Bringing game theory to hypothesis testing: Establishing finite sample bounds on inference

Small sample properties are of fundamental interest when only limited data is avail-able. Exact inference is limited by constraints imposed by speci.c nonrandomizedtests and of course also by lack of more data. These e¤ects can be separated as we propose to evaluate a test by comparing its type II error to the minimal type II error among all tests for the given sample. Game theory is used to establish this minimal type II error, the associated randomized test is characterized as part of a Nash equilibrium of a .ctitious game against nature.We use this method to investigate sequential tests for the di¤erence between twomeans when outcomes are constrained to belong to a given bounded set. Tests ofinequality and of noninferiority are included. We .nd that inference in terms oftype II error based on a balanced sample cannot be improved by sequential sampling or even by observing counter factual evidence providing there is a reasonable gap between the hypotheses.

The optimum quantity of money: Theory and evidence

In this paper we propose a simple and general model for computing the Ramsey optimal inflation tax, which includes several models from the previous literature as special cases. We show that it cannot be claimed that the Friedman rule is always optimal (or always non--optimal) on theoretical grounds. The Friedman rule is optimal or not, depending on conditions related to the shape of various relevant functions. One contribution of this paper is to relate these conditions to {\it measurable} variables such as the interest rate or the consumption elasticity of money demand. We find that it tends to be optimal to tax money when there are economies of scale in the demand for money (the scale elasticity is smaller than one) and/or when money is required for the payment of consumption or wage taxes. We find that it tends to be optimal to tax money more heavily when the interest elasticity of money demand is small. We present empirical evidence on the parameters that determine the optimal inflation tax. Calibrating the model to a variety of empirical studies yields a optimal nominal interest rate of less than 1\%/year, although that finding is sensitive to the calibration.

Relative price riddles in international business cycle theory: Are transport costs the explanation?

We study relative price behavior in an international business cyclemodel with specialization in production, in which a goods marketfriction is introduced through transport costs. The transporttechnology allows for flexible transport costs. We analyze whetherthis extension can account for the striking differences betweentheory and data as far as the moments of terms of trade and realexchange rates are concerned. We find that transport costs increaseboth the volatility of the terms of trade and the volatility of thereal exchange rate. However, unless the transport technology isspecified by a Leontief technology, transport costs do not resolvethe quantitative discrepancies between theory and data. Asurprising result is that transport costs may actually lower thepersistence of the real exchange rate, a finding that is in contrastto much of the emphasis of the empirical literature.

Polymorphism, inter-population and inter-specific variation in Nyssomyia intermedia (Lutz & Neiva) and Nyssomyia neivai (Pinto) (Diptera, Psychodidae, Phlebotominae)

Nyssomyia intermedia (Lutz & Neiva) and Nyssomyia neivai (Pinto) are morphologically very close and both present great variation in some structures. The objective of this study is a description of the variation among the females of these species in populations from the States of Minas Gerais and São Paulo. The morphological structures studied were the number of horizontal teeth in the cibarium and the number of rings and the shape of the terminal knob of the spermathecae. The spermatheca rings are significantly more numerous in N. intermedia than in N. neivai and the simple shape of the terminal knob predominated in both species. Regarding the cibarium, eight to eleven teeth have been found in both species, with up to twelve teeth in the latter. The number of horizontal teeth and the shape of the terminal knob of the spermathecae were variable throughout the populations of both species and all structures were polymorphic in the populations studied.

Social security in theory and practice (II): Efficiency theories, narrative theories and implications for reform

166 countries have some kind of public old age pension. What economic forcescreate and sustain old age Social Security as a public program? Mulligan and Sala-i-Martin (1999b) document several of the internationally and historically common features of social security programs, and explore "political" theories of Social Security. This paper discusses the "efficiency theories", which view creation of the SS program as a full of partial solution to some market failure. Efficiency explanations of social security include the "SS as welfare for the elderly" the "retirement increases productivity to optimally manage human capital externalities", "optimal retirement insurance", the "prodigal father problem", the "misguided Keynesian", the "optimal longevity insurance", the "governmenteconomizing transaction costs", and the "return on human capital investment". We also analyze four "narrative" theories of social security: the "chain letter theory", the "lump of labor theory", the "monopoly capitalism theory", and the "Sub-but-Nearly-Optimal policy response to private pensions theory".The political and efficiency explanations are compared with the international and historical facts and used to derive implications for replacing the typical pay-as-you-go system with a forced savings plan. Most of the explanations suggest that forced savings does not increase welfare, and may decrease it.

