - people marry others who are relatively similar to themselves. Intermarriage between different social, religious and ethnic groups in most societies is relatively rare (Blossfeld and Timm 2003). Where it occurs, it is associated with more rapid assimilation (Meng and Gregory 2005). The frequency of intermarriage can therefore serve as a useful indicator of tolerant attitudes towards a minority, and of the desire to integrate (Bisin, Topa, and Verdier 2004). In this paper, we analyze under which conditions intermarriage can be used as an indicator of tolerance, and whether such tolerant attitudes persisted in Germany during the last century. We combine information on individual-level attitudes from the German social survey (GESIS) with historical data on marriage patterns. Sat, 01 Dec 2012 00:00:00 GMT http://www.recercat.cat:80/handle/2072/208014 2012-12-01T00:00:00Z http://www.recercat.cat:80/handle/2072/208012 Spinning welfare: The gains from process innovation in cotton and car production Tim Leunig; Joachim Voth Economists and economic historians want to know how much better life is today than in the past. Fifty years ago economic historians found surprisingly small gains from 19th century US railroads, while more recently economists have found relatively large gains from electricity, computers and cell phones. In each case the implicit or explicit assumption is that researchers were measuring the value of a new good to society. In this paper we use the same techniques to find the value to society of making existing goods cheaper. Henry Ford did not invent the car, and the inventors of mechanised cotton spinning in the industrial revolution invented no new product. But both made existing products dramatically cheaper, bringing them into the reach of many more consumers. That in turn has potentially large welfare effects. We find that the consumer surplus of Henry Ford's production line was around 2% by 1923, 15 years after Ford began to implement the moving assembly line, while the mechanisation of cotton spinning was worth around 6% by 1820, 34 years after its initial invention. Both are large: of the same order of magnitude as consumer expenditure on these items, and as large or larger than the value of the internet to consumers. On the social savings measure traditionally used by economic historians, these process innovations were worth 15% and 18% respectively, making them more important than railroads. Our results remind us that process innovations can be at least as important for welfare and productivity as the invention of new products. Sun, 01 May 2011 00:00:00 GMT http://www.recercat.cat:80/handle/2072/208012 2011-05-01T00:00:00Z http://www.recercat.cat:80/handle/2072/208011 Oil price shocks, income and democracy Marcus Brückner; Antonio Ciccone; Andrea Tesei We examine the effect of oil price fluctuations on democratic institutions over the 1960-2007 period. We also exploit the very persistent response of income to oil price fluctuations to study the effect of persistent (oil price-driven) income shocks on democracy. Our results indicate that countries with greater net oil exports over GDP see improvements in democratic institutions following upturns in international oil prices. We estimate that a 1 percentage point increase in per capita GDP growth due to a positive oil price shock increases the Polity democracy score by around 0.2 percentage points on impact and by around 2 percentage points in the long run. The effect on the probability of a democratic transition is around 0.4 percentage points. Tue, 01 Feb 2011 00:00:00 GMT http://www.recercat.cat:80/handle/2072/208011 2011-02-01T00:00:00Z http://www.recercat.cat:80/handle/2072/208010 Predestination and the Protestant ethic Larbi Alaoui; Alvaro Sandroni This paper shows an equivalence result between the utility functions of secular agents who abide by a moral obligation to accumulate wealth and those of religious agents who believe that salvation is immutable and preordained by God. This result formalizes Weber's renowned thesis on the connection between the worldly asceticism of Protestants and the religious premises of Calvinism. Furthermore, ongoing economies are often modeled with preference relations such as "Keeping up with the Joneses" which are not associated with religion. Our results relate these secular economies of today and economies of the past shaped by religious ideas. Tue, 01 Jan 2013 00:00:00 GMT http://www.recercat.cat:80/handle/2072/208010 2013-01-01T00:00:00Z http://www.recercat.cat:80/handle/2072/208008 Time scarcity and the market for news Larbi Alaoui; Fabrizio Germano We develop a general theory of news media. News consumers are time constrained and perform a (possibly subconscious) optimal search, given the amount of time they possess. Their utility functions are general and allow for complementarities over the amount of