Optimal negligence rule under limited liability

We study the standard economic model of unilateral accidents, in its simplest form, assumingthat the injurers have limited assets.We identify a second-best optimal rule that selects as duecare the minimum of first-best care, and a level of care that takes into account the wealth ofthe injurer. We show that such a rule in fact maximizes the precautionary effort by a potentialinjurer. The idea is counterintuitive: Being softer on an injurer, in terms of the required level ofcare, actually improves the incentives to take care when he is potentially insolvent. We extendthe basic result to an entire population of potentially insolvent injurers, and find that the optimalgeneral standards of care do depend on wealth, and distribution of income. We also show theconditions for the result that higher income levels in a given society call for higher levels of carefor accidents.

Ex post bargaining, labor coordination and wage formation at the firm level

We lay out a model of wage bargaining with two leading features:bargaining is ex post to relevant investments and there isindividual bargaining in firms without a Union. We compareindividual ex post bargaining to coordinated ex post bargainingand we analyze the effects on wage formation. As opposed to exante bargaining models, the costs of destroying the employmentrelationship play a crucial role in determining wages. Highfiring costs in particular yield a rent for employees. Ourtheory points to a employer size-wage effect that is independentof the production function and market power. We derive a simpleleast squares specification from the theoretical model thatallow us to estimate components of the wage premium fromcoordination. We reject the hypothesis that labor coordinationdoes not alter the extensive form of the bargaining game. Laborcoordination substantially increases bargaining power butdecreases labor's ability to pose costly threats to the firm.

Weighted Kernel regression

In the fixed design regression model, additional weights areconsidered for the Nadaraya--Watson and Gasser--M\"uller kernel estimators.We study their asymptotic behavior and the relationships between new andclassical estimators. For a simple family of weights, and considering theIMSE as global loss criterion, we show some possible theoretical advantages.An empirical study illustrates the performance of the weighted estimatorsin finite samples.

Social preferences and skill segregation

This paper shows that models where preferences of individuals dependnot only on their allocations, but also on the well-being of otherpersons, can produce both large and testable effects. We study theallocation of workers with heterogeneous productivities to firms. Weshow that even small deviations from purely selfish preferences leadsto widespread workplace skill segregation. That is, workers ofdifferent abilities tend to work in di¤erent firms, as long as theycare somewhat more about the utilities of workers who are close .

An axiomatization of the prekernel of nontransferable utility games

We characterize the prekernel of NTU games by means of consistency,converse consistency, and five axioms of the Nash type on bilateral problems.The intersection of the prekernel and the core is also characterized with thesame axioms over the class of games where the core is nonempty.

Window-dressing in German interwar balance sheets

German accounting rules value assets and liabilities asymmetricallyand thus lead to grossly distorted balance sheets. In the interwardebate on a reform of disclosure regulation, financial expertsconsidered the (undisclosed) tax balance sheet, which had to bedrawn up separately for the corporate tax assessment, as a paradigmfor adequate financial disclosure. However, due to tax secrecy thaywere barred from analyzing tax documents. Using archival evidence,we analyze tax balance sheets from which the reliability of disclosedbalance sheets of the interwar period can be assessed. It emergesthat companies overstated their profits in the middand late 1920s,but grossly understated them in the Nazi economy.

Optimal second-degree price discrimination and arbitrage: On the role of asymetric information among buyers

The traditional theory of monopolistic screening tackles individualself-selection but does not address the possibility that buyers couldform a coalition to coordinate their purchases and to reallocate thegoods. In this paper, we design the optimal sale mechanism which takesinto account both individual and coalition incentive compatibilityfocusing on the role of asymmetric information among buyers. We showthat when a coalition of buyers is formed under asymmetric information,the monopolist can do as well as when there is no coalition. Although inthe optimal sale mechanism marginal rates of substitution are notequalized across buyers (hence there exists room for arbitrage), theyfail to realize the gains from arbitrage because of the transaction costsin coalition formation generated by asymmetric information.

Communication, coordination and efficiency in evolutionary one-population models

We analyze the role of commitment in pre-play communication for ensuringefficient evolutionarily stable outcomes in coordination games. All players are a priori identical as they are drawn from the same population. In games where efficient outcomes can be reached by players coordinating on the same action we find commitment to be necessary to enforce efficiency. In games where efficienct outcomes only result from play of different actions, communication without commitment is most effective although efficiency can no longer be guaranteed. Only when there are many messages then inefficient outcomes are negligible as their basins of attraction become very small.