Credit cycles in theory and experiment

We test in the laboratory the potential of evolutionary dynamics as predictor of actual behavior. To this end, we propose an asymmetricgame -which we interpret as a borrowerlender relation-, study itsevolutionary dynamics in a random matching set-up, and tests itspredictions. The model provides conditions for the existence ofcredit markets and credit cycles. The theoretical predictions seemto be good approximations of the experimental results.

Horizontal innovation in the theory of growth and development

We analyze recent contributions to growth theory based on the model of expanding variety of Romer (1990). In the first part, we present different versions of the benchmark linear model with imperfect competition. These include the labequipment model, labor-for-intermediates and directed technical change . We review applications of the expanding variety framework to the analysis of international technology diffusion, trade, cross-country productivity differences, financial development and fluctuations. In many such applications, a key role is played by complementarities in the process of innovation.

Survey on batch-to-batch variation in spray paints: a collaborative study

This study represents the most extensive analysis of batch-to-batch variations in spray paint samples to date. The survey was performed as a collaborative project of the ENFSI (European Network of Forensic Science Institutes) Paint and Glass Working Group (EPG) and involved 11 laboratories. Several studies have already shown that paint samples of similar color but from different manufacturers can usually be differentiated using an appropriate analytical sequence. The discrimination of paints from the same manufacturer and color (batch-to-batch variations) is of great interest and these data are seldom found in the literature. This survey concerns the analysis of batches from different color groups (white, papaya (special shade of orange), red and black) with a wide range of analytical techniques and leads to the following conclusions. Colored batch samples are more likely to be differentiated since their pigment composition is more complex (pigment mixtures, added pigments) and therefore subject to variations. These variations may occur during the paint production but may also occur when checking the paint shade in quality control processes. For these samples, techniques aimed at color/pigment(s) characterization (optical microscopy, microspectrophotometry (MSP), Raman spectroscopy) provide better discrimination than techniques aimed at the organic (binder) or inorganic composition (fourier transform infrared spectroscopy (FTIR) or elemental analysis (SEM - scanning electron microscopy and XRF - X-ray fluorescence)). White samples contain mainly titanium dioxide as a pigment and the main differentiation is based on the binder composition (Csingle bondH stretches) detected either by FTIR or Raman. The inorganic composition (elemental analysis) also provides some discrimination. Black samples contain mainly carbon black as a pigment and are problematic with most of the spectroscopic techniques. In this case, pyrolysis-GC/MS represents the best technique to detect differences. Globally, Py-GC/MS may show a high potential of discrimination on all samples but the results are highly dependent on the specific instrumental conditions used. Finally, the discrimination of samples when data was interpreted visually as compared to statistically using principal component analysis (PCA) yielded very similar results. PCA increases sensitivity and could perform better on specific samples, but one first has to ensure that all non-informative variation (baseline deviation) is eliminated by applying correct pre-treatments. Statistical treatments can be used on a large data set and, when combined with an expert's opinion, will provide more objective criteria for decision making.

Contracting externalities and multiple equilibria in sectors: Theory and evidence

We consider an economy where the production technology has constantreturns to scale but where in the descentralized equilibrium thereare aggregate increasing returns to scale. The result follows froma positive contracting externality among firms. If a firms issurrounded by more firms, employees have more opportunitiesoutside their own firm. This improves employees' incentives toinvest in the presence of ex post renegotiation at the firm level,at not cost. Our leading result is that if a region is sparselypopulated or if the degree of development in the region is lowenough, there are multiple equilibria in the level of sectorialemployment. From the theoretical model we derive a non-linearfirst-order censored difference equation for sectoral employment.Our results are strongly consistent with the multiple equilibriahypothesis and the existence of a sectoral critical scale (belowwich the sector follows a delocation process). The scale of theregions' population and the degree of development reduce thecritical scale of the sector.