information they acquire on any given topic. Media outlets are aware of consumers' preferences and constraints, and aim to maximize readership. These outlets observe the news items of the day and decide on a ranking to provide to readers. They cannot falsify or misreport news. In the baseline model readers and outlets are unbiased and fully rational. We then derive basic properties of equilibria on these markets for news. In particular, equilibrium rankings need not be reader-efficient. Even in competitive markets, readers may read more than they would like to; they may read stories distinct from the ones they prefer and on topics that are different from the ones they consider to be important. Next, we derive implications on diverse aspects of new and traditional media. These include a rationale for tabloid news based on complementarities in preferences, a rationale for why readers switch to certain online media platforms as a way to circumvent inefficient rankings found in traditional media, and the derivation of a positive role for public media in restoring reader-efficient standards. Finally, we relate some of our findings to recent stylized facts, and briefly discuss political economy implications of the model. Sat, 01 Dec 2012 00:00:00 GMT http://www.recercat.cat:80/handle/2072/208008 2012-12-01T00:00:00Z http://www.recercat.cat:80/handle/2072/208009 A new compact linear programming formulation for choice network revenue management Sumit Kunnumkal; Kalyan Talluri The choice network revenue management model incorporates customer purchase behavior as a function of the offered products, and is the appropriate model for airline and hotel network revenue management, dynamic sales of bundles, and dynamic assortment optimization. The optimization problem is a stochastic dynamic program and is intractable. A certainty-equivalence relaxation of the dynamic program, called the choice deterministic linear program (CDLP) is usually used to generate dyamic controls. Recently, a compact linear programming formulation of this linear program was given for the multi-segment multinomial-logit (MNL) model of customer choice with non-overlapping consideration sets. Our objective is to obtain a tighter bound than this formulation while retaining the appealing properties of a compact linear programming representation. To this end, it is natural to consider the affine relaxation of the dynamic program. We first show that the affine relaxation is NP-complete even for a single-segment MNL model. Nevertheless, by analyzing the affine relaxation we derive a new compact linear program that approximates the dynamic programming value function better than CDLP, provably between the CDLP value and the affine relaxation, and often coming close to the latter in our numerical experiments. When the segment consideration sets overlap, we show that some strong equalities called product cuts developed for the CDLP remain valid for our new formulation. Finally we perform extensive numerical comparisons on the various bounds to evaluate their performance. Sat, 01 Dec 2012 00:00:00 GMT http://www.recercat.cat:80/handle/2072/208009 2012-12-01T00:00:00Z http://www.recercat.cat:80/handle/2072/208007 On the goodness of fit of Kirk's formula for spread option prices Elisa Alòs; Jorge A. León In this paper we investigate the goodness of fit of the Kirk's approximation formula for spread option prices in the correlated lognormal framework. Towards this end, we use the Malliavin calculus techniques to find an expression for the short-time implied volatility skew of options with random strikes. In particular, we obtain that this skew is very pronounced in the case of spread options with extremely high correlations, which cannot be reproduced by a constant volatility approximation as in the Kirk's formula. This fact agrees with the empirical evidence. Numerical examples are given. Thu, 01 Nov 2012 00:00:00 GMT http://www.recercat.cat:80/handle/2072/208007 2012-11-01T00:00:00Z http://www.recercat.cat:80/handle/2072/204191 Calibration of stochastic volatility models via second order approximation: the Heston model case Alòs, Elisa; Santiago Hernando, Rafael de; Vives, Josep Using a suitable Hull and White type formula we develop a methodology to obtain a second order approximation to the implied volatility for very short maturities. Using this approximation we accurately calibrate the full set of parameters of the Heston model. One of the reasons that makes our calibration for short maturities so accurate is that we also take into account the term-structure for large maturities. We may say that calibration is not "memoryless", in the sense that the option's behavior far away from maturity does influence calibration when the option gets close to expiration. Our results provide a way to perform a quick calibration of a closed-form approximation to vanilla options that