|
on Utility Models and Prospect Theory |
|
Issue of 2022‒12‒05
thirty papers chosen by |
| By: | Nicolas Gravel (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique); Thierry Marchant (UGENT - Universiteit Gent = Ghent University [Belgium]) |
| Abstract: | The paper provides an axiomatic characterization of a family of rank dependent weighted average utility criteria applicable to decisions under ignorance or objective ambiguity. A decision under ignorance is described by the finite set of its final consequences while a decision under objective ambiguity is described by a finite set of probability distributions over a set of final consequences. The criteria characterized are those that assign to every element in a set a weight that depends upon the rank of this element if it was available for sure (or non-ambiguously) and that compare sets on the basis of their weighted utility for some utility function. A specific subfamily of these criteria that requires the weights to be proportional to each other is also characterized. |
| Keywords: | Ignorance,Ambiguity,Ranking Sets,Axioms,Ranks,Weights,Utility |
| Date: | 2022–10–22 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-03817362&r=upt |
| By: | George Samartzis; Nikitas Pittis |
| Abstract: | We study the necessary and sufficient conditions under which the Mean-Variance Criterion (MVC) is equivalent to the Maximum Expected Utility Criterion (MEUC), for two lotteries. Based on Chamberlain (1983), we conclude that the MVC is equivalent to the Second-order Stochastic Dominance Rule (SSDR) under any symmetric Elliptical distribution. We then discuss the work of Schuhmacher et al. (2021). Although their theoretical findings deduce that the Mean-Variance Analysis remains valid under Skew-Elliptical distributions, we argue that this does not entail that the MVC coincides with the SSDR. In fact, generating multiple MV-pairs that follow a Skew-Normal distribution it becomes evident that the MVC fails to coincide with the SSDR for some types of risk-averse investors. In the second part of this work, we examine the premise of Levy and Markowitz (1979) that "the MVC deduces the maximization of the expected utility of an investor, under any approximately quadratic utility function, without making any further assumption on the distribution of the lotteries". Using Monte Carlo Simulations, we find out that the set of approximately quadratic utility functions is too narrow. Specifically, our simulations indicate that $\log{(a+Z)}$ and $(1+Z)^a$ are almost quadratic, while $-e^{-a(1+Z)}$ and $-(1+Z)^{-a}$ fail to approximate a quadratic utility function under either an Extreme Value or a Stable Pareto distribution. |
| Date: | 2022–11 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2211.01240&r=upt |
| By: | Hans-Martin von Gaudecker (University of Bonn and IZA – Institute of Labor Economics); Christian Zimpelmann (Private Sector); Axel Wogrolly (IZA) |
| Abstract: | This paper analyzes the stability and distribution of ambiguity attitudes using a broad population sample. Using high-powered incentives, we collected six waves of data on ambiguity attitudes about financial markets—our main application—and climate change. Estimating a structural stochastic choice model, we obtain three individual-level parameters: Ambiguity aversion, likelihood insensitivity, and the magnitude of decision errors. These parameters are very heterogeneous in the population. At the same time, they are stable over time and largely stable across domains. We summarize heterogeneity in these three dimensions using a discrete classification approach with four types. Each group makes up 20-30 % of the sample. One group comes close to the behavior of expected utility maximizers. Two types are characterized by high likelihood insensitivity; one of them is ambiguity averse and the other ambiguity seeking. Members of the final group have large error parameters; robust conclusions about their ambiguity attitudes are difficult. Observed characteristics vary between groups in plausible ways. Ambiguity types predict risky asset holdings in the expected fashion, even after controlling for many covariates. |
| Keywords: | ambiguity attitudes; temporal stability; domain specificity; socio-demographic fac- tors; cluster analysis; household portfolio choice |
| JEL: | D81 G41 C38 D14 |
| Date: | 2022–11 |
| URL: | http://d.repec.org/n?u=RePEc:ajk:ajkdps:209&r=upt |
| By: | Christoph Czichowsky; Raphael Huwyler |
| Abstract: | We consider robust utility maximisation in continuous-time financial markets with proportional transaction costs under model uncertainty. For this, we work in the framework of Chau and R\'asonyi (2019), where robustness is achieved by maximising the worst-case expected utility over a possibly uncountable class of models that are all given on the same underlying filtered probability space with incomplete filtration. In this setting, we give sufficient conditions for the existence of an optimal trading strategy extending the result for utility functions on the positive half-line of Chau and R\'asonyi (2019) from continuous to general strictly positive c\`adl\`ag price processes. This allows us to provide a positive answer to an open question pointed out in Chau and R\'asonyi (2019) and shows that the embedding into a countable product space is not essential. |