An economic theory of church strictness

This paper makes several contributions to the growing literatureon the economics of religion. First, we explicitly introduce spatial-location models into the economics of religion. Second, we offer a newexplanation for the observed tendency of state (monopoly) churches tolocate toward the "low-tension" end of the "strictness continuum" (ina one-dimensional product space): This result is obtained through theconjunction of "benevolent preferences" (denominations care about theaggregate utility of members) and asymmetric costs of going to a moreor less strict church than one prefers.We also derive implications regarding the relationship between religiousstrictness and membership. The driving forces of our analysis, religiousmarket interactions and asymmetric costs of membership, high-light newexplanations for some well-established stylized facts. The analysis opensthe way to new empirical tests, aimed at confronting the implications ofour model against more traditional explanations.

A theory of international conflict management and sanctioning

In this paper we analyze sanctioning policies in international law. We develop a model of international military conflict where the conflicting countries can be a target of international sanctions. These sanctions constitute an equilibrium outcome of an international political market for sanctions, where different countries trade political influence. We show that the level of sanctions in equilibrium is strictly positive but limited, in the sense that higher sanctions would exacerbate the military conflict, not reduce it. We then propose an alternative interpretation to the perceived lack of effectiveness of international sanctions, by showing that the problem might not be one of undersanctioning but of oversanctioning.

Wh-constructions in cape verdean creole: extensions of the copy theory of movement

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Seasonal and spatial species richness variation of dung beetle (Coleoptera, Scarabaeidae s. str.) in the Atlantic Forest of southeastern Brazil

The knowledge on Atlantic Forest scarab beetle fauna is quite limited. This biome is strongly degraded and these insects can be used as bioindicators since they are sensitive to forest destruction and show distinct organizational patterns in forest fragments or in areas that have been deteriorated by human activity. Thus, a study of the Scarabaeidae (sensu stricto) dung beetles fauna that inhabit Serra do Japi, São Paulo, Brazil (23º12'-23º22' S and 46º53'-47º03'W) was carried out; the monthly species richness was analyzed in six areas during one year and the vegetation's structural physiognomy was described. The areas included a conserved and a degraded valley, a northward and a southward hillside, a hilltop, and an area of secondary forest growing under eucalyptus trees. The specimens were collected using four pitfall traps baited with human feces, which remained at each spot during 48 hours. Between September, 1997 and August, 1998, 3524 individuals of 39 species were collected; the most abundant were: Canthidium trinodosum, Eurysternus cyanescens, Uroxys kratochvili, Scybalocanthon nigriceps, Uroxys lata, Canthonella sp., Dichotomius assifer, Deltochilum furcatum, Canthidium sp.2, Canthon latipes, Deltochilum rubripenne, Eurysternus sp., and Dichotomius sp.1. The number of individuals and species was greater in the hot, rainy season, when there was a correlation between the number of species and the mean annual temperature [r²= 0.69; p<0.01]. The lower winter richness was most pronounced in the conserved valley, while richness remained relatively constant in the degraded valley; abundance was much higher in the degraded valley. The cluster analysis showed that the valleys and hillsides are the most similar in relation to species composition and abundance, yet different from the secondary forest with eucalypts and the hilltop.

Morphological and physiological variation between queens and workers of Protonectarina sylveirae (de Saussure) (Hymenoptera, Vespidae, Epiponini)

Morphological and physiological variation between queens and workers of Protonectarina sylveirae (de Saussure) (Hymenoptera, Vespidae, Epiponini). The Neotropical swarm-founding wasps, Epiponini, range from the absence of morphological differentiation between castes to highly distinct castes. We measured eight body parts of females of two colonies of Protonectarina sylveirae (de Saussure, 1854). ANOVA and Discriminant Analysis evidenced significant differences between castes, as previously observed by other authors for other species of Epiponini. However, some females previously categorized as queens, were actually workers, supported by our statistic analyses. These individuals showed intermediate morphological features between queens and workers, having distinct patterns of hairs and clypeal spots. The castes of P. sylveirae are distinct, however intermediate individuals may be found in colonies promoting social flexibility.