can then be used to price exotic derivatives. The methodology is simple, accurate, fast, and it requires a minimal computational cost. Mon, 01 Oct 2012 00:00:00 GMT http://www.recercat.cat:80/handle/2072/204191 2012-10-01T00:00:00Z http://www.recercat.cat:80/handle/2072/204190 Growth, selection and appropriate contracts Bonfiglioli, Alessandra; Gancia, Gino We study a dynamic model where growth requires both long-term investment and the selection of talented managers. When ability is not ex-ante observable and contracts are incomplete, managerial selection imposes a cost, as managers facing the risk of being replaced choose a sub-optimally low level of long-term investment. This generates a trade-off between selection and investment that has implications for the choice of contractual relationships and institutions. Our analysis shows that rigid long-term contracts sacrificing managerial selection may prevail at early stages of economic development and when heterogeneity in ability is low. As the economy grows, however, knowledge accumulation increases the return to talent and makes it optimal to adopt flexible contractual relationships, where managerial selection is implemented even at the cost of lower investment. Measures of investor protection aimed at limiting the bargaining power of managers improve selection under short-term contract. Given that knowledge accumulation raises the value of selection, the optimal level of investor protection increases with development. Wed, 01 Jul 2009 00:00:00 GMT http://www.recercat.cat:80/handle/2072/204190 2009-07-01T00:00:00Z http://www.recercat.cat:80/handle/2072/204186 Man-bites-dog business cycles Nimark, Kristoffer The newsworthiness of an event is partly determined by how unusual it is and this paper investigates the business cycle implications of this fact. We present a tractable model that features an information structure in which some types of signals are more likely to be observed after unusual events. Counterintuitively, more signals may then increase uncertainty. When embedded in a simple business cycle model, the proposed information structure can help us understand why we observe (i) large changes in macro economic aggregate variables without a correspondingly large change in underlying fundamentals (ii) persistent periods of high macroeconomic volatility and (iii) a positive correlation between absolute changes in macro variables and the cross-sectional dispersion of expectations as measured by survey data. These results are consequences of optimal updating by agents when the availability of some signals is positively correlated with tail-events. The model is estimated by likelihood based methods using raw survey data and a quarterly time series of total factor productivity along with standard aggregate time series. The estimated model suggests that there have been episodes in recent US history when the impact on output of innovations to productivity of a given magnitude were up to twice as large compared to normal times. Thu, 01 Dec 2011 00:00:00 GMT http://www.recercat.cat:80/handle/2072/204186 2011-12-01T00:00:00Z http://www.recercat.cat:80/handle/2072/204189 (Re-) Shaping hatred: Anti-Semitic attitudes in Germany, 1890-2006 Voigtländer, Nico; Voth, Hans-Joachim In this paper, we assess the determinants of long-run persistence of local culture, and examine the success of policy interventions designed to change attitudes. We analyze anti-Semitic attitudes drawing on individual-level survey results from Germany's social value survey in 1996 and 2006. On average, we find that historical voting patterns for anti-Semitic parties between 1890 and 1933 are powerful predictors of anti-Jewish attitudes today. There is evidence that transmission takes place both vertically (parent to child) and horizontally (among peers). Policy modified German views on Jews in important ways: The cohort that grew up under the Nazi regime shows significantly higher levels of anti-Semitism. After 1945, the victorious Allies implemented denazification programs in their zones of occupation. We use differences in these policies between the occupying powers as a source of identifying variation. The US and French zones today still show high anti-Semitism, reflecting an ambitious botched attempt at denazification. In contrast, the British and Soviet zones, register much lower levels of Jew-hatred. Thu, 01 Mar 2012 00:00:00 GMT http://www.recercat.cat:80/handle/2072/204189 2012-03-01T00:00:00Z http://www.recercat.cat:80/handle/2072/204187 Austerity and anarchy: Budget cuts and social unrest in Europe, 1919-2008 Ponticelli, Jacopo; Voth, Hans-Joachim Does fiscal consolidation lead to social unrest? Using cross-country evidence for the period 1919 to 2008, we examine the extent to which societies become unstable after budget cuts. The results show a clear correlation between fiscal retrenchment and