| Date: | 2022–11 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2211.00532&r=upt |
| By: | Flores-Szwagrzak, Karol (Department of Economics, Copenhagen Business School) |
| Abstract: | We study how an agent evaluates the optimality of an action when she only observes a sample of its outcomes, not the outcome distribution. We characterize a model where the agent assigns an ex-ante utility to the action and then, upon seeing the sample, “updates” her evaluation by taking a convex combination of this ex-ante utility and the average utility of the outcomes in the sample. The weight on the average utility in this convex combination increases with sample size. Asymptotically, actions are evaluated using their sample average utility. The model includes Bayesian benchmarks as special cases. More generally, it describes an agent that may learn imperfectly yet consistently with a rough intuitive understanding of the Law of Large Numbers; it also enables decision-theoretic definitions of important concepts in the descriptive study of probabilistic judgement. |
| Keywords: | Sample; Sample size; Learning; uncertainty |
| JEL: | D81 D83 |
| Date: | 2022–11–24 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:cbsnow:2022_016&r=upt |
| By: | daud, Nur amalia |
| Abstract: | perilaku konsumen adalah manfaat yang dirasakan dari konsumsi suatu barang atau kepuasan yang diperoleh dari barang / jasa tersebut. Teori utility sering digunakan sebagai pendekatan dalam menjelaskan perilaku konsumen. |
| Date: | 2022–10–15 |
| URL: | http://d.repec.org/n?u=RePEc:osf:osfxxx:ak7df&r=upt |
| By: | Krebs, Tom (University of Mannheim); Scheffel, Martin (University of Cologne) |
| Abstract: | This paper considers a class of growth models with idiosyncratic human capital risk and private information about individual effort choices (moral hazard). Households are infinitely-lived and have preferences that allow for a time-additive expected utility representation with a one-period utility function that is additive over consumption and effort as well as logarithmic over consumption. Human capital investment is risky due to idiosyncratic shocks that follow a Markov process with transition probabilities that depend on effort choices. The production process is represented by an aggregate production function that uses physical capital and human capital as input factors. We show that constrained optimal allocations are simple in the sense that individual effort levels and individual consumption growth rates are history-independent. Further, constrained optimal allocations are the solutions to a recursive social planner problem that is simple in the sense that exogenous shocks are the only state variables. We also show that constrained optimal allocations can be decentralized as competitive equilibrium allocations of a market economy with a simple tax- and transfer scheme. Finally, it is always optimal to subsidize human capital investment in the market economy. |
| Keywords: | economic growth, private information, human capital risk |
| JEL: | D51 D82 E20 |
| Date: | 2022–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp15650&r=upt |
| By: | Soroush Ebadian (DCS - Department of Computer Science [University of Toronto] - University of Toronto); Anson Kahng (Department of Computer Science [Rochester] - University of Rochester [USA]); Dominik Peters (LAMSADE - Laboratoire d'analyse et modélisation de systèmes pour l'aide à la décision - Université Paris Dauphine-PSL - PSL - Université Paris sciences et lettres - CNRS - Centre National de la Recherche Scientifique); Nisarg Shah (DCS - Department of Computer Science [University of Toronto] - University of Toronto) |
| Abstract: | A voting rule decides on a probability distribution over a set of m alternatives, based on rankings of those alternatives provided by agents. We assume that agents have cardinal utility functions over the alternatives, but voting rules have access to only the rankings induced by these utilities. We evaluate how well voting rules do on measures of social welfare and of proportional fairness, computed based on the hidden utility functions. In particular, we study the distortion of voting rules, which is a worst-case measure. It is an approximation ratio comparing the utilitarian social welfare of the optimum outcome to the social welfare produced by the outcome selected by the voting rule, in the worst case over possible input profiles and utility functions that are consistent with the input. The previous literature has studied distortion with unit-sum utility functions (which are normalized to sum to 1), and left a small asymptotic gap in the best possible distortion. Using tools from the theory of fair multi-winner elections, we propose the first voting rule which achieves the optimal distortion Θ(√ m) for unit-sum utilities. Our voting rule also achieves optimum Θ(√ m) distortion for a larger class of utilities, including