The Economics of Gasification: A Market-Based Approach

This paper deals with the economics of gasification facilities in general and IGCC power plants in particular. Regarding the prospects of these systems, passing the technological test is one thing, passing the economic test can be quite another. In this respect, traditional valuations assume constant input and/or output prices. Since this is hardly realistic, we allow for uncertainty in prices. We naturally look at the markets where many of the products involved are regularly traded. Futures markets on commodities are particularly useful for valuing uncertain future cash flows. Thus, revenues and variable costs can be assessed by means of sound financial concepts and actual market data. On the other hand, these complex systems provide a number of flexibility options (e.g., to choose among several inputs, outputs, modes of operation, etc.). Typically, flexibility contributes significantly to the overall value of real assets. Indeed, maximization of the asset value requires the optimal exercise of any flexibility option available. Yet the economic value of flexibility is elusive, the more so under (price) uncertainty. And the right choice of input fuels and/or output products is a main concern for the facility managers. As a particular application, we deal with the valuation of input flexibility. We follow the Real Options approach. In addition to economic variables, we also address technical and environmental issues such as energy efficiency, utility performance characteristics and emissions (note that carbon constraints are looming). Lastly, a brief introduction to some stochastic processes suitable for valuation purposes is provided.

Adapting to climate change: Combining economics and geomorphology in coastal policy

How is climate change affecting our coastal environment? How can coastal communities adapt to sea level rise and increased storm risk? These questions have garnered tremendous interest from scientists and policy makers alike, as the dynamic coastal environment is particularly vulnerable to the impacts of climate change. Over half the world population lives and works in a coastal zone less than 120 miles wide, thereby being continuously affected by the changes in the coastal environment [6]. Housing markets are directly influenced by the physical processes that govern coastal systems. Beach towns like Oak Island in North Carolina (NC) face severe erosion, and the tax assesed value of one coastal property fell by 93% in 2007 [9]. With almost ninety percent of the sandy beaches in the US facing moderate to severe erosion [8], coastal communities often intervene to stabilize the shoreline and hold back the sea in order to protect coastal property and infrastructure. Beach nourishment, which is the process of rebuilding a beach by periodically replacing an eroding section of the beach with sand dredged from another location, is a policy for erosion control in many parts of the US Atlantic and Pacific coasts [3]. Beach nourishment projects in the United States are primarily federally funded and implemented by the Army Corps of Engineers (ACE) after a benefit-cost analysis. Benefits from beach nourishment include reduction in storm damage and recreational benefits from a wider beach. Costs would include the expected cost of construction, present value of periodic maintenance, and any external cost such as the environmental cost associated with a nourishment project (NOAA). Federal appropriations for nourishment totaled $787 million from 1995 to 2002 [10]. Human interventions to stabilize shorelines and physical coastal dynamics are strongly coupled. The value of the beach, in the form of storm protection and recreation amenities, is at least partly capitalized into property values. These beach values ultimately influence the benefit-cost analysis in support of shoreline stabilization policy, which, in turn, affects the shoreline dynamics. This paper explores the policy implications of this circularity. With a better understanding of the physical-economic feedbacks, policy makers can more effectively design climate change adaptation strategies. (PDF contains 4 pages)

Economics of co-managing water quality and invasive species for California and Baja California coastal boats

Regulatory action to protect California’s coastal water quality from degradation by copper from recreational boats’ antifouling paints interacts with efforts to prevent transport of invasive, hull-fouling species. A copper regulatory program is in place for a major yacht basin in northern San Diego Bay and in process for other major, California boat basins. “Companion” fouling control strategies are used with copper-based antifouling paints, as some invasive species have developed resistance to the copper biocide. Such strategies are critical for boats with less toxic or nontoxic hull coatings. Boat traffic along over 3,000 miles of coastline in California and Baja California increases invasive species transport risks. For example, 80% of boats in Baja California marinas are from the United States, especially California. Policy makers, boating businesses and boat owners need information on costs and supply-side capacity for effective fouling control measures to co-manage water quality and invasive species concerns. (PDF contains 3 pages)

Essays in behavioral and neuro-economics

This thesis examines foundational questions in behavioral economics—also called psychology and economics—and the neural foundations of varied sources of utility. We have three primary aims: First, to provide the field of behavioral economics with psychological theories of behavior that are derived from neuroscience and to use those theories to identify novel evidence for behavioral biases. Second, we provide neural and micro foundations of behavioral preferences that give rise to well-documented empirical phenomena in behavioral economics. Finally, we show how a deep understanding of the neural foundations of these behavioral preferences can feed back into our theories of social preferences and reference-dependent utility.

