The price of pain and the value of suffering.

Estimating the financial value of pain informs issues as diverse as the market price of analgesics, the cost-effectiveness of clinical treatments, compensation for injury, and the response to public hazards. Such valuations are assumed to reflect a stable trade-off between relief of discomfort and money. Here, using an auction-based health-market experiment, we show that the price people pay for relief of pain is strongly determined by the local context of the market, that is, by recent intensities of pain or immediately disposable income (but not overall wealth). The absence of a stable valuation metric suggests that the dynamic behavior of health markets is not predictable from the static behavior of individuals. We conclude that the results follow the dynamics of habit-formation models of economic theory, and thus, this study provides the first scientific basis for this type of preference modeling.

L'azione economica tra etica e neurobiologia

The heated debate over the conflict between ethics and economics is often described as an epochal issue, an expression of present-day fragility, resulting from the implosion of the development model, which has characterised western society. The debate, however, exposes a paradox. Whilst, on the one hand, the neoclassical economic theory is radically criticized, on the other such criticism does not appear to delineate any solid, practicable alternative. Thus, the mainstream economic theory is still taught, practised by individuals as well as institutions, and further developed by the prevailing academic research. For this reason, a viable alternative needs to be sought, along with a new research methodology, which would allow to apply novel and more coherent theoretical assumptions into effective research and real cases. The theoretical instruments by which to create the models for human behaviour need to take into account the biological foundation of behaviour, expressed in evolutionary genetics terms. The aim of this paper is to establish whether our moral knowledge of economics may claim any scientific objectivity in light of advances in subject areas that differ in their scope and methods: moral philosophy, economics, cognitive neuroscience and artificial intelligence, each of which makes a specific contribution to understanding the operation of the human mind and towards forming the moral values onto which economic choice and action are founded. Given that the object of the study of economic science is the analysis of complex systems, nowadays the most efficient method seems to be artificial life simulation.

Recovering a lost inheritance : The marital economy and its absence from the Prehistory of Economics in Britain

Roberts, Michael. 'Recovering a lost inheritance: the marital economy and its absence from the Prehistory of Economics in Britain', in: 'The Marital Economy in Scandinavia and Britain 1400-1900', (Eds) Argen, Maria., Erickson, Amy Louise., Farnham: Ashgate, 2005, pp.239-256 RAE2008

Public goods in networks

This paper considers incentives to provide goods that are non-excludable along social or geographic links. We find, first, that networks can lead to specialization in public good provision. In every social network there is an equilibrium where some individuals contribute and others free ride. In many networks, this extreme is the only outcome. Second, specialization can benefit society as a whole. This outcome arises when contributors are linked, collectively, to many agents. Finally, a new link increases access to public goods, but reduces individual incentives to contribute. Hence, overall welfare can be higher when there are holes in a network. © 2006 Elsevier Inc. All rights reserved.

A decentralized model of information pricing in networks

We propose a recursive method of pricing an information good in a network of holders and demanders of this good. The prices are determined via a unique equilibrium outcome in a sequence of bilateral bargaining games that are played by connected agents. If the information is an homogenous, non-depreciating good without network effects we derive explicit formulae which elucidate the role of the link pattern among the players. Particularly, we find out that the equilibrium price is intimately related to the existence of cycles in the network: It is zero if a cycle covers the trading pair and it is proportional to the direct and indirect utility that the good generates otherwise.

Bilateral Bargaining in Networks

Each connected pair of nodes in a network can jointly produce one unit of surplus. A maximum number of linked nodes is selected in every period to bargain bilaterally over the division of the surplus, according to the protocol proposed by Rubinstein and Wolinsky (Econometrica 53 (1985), 1133-1150). All pairs, that reach an agreement, obtain the (discounted) payoffs and are removed from the network. This bargaining game has a unique subgame perfect equilibrium that induces the Dulmage-Mendelsohn decomposition (partition) of the bipartite network (of the set of nodes in this network).

Theoretical and spatial limits to the value of rural environmental benefits: Evidence from the forestry sector

The valuation of environmental benefits has been well researched in the forestry sector. This is not generally the case in the agriculture sector although schemes to compensate farmers for provision of officially defined environmental benefits are already in place throughout the European Union. This paper draws on empirical findings from forestry and deductions from economic theory to challenge the notion of the universality of such benefits. Empirical findings from forestry suggest recreational use value is location specific rather than widely spread. Household utility theory predicts zero willingness to pay to maintain the status quo level of a previously unpaid for environmental benefit (when provision is not perceived as under risk) but a positive willingness to pay for an increase. Thus, non use values cannot be attributed to the major part of existing commercial forestry area but to spatially restricted schemes such as additional afforestation or preservation of ancient natural woodlands.

Implementing efficient graphs in connection networks

We consider the problem of sharing the cost of a network that meets the connection demands of a set of agents. The agents simultaneously choose paths in the network connecting their demand nodes. A mechanism splits the total cost of the network formed among the participants. We introduce two new properties of implementation. The first property, Pareto Nash implementation (PNI), requires that the efficient outcome always be implemented in a Nash equilibrium and that the efficient outcome Pareto dominates any other Nash equilibrium. The average cost mechanism and other asymmetric variations are the only mechanisms that meet PNI. These mechanisms are also characterized under strong Nash implementation. The second property, weakly Pareto Nash implementation (WPNI), requires that the least inefficient equilibrium Pareto dominates any other equilibrium. The egalitarian mechanism (EG) and other asymmetric variations are the only mechanisms that meet WPNI and individual
rationality. EG minimizes the price of stability across all individually rational mechanisms. © Springer-Verlag Berlin Heidelberg 2012

Poverty Trap and Educational Shock: Evidence from Missionary Fields

Low growth equilibria with low investment in human capital generally tend to
persist till an external shock affects the economy. In this paper we use data on
Christian missions to proxy a long-lasting educational shock in Africa. We estimate
the effect of this shock on the quality of children which we proxy using the rate of
underweight children. Consistent with the economic theory we find that the quality
of children significantly rises with the exposure to this shock and this indirect effect
accounts to almost 4 percent in terms of GDP for districts with the maximal exposure