Working papers 2001
(including abstracts)
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I servizi di igiene urbana: il passaggio dalla Tarsu alla tariffa Carlo Cambini Il settore dei rifiuti sta entrando in una fase di profonda trasformazione che dovrebbe a breve consentirgli di superare quei limiti strutturali e tecnologici che fino ad oggi lo hanno caratterizzato. La nuova normativa in vigore (D.lgs 5 febbraio 1997, n. 22) sembra costituita da un buon impianto di regolazione ambientale mentre appaiono del tutto insufficienti gli aspetti di regolazione economica. Il settore dei rifiuti è stato per troppi anni caratterizzato da una eccessiva frammentazione nella gestione a livello nazionale, da gestioni poco attente ai problemi di efficienza, da bassi livelli di investimenti e da condizioni di monopolio locale che hanno portato a rendite di posizione per gli operatori. Uno dei principali cambiamenti introdotti con la riforma in atto, su cui questo lavoro si sofferma, è l'abolizione della tassa di smaltimento dei rifiuti solidi urbani (la cosiddetta Tarsu) sostituita da una "tariffa normalizzata" che, nella sua articolazione originaria, dovrebbe incentivare l'impresa ad una maggiore efficienza e l'utente ad una produzione più razionale di rifiuti stimolandolo ad aumentare la raccolta differenziata degli stessi. Il lavoro si presuppone di affiancare ad un'analisi normativa sulla tariffa rifiuti un'analisi di tipo economico in cui si individuano le criticità del meccanismo predisposto dalla normativa nazionale (incentivi agli investimenti, all'efficienza produttiva, distorsione nel comportamento delle imprese, ecc.). |
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Structure and behaviour of a textile industrial district Guido Fioretti This article presents a model of the structure of information fluxes that underlie the creation of production chains in a textile district located in Prato, Tuscany, central Italy. Contrary to most textile districts in western Europe and north America, Prato did not extinct once average salaries in the re-gion rose well above the world's lowest standards. The reason is that Prato was able to switch from a competitive advantage based on low prices to a competitive advantage based on aesthetical features and variety of textiles. Analysis of the structure of production chains can explain the behaviour of the district throughout its evolution. The model reconstructs interactions of ten types of Pratese firms from 1946 to 1993 in scale 1:1. |
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A mathematical theory of evidence for G.L.S. Shackle Guido Fioretti Evidence Theory is a branch of mathematics that concerns the combination of empirical evidence in an individual's mind in order to construct a coherent picture of reality. Designed to deal with unexpected empirical evidence suggesting new possibilities, evidence theory has a lot in common with Shackle's idea of decision-making as a creative act. This essay investigates this connection in detail, pointing to the usefulness of evidence theory to formalise and extend Shackle's decision theory. In order to ease a proper framing of the issues involved, evidence theory is not only compared with Shackle's ideas but also with additive and sub-additive probability theories. Furthermore, the presentation of evidence theory does not refer to the original version only, but takes account of its most recent developments, too. |
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Local asympotic efficiency of some goodness-of-fit tests under skew alternatives Alessandra Durio, Yacov Yu. Nikitin The efficiency of most known distribution-free goodness-of-fitt tests such as Kolmogorov - Smirnov, Cramér - von Mises and their numerous variants was studied mainly under the classical alternatives of location and scale. However it is interesting to compare the efficiencies of these tests under asymmetric alternatives among which the most popular is the so-called skew alternative proposed by Azzalini (1985) in the case of the normal distribution. We find and compare local Bahadur efficiencies of many known statistics for skew alternatives and discuss also the conditions of their local optimality. |
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On Fragility of Bubbles in Equilibrium Asset Pricing Models of Lucas-Type Luigi Montrucchio, Fabio Privileggi In this paper we study the existence of bubbles for pricing equilibria in a pure exchange economy à la Lucas, with infinitely lived homogeneous agents. The model is analyzed under fairly general assumptions: no restrictions either on the stochastic process governing dividends’ distribution or on the utilities (possibly unbounded) are required. We prove that the pricing equilibrium is unique as long as the agents exhibit uniformly bounded relative risk aversion. A generic uniqueness result is also given regardless of agent’s preferences. A few ”pathological” examples of economies exhibiting pricing equilibria with bubble components are constructed. Finally, a possible relationship between our approach and the theory developed by Santos and Woodford on ambiguous bubbles is investigated. The whole discussion sheds more insight on the common belief that bubbles are a marginal phenomenon in such models. |
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Categorical variables in DEA Finn R. Førsund If a DEA model has a mix of categorical and continuous variables a standard LP formulation can still be used by entering all combinations of categorical and continuous variables as different types of inputs and/or outputs. Most units will then not have positive levels of all variables. The implications for selection of peers are investigated. Peers can have the same or fewer types of inputs than the unit under investigation, but either fewer or more types of outputs. There is a basic asymmetry between number of positive inputs and outputs of the peer units due to more of inputs reducing efficiency while more of outputs improving efficiency. The special cases of imposing a hierarchical structure on the categorical variables dealt with in the literature can easily be incorporated. |