unit-range and approval (0/1) utilities. We then take a similar worst-case approach to a quantitative measure of the fairness of a voting rule, called proportional fairness. Informally, it measures whether the influence of cohesive groups of agents on the voting outcome is proportional to the group size. We show that there is a voting rule which, without knowledge of the utilities, can achieve an O(log m)-approximation to proportional fairness, which is the best possible approximation. As a consequence of its proportional fairness, we show that this voting rule achieves O(log m) distortion with respect to the Nash welfare, and selects a distribution that is approximately stable by being an O(log m)-approximation to the core, making it interesting for applications in participatory budgeting. |
| Date: | 2022–07 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-03834512&r=upt |
| By: | Vittorio Bilò (University of Salento [Lecce]); Ioannis Caragiannis (CTI - Computer Technology Institute - Computer Technology Institute); Michele Flammini (GSSI - Gran Sasso Science Institute - INFN - Istituto Nazionale di Fisica Nucleare); Ayumi Igarashi (NII - National Institute of Informatics); Gianpiero Monaco (DI - Dipartimento di Informatica [Italy] - UNIVAQ - Università degli Studi dell'Aquila); Dominik Peters (LAMSADE - Laboratoire d'analyse et modélisation de systèmes pour l'aide à la décision - Université Paris Dauphine-PSL - PSL - Université Paris sciences et lettres - CNRS - Centre National de la Recherche Scientifique); Cosimo Vinci (UNISA - University of Salerno); William Zwicker (Union College) |
| Abstract: | We study the existence of allocations of indivisible goods that are envy-free up to one good (EF1), under the additional constraint that each bundle needs to be connected in an underlying item graph. If the graph is a path and the utility functions are monotonic over bundles, we show the existence of EF1 allocations for at most four agents, and the existence of EF2 allocations for any number of agents; our proofs involve discrete analogues of the Stromquist's moving-knife protocol and the Su-Simmons argument based on Sperner's lemma. For identical utilities, we provide a polynomial-time algorithm that computes an EF1 allocation for any number of agents. For the case of two agents, we characterize the class of graphs that guarantee the existence of EF1 allocations as those whose biconnected components are arranged in a path; this property can be checked in linear time. |
| Keywords: | Envy-free Division,Cake-cutting,Resource Allocation |
| Date: | 2021–11–26 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-03834506&r=upt |
| By: | Jens Rommel (Department of Economics, Swedish University of Agricultural Sciences); Julian Sagebiel (German Centre for Integrative Biodiversity Research (iDiv) Halle-Jena-Leipzig); Marieke Cornelia Baaken (Department of Environmental Politics, Helmholtz Centre for Environmental Research – UFZ); Jesús Barreiro-Hurlé (European Commission, Joint Research Centre (JRC)); Douadia Bougherara (CEE-M, Univ. Montpellier, CNRS, INRAE, Institut Agro); Luigi Cembalo (Department of Agricultural Sciences, University of Naples Federico II); Marija Cerjak (Faculty of Agriculture, University of Zagreb); Tajana Čop (Faculty of Agriculture, University of Zagreb); Mikołaj Czajkowski (University of Warsaw, Faculty of Economic Sciences); María Espinosa-Goded (Department of Economic Analysis and Political Economy, Faculty of Economics and Business Sciences, University of Sevilla); Julia Höhler (Business Economics Group, Wageningen University & Research); Laure Kuhfuss (Social Economic and Geographical Sciences Department, the James Hutton Institute); Carl-Johan Lagerkvist (Department of Economics, Swedish University of Agricultural Sciences); Margaux Lapierre (CEE-M, Univ. Montpellier, CNRS, INRAE, Institut Agro); Marianne Lefebvre (GRANEM n° 7456, Université d’Angers); Bettina Matzdorf (Leibniz Centre for Agricultural Landscape Research (ZALF), Müncheberg and Institute of Environmental Planning, Leibniz University of Hannover); Edward Ott (Leibniz Centre for Agricultural Landscape Research (ZALF)); Antonio Paparella (Department of Agricultural Sciences, University of Naples Federico II); Erika Quendler (Federal Institute of Agricultural Economics, Rural and Mountain Research); Macario Rodriguez-Entrena (WEARE - Water, Environmental, and Agricultural Resources Economics Research Group, Universidad de Córdoba); Christoph Schulze (Leibniz Centre for Agricultural Landscape Research (ZALF)); Tanja Šumrada (Biotechnical Faculty, University of Ljubljana); Annika Tensi (Business Economics Group, Wageningen University & Research); Sophie Thoyer (CEE-M, Univ. Montpellier, CNRS, INRAE, Institut Agro); Marina Tomić Maksan (Faculty of Agriculture, University of Zagreb); Riccardo Vecchio (Department of Agricultural Sciences, University of Naples Federico II); Marc Willinger (CEE-M, Univ. Montpellier, CNRS, INRAE, Institut Agro); Katarzyna Zagórska (University of Warsaw, Faculty of Economic Sciences) |
