A Simple Access Pricing Rule to Achieve the Ramsey Outcome in Two-Way Access

In this paper, I consider a general and informationally effcient approach to determine the optimal access rule and show that there exists a simple rule that achieves the Ramsey outcome as the unique equilibrium when networks compete in linear prices without network-based price discrimination. My approach is informationally effcient in the sense that the regulator is required to know only the marginal cost structure, i.e. the marginal cost of making and terminating a call. The approach is general in that access prices can depend not only on the marginal costs but also on the retail prices, which can be observed by consumers and therefore by the regulator as well. In particular, I consider the set of linear access pricing rules which includes any fixed access price, the Efficient Component Pricing Rule (ECPR) and the Modified ECPR as special cases. I show that in this set, there is a unique access rule that achieves the Ramsey outcome as the unique equilibrium as long as there exists at least a mild degree of substitutability among networks' services.

The Simple Economics of Conglomeration with Bankruptcy Costs: Separate or Joint Financing?

Which projects should be financed through separate non-recourse loans (or limited- liability companies) and which should be bundled into a single loan? In the pres- ence of bankruptcy costs, this conglomeration decision trades off the benefit of co- insurance with the cost of risk contamination. This paper characterize this tradeoff for projects with binary returns, depending on the mean, variability, and skewness of returns, the bankruptcy recovery rate, the correlation across projects, the number of projects, and their heterogeneous characteristics. In some cases, separate financing dominates joint financing, even though it increases the interest rate or the probability of bankruptcy.

Developing a Simple and Rapid Test for Monitoring the Heat Evolution of Concrete Mixtures for Both Laboratory and Field Applications, January 2006

Various test methods exist for measuring heat of cement hydration; however, most current methods require expensive equipment, complex testing procedures, and/or extensive time, thus not being suitable for field application. The objectives of this research are to identify, develop, and evaluate a standard test procedure for characterization and quality control of pavement concrete mixtures using a calorimetry technique. This research project has three phases. Phase I was designed to identify the user needs, including performance requirements and precision and bias limits, and to synthesize existing test methods for monitoring the heat of hydration, including device types, configurations, test procedures, measurements, advantages, disadvantages, applications, and accuracy. Phase II was designed to conduct experimental work to evaluate the calorimetry equipment recommended from the Phase I study and to develop a standard test procedure for using the equipment and interpreting the test results. Phase II also includes the development of models and computer programs for prediction of concrete pavement performance based on the characteristics of heat evolution curves. Phase III was designed to study for further development of a much simpler, inexpensive calorimeter for field concrete. In this report, the results from the Phase I study are presented, the plan for the Phase II study is described, and the recommendations for Phase III study are outlined. Phase I has been completed through three major activities: (1) collecting input and advice from the members of the project Technical Working Group (TWG), (2) conducting a literature survey, and (3) performing trials at the CP Tech Center’s research lab. The research results indicate that in addition to predicting maturity/strength, concrete heat evolution test results can also be used for (1) forecasting concrete setting time, (2) specifying curing period, (3) estimating risk of thermal cracking, (4) assessing pavement sawing/finishing time, (5) characterizing cement features, (6) identifying incompatibility of cementitious materials, (7) verifying concrete mix proportions, and (8) selecting materials and/or mix designs for given environmental conditions. Besides concrete materials and mix proportions, the configuration of the calorimeter device, sample size, mixing procedure, and testing environment (temperature) also have significant influences on features of concrete heat evolution process. The research team has found that although various calorimeter tests have been conducted for assorted purposes and the potential uses of calorimeter tests are clear, there is no consensus on how to utilize the heat evolution curves to characterize concrete materials and how to effectively relate the characteristics of heat evolution curves to concrete pavement performance. The goal of the Phase II study is to close these gaps.

A simple permutation test for clusteredness

Hierarchical clustering is a popular method for finding structure in multivariate data,resulting in a binary tree constructed on the particular objects of the study, usually samplingunits. The user faces the decision where to cut the binary tree in order to determine the numberof clusters to interpret and there are various ad hoc rules for arriving at a decision. A simplepermutation test is presented that diagnoses whether non-random levels of clustering are presentin the set of objects and, if so, indicates the specific level at which the tree can be cut. The test isvalidated against random matrices to verify the type I error probability and a power study isperformed on data sets with known clusteredness to study the type II error.

Simple models for multi-attribute choice with many alternatives: When it does and does not pay to face tradeoffs with binary attributes

Working Paper no longer available. Please contact the author.

A simple adaptive procedure leading to correlated equilibrium

We propose a simple adaptive procedure for playing a game. In thisprocedure, players depart from their current play with probabilities thatare proportional to measures of regret for not having used other strategies(these measures are updated every period). It is shown that our adaptiveprocedure guaranties that with probability one, the sample distributionsof play converge to the set of correlated equilibria of the game. Tocompute these regret measures, a player needs to know his payoff functionand the history of play. We also offer a variation where every playerknows only his own realized payoff history (but not his payoff function).

Take-the-best and other simple strategies: Why and when they work 'well' in binary choice

The effectiveness of decision rules depends on characteristics of bothrules and environments. A theoretical analysis of environments specifiesthe relative predictive accuracies of the lexicographic rule 'take-the-best'(TTB) and other simple strategies for binary choice. We identify threefactors: how the environment weights variables; characteristics of choicesets; and error. For cases involving from three to five binary cues, TTBis effective across many environments. However, hybrids of equal weights(EW) and TTB models are more effective as environments become morecompensatory. In the presence of error, TTB and similar models do not predictmuch better than a naïve model that exploits dominance. We emphasizepsychological implications and the need for more complete theories of theenvironment that include the role of error.