Incentives to cooperate and the discretionary power of courts in divorce law

In this paper, we study how the uncertainty in the behavior of judges provides parents going to separate with incentives to cooperate. We introduce a model of cooperative bargaining to describe the behavior of parents whose preferences satisfy the characterization of risk averse/pessimistic types proposed by Yaari (1987, Econometrica, 55, 95–116) in his Dual Decision Theory under Risk. The behavior of the judge is modeled in a simple manner: he is either supposed to follow a strict rule (we will say that he uses an imperative scale of alimony), or he may use discretion (he uses an indicative scale of alimony). The point is that for both parents the judgment represents an external opportunity to divorce—the disagreement point in negotiation. We show that the effective decision of parents (cooperation versus trial) depends on the specific structure of the costs and risks associated with divorce procedures, such that more uncertainty at trial increases the incentives to cooperate for risk averse parents. Finally, we give a characterization of the optimal degree of the judges’ discretionary power required to maximize the parents’ gains from negotiation.

Learning While Voting: Determinants of Collective Experimentation

This paper combines dynamic social choice and strategic experimentation to study the following question: How does a society, a committee, or, more generally, a group of individuals with potentially heterogeneous preferences, experiment with new opportunities? Each voter recognizes that, during experimentation, other voters also learn about their preferences. As a result, pivotal voters today are biased against experimentation because it reduces their likelihood of remaining pivotal. This phenomenon reduces equilibrium experimentation below the socially efficient level, and may even result in a negative option value of experimentation. However, one can restore efficiency by designing a voting rule that depends deterministically on time. Another main result is that even when payoffs of a reform are independently distributed across the population, good news about any individual's payoff increases other individuals' incentives to experiment with that reform, due to a positive voting externality.     

Insurability and Mitigation of Flood Losses in Private Households in Germany

In Germany, flood insurance is provided by private insurers as a supplement to building or contents insurance. This article presents the results of a survey of insurance companies with regard to eligibility conditions for flood insurance changes after August 2002, when a severe flood caused 1.8 billion euro of insured losses in the Elbe and the Danube catchment areas, and the general role of insurance in flood risk management in Germany. Besides insurance coverage, governmental funding and public donations played an important role in loss compensation after the August 2002 flood. Therefore, this article also analyzes flood loss compensation, risk awareness, and mitigation in insured and uninsured private households. Insured households received loss compensation earlier. They also showed slightly better risk awareness and mitigation strategies. Appropriate incentives should be combined with flood insurance in order to strengthen future private flood loss mitigation. However, there is some evidence that the surveyed insurance companies do little to encourage precautionary measures. To overcome this problem, flood hazards and mitigation strategies should be better communicated to both insurance companies and property owners.     

The experience effect and pricing for agricultural products

It has been found that for a wide range of industrial products the unit prices and costs decrease by a constant percentage when production volume doubles—this is called the experience effect. This unit price behaviour is also observed for certain classes of basic agricultural products. As international market competition increases, price behaviour differences among countries may lead farmers, their organizations and governments to better understand what are the causes of the differences so that they can maintain and improve their competitive position internationally.     

Validation Theory and Research for a Population-Level Measure of Children’s Development,Wellbeing, and School Readiness

This paper delineates general validity and research questions that are underlying an ongoing program of research pertaining to the Early Development Instrument (EDI, Janus and Offord 2007), a population-level measure, on which teachers rate kindergarten children’s developmental outcomes in the social, emotional, physical, cognitive, and communicative domains. It describes the large-scale research projects that are using the EDI to measure children’s developmental outcomes for entire populations (e.g., provinces, cities). Given the uniqueness of the EDI’s use as monitoring tool, or social indicator, for children’s developmental health at an early age, we spell out the opportunities and challenges that these projects provide with regard to validation research. The article sets the stage for the special issue, as it is dedicated to showcase the different aspects of the conceptual, theoretical, and empirical validation research as well as the collaborative community-based projects that are currently being undertaken with respect to the EDI.     