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Selling Picasso paintings: the efficiency of auction houses Finn R. Førsund, Roberto Zanola Previous works applying hedonic price technique to determine the formation of auction prices of objects of art have found no conclusive result about the impact of auction houses on final prices. In these studies the object of art has been the unit, and influence of auction houses is analysed by testing whether auction house impact on price is significant or not within a framework of central tendencies. In order to focus on auction houses as a unit we have applied a benchmarking technique, DEA, developed for efficiency studies. Categorial and continuous variables are used as inputs and auction prices as outputs. Performance indicators are defined and calculated giving an insight into auction house differences impossible to obtain using hedonic price approach. |
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Probabilistic sophistication and multiple priors Massimo Marinacci We show that under fairly mild conditions, a maximin expected utility preference relation is probabilistically sophisticated if and only if it is subjective expected utility. |
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Subcalculus for set functions and cores of TU games Massimo Marinacci, Luigi Montrucchio This paper introduces a subcalculus for general set functions and uses this framework to study the core of TU games. After stating a linearity theorem, we establish several theorems that characterize mea- sure games having finite-dimensional cores. This is a very tractable class of games relevant in many economic applications. Finally, we show that exact games with Þnite dimensional cores are generalized linear production games. |
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Semiproportional Values for TU Games Anna B. Khmelnitskaya, Theo S.H. Driessen The goal of the paper is to introduce a family of values for transferable utility cooperative games that are proportional for two- person games and as well satisfying some combinatorial structure com- posed by contributions of complementary coalitions or, to less extent, marginal contributions by players. |
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Expected utility theory without the completeness axiom Juan Dubra, Fabio Maccheroni, Efe Oki We study axiomatically the problem of obtaining an expected utility representation for a potentially incomplete preference relation over lotteries by means of a set of von Neumann-Morgenstern utility functions. It is shown that, when the prize space is a compact metric space, a preference relation admits such a Multi-utility representation provided that it satisfies the standard axioms of expected utility theory. Moreover, the representing set of utilities in unique in a well-defined sense. |
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Random correspndences as bundles of random variables Adriana Castaldo, Massimo Marinacci We prove results that relate random correspondences with their measurable selections, thus providing a foundation for viewing random correspondences as "bundles" of random variables. |
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A praxeological view of Post-Soviet institutional engineering Enrico Colombatto The Misesian lesson in a transition framework leads to a number of questions about the very aims pursued by individuals as they switched from the communist regime to a so-called capitalist environment. According to the answers provided, one may then understand why so many candidates to free-market experiments are now evolving towards some kind of mixed-economy system. This paper tries to suggest the right questions by looking at the origin of the transition process in Eastern Europe. Four different theories are put forwards and analyzed. It is concluded that the so-called transition economies did not opt for a clearly-defined institutional system to oppose to Soviet communism. Rather, transition should refer to a painful process of finding out new institutional rules apt to replace the previous order. Nationalistic feelings surely play an important role and may explain why paternalistic policies tend to be welcome. From a praxeological viewpoint, it will be important to assess whether the present institutional framework is flexible enough to accommodate today's yearning for paternalistic policies, but strong enough to resist pressure to transform paternalism into redistribution and thereby award privileges to new rent-seeking coalitions. |
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The economic evolution of petroleum property rights in the United States: a test of the Demsetz hypothesis Gary Libecap, James L. Smith We examine Harold Demsetz’s (1967) prediction that property rights will emerge and be refined once the benefits of doing so exceed the costs. We follow the development of property rights to oil and gas deposits in the United States to test this prediction. The pattern of development has been influenced by technological change, shifts in relative prices, information asymmetries, and political factors. While the pattern follows the broad outlines sketched by Demsetz; details of the bargaining process, the importance of information asymmetries and price volatility, and the key role of politics have resulted in property rights structures that would not have been predicted in a strict neo-classical sense. Our analysis provides insights regarding the structure and scope of voluntary unitization agreements, and appropriate limits on the practice of compulsory unitization by the states. |