The first chapter focuses on classical conditioning and its application in identifying the psychological underpinnings of a pricing phenomenon. We return to classical conditioning again in the third chapter where we use fMRI to identify varied sources of utility—here, reference dependent versus direct utility—and cross-validate our interpretation with a conditioning experiment. The second chapter engages social preferences and, more broadly, causative utility (wherein the decision-maker derives utility from making or avoiding particular choices).

Design, operation and economics of a small-scale hatchery for the larval rearing of sugpo, Penaeus monodon Fab.

One of the major problems in the mass production of sugpo is how to obtain a constant supply of fry. Since ultimately it is the private sector which should produce the sugpo fry to fill the needs of the industry, the Barangay Hatchery Project under the Prawn Program of the Aquaculture Department of SEAFDEC has scaled down the hatchery technology from large tanks to a level which can be adopted by the private sector, especially in the villages, with a minimum of financial and technical inputs. This guide to small-scale hatchery operations is expected to generate more enthusiasm among fish farmers interested in venturing into sugpo culture.

Essays on economics networks

This thesis belongs to the growing field of economic networks. In particular, we develop three essays in which we study the problem of bargaining, discrete choice representation, and pricing in the context of networked markets. Despite analyzing very different problems, the three essays share the common feature of making use of a network representation to describe the market of interest.

In Chapter 1 we present an analysis of bargaining in networked markets. We make two contributions. First, we characterize market equilibria in a bargaining model, and find that players' equilibrium payoffs coincide with their degree of centrality in the network, as measured by Bonacich's centrality measure. This characterization allows us to map, in a simple way, network structures into market equilibrium outcomes, so that payoffs dispersion in networked markets is driven by players' network positions. Second, we show that the market equilibrium for our model converges to the so called eigenvector centrality measure. We show that the economic condition for reaching convergence is that the players' discount factor goes to one. In particular, we show how the discount factor, the matching technology, and the network structure interact in a very particular way in order to see the eigenvector centrality as the limiting case of our market equilibrium.

We point out that the eigenvector approach is a way of finding the most central or relevant players in terms of the “global” structure of the network, and to pay less attention to patterns that are more “local”. Mathematically, the eigenvector centrality captures the relevance of players in the bargaining process, using the eigenvector associated to the largest eigenvalue of the adjacency matrix of a given network. Thus our result may be viewed as an economic justification of the eigenvector approach in the context of bargaining in networked markets.

As an application, we analyze the special case of seller-buyer networks, showing how our framework may be useful for analyzing price dispersion as a function of sellers and buyers' network positions.

Finally, in Chapter 3 we study the problem of price competition and free entry in networked markets subject to congestion effects. In many environments, such as communication networks in which network flows are allocated, or transportation networks in which traffic is directed through the underlying road architecture, congestion plays an important role. In particular, we consider a network with multiple origins and a common destination node, where each link is owned by a firm that sets prices in order to maximize profits, whereas users want to minimize the total cost they face, which is given by the congestion cost plus the prices set by firms. In this environment, we introduce the notion of Markovian traffic equilibrium to establish the existence and uniqueness of a pure strategy price equilibrium, without assuming that the demand functions are concave nor imposing particular functional forms for the latency functions. We derive explicit conditions to guarantee existence and uniqueness of equilibria. Given this existence and uniqueness result, we apply our framework to study entry decisions and welfare, and establish that in congested markets with free entry, the number of firms exceeds the social optimum.

Experimental Economics Meets Language Choice

Roughly one half of World's languages are in danger of extinction. The endangered languages, spoken by minorities, typically compete with powerful languages such as En- glish or Spanish. Consequently, the speakers of minority languages have to consider that not everybody can speak their language, converting the language choice into strategic,coordination-like situation. We show experimentally that the displacement of minority languages may be partially explained by the imperfect information about the linguistic type of the partner, leading to frequent failure to coordinate on the minority language even between two speakers who can and prefer to use it. The extent of miscoordination correlates with how minoritarian a language is and with the real-life linguistic condition of subjects: the more endangered a language the harder it is to coordinate on its use, and people on whom the language survival relies the most acquire behavioral strategies that lower its use. Our game-theoretical treatment of the issue provides a new perspective for linguistic policies.

Efficient methods for empirical tests of behavioral economics theories in laboratory and field experiments

In the quest for a descriptive theory of decision-making, the rational actor model in economics imposes rather unrealistic expectations and abilities on human decision makers. The further we move from idealized scenarios, such as perfectly competitive markets, and ambitiously extend the reach of the theory to describe everyday decision making situations, the less sense these assumptions make. Behavioural economics has instead proposed models based on assumptions that are more psychologically realistic, with the aim of gaining more precision and descriptive power. Increased psychological realism, however, comes at the cost of a greater number of parameters and model complexity. Now there are a plethora of models, based on different assumptions, applicable in differing contextual settings, and selecting the right model to use tends to be an ad-hoc process. In this thesis, we develop optimal experimental design methods and evaluate different behavioral theories against evidence from lab and field experiments.