instability. We test if the relationship simply reflects economic downturns, and conclude that this is not the case. While autocracies and democracies show a broadly similar responses to budget cuts, countries with more constraints on the executive are less likely to see unrest after austerity measures. Growing media penetration does not strengthen the effect of cut-backs on the level of unrest. Fri, 01 Jul 2011 00:00:00 GMT http://www.recercat.cat:80/handle/2072/204187 2011-07-01T00:00:00Z http://www.recercat.cat:80/handle/2072/204188 Optimal delay: Distressed trading in 18th c. Amsterdam Koudijs, Peter Arie Eliza; Voth, Hans-Joachim Distressed sales (or purchases) often lead to a V-shaped pattern in asset prices. We investigate the underlying dynamics of this overshooting of the price in a unique historical setting. We present detailed transaction data for two cases of distressed trading in the Amsterdam stock market in 1772 and 1773. We show that there is an interesting disconnect between the realization of the shock and price overshooting on the one hand, and the actual distressed trading on the other. A large fraction of trades were delayed until the overshooting of the price had been corrected. Using qualitative sources we document significant contemporary uncertainty about the size of the shock. We argue that a model based on this uncertainty could potentially explain the disconnect between price overshooting and the timing of transactions. Thu, 01 Sep 2011 00:00:00 GMT http://www.recercat.cat:80/handle/2072/204188 2011-09-01T00:00:00Z http://www.recercat.cat:80/handle/2072/204181 Shrouded costs of government: The political economy of state and local public pensions Glaeser, Edward L.; Ponzetto, Giacomo A. M. Credit card companies and hotels have charged "shrouded" fees that were difficult for most consumers to assess at the first point of purchase (Gabaix and Laibson 2006). States and localities commit to pension obligations that are similarly difficult for voters to assess. Novy- Marx and Rauh (2010) argue that states and localities have underestimated the shortfall in pension funding by trillions of dollars because of aggressive assumptions about returns on pension investments, and the continuing debate over their conclusions reinforces the point that pension promises are hard to evaluate (Mitchell and McCarthy 1999). How does the difficulty of evaluating the costs of future obligations impact the level of public wages and benefits, and what institutions lead to better outcomes for taxpayers and public-sector workers? Wed, 01 Aug 2012 00:00:00 GMT http://www.recercat.cat:80/handle/2072/204181 2012-08-01T00:00:00Z http://www.recercat.cat:80/handle/2072/204182 Speculation, risk premia and expectations in the yield curve Francisco Barillas; Kristoffer Nimark An affine asset pricing model in which traders have rational but heterogeneous expectations about future asset prices is developed. We use the framework to analyze the term structure of interest rates and to perform a novel three-way decomposition of bond yields into (i) average expectations about short rates (ii) common risk premia and (iii) a speculative component due to heterogeneous expectations about the resale value of a bond. The speculative term is orthogonal to public information in real time and therefore statistically distinct from common risk premia. Empirically we find that the speculative component is quantitatively important accounting for up to a percentage point of yields, even in the low yield environment of the last decade. Furthermore, allowing for a speculative component in bond yields results in estimates of historical risk premia that are more volatile than suggested by standard Affine Gaussian term structure models which our framework nests. Wed, 01 Aug 2012 00:00:00 GMT http://www.recercat.cat:80/handle/2072/204182 2012-08-01T00:00:00Z http://www.recercat.cat:80/handle/2072/204184 Notes for a new guide to Keynes (I): Wages, aggregate demand, and employment Jordi Galí I revisit the General Theory's discussion of the role of wages in employment determination through the lens of the New Keynesian model. The analysis points to the key role played by the monetary policy rule in shaping the link between wages and employment, and in determining the welfare impact of enhanced wage flexibility. I show that the latter is not always welfare improving. Sat, 01 Sep 2012 00:00:00 GMT http://www.recercat.cat:80/handle/2072/204184 2012-09-01T00:00:00Z http://www.recercat.cat:80/handle/2072/204183 Two-sided learning in New Keynesian models: Dynamics, (lack of) convergence and the value of information Christian Matthes; Francesca Rondina This paper investigates the role of learning by private agents and the central bank (two-sided learning) in a New Keynesian framework in which both sides of the economy have asymmetric and imperfect knowledge about