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Transition Miroslav Prokopijevic The intention in this article is to consider some basic questions of transition after the more than ten years that have elapsed since this process has started, and after the emergence of a huge literature which tries to explain it. The structure of the article is as it follows: Part I is about a tentative definition of transition, followed by part II, which presents an analysis of the big-bang theory, probably the most popular policy recommendation for post-communist reforms. Part III is about privatization, which championed the attention of economists dealing with transition. It is argued that policy recommendations are unlikely to work during transition in the East Europe, if they do not take into account specific conditions in these countries; since conditions are quite different and since they change during reform, a strong commitment to reform is more important than a ready-made program. That indicates why nearly all policy recommendations of western experts (and those experts from East Europe who support them) have missed the point. |
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Political constraints on government cartelization: the case of oil production regulation in Texas and Saudi Arabia Gary Libecap, James L. Smith We examine government cartelization efforts in crude oil production. Texas and Saudi Arabia are alleged to act as swing producers to maintain the interstate (1933-1972) and OPEC (1973 on) oil cartels respectively. We analyze the political constraints that affected the ability of Texas and Saudi Arabia to act as residual producers within their respective cartels. In the case of Texas, political factors molded individual firm production quotas, advantaging high-cost producers and hence, reducing total cartel net profits. Further, Texas had limited range for adjusting total state production to maintain interstate output at levels consistent with target prices. Saudi Arabia’s role as swing producer within OPEC raises similar questions regarding how cartel output is shared among members, and the extent to which domestic economic and political pressures coming from various member countries may undermine the effectiveness of the cartel. OPEC ‘s coordination problem has been more difficult than that faced by the interstate cartel for a variety of reasons that we explore. Even so, they have not kept the OPEC members in general, and Saudi Arabia in particular, from exerting a strong influence on the level of world oil prices. |
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A subjective spin on roulette wheels Paolo Ghirardato, Fabio Maccheroni, Massimo Marinacci, Marciano Siniscalchi We provide a behavioral foundation to the notion of ‘mixture’ of acts, which is used to great advantage in he decision setting introduced by Anscombe and Aumann. Our construction allows one to formulate mixture-space axioms even in a fully sub-jective setting, without assuming the existence of randomizing devices. This simplifies the task of developing axiomatic models which only use behavioral data. Moreover, it is immune from the difficulty that agents may ‘distort’ the probabilities associated with randomizing devices. For illustration, we present simple subjective axiomatizations of some models of choice under uncertainty, including the maxmin expected utility model of Gilboa and Schmeidler, and Bewley’s model of choice with incomplete preferences. |
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Optimal two-object auctions with synergies Domenico Menicucci We design the revenue-maximizing auction for two goods when each buyer has bi-dimensional private information and a superadditive utility function (i.e., a synergy is generated if a buyer wins both goods). In this setting the seller is likely to allocate the goods inefficiently with respect to an environ-ment with no synergies. In particular, if the synergy is large then it may occur that a buyer’s valuations for the goods weakly dominate the valuations of another buyer and the latter one receives the bundle. We link this fact, which contrasts with the results for a setting without synergies, to "non-regular" one-good models. |
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Legal rules, governance structures and financial systems Aleksandra Jovanovic This paper intends to reexamine commonly accepted view on association of legal rules with corporate governance and financial markets. It summarizes findings of a number of empirical studies and gives view of current thinking on association between legal rules and financial systems characterized by ownership patterns, nature of equity, governance structure, finance behavior and capital structure. Nature and effectiveness of financial systems across countries can be partly traced to the differences in legal structures. On the other hand, legal systems are products of different governance and financial systems that place different "demands" on legal institutions. Thus, on the issue of causality, we argue that legal systems evolve as a reflection, as well as a cause, of different governance and financial systems. The practical implication is that few strong conclusions can be deduced about the policy reform. Thus, the policy reform should rely on basic principles. |
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Asymptotic efficiency and local optimality of distribution - free tests based on U- and V-statistics Yakov Nikitin Many well-known goodness-of-fit and symmetry tests are based on U- et V-statistics. Recent progress in the analysis of their large deviations enables to find new expressions for their local Bahadur efficiency in case of bounded kernels and to formulate the conditions of local optimality. For some known statistics and such alternatives as location, scale and skew models this leads to original characterizations of distributions. |
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Risk, ambiguity, and the separation of utility and beliefs Paolo Ghirardato, Massimo Marinacci We introduce a general model of static choice under uncertainty, arguably the weakest model achieving a separation of cardinal utility and a unique representation of beliefs. Most of the non-expected utility models existing in the literature are special cases of it. Such separation is motivated by the view that tastes are constant, whereas beliefs change with new information. The model has a simple and natural axiomatization. Elsewhere (forthcoming) we show that it can be very helpful in the characterization of a notion of ambiguity aversion, as separating utility and beliefs allows to identify and remove aspects of risk attitude from the decision maker’s behavior. Here we show that the model allows to generalize several results on the characterization of risk aversion in betting behavior. These generalizations are of independent interest, as they show that some traditional results for subjective expected utility preferences can be formulated only in terms of binary acts. |