We look at evidence from controlled laboratory experiments. Subjects are presented with choices between monetary gambles or lotteries. Different decision-making theories evaluate the choices differently and would make distinct predictions about the subjects' choices. Theories whose predictions are inconsistent with the actual choices can be systematically eliminated. Behavioural theories can have multiple parameters requiring complex experimental designs with a very large number of possible choice tests. This imposes computational and economic constraints on using classical experimental design methods. We develop a methodology of adaptive tests: Bayesian Rapid Optimal Adaptive Designs (BROAD) that sequentially chooses the "most informative" test at each stage, and based on the response updates its posterior beliefs over the theories, which informs the next most informative test to run. BROAD utilizes the Equivalent Class Edge Cutting (EC²) criteria to select tests. We prove that the EC² criteria is adaptively submodular, which allows us to prove theoretical guarantees against the Bayes-optimal testing sequence even in the presence of noisy responses. In simulated ground-truth experiments, we find that the EC² criteria recovers the true hypotheses with significantly fewer tests than more widely used criteria such as Information Gain and Generalized Binary Search. We show, theoretically as well as experimentally, that surprisingly these popular criteria can perform poorly in the presence of noise, or subject errors. Furthermore, we use the adaptive submodular property of EC² to implement an accelerated greedy version of BROAD which leads to orders of magnitude speedup over other methods.

We use BROAD to perform two experiments. First, we compare the main classes of theories for decision-making under risk, namely: expected value, prospect theory, constant relative risk aversion (CRRA) and moments models. Subjects are given an initial endowment, and sequentially presented choices between two lotteries, with the possibility of losses. The lotteries are selected using BROAD, and 57 subjects from Caltech and UCLA are incentivized by randomly realizing one of the lotteries chosen. Aggregate posterior probabilities over the theories show limited evidence in favour of CRRA and moments' models. Classifying the subjects into types showed that most subjects are described by prospect theory, followed by expected value. Adaptive experimental design raises the possibility that subjects could engage in strategic manipulation, i.e. subjects could mask their true preferences and choose differently in order to obtain more favourable tests in later rounds thereby increasing their payoffs. We pay close attention to this problem; strategic manipulation is ruled out since it is infeasible in practice, and also since we do not find any signatures of it in our data.

In the second experiment, we compare the main theories of time preference: exponential discounting, hyperbolic discounting, "present bias" models: quasi-hyperbolic (α, β) discounting and fixed cost discounting, and generalized-hyperbolic discounting. 40 subjects from UCLA were given choices between 2 options: a smaller but more immediate payoff versus a larger but later payoff. We found very limited evidence for present bias models and hyperbolic discounting, and most subjects were classified as generalized hyperbolic discounting types, followed by exponential discounting.

In these models the passage of time is linear. We instead consider a psychological model where the perception of time is subjective. We prove that when the biological (subjective) time is positively dependent, it gives rise to hyperbolic discounting and temporal choice inconsistency.

We also test the predictions of behavioral theories in the "wild". We pay attention to prospect theory, which emerged as the dominant theory in our lab experiments of risky choice. Loss aversion and reference dependence predicts that consumers will behave in a uniquely distinct way than the standard rational model predicts. Specifically, loss aversion predicts that when an item is being offered at a discount, the demand for it will be greater than that explained by its price elasticity. Even more importantly, when the item is no longer discounted, demand for its close substitute would increase excessively. We tested this prediction using a discrete choice model with loss-averse utility function on data from a large eCommerce retailer. Not only did we identify loss aversion, but we also found that the effect decreased with consumers' experience. We outline the policy implications that consumer loss aversion entails, and strategies for competitive pricing.

In future work, BROAD can be widely applicable for testing different behavioural models, e.g. in social preference and game theory, and in different contextual settings. Additional measurements beyond choice data, including biological measurements such as skin conductance, can be used to more rapidly eliminate hypothesis and speed up model comparison. Discrete choice models also provide a framework for testing behavioural models with field data, and encourage combined lab-field experiments.

Analysis and Use of Information and Communication Tools in Economics of Climate Change

16 p.

Economics of Energy and Climate Change: Origins, Developments and Growth

27 p.

The economics of hydro-meteorological disasters: approaching the estimation of the total costs

21 p.