Validation of Multilevel Constructs: Validation Methods and Empirical Findings for the EDI

The purposes of this paper are to highlight the foundations of multilevel construct validation, describe two methodological approaches and associated analytic techniques, and then apply these approaches and techniques to the multilevel construct validation of a widely-used school readiness measure called the Early Development Instrument (EDI; Janus and Offord 2007). Validation evidence is presented regarding the multilevel covariance structure of the EDI, the appropriateness of aggregation to classroom and neighbourhood levels, and the effects of teacher and classroom characteristics on these structural patterns. The results are then discussed in the context of the theoretical framework of the EDI, with suggestions for future validation work.     

Competing Mechanisms in a Common Value Environment

Consider strategic risk‐neutral traders competing in schedules to supply liquidity to a risk‐averse agent who is privately informed about the value of the asset and his hedging needs. Imperfect competition in this common value environment is analyzed as a multi‐principal game in which liquidity suppliers offer trading mechanisms in a decentralized way. Each liquidity supplier behaves as a monopolist facing a residual demand curve resulting from the maximizing behavior of the informed agent and the trading mechanisms offered by his competitors. There exists a unique equilibrium in convex schedules. It is symmetric and differentiable and exhibits typical features of market‐power: Equilibrium trading volume is lower than ex ante efficiency would require. Liquidity suppliers charge positive mark‐ups and make positive expected profits, but these profits decrease with the number of competitors. In the limit, as this number goes to infinity, ask (resp. bid) prices converge towards the upper (resp. lower) tail expectations obtained in Glosten (1994) and expected profits are zero.     

Education,Mobility and Employers’ Monopsony Power: A Search‐theoretic Analysis

Abstract. We analyse the efficiency of schooling choices in a wage‐posting search equilibrium model with on‐the‐job search. The workers have multidimensional skills and the search market is segmented by technology. Education determines the scope — or adaptability— of individual skills. Individuals obtain schooling to leave unemployment more quickly and to climb the wage ladder rapidly through job‐to‐job mobility — that is, to speed up job shopping. Education reduces firms’ monopsony power in the wage determination by improving workers’ mobility. As a result, the wage distribution shifts rightward with aggregate schooling. However, the ratio of vacant jobs to job seekers also falls in each sector. Either one or the other externality may dominate, implying, respectively, under‐ or over‐education. A combination of minimum wage and schooling fee can decentralize the efficient allocation.     

Work,social protection and the middle classes: What future in the digital age?

The digitalization of the economy can be interpreted as an industrial revolution, a series of technological innovations associated with new practices and new business models. As for previous industrial revolutions, a phase involving the destruction of existing systems and structures is driving a profound transformation of the world of work and the development of new sectors of activity and new jobs, including changes in the labour market and in the types of jobs created. This puts into question the position of the middle classes, and presents new challenges for social protection. This article seeks to understand the impacts of digital technology on the economy and employment, including the phenomena of labour market polarization. It describes the new forms of employment and work and analyses the social risks and the likely ramifications for the middle classes in the digital age. In turn, new possibilities for social protection in the digital age are discussed. The article concludes that there is a need to re‐evaluate jobs that involve the provision of personal and care services, including to support social investment, to strengthen the future prospects of the weakened middle classes.     

L’Europe et les États-providence

This analysis of the EU's influence on the future of national welfare states points out three distinct phases in the interactions between the building of Europe and of welfare states. During a phase of expansion (1950s-1970s), European authorities were building a common market while allowing member states that were lagging behind in welfare to catch up. During a second phase of conflict (1980s-1990s), advances in the economic construction of Europe caused tensions to flare up with social policies inherited from the past. During a third phase (starting in the late 1990s), EU authorities have been trying to reconcile economic policies with new social policies. To analyze each phase, we must take into account both the EU initiatives capable of having a direct or indirect impact on national welfare systems and the national welfare institutions and strategies that were adopted.