the true data generating process. We assume that all agents employ the data that they observe (which may be distinct for different sets of agents) to form beliefs about unknown aspects of the true model of the economy, use their beliefs to decide on actions, and revise these beliefs through a statistical learning algorithm as new information becomes available. We study the short-run dynamics of our model and derive its policy recommendations, particularly with respect to central bank communications. We demonstrate that two-sided learning can generate substantial increases in volatility and persistence, and alter the behavior of the variables in the model in a significant way. Our simulations do not converge to a symmetric rational expectations equilibrium and we highlight one source that invalidates the convergence results of Marcet and Sargent (1989). Finally, we identify a novel aspect of central bank communication in models of learning: communication can be harmful if the central bank's model is substantially mis-specified. Sat, 01 Sep 2012 00:00:00 GMT http://www.recercat.cat:80/handle/2072/204183 2012-09-01T00:00:00Z http://www.recercat.cat:80/handle/2072/204185 Financial reforms and capital flows: Insights from general equilibrium Martin, Alberto; Ventura, Jaume As a result of debt enforcement problems, many high-productivity firms in emerging economies are unable to pledge enough future profits to their creditors and this constrains the financing they can raise. Many have argued that, by relaxing these credit constraints, reforms that strengthen enforcement institutions would increase capital flows to emerging economies. This argument is based on a partial equilibrium intuition though, which does not take into account the origin of any additional resources that flow to high-productivity firms after the reforms. We show that some of these resources do not come from abroad, but instead from domestic low-productivity firms that are driven out of business as a result of the reforms. Indeed, the resources released by these low-productivity firms could exceed those absorbed by high-productivity ones so that capital flows to emerging economies might actually decrease following successful reforms. This result provides a new perspective on some recent patterns of capital flows in industrial and emerging economies. Sat, 01 Sep 2012 00:00:00 GMT http://www.recercat.cat:80/handle/2072/204185 2012-09-01T00:00:00Z http://www.recercat.cat:80/handle/2072/204176 Sources of comparative advantage in polluting industries Broner, Fernando; Bustos, Paula; Carvalho, Vasco M We study the determinants of comparative advantage in polluting industries. We combine data on environmental policy at the country level with data on pollution intensity at the industry level to show that countries with laxer environmental regulation have a comparative advantage in polluting industries. Further, we address the potential problem of reverse causality. We propose an instrument for environmental regulation based on meteorological determinants of pollution dispersion identified by the atmospheric pollution literature. We find that the effect of environmental regulation on the pattern of trade is causal and comparable in magnitude to the effect of physical and human capital. Wed, 01 Jun 2011 00:00:00 GMT http://www.recercat.cat:80/handle/2072/204176 2011-06-01T00:00:00Z http://www.recercat.cat:80/handle/2072/204180 Centralization and accountability: Theory and evidence from the Clean Air Act Boffa, Federico; Piolatto, Amedeo; Ponzetto, Giacomo A. M. This paper studies fiscal federalism when voter information varies across regions. We develop a model of political agency with heterogeneously informed voters. Rent-seeking politicians provide public goods to win the votes of the informed. As a result, rent extraction is lower in regions with higher information. In equilibrium, electoral discipline has decreasing returns. Thus, political centralization efficiently reduces aggregate rent extraction. The model predicts that a region's benefits from centralization are decreasing in its residents' information. We test this prediction using panel data on pollutant emissions across U.S. states. The 1970 Clean Air Act centralized environmental policy at the federal level. In line with our theory, we find that centralization induced a differential decrease in pollution for uninformed relative to informed states. Sat, 01 Oct 2011 00:00:00 GMT http://www.recercat.cat:80/handle/2072/204180 2011-10-01T00:00:00Z http://www.recercat.cat:80/handle/2072/204177 Level-k reasoning and incentives Alaoui, Larbi; Penta, Antonio Level-k theories are agnostic over whether individuals stop the iterated reasoning because of their own cognitive constraints, or because of their beliefs over the cognitive constraints of their opponents. In practice, individual level of play may be a