Application of ipil- ipil leaf meal (IILM) as feed Ingredient for Monosex tilapia fry (oreochronis niioticus) : In terms of growth and economics

The Ipil-ipil (Leucaena leucocephal) leaf analyzed for crude protein (CP), fat, crude fibre (CF), ash content, moisture content and nitrogen free extract (NFE). The CP 23± 0.12 % , fat 8 ± 0.11 %, CF 18 ± 0.15 % , ash 10 ± 0.13 %, moisture 14. ± .16% and NFE 29.± 1.10 % were recorded. A twenty one days experiment was conduced to assess the response of juvenile monosex tilapia with different iso-nitrogenous formulated diets for find out the feasibility study of using ipil-ipil leaf meals as feed ingredient for juvenile tilapia. Three experimental diets were formulated by using fish meal, soybean meal, rice bran and ipil ipil leaf meal. One control diet was formulated by using fish meal, soybean meal and rice bran. Considering the high demand, limited availability of fish meal and soybean meal, ipil ipil leaf meal was incorporated in juvenile tilapia feed. Among plant protein ingredients ipil ipil leaf meal was considered as the most nutritive plant protein source after soybean meal. However, high concentration of toxic element limited the incorporation level of ipil ipil leaf meal in fish feed. Use of 15 % ipil ipil leaf meal in fish feed was more significant from the view of growth performance and economics. The higher Absolute Growth was 1119.26 gm, higher Specific Growth Rate was 6.52% /day higher Feed Conversion Efficiency was 41.23% , higher Protein Efficiency Ratio was 1.178 and higher Average Daily Growth rate was 14.00% recorded in diet-4 ( which contained 15% IILM). The lower Feed Conversion Ratio 2.42 and lower cost for per unit production 34.65 taka/kg were recorded in diet-4. The higher cost for per unit fish production 45.6 tk./kg was recorded for diet-1 where no ipil ipil leaf meal.. The results suggest that tree legumes Ipil-ipil (Leucaena leucocephal) leaf has potential and excellent source of feed ingredients as protein supplements for juvenile monosex

Three essays on economics and information shocks

A person living in an industrialized society has almost no choice but to receive information daily with negative implications for himself or others. His attention will often be drawn to the ups and downs of economic indicators or the alleged misdeeds of leaders and organizations. Reacting to new information is central to economics, but economics typically ignores the affective aspect of the response, for example, of stress or anger. These essays present the results of considering how the affective aspect of the response can influence economic outcomes.

The first chapter presents an experiment in which individuals were presented with information about various non-profit organizations and allowed to take actions that rewarded or punished those organizations. When social interaction was introduced into this environment an asymmetry between rewarding and punishing appeared. The net effects of punishment became greater and more variable, whereas the effects of reward were unchanged. The individuals were more strongly influenced by negative social information and used that information to target unpopular organizations. These behaviors contributed to an increase in inequality among the outcomes of the organizations.

The second and third chapters present empirical studies of reactions to negative information about local economic conditions. Economic factors are among the most prevalent stressors, and stress is known to have numerous negative effects on health. These chapters document localized, transient effects of the announcement of information about large-scale job losses. News of mass layoffs and shut downs of large military bases are found to decrease birth weights and gestational ages among babies born in the affected regions. The effect magnitudes are close to those estimated in similar studies of disasters.

On the economics of the "meeting competition defense" under the Robinson-Patman Act

Documento de trabajo

Essays in revealed preference theory and behavioral economics

Time, risk, and attention are all integral to economic decision making. The aim of this work is to understand those key components of decision making using a variety of approaches: providing axiomatic characterizations to investigate time discounting, generating measures of visual attention to infer consumers' intentions, and examining data from unique field settings.

Chapter 2, co-authored with Federico Echenique and Kota Saito, presents the first revealed-preference characterizations of exponentially-discounted utility model and its generalizations. My characterizations provide non-parametric revealed-preference tests. I apply the tests to data from a recent experiment, and find that the axiomatization delivers new insights on a dataset that had been analyzed by traditional parametric methods.

Chapter 3, co-authored with Min Jeong Kang and Colin Camerer, investigates whether "pre-choice" measures of visual attention improve in prediction of consumers' purchase intentions. We measure participants' visual attention using eyetracking or mousetracking while they make hypothetical as well as real purchase decisions. I find that different patterns of visual attention are associated with hypothetical and real decisions. I then demonstrate that including information on visual attention improves prediction of purchase decisions when attention is measured with mousetracking.

Chapter 4 investigates individuals' attitudes towards risk in a high-stakes environment using data from a TV game show, Jeopardy!. I first quantify players' subjective beliefs about answering questions correctly. Using those beliefs in estimation, I find that the representative player is risk averse. I then find that trailing players tend to wager more than "folk" strategies that are known among the community of contestants and fans, and this tendency is related to their confidence. I also find gender differences: male players take more risk than female players, and even more so when they are competing against two other male players.

Chapter 5, co-authored with Colin Camerer, investigates the dynamics of the favorite-longshot bias (FLB) using data on horse race betting from an online exchange that allows bettors to trade "in-play." I find that probabilistic forecasts implied by market prices before start of the races are well-calibrated, but the degree of FLB increases significantly as the events approach toward the end.