| Abstract: | We replicate Bocquého et al. (2014), who used multiple price lists to investigate risk preferences of 107 French farmers. We collect new data from 1,430 participants in eleven European farming systems. In agreement with the original study, farmers’ risk preferences are best described by Cumulative Prospect Theory. Structural model estimates show that farmers in the new samples are, on average, less loss averse and more susceptible to probability distortion than in the original study. Explorative analyses indicate differences between estimation approaches, as well as heterogeneity between and within samples. We discuss challenges in replications of economic experiments with farmers across farming contexts. |
| Keywords: | Risk Attitudes, Agriculture, Cumulative Prospect Theory, Expected Utility Theory, Artefactual Field Experiment |
| JEL: | D81 D90 Q12 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:war:wpaper:2022-24&r=upt |
| By: | Zahra, Urmila Az |
| Abstract: | perilaku konsumen adalah manfaat yang dirasakan dari konsumsi suatu barang atau kepuasan yang diperoleh dari barang / jasa tersebut. Teori utility sering digunakan sebagai pendekatan dalam menjelaskan perilaku konsumen. Pokok persoalan ekonomi yang dihadapi oleh setiap orang dalam perannya sebagai konsumen membutuhkan bermacam barang dan jasa yang semua harus diimbangi dengan kemampuan membeli. |
| Date: | 2022–11–01 |
| URL: | http://d.repec.org/n?u=RePEc:osf:osfxxx:657vq&r=upt |
| By: | David Bartl; Mikl\'os Pint\'er |
| Abstract: | We consider transferable utility cooperative games with infinitely many players. In particular, we generalize the notions of core and balancedness, and also the Bondareva-Shapley Theorem for infinite TU-games with and without restricted cooperation, to the cases where the core consists of $\kappa$-additive set functions. Our generalized Bondareva-Shapley Theorem extends previous results by Bondareva (1963), Shapley (1967), Schmeidler (1967), Faigle (1989), Kannai (1969), Kannai (1992), Pinter(2011) and Bartl and Pint\'er (2022). |
| Date: | 2022–11 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2211.05843&r=upt |
| By: | Alpaslan AKAY; Olivier BARGAIN; H. Xavier JARA |
| Abstract: | Subjective well-being (SWB) data is increasingly used to perform welfare analysis. Interpreted as ‘experienced utility’, it has recently been compared to ‘decision utility’ using small-scale experiments most often based on stated preferences. We transpose this comparison to the framework of non-experimental and large-scale data commonly used for policy analysis, focusing on the income-leisure domain where redistributive policies operate. Using the British Household Panel Survey, we suggest a ‘deviation’ measure, which is simply the difference between actual working hours and SWB-maximizing hours. We show that about three-quarters of individuals make decisions that are not inconsistent with maximizing their SWB. We discuss the potential channels that explain the lack of optimization when deviations are significantly large. We find proxies for a number of individual and external constraints, and show that constraints alone can explain at least half of the deviations. In our context, deviations partly reflect the inability of the revealed preference approach to account for labor market rigidities, so the actual and SWB-maximizing hours should be used in a complementary manner. The suggested approach based on our deviation metric could help identify labor market frictions. |
| Keywords: | Decision Utility, Experienced Utility, Labor Supply, Subjective Well-Being |
| JEL: | C90 I31 J22 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:grt:bdxewp:2022-23&r=upt |
| By: | Sumirah, R.R. Dhewi Putri Ayu |
| Abstract: | perilaku konsumen adalah deskripsi tentang bagaimana konsumen mengalokasikan pendapatan antara barang dan jasa yang berbeda-beda untuk memaksimalkan kesejahteraan. Utility atau nilai guna sering digunakan sebagai istilah untuk menjelaskan mengenai suatu manfaat barang atau komoditas tertentu. Pokok persoalan ekonomi yang dihadapi oleh setiap orang dalam perannya sebagai konsumen membutuhkan bermacam barang dan jasa yang semua harus di imbangi dengan kemampuan membeli. |
| Date: | 2022–10–17 |
| URL: | http://d.repec.org/n?u=RePEc:osf:osfxxx:652n3&r=upt |
| By: | Florian Brandl (HCM - Hausdorff Center for Mathematics - Rheinische Friedrich-Wilhelms-Universität Bonn); Felix Brandt (TUM - Technische Universität Munchen - Université Technique de Munich [Munich, Allemagne]); Matthias Greger (TUM - Technische Universität Munchen - Université Technique de Munich [Munich, Allemagne]); Dominik Peters (LAMSADE - Laboratoire d'analyse et modélisation de systèmes pour l'aide à la décision - Université Paris Dauphine-PSL - PSL - Université Paris sciences et lettres - CNRS - Centre National de la Recherche Scientifique); Christian Stricker (TUM - Technische Universität Munchen - Université Technique de Munich [Munich, Allemagne]); Warut Suksompong (NUS - National University of Singapore) |