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Change of numéraire for affine arbitrage pricing models driven by multifactor marked point processes Andrea Roncoroni We derive a general formula for the change of numéraire in multifactor ane arbitrage free models driven by marked point processes. As a complement, we present both ane structures and change of measures in the general setting of jump diusions. This provides for a comprehensive view on the subject. |
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Credit rationing, wealth inequality, and allocation of talent Maitreesh Ghatak, Massimo Morelli, Tomas Sjoström We provide a simple model of credit rationing with endogenous occupational chioce. Entrepreneurial talent is subject to private information and to screen borrowers banks ask for collateral. The interplay between the labour market and the credit market leads to multiple equilibria in a natural way. The higher is the wage rate, the lower is the collateral needed to discourage less talented agents from borrowing. This allows a greater number of poor but talented agets to become entrepreneurs, thereby increasing labor demand and justifying the wage increase. We discuss the implications of our model for economic policy which are very different from those suggested by models that focus on the credit market only. |
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Discretionary power, rent-seeking and corruption Enrico Colombatto This article considers corruption as a breach of contract between a principal and an agent. This does not necessarily imply that corruption is immoral, for the nature of the violation actually depends on the features of the underlying contract. In this light, under many circumstances corruption turns out to be a rational and understandable reaction to institutional failures, which are often far from accidental. To this purpose, three different stylized institutional frameworks are analyzed: developed, undeveloped and transition countries. Contrary to the mainstream approach to corruption, it is here argued that the origin, scope and consequences of corruption vary significantly across the different frameworks. Normative conclusions should therefore be adjusted accordingly. |
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Learning in economics: the Austrian insights Pierre Garrouste In this contribution I first present a selective review of the literature on learning theories in economics. I then show that those theories are often assimilating knowledge to information or considering knowledge as a structure of information. Finally I discuss the possibility for those theories to be defined as Austrian and I conclude with a presentation of a research agenda. |
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Knowledge: a Challenge for the Austrian Theory of the Firm Pierre Garrouste In this paper I argue that the unequal distribution of knowledge implies that an Austrian theory of the firm must investigate two items. The first is the growth of knowledge within the firm (learning process), the second the way in the rights to decide over the distribution of knowledge are assigned and controlled. Finally, because those two elements are interdependent, we must define what their possible relations can be. |
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Rank dependent expected utility models of tax evasion Erling Eide In this paper the rank-dependent expected utility theory is substituted for the expected utility theory in models of tax evasion. It is demonstrated that the comparative statics results of the expected utility, portfolio choice model of tax evasion carry over to the more general rank dependent expected utility model. |
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The law of
insurance contractsi n the People's Republic of China. Alberto Monti The
implementation of China's economic reforms, beginning in the early
80's, and the formal
establishment of a "Socialist Market Economy" in the following
decade, stimulated substantial changes and improvements in the Insurance
Laws and Regulations of the People's Republic of China (hereafter:
PRC).
The need for a modern and sophisticated legal framework aimed at regulating
rights and remedies arising out of insurance contracts, as well as
the
insurance business in general, became clear and compelling as soon
as the Communist State began its slow but inexorable retreat and it
ceased
to take care of every aspect of the life of the Chinese People. |
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BV as a dual space. Fabio Maccheroni and William H. Ruckle Let C be a field of subsets of a set I. It is well known that the space FA of all the finitely additive games of bounded variation on C is the norm dual of the space of all simple functions on C. In this paper we prove that the space BV of all the games of bounded variation on C is the norm dual of the space of all simple games on C. This result is equivalent to the compactness of the unit ball in BV with respect to the vague topology. |
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Yaari dual theory without the completeness axiom. Fabio Maccheroni This note shows how Yaari’s dual theory of choice under risk naturally extends to the case of incomplete preferences. This also provides an axiomatic characterization of a large and widely studied class of stochastic orders used to rank the riskiness of random variables or the dispersion of income distributions (including, e.g., second order stochastic dominance, dispersion, location independent riskiness). |
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