Option-Implied Preferences Adjustments and Risk-Neutral Density Forecasts

The main objective of this paper is to analyse the value of information contained in prices of options on the IBEX 35 index at the Spanish Stock Exchange Market. The forward looking information is extracted using implied risk-neutral density functions estimated by a mixture of two-lognormals and three alternative risk-adjustments: the classic power and exponential utility functions and a habit-based specification that allows for a counter-cyclical variation of risk aversion. Our results show that at four-week horizon we can reject the hypothesis that between October 1996 and March 2000 the risk-neutral densities provide accurate predictions of the distributions of future realisations of the IBEX 35 index at a four-week horizon. When forecasting through risk-adjusted densities the performance of this period is statistically improved and we no longer reject that hypothesis. All risk-adjusted densities generate similar forecasting statistics. Then, at least for a horizon of four-weeks, the actual risk adjustment does not seem to be the issue. By contrast, at the one-week horizon risk-adjusted densities do not improve the forecasting ability of the risk-neutral counterparts.

Uncovering Ecosystem Service Bundles through Social Preferences

11 p.

Optimal Monetary Policy with Asymmetric Preferences for Output

Using a model of an optimizing monetary authority which has preferences that weigh inflation and unemployment, Ruge-Murcia (2003, 2004) finds empirical evidence that the authority has asymmetric preferences for unemployment. We extend this model to weigh inflation and output and show that the empirical evidence using these series also supports an asymmetric preference hypothesis, only in our case, preferences are asymmetric for output. We also find evidence that the monetary authority targets potential output rather than some higher output level as would be the case in an extended Barro and Gordon (1983) model.

Fisheries marketing systems and consumer preferences in Puttalam District Sri-Lanka

The aim of this study was to understand the current and historic market situation for inland fish and it’s substitutes in order to identify which of the various production opportunities presented by the seasonal tank resource might have greatest relevance for marginal communities in the Dry-zone. Regional and sub-regional market networks for fish and meat products were investigated, ranking and scoring exercises used to characterise consumer demand in rain-fed areas of North West Province and secondary data sources were used to assess historic patterns of demand and supply [PDF contains 57 pages]

Preferences, actions and voting rules

In this paper we address several issues related to collective dichotomous decision-making by means of quaternary voting rules, i.e., when voters may choose between four actions: voting yes, voting no, abstaining and not turning up-which are aggregated by a voting rule into a dichotomous decision: acceptance or rejection of a proposal. In particular we study the links between the actions and preferences of the actors. We show that quaternary rules (unlike binary rules, where only two actions -yes or no- are possible) leave room for "manipulability" (i.e., strategic behaviour). Thus a preference profile does not in general determine an action profile. We also deal with the notions of success and decisiveness and their ex ante assessment for quaternary voting rules, and discuss the role of information and coordination in this context.

Comparison of resident and tourist preferences for public beach access

As coastal destinations continue to grow, due to tourism and residential expansion, the demand for public beach access and related amenities will also increase. As a resultagencies that provide beach access and related amenities face challenges when considering both residents and visitors use beaches and likely possess different needs, as well as different preferences for management decisions. Being a resident of a coastal county provides more opportunity to use local beaches, but coastal tourism is an important and growing economic engine in coastal communities (Kriesel, Landry, & Keeler, 2005; Pogue & Lee, 1999). Therefore, providing agencies with a comprehensive assessment of the differences between these two groups will increase the likelihood of effective management programs and policies for the provision of public beach access and related amenities. The purpose of this paper was to use a stated preference choice method (SPCM) to identify the extent of both residents’ and visitors’ preferences for public beach management options. (PDF contains 4 pages)

Weighting social preferences in participatory multi-criteria evaluations: a case study on sustainable natural resource management

28 p.

Reconciling yield stability with international fisheries agencies precautionary preferences: the role of non constant discount factors in age structured models

International fisheries agencies recommend exploitation paths that satisfy two features. First, for precautionary reasons exploitation paths should avoid high fishing mortality in those fisheries where the biomass is depleted to a degree that jeopardise the stock's capacity to produce the Maximum Sustainable Yield (MSY). Second, for economic and social reasons, captures should be as stable (smooth) as possible over time. In this article we show that a conflict between these two interests may occur when seeking for optimal exploitation paths using age structured bioeconomic approach. Our results show that this conflict be overtaken by using non constant discount factors that value future stocks considering their relative intertemporal scarcity.

The relationships between fish assemblages and the amount of bottom horizontal beam exposed at California oil platforms: fish habitat preferences at man-made platforms and (by inference) at natural reefs

Between 1995 and 2002, we surveyed fish assemblages at seven oil platforms off southern and central California using the manned research submersible Delta. At each platform, there is a large horizontal beam situated at or near the sea floor. In some instances, shells and sediment have buried this beam and in other instances it is partially or completely exposed. We found that fish species responded in various ways to the amount of exposure of the beam. A few species, such as blackeye goby (Rhinogobiops nicholsii), greenstriped rockfish (Sebastes elongatus), and pink seaperch (Zalembius rosaceus) tended to avoid the beam. However, many species that typically associate with natural rocky outcrops, such as bocaccio (S. paucispinis), cowcod (S. levis), copper (S. caurinus), greenblotched (S. rosenblatti), pinkrose (S. simulator) and vermilion (S. miniatus) rockfishes, were found most often where the beam was exposed. In particular, a group of species (e.g., bocaccio, cowcod, blue (Sebastes mystinus), and vermilion rockfishes) called here the “sheltering habitat” guild, lived primarily where the beam was exposed and formed a crevice. This work demonstrates that the presence of sheltering sites is important in determining the species composition of man-made reefs and, likely, natural reefs. This research also indicates that adding structures that form sheltering sites in and around decommissioned platforms will likely lead to higher densities of many species typical of hard and complex structure.

What Can the Brain Teach Us about Winemaking? An fMRI Study of Alcohol Level Preferences

Over the last few decades, wine makers have been producing wines with a higher alcohol content, assuming that they are more appreciated by consumers. To test this hypothesis, we used functional magnetic imaging to compare reactions of human subjects to different types of wine, focusing on brain regions critical for flavor processing and food reward. Participants were presented with carefully matched pairs of high- and low- alcohol content red wines, without informing them of any of the wine attributes. Contrary to expectation, significantly greater activation was found for low- alcohol than for high- alcohol content wines in brain regions that are sensitive to taste intensity, including the insula as well as the cerebellum. Wines were closely matched for all physical attributes except for alcohol content, thus we interpret the preferential response to the low- alcohol content wines as arising from top-down modulation due to the low alcohol content wines inducing greater attentional exploration of aromas and flavours. The findings raise intriguing possibilities for objectively testing hypotheses regarding methods of producing a highly complex product such as wine.