Economics rests upon a set of presumptions about how human beings are affected by income. Yet causal evidence is scant. This paper reports a longitudinal study of randomly selected lottery winners. Remarkably, we show that it takes almost three years before they enjoy their money. We develop a model of dissonance and deservingness. We argue that, despite the tradition of economics, human beings may weight differently the different kinds of income that accrue to them. If so, it is not sufficient to describe utility by a function u(y), and it is not true that ‘a dollar is a dollar’.
This study uses Markowitz mean-variance portfolio theory with forecasted data for the years 2005 to 2035 to determine efficient electricity generating technology mixes for Switzerland. The SURE procedure has been applied to filter out the systematic components of the covariance matrix. Results indicate that risk-averse electricity users in 2035 gain in terms of higher expected return, less risk, more security of supply and a higher return-to-risk ratio compared to 2000 by adopting a feasible minimum variance (MV) technology mix containing 28 percent Gas, 20 percent Run of river, 13 percent Storage hydro, 9 percent Nuclear, and 5 percent each of Solar, Smallhydro, Wind, Biomass, Incineration, and Biogas respectively. However, this mix comes at the cost of higher CO2 emissions.
This paper analyses the equilibrium effects of individual information filters. Information is modelled as advertisements which are distributed across a population of consumers with heterogeneous preferences. An advertisement that provides knowledge about a product with little or no utility for a consumer is considered junk. Filters are characterised by their level of tolerance. The quality of the filter is measured in terms of the share of useful items in the total set of items passing the filter. It is shown that in conditions of decentralised competition, multiple equilibria arise. A social optimum can be achieved by demanding each consumer to reject a certain percentage of advertisements, leaving the choice of what is rejected up to the consumer him/herself.
In this paper, the amount of income redistribution in the United States, the European Union, and Switzerland is compared and empirically related to economic, political, and behavioral determinants elaborated in the literature. Lying in between the two poles, Switzerland provides unique evidence about the relative merits of competing hypotheses. It tips the balance against the economic explanation, which predicts more rather than less income redistribution in the United States compared to the EU. It only weakly supports the political model linking proportional representation and multiparty structure (which also characterize Switzerland) to redistribution; yet the Swiss share of transfers in the GDP is low. Behavioral explanations receive a good deal of support from the case of Switzerland, a country that shares with the United States the belief that hard work rather than luck, birth, connections, and corruption determine wealth. In this way, the Janus face of Switzerland may help to explain the difference in the amount of U.S. and EU income redistribution.
The search for economically e?cient policy instruments designed to promote the diffusion of renewable energy technologies in liberalized markets has led to the introduction of quota-based tradable ‘green’ certi?cate (TGC) schemes for renewable electricity. However, there is a debate about the pros and cons of TGC, a quantity control policy, compared to guaranteed feed-in tariffs, a price control policy. In this paper we contrast these two alternatives in terms of social welfare, taking into account that electricity markets are not perfectly competitive, and show that the price control policy dominates the quantity control policy in terms of social welfare.
The paper characterizes the mixed-strategy equilibria in all-pay auctions with endogenous prizes that depend positively on own e?ort and negatively on the e?ort of competitors. Such auctions arise naturally in the context of investment games, lobbying games, and promotion tournaments. We also provide an experimental analysis of a special case which captures the strategic situation of a two-stage game with investment preceding homogenous Bertrand competition. We obtain overinvestment both relative to the mixed-strategy equilibrium and the social optimum.
Advertisements provide consumers with knowledge about private products, whereas political information is required to provide voters with knowledge of public issues. Modern information technologies and globalisation are increasing the exposure of individuals to information. Goods advertising is competing with political information for people's attention. This paper presents a politico-economic equilibrium model in which the tension between private and public agendas can be analysed. It is shown that in an information-rich society, international goods market integration tends to reduce the quality of public policy. Complementing economic integration with political integration can increase the gains from globalisation, though not in all cases.
This paper applies the five modified standard criteria generally used in economics for assessing system performances to gauge the contribution of Managed Care to the performance of three health care systems, viz. Germany, the Netherlands and the United States. The maximum contribution of Managed Care to the performance of the health care system is found for the United States and the Netherlands. The Health Maintenance Organization (U.S.) and the gatekeeper model (the Netherlands) score 10 and 9 out of 15 points, respectively, importantly due to a market-oriented environment. By way of contrast, the so-called ‘structured treatment programs’ of the German health care system score only 4 out of 15 points. Not only the more tightly regulated environment but also the lack of consideration of consumer preferences and of incentives for service providers to participate in the programs contributed to poor performance.
By means of a very simple example, this note illustrates the appeal of using Bayesian rather than classical methods to producen inference on hidden states in models of Markovian regime switching.
In November 2005, 55.7 percent of 2 million Swiss voters approved a 5-year moratorium (ban) on the commercial cultivation of genetically modified (GM) plants within Switzerland. The present study examines how individual voting decisions were determined by (i) socioeconomic characteristics, (ii) political preference/ideology and (iii) agreement with a series of arguments in favour and against the use of GM plants in Swiss agriculture. The analysis is based on the data of the regular voter survey undertaken after national-level voting decisions in Switzerland. Among the socioeconomic characteristics, only the age group was clearly significant with individuals above 65 years less opposed to crop biotechnology. Several political preference/ideology variables were significant determinants of the vote, most notably the preferences about the role of the state in the economy. Perceived consequences of the use of GM plants for health, natural diversity of plants and animals were also strongly and significantly associated with approving and disapproving voter groups. The disapproving votes were not motivated by perceived benefits of GM-food production but mainly by perceived interests of Swiss science and industry. Our findings suggest that current concerns about the use of genetically engineered plants in agriculture may not automatically decrease with higher levels of education/knowledge and generational change. Furthermore, the analysis of the voter motives suggests that the public support for GM-free agricultural production would be even larger in other countries, where industrial interests in crop biotechnology are less pronounced.