| Abstract: | We study a mechanism design problem where a community of agents wishes to fund public projects via voluntary monetary contributions by the community members. This serves as a model for public expenditure without an exogenously available budget, such as participatory budgeting or voluntary tax programs, as well as donor coordination when interpreting charities as public projects and donations as contributions. Our aim is to identify a mutually beneficial distribution of the individual contributions. In the preference aggregation problem that we study, agents with linear utility functions over projects report the amount of their contribution, and the mechanism determines a socially optimal distribution of the money. We identify a specific mechanism-the Nash product rule-which picks the distribution that maximizes the product of the agents' utilities. This rule is Pareto efficient and incentivizes agents to contribute their entire budget while spending each agent's contribution only on projects the agent finds acceptable. |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-03818329&r=upt |
| By: | Romain Gauriot; Stephanie A. Heger; Robert Slonim |
| Abstract: | We apply the basic lessons and insights learned in the elicitation and estimation of risk and time preferences literature to the literature on social preferences. Following Andersen et al. (2008), we design a laboratory experiment to jointly elicit risk preferences and preferences for altruism. Consistent with theory, we find that the standard simplifying assumptions about risk preferences lead to significantly biased estimates of altruism. This is particularly problematic when comparing altruism across relevant sub-groups, such as gender and wealth, leading to possibly erroneous conclusions about which is the more generous sex and the self-regarding rich. |
| Keywords: | altruism, risk aversion, experiment |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_9993&r=upt |
| By: | Abreu, Maria; Comim, Flavio; Jones, Calvin |
| Abstract: | We provide an introduction to the capability approach and the concept of comprehensive outcomes, and show how it can be useful as a framework for regional development policies. We highlight the role of real opportunities (capabilities) in allowing individuals to achieve the things that they consider valuable in their lives, and the role of agency and process in achieving those outcomes, providing a contrast to other approaches which focus on resources (GDP, productivity, income) or desire fulfilment (utility, subjective wellbeing). We identify practical steps for policymakers wanting to incorporate the capability approach, either partially or fully, into the regional policy process. |
| Date: | 2022–08–14 |
| URL: | http://d.repec.org/n?u=RePEc:osf:socarx:qjau5&r=upt |
| By: | Kazuo Sano |
| Abstract: | The value function of the prospect theory is normally concave for gains, commonly convex for losses, and is generally steeper for losses than for gains. The neural system is quite different on the loss and gain sides. Three new studies on neurons related to this issue have examined neuronal responses to losses and gains, respectively. The value function with a neuronal cusp could have variations and behavior cusps with catastrophe where a trader closes her position. |
| Date: | 2022–10 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2211.00131&r=upt |
| By: | Benjamin Balzer; Antonio Rosato |
| Abstract: | We characterize optimal reserve prices in first-price and second-price auctions with independent private values when bidders are expectations-based loss averse. Under ``unacclimating personal equilibrium", the optimal public reserve price can be lower than under risk neutrality or risk aversion. Moreover, secret and random reserve prices raise more revenue than public ones since, by giving every bidder a chance to win, they expose all bidders to the ``attachment effect". In contrast, under ``choice-acclimating personal equilibrium", the optimal reserve price is public and differs across the two auction formats. Furthermore, the seller excludes more types compared to the risk-neutral and risk-averse benchmarks. |
| Date: | 2022–10 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2210.10938&r=upt |
| By: | Rian Dolphin; Barry Smyth; Ruihai Dong |
| Abstract: | Industry classification schemes provide a taxonomy for segmenting companies based on their business activities. They are relied upon in industry and academia as an integral component of many types of financial and economic analysis. However, even modern classification schemes have failed to embrace the era of big data and remain a largely subjective undertaking prone to inconsistency and misclassification. To address this, we propose a multimodal neural model for training company embeddings, which harnesses the dynamics of both historical pricing data and financial news to learn objective company representations that capture nuanced relationships. We explain our approach in detail and highlight the utility of the embeddings through several case studies and application to the downstream task of industry classification. |
| Date: | 2022–11 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2211.06378&r=upt |