function both of their own constraints and their beliefs over their opponents' reasoning process. Moreover, the rounds of introspection that players perform may depend on their incentives to think more deeply. We develop a theory which explicitly models players' reasoning procedure. The rounds of introspection that individuals perform and their actual level of play both follow endogenously. This model delivers testable implications as payoffs and opponents change, and it allows for comparisons across games. It also disentangles the cognitive bound of players for a given game from their beliefs about the play of their opponents. In conjunction with the framework, we present an experiment designed to test its predictions. We modify the Arad and Rubinstein (2012) `11-20' game to serve this precise purpose, and administer different treatments which vary beliefs over payoffs and opponents. The results of this experiment are consistent with the model, and appear to lend support to our theory. This experiment also confirms the central premise that individuals change their level of play as incentives to think more and beliefs over opponents vary. Sun, 01 Jul 2012 00:00:00 GMT http://www.recercat.cat:80/handle/2072/204177 2012-07-01T00:00:00Z http://www.recercat.cat:80/handle/2072/204178 Civil conflict and human capital accumulation: The long-term effects of political violence in Perú Gianmarco León This paper provides empirical evidence of the persistent effect of exposure to political violence on human capital accumulation. I exploit the variation in conflict location and birth cohorts to identify the longand short-term effects of the civil war on educational attainment. Conditional on being exposed to violence, the average person accumulates 0.31 less years of education as an adult. In the short-term, the effects are stronger than in the long-run; these results hold when comparing children within the same household. Further, exposure to violence during early childhood leads to permanent losses. I also explore the potential causal mechanisms. Thu, 01 Mar 2012 00:00:00 GMT http://www.recercat.cat:80/handle/2072/204178 2012-03-01T00:00:00Z http://www.recercat.cat:80/handle/2072/204179 How accurate are surveyed preferences for public policies? Evidence from a unique institutional setup Patricia Funk Opinion polls are widely used to capture public sentiments on a variety of issues. If citizens are unwilling to reveal certain policy preferences to others, opinion polls may fail to characterize population preferences accurately. The innovation of this paper is to use unique data to measure biases in opinion polls for a broad range of policies. I combine data on 184 referenda held in Switzerland between 1987 and 2007, with postballot surveys that ask for each proposal how the citizens voted. The difference between stated preferences in the survey and revealed preferences at the ballot box provides a direct measure of bias in opinion polls. I find that these biases vary by policy areas, with the largest ones occurring in policies on immigration, international integration, and votes involving liberal/conservative attitudes. Also, citizens show a tendency to respond in accordance to the majority. Sat, 01 Sep 2012 00:00:00 GMT http://www.recercat.cat:80/handle/2072/204179 2012-09-01T00:00:00Z http://www.recercat.cat:80/handle/2072/204171 Approximate knowledge of rationality and correlated equilibria Fabrizio Germano; Peio Zuazo-Garin We extend Aumann's theorem [Aumann 1987], deriving correlated equilibria as a consequence of common priors and common knowledge of rationality, by explicitly allowing for non-rational behavior. We replace the assumption of common knowledge of rationality with a substantially weaker one, joint p-belief of rationality, where agents believe the other agents are rational with probability p or more. We show that behavior in this case constitutes a kind of correlated equilibrium satisfying certain p-belief constraints, and that it varies continuously in the parameters p and, for p sufficiently close to one, with high probability is supported on strategies that survive the iterated elimination of strictly dominated strategies. Finally, we extend the analysis to characterizing rational expectations of interim types, to games of incomplete information, as well as to the case of non-common priors. Fri, 01 Jun 2012 00:00:00 GMT http://www.recercat.cat:80/handle/2072/204171 2012-06-01T00:00:00Z http://www.recercat.cat:80/handle/2072/204172 Transition probabilities and duration analysis among disability states: Some evidence from Spanish data Guillem López i Casasnovas; Catia Nicodemo In this paper we study the disability transition probabilities (as well as the mortality probabilities) due to concurrent factors to age such as income, gender and education. Although it is well known that ageing and socioeconomic status