OPTION VALUE: A GENERAL APPROACH

This article examines a potential bias if expected consumer surplus is used to measure the benefits of a price change under uncertainty. This bias, which is called option value, may be positive or negative. A general framework is developed for analyzing the determinants of the sign of option value, and this framework is applied to three types of uncertainty: income uncertainty, quality uncertainty, and uncertainty over consumer tastes. In the first two cases, option value has a determinate sign; however, in the last case, option value may be positive, negative, or zero in an unpredictable fashion.     

THE RATIONALE OF GENERAL EQUILIBRIUM THEORY

This paper is concerned with the methodological issues raised by the attempt to use or apply the results of general equilibrium theory. This concern arises out of a critical discussion of Professor F. H. Hahn's view that general equilibrium theory is far from being a self-contained exercise, and is all the more decisive in its application for being carried out at such a high level of abstraction. It is argued that Hahn's rationale for general equilibrium theorising is unsatisfactory, and alternative lines are suggested along which such a rationale could be constructed.     

A GENERAL EQUILIBRIUM EVALUATION OF CORPORATE INCOME TAX REFORM

This study provides new insights into the effects of the corporate income tax by introducing a general equilibrium model in which households choose portfolios composed of housing and non-housing assets, industries make investment decisions based on Hall-Jorgenson cost-of-capital formulas, and the corporate-noncorporate mix in each industry is endogenous. The annual efficiency cost of an unintegrated tax on corporations is found to be about 3 1/2 percent of expanded national income. This new estimate is intended to spur further investigation of individuals' demand for owner-occupied housing and firms' decisions about incorporation.     

GENERAL WAGE ESCALATOR CLAUSES AND THE INFLATION UNEMPLOYMENT TRADE OFF

The purpose of this paper is to determine empirically the effect of general wage escalation, which is practiced in Israel, on the inflation unemployment trade off. Wage escalation is introduced by including a cost of living allowance variable in the wage equation which turns out to be very significant. It makes the long run Phillips Trade off relation much more inflationary, but does not obliterate it. A comparison with a wage price block for the U.S. suggests that the long run trade off is more inflationary in Israel and that wage indexation is one of the reasons for this bias.     

NORMS OF PUNISHMENT: EXPERIMENTS WITH STUDENTS AND THE GENERAL POPULATION

Norms of cooperation and punishment differ across societies, but also within a single society. In an experiment with two subject pools sharing the same geographical and cultural origins, we show that opportunities for peer punishment increase cooperation among students but not in the general population. In previous studies, punishment magnified the differences across societies in people's ability to cooperate. Here, punishment reversed the order: with punishment, students cooperate more than the general population while they cooperate less without it. (JEL C72, C90, Z13)     

TAX POLICY AND CONSUMER FORESIGHT: A GENERAL EQUILIBRIUM SIMULATION STUDY

This paper presents a dynamic computational general equilibrium model in which expectations regarding future prices can be varied systematically. The model is employed to evaluate how expectations influence the effect of long-run tax policy changes. Under policies (like a consumption tax) that reduce rates of return over time, individuals with perfect foresight save less than individuals with myopic beliefs. This is because consumers with foresight are better able to anticipate the lower returns. Lower saving means that existing distortions due to capital taxes are not offset as much, so that welfare gains are smaller under perfect foresight.     

STRICT PRODUCT LIABILITY AND SAFETY: EVIDENCE FROM THE GENERAL AVIATION MARKET

This paper examines the impact of a strict product liability standard on the accident rate in the general aviation (GA) industry. Liability expenses increased by 775% between 1976 and 1986, reducing the sales of new GA aircraft by 90% and increasing the age of the GA fleet. Using both aggregate and model‐specific data, our results indicate that the increase in the age of the GA fleet increased the accident rate by 25%–35% during 1981–2000. In addition, the higher price of GA aircraft boosted sales of homebuilt planes, which have higher accident and fatality rates than GA aircraft. (JEL K13, L62, L15)     

GENERAL EVOLUTION AND DURKHEIM'S HYPOTHESIS OF CRIME FREQUENCY: A Cross-Cultural Test

This research tests and supports the hypothesis proposed by Durkheim which relates increasing crime frequency to social differentiation as a process of sociocultural evolution. Unlike past tests of this hypothesis, the current study provides a cross-cultural sample of 121 societies representing a broad range of societal development, geographical dispersion, and cultural diversity. This examination interprets social differentiation in the broader scope of general evolutionary theory, thus providing a between society analysis of sociocultural complexity. While it is recognized that "crime" is not defined the same across all societal types, this research does examine 14 behavioral categories which are of interest to modern criminology.