infonet-economy

Neoclassical economic theory rules out systematic errors in consumption choice. According to the basic view, individuals know what they choose. They are able to predict how much utility an activity or a good produces for them now and in the future and they can maximize their utility. This implies that behavior reveals consistent preferences. This approach makes it impossible to…

Trends in arts and culture tend to be longer-lasting and less fragile than in other fields such as clothing design. Most herding models are not able to explain such stability, instead predicting informational cascades to be fragile and fads to be frequent. Thenpresent contribution is able to explain the hysterisis of trends in arts by incorporating thenaccumulation of consumption…

It is common in econometric applications that several hypothesis tests are carried out at the same time. The problem then becomes how to decide whichnhypotheses to reject, accounting for the multitude of tests.nThe classical approach is to control the familywise error rate (FWE), that is, thenprobability of one or more false rejections. But when thennumber of hypotheses under…

"Multilevel or mixed effects models are commonly applied to hierarchical data; for example,nsee Goldstein (2003), Raudenbush and Bryk (2002), and Laird and Ware (1982). Although therenexist many outputs from such an analysis, the level-2 residuals, otherwise known as randomneffects, are often of both substantive and diagnostic interest. Substantively, they are frequently used…

Famous cultural monuments are often regarded as unique icons, making them an attractive target for terrorists. Despite huge military and police outlays, terrorist attacks on important monuments can hardly be avoided. We argue that an effective strategy for discouraging terrorist attacks on iconic monuments is for the government to show a firm commitment to swift reconstruction. Using…

Health insurance is potentially subject to risk selection, i.e. adverse selection on the part of consumers and cream skimming on the part of insurers. Adverse selection models predict that competitive health insurers can eschew high-risk individuals by o¤ering contracts with low deductibles or co-payment rates, while attracting low-risk individuals with higher copayments, resulting…

We model income redistribution with dynamic distortions as determined by rational voting without commitment among individuals of different types and income realizations. We find that redistribution is too persistent relative to that chosen by a planner with commitment. The difference is larger, the lower is the political influence of young agents, the lower is the altruistic concern…

I give necessary and sufficient conditions for the uniqueness of the equilibrium in a wide class of Rubinstein bargaining models. The requirements encompass a class of non-convex or disconnected payoff sets with discontinuous Pareto frontiers. The equilibrium of the non-cooperative game is unique if the objective function of the corresponding Nash-bargaining game has a unique maximum…

This paper analyzes and compares different ways of assessing how people perceived impending threats of war in the past. Conventional Nordic historiography of World War IInclaims there were few, if any, people in the Nordic countries who perceived a significantlynincreased threat of war between 1938 and early 1940. At the same time, historical methodsnface problems when it comes to…