Full insurance, asymmetric information and genetic testing

This paper extends previous resuls on optimal insurance trading in the presence of a stock market that allows continuous asset trading and substantial personal heterogeneity, and applies those results in a context of asymmetric informationwith references to the role of genetic testing in insurance markets.We find a novel and surprising result under symmetric information:agents may optimally prefer to purchase full insurance despitethe presence of unfairly priced insurance contracts, and other assets which are correlated with insurance.Asymmetric information has a Hirschleifer-type effect whichcan be solved by suspending insurance trading. Nevertheless,agents can attain their first best allocations, which suggeststhat the practice of restricting insurance not to be contingenton genetic tests can be efficient.

Economic rationality and ethical behavior

This paper argues that economic rationality and ethical behavior cannotbe reduced one to the other, casting doubts on the validity of formulaslike 'profit is ethical' or 'ethics pays'. In order to express ethicaldilemmas as opposing economic interest with ethical concerns, we proposea model of rational behavior that combines these two irreducible dimensions in an open but not arbitrary manner. Behaviors that are neither ethicalnor profitable are considered irrational (non-arbitrariness). However,behaviors that are profitable but unethical, and behaviors that are ethicalbut not profitable, are all treated as rational (openness). Combiningethical concerns with economic interest, ethical business is in turn anoptimal form of rationality between venality and sacrifice.Because every one prefers to communicate that he acts ethically, ethicalbusiness remains ambiguous until some economic interest is actuallysacrificed. We argue however that ethical business has an interest indemonstrating its consistency between communication and behavior by atransparent attitude. On the other hand, venal behaviors must remainconfidential to hide the corresponding lack of consistency. Thisdiscursive approach based on transparency and confidentiality helpsto further distinguish between ethical and unethical business behaviors.

Using composite estimators to improve both domain and total area estimation

In this article we propose using small area estimators to improve the estimatesof both the small and large area parameters. When the objective is to estimateparameters at both levels accurately, optimality is achieved by a mixed sampledesign of fixed and proportional allocations. In the mixed sample design, oncea sample size has been determined, one fraction of it is distributedproportionally among the different small areas while the rest is evenlydistributed among them. We use Monte Carlo simulations to assess theperformance of the direct estimator and two composite covariant-freesmall area estimators, for different sample sizes and different sampledistributions. Performance is measured in terms of Mean Squared Errors(MSE) of both small and large area parameters. It is found that the adoptionof small area composite estimators open the possibility of 1) reducingsample size when precision is given, or 2) improving precision for a givensample size.

The case for a new accounting research agenda in Spain

In Spain both accounting practice and accounting research have been strongly influenced by accounting practices developed in the Englishspeaking world. This paper:1) Summarizes a seminal English paper, the 'Corporate Report', that identified the potential for accounting reports to serve a wide range of users.2) Identifies the ways in which English language accounting conceptual frameworks have paid lip service to a range of user needs, but in practice have excluded users other than investors and creditors.3) Argues that for Spain the ideas put forward in the Corporate Report have a particular relevance, and might usefully form the basis for a new research agenda.

Probabilistic maximal covering location-allocation models with constrained waiting time or queue length for congested systems

When dealing with the design of service networks, such as healthand EMS services, banking or distributed ticket selling services, thelocation of service centers has a strong influence on the congestion ateach of them, and consequently, on the quality of service. In this paper,several models are presented to consider service congestion. The firstmodel addresses the issue of the location of the least number of single--servercenters such that all the population is served within a standard distance,and nobody stands in line for a time longer than a given time--limit, or withmore than a predetermined number of other clients. We then formulateseveral maximal coverage models, with one or more servers per service center.A new heuristic is developed to solve the models and tested in a 30--nodesnetwork.

Strategic ambiguity in electoral competition

Many have observed that political candidates running for election areoften purposefully expressing themselves in vague and ambiguous terms. In thispaper we provide a simple formal model of this phenomenon. We model theelectoral competition between two candidates as a two--stage game. In thefirst stage of the game two candidates simultaneously choose their ideologies,and in the second stage they simultaneously choose their level of ambiguity.Our results show that ambiguity, although disliked by voters, may be sustainedin equilibrium. The introduction of ambiguity as a strategic choice variablefor the candidates can also serve to explain why candidates with the sameelectoral objectives end up ``separating'', that is, assuming different ideological positions.

How wide is the gap? An investigation of gender wage differences using quantile regression

In this paper we examine the determinants of wages and decompose theobserved differences across genders into the "explained by differentcharacteristics" and "explained by different returns components"using a sample of Spanish workers. Apart from the conditionalexpectation of wages, we estimate the conditional quantile functionsfor men and women and find that both the absolute wage gap and thepart attributed to different returns at each of the quantiles, farfrom being well represented by their counterparts at the mean, aregreater as we move up in the wage range.