| By: | Leonhard K. Lades (Environmental Policy & Geary Institute, University College Dublin); Ewa Zawojska (University of Warsaw, Faculty of Economic Sciences); Robert J. Johnston (George Perkins Marsh Institute and Department of Economics, Clark University); Nick Hanley (Institute of Biodiversity Animal Health & Comparative Medicine, University of Glasgow); Liam Delaney (Department of Psychological and Behavioural Science, The London School of Economics and Political Science); Mikołaj Czajkowski (University of Warsaw, Faculty of Economic Sciences) |
| Abstract: | The stated preference literature contains an expansive body of research on behavioral anomalies, typically understood as response patterns that are inconsistent with standard neoclassical choice theory. While the literature often implies that anomalous behaviors are distinct to stated preferences, widespread evidence of similar patterns across real-world settings raises the potential for an alternative interpretation. We argue that these anomalies might actually reflect behaviors that are to be expected once deviations from the standard economic model and behavioral reactions to the choice architecture in stated preference surveys are considered. The article reviews and organizes the evidence of so-called “anomalous” stated preference behaviors within the context of behavioral science to provide guidance for applied welfare economics. We coordinate evidence on these anomalies using a typology grounded in behavioral science, which groups non-standard behaviors into: non-standard preferences, non-standard beliefs, and non-standard decision-making. We apply this typology to organize the evidence, clarify nomenclature, and understand the implications of non-standard behaviors in stated preference studies for applied welfare analysis. Observing the systematic and common nature of these behaviors in actual and hypothetical settings, we outline possibilities to overcome associated challenges for applied welfare analysis, by adapting new frameworks for welfare analysis proposed within behavioral science. |
| Keywords: | anomalies, behavioral science, non-standard behaviors, stated preferences, welfare analysis |
| JEL: | D61 D91 Q51 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:war:wpaper:2022-20&r=upt |
| By: | Lanqing Du; Michelle Kim; Jinwook Lee |
| Abstract: | Non-Fungible Tokens (NFTs) are crypto assets with a unique digital identifier for ownership, powered by blockchain technology. Technically speaking, anything digital could be minted and sold as an NFT, which provides proof of ownership and authenticity of a digital file. For this reason, it helps us distinguish between the originals and their copies, making it possible to trade them. This paper focuses on art NFTs that change how artists can sell their products. It also changes how the art trade market works since NFT technology cuts out the middleman. Recently, the utility of NFTs has become an essential issue in the NFT ecosystem, which refers to the owners' usefulness, profitability, and benefits. Using recent major art NFT marketplace datasets, we summarize and interpret the current market trends and patterns in a way that brings insight into the future art market. Numerical examples are presented. |
| Date: | 2022–10 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2210.14942&r=upt |
| By: | Tolstoguzov, Oleg; Belykh, Anastasia |
| Abstract: | Исследование посвящено созданию аналитического инструментария в рамках формирования мониторинга в целях получения ответов на карбоновый вызов и достижения глубины понимания фундаментальных противоречий структуры социально-природных отношений. Мониторинг необходим для подсчета углеродного баланса и формирования своевременных легитимных финансовых и институциональных решений. Для учета финансового результата и полезности в условиях равновесия отрасли с высокой природоемкостью используется модель монополистической конкуренции Диксита - Стиглица с применением ставки социального дисконтирования, учитывающей особенности территорий. This research focuses on the creation of an analytical toolkit as part of monitoring formation to answer the Carboniferous challenge and achieve a deeper understanding of fundamental contradictions in the structure of socio-natural relations. This monitoring is necessary to calculate the carbon balance and to formulate timely legitimate financial and institutional decisions. The Dixit-Stiglitz monopolistic competition model, using an area-specific social discount rate, is used to account for financial performance and utility in an equilibrium high nature-intensive industry. |
| Keywords: | карбоновая повестка дня; природные и социальные геосистемы; полезность; социальное дисконтирование; социальный бренд |
| JEL: | D24 P28 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:115215&r=upt |
| By: | Mikołaj Czajkowski (University of Warsaw, Faculty of Economic Sciences); Ewa Zawojska (University of Warsaw, Faculty of Economic Sciences); Norman Meade (Independent consultant); Ronaldo Seroa da Motta (State University of Rio de Janeiro); Mike Welsh (Independent consultant); Ramon Arigoni Ortiz (Independent consultant) |