influence the probability of causing functional disorders, surprisingly little attention has been paid to the combined effect of those factors along the individuals' life and how this affects the transition from one degree of disability to another. The assumption that tomorrow's disability state is only a function of the today's state is very strong, since disability is a complex variable that depends on several other elements than time. This paper contributes into the field in two ways: (1) by attending the distinction between the initial disability level and the process that leads to his course (2) by addressing whether and how education, age and income differentially affect the disability transitions. Using a Markov chain discrete model and a survival analysis, we estimate the probability by year and individual characteristics that changes the state of disability and the duration that it takes its progression in each case. We find that people with an initial state of disability have a higher propensity to change and take less time to transit from different stages. Men do that more frequently than women. Education and income have negative effects on transition. Moreover, we consider the disability benefits associated to those changes along different stages of disability and therefore we offer some clues on the potential savings of preventive actions that may delay or avoid those transitions. On pure cost considerations, preventive programs for improvement show higher benefits than those for preventing deterioration, and in general terms, those focussing individuals below 65 should go first. Finally the trend of disability in Spain seems not to change among years and regional differences are not found. Fri, 01 Jun 2012 00:00:00 GMT http://www.recercat.cat:80/handle/2072/204172 2012-06-01T00:00:00Z http://www.recercat.cat:80/handle/2072/204175 Assessing technology-based spin-offs from university support units Mircea Epure; Diego Prior; Christian Serarols Literature highlights the importance of university spin-offs and their assistance mechanisms. However, there is little evidence on how to select and operationalize the appropriate variables for assessing this type of firms. This paper proposes a multidimensional design to estimate and interpret the efficiency of spin-offs embedded in university-based support mechanisms. We thus contribute to the literature in at least two ways. First, we identify the specific inputs and outputs that are required by both organisational and regional development perspectives. Second, an application considers a unique sample of spin-offs created at Catalan universities within a regional support programme. Main descriptive results indicate that many efficient spin-offs have formal technology transfer agreements and emerge from universities with more technological background. Second stage analyses show that higher levels of innovation and specific academic knowledge or experience related with the university of origin are associated with higher efficiency. Tue, 01 Nov 2011 00:00:00 GMT http://www.recercat.cat:80/handle/2072/204175 2011-11-01T00:00:00Z http://www.recercat.cat:80/handle/2072/204174 Standardized enforcement: Access to justice vs contractual innovation Gennaioli, Nicola; Perotti, Enrico Camillo We model the different ways in which precedents and contract standardization shape the development of markets and the law. In a setup where more resourceful parties can distort contract enforcement to their advantage, we find that the introduction of a standard contract reduces enforcement distortions relative to precedents, exerting two effects: i) it statically expands the volume of trade, but ii) it crowds out the use of innovative contracts, hindering contractual innovation. We shed light on the large scale commercial codification occurred in the 19th century in many countries (even Common Law ones) during a period of booming commerce and long distance trade. Wed, 01 Apr 2009 00:00:00 GMT http://www.recercat.cat:80/handle/2072/204174 2009-04-01T00:00:00Z http://www.recercat.cat:80/handle/2072/204173 Taming SIFIs Xavier Freixas; Jean-Charles Rochet We model a Systemically Important Financial Institution (SIFI) that is too big (or too interconnected) to fail. Without credible regulation and strong supervision, the shareholders of this institution might deliberately let its managers take excessive risk. We propose a solution to this problem, showing how insurance against systemic shocks can be provided without generating moral hazard. The solution involves levying a systemic tax needed to cover the costs of future crises and more importantly establishing a Systemic Risk Authority endowed with special resolution powers, including the control of bankers' compensation packages during crisis periods. Fri, 01 Jun 2012 00:00:00 GMT http://www.recercat.cat:80/handle/2072/204173 2012-06-01T00:00:00Z