| Abstract: | Although contingent valuation (CV) is one of the main sources of estimates of non-market values of environmental goods, little guidance exists regarding parametric approaches for modelling CV data, which would reliably estimate willingness-to-pay (WTP) values based on binary choice, payment card or open-ended preference elicitation data, among others. CV studies often rely on relatively simple approaches to modeling stated preference responses, without examining alternative modelling specifications. Lower-bound, non-parametric estimates seem to be preferred in legal cases, while studies that apply parametric approaches often select a specification among a limited set of commonly used distributions. To enhance the reliability of CV-based WTP estimates, we propose to adopt a more flexible approach to parametric modelling of a WTP distribution, by considering a wide range of parametric model specifications. We demonstrate the advantages of the proposed approach using databases from two large CV studies: the eutrophication reduction valuation for the Baltic Sea Action Plan and the Deepwater Horizon natural resource damage assessment. We find non-negligible differences in WTP value estimates across models with different assumed parametric distributions, and we observe the variation in the values to decrease when only better-fitting models are considered. This emphasizes the need for cautiously identifying the model best fitting to the data, instead of choosing a specification ad hoc without taking into account alternative parametric distributions. Focusing on the best-fitting parametric specifications, we provide alternative WTP value estimates for the two empirical cases studied. |
| Keywords: | contingent valuation, parametric modelling, stated preferences, willingness to pay, welfare estimates |
| JEL: | D61 H41 H43 Q51 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:war:wpaper:2022-08&r=upt |
| By: | Sumirah, R.R. Dhewi Putri Ayu |
| Abstract: | Rasional (rational) adalah lawan dari irrational, secara bahasa diartikan seperti ungkapan rational human beings (manusia yang dapat berpikir), rational behavior (perilaku yang masuk akal). Rasionalitas (rationality) adalah istilah yang berkaitan dengan gagasan akal yang berkonotasi pada proses berpikir dalam memberikan laporan atau keterangan |
| Date: | 2022–10–17 |
| URL: | http://d.repec.org/n?u=RePEc:osf:osfxxx:cfdnh&r=upt |
| By: | Christos Makriyannis (Suffolk University, Department of Economics); Robert J. Johnston (Clark University, George Perkins Marsh Institute and Department of Economics); Ewa Zawojska (University of Warsaw, Faculty of Economic Sciences) |
| Abstract: | Inherent outcome uncertainty within stated preference surveys is invariant across valuation scenarios. It has received relatively little attention in the environmental stated preference literature. Specifically, it is unknown whether percentage probabilities—a ubiquitous means of communicating uncertainty in questionnaires—are an effective risk communication tool. This article systematically evaluates two treatments in a discrete choice experiment survey related to coastal climate change adaptation in Connecticut, USA: one provides only raw frequencies as a risk communication tool, while the other provides implied numerical probabilities in addition to the same raw frequencies. Results from a mixed logit model and from a latent class model that controls for sociodemographic influences show that the use of percentage probabilities to communicate inherent uncertainty has no additional effect on average welfare estimates or the choice behavior of respondents. Our findings suggest that percentage probabilities may not be an impactful way to communicate inherent uncertainty in environmental stated preference questionnaires. |
| Keywords: | flood adaptation, inherent uncertainty, discrete choice experiment, stated preference, mixed logit, risk communication, WTP-space |
| JEL: | D61 D83 H41 Q51 Q5 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:war:wpaper:2022-05&r=upt |
| By: | Soroush Ebadian (DCS - Department of Computer Science [University of Toronto] - University of Toronto); Dominik Peters (LAMSADE - Laboratoire d'analyse et modélisation de systèmes pour l'aide à la décision - Université Paris Dauphine-PSL - PSL - Université Paris sciences et lettres - CNRS - Centre National de la Recherche Scientifique); Nisarg Shah (DCS - Department of Computer Science [University of Toronto] - University of Toronto) |
| Abstract: | A major open question in fair allocation of indivisible items is whether there always exists an allocation of chores that is Pareto optimal (PO) and envy-free up to one item (EF1). We answer this question affirmatively for the natural class of bivalued utilities, where each agent partitions the chores into easy and difficult ones, and has cost > 1 for chores that are difficult for her and cost 1 for chores that are easy for her. Such an allocation can be found in polynomial time using an algorithm based on the Fisher market. We also show that for a slightly broader class of utilities, where each agent can have a potentially different integer , an allocation that is maximin share fair (MMS) always exists and can be computed in polynomial time, provided that each is an integer. Our MMS arguments also hold when allocating goods instead of chores, and extend to another natural class of utilities, namely weakly lexicographic utilities. |
| Date: | 2022–05 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-03834514&r=upt |
| By: | Andrzej Kocięcki (University of Warsaw, Faculty of Economic Sciences; Narodowy Bank Polski); Tomasz Łyziak (Narodowy Bank Polski); Ewa Stanisławska (Narodowy Bank Polski) |
| Abstract: | Analysis of macroeconomic expectations of private sector agents reveals not only the path of expected macroeconomic developments and the mechanism of expectation formation, but also the degree of uncertainty faced by economic agents. Relying on this observation the aim of this paper is twofold. First, we lay down the formal theory of subjective expectations and derive the subjective assessment hypothesis, which defines the optimal forecast of an individual under a specific loss function. Keeping the mathematical rigor, the proposed theory attempts to reflect the process of expectation formation that is consistent with well known behavioral features. Second, we apply the subjective assessment hypothesis to pin down the notion of uncertainty. We propose a novel uncertainty index, retrieved from forecast revisions of professional forecasters using an empirical model within the Bayesian approach. The two versions of this index derived for the US—based either on GDP growth or on inflation forecasts—describe different kinds of macroeconomic uncertainty. Their shocks act similarly as demand shocks, pushing economic activity and inflation down. |
| Keywords: | Subjective expectations, Uncertainty, Stochastic volatility, Identification, Bayesian approach, Survey of Professional Forecasters |
| JEL: | C10 C11 E31 D81 D84 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:war:wpaper:2022-10&r=upt |
| By: | Merrill, Nathaniel; Mazzotta, Marisa J.; Mulvaney, Kate K.; Sawyer, Joshua Paul (EPA); Twichell, Julia; Atkinson, Sarina F.; Keith, Darryl; Erban, Laura |
| Abstract: | Water recreation is valuable to people and its value can be affected by changes in water quality. This paper presents the results of a primary data collection effort using a revealed preference survey to elicit coastal New England, USA residents’ values for water recreation and water quality. We combined the survey responses with a comprehensive dataset of coastal attributes, including in-water and remotely sensed water quality metrics for the coast of New England. The results provide an updated willingness-to-pay for a coastal recreation trip of $26-$28 (USD). Using a travel cost model framework, we found water clarity and the bacterial conditions of coastal waters to be practical water quality inputs to economic analysis, available at appropriate scales and meaningful to people and their behavior. Changes in clarity and bacterial conditions affected trip values, with a $4-$5 change for a meter in clarity and $0.13 for a one-unit change, respectively. We demonstrate their utility and the large potential value of improving water quality through welfare analysis scenarios for Narragansett Bay, Rhode Island, and Cape Cod, Massachusetts, USA. The paper discusses generalizable lessons for improving the policy relevance and applicability of water quality valuation studies in the U.S. and worldwide through improved water quality data collection and aggregation combined with application of scalable analysis tools for valuation. |
| Date: | 2022–09–08 |
| URL: | http://d.repec.org/n?u=RePEc:osf:socarx:q2mg3&r=upt |
| By: | Roberto Brunetti (Univ Rennes, CNRS, CREM - UMR 6211, F-35000 Rennes); Carl Gaigné (INRAE, UMR1302, SMART Rennes (France) and CREATE, Laval University, Quebec (Canada)); Fabien Moizeau (Univ Rennes, CNRS, CREM - UMR 6211, F-35000 Rennes) |
| Abstract: | This paper investigates the impact of the credit market on urban land rents and the implications for tax policy. We introduce two credit market imperfections in the canonical urban land use model: a borrowing cost and a down-payment requirement. We first show that both imperfections lower equilibrium land prices in the most attractive locations within a city. This downward effect is more likely to occur when land is scarce as well as when cities are large and endowed with inefficient transport infrastructures. However, only the down-payment requirement generates utility differentials among homogeneous households (symmetry-breaking). We further show that the Henry George Theorem, which posits that a confiscatory tax on land rents is sufficient to finance public goods, needs to be amended in the presence of credit market imperfections as aggregate land rents are lower than public expenditures. Depending on the nature of mortgage market imperfections, we derive optimal tax schedules. |
| Keywords: | Credit constraint; Land use; Henry George Theorem; Land taxation; Local public good |
| JEL: | H20 R14 R21 R50 |
| Date: | 2022–11 |
| URL: | http://d.repec.org/n?u=RePEc:tut:cremwp:2022-07&r=upt |