TRANSACTION RISK AND BIDDING BEHAVIOR

This paper analyzes a model of consumer behavior where transaction risk in the form of a divergence between bid and executed demand is incorporated into the consumer's decision process. A neutral assumption concerning risk preferences, combined with income and expenditure constraints, is shown to be sufficient to generate behavior commonly associated with risk aversion. Such responses to transaction risk are referred to as objective reactions as opposed to subjective attitudes toward risk. The income effect is shown to play an important role in determining behavioral reactions to this type of risk.     

THE WELFARE COST OF THE UNDERGROUND ECONOMY

This paper estimates the welfare cost of taxes that create an incentive for resources to flow to the underground, or untaxed, sector in the United States. Using a general equilibrium model of the American economy, the welfare cost is found to be large and growing in absolute and relative terms over time. In 1980 the welfare cost may be as much as $220 billion, or over 9 percent of output; even conservative estimates place the loss at nearly $100 billion. It also is found that small reductions in tax rates substantially reduce the welfare cost.     

Work and social participation in a contemporary urban-industrial society: a review of the literature and analysis of Canadian data*

Les études qui ont tenté d'expliquer la ségrégation dans les activités sociales de la famille, relativement à la communauté, en insistant sur son statut socio-économique et la cohérence de son réseau (network connectedness), ont été en grande partie peu concluantes. Cette étude entreprend une critique d'évaluation de ces 2 façons d'aborder la question et explore ensuite un autre raisonnement voulant que l'explication de la ségrégation sociale puisse se retrouver dans l'expérience de travail du salarié qui la transmet à sa vie de famille. Plusieurs études théoriques et empiriques admettent l'hypothèse que la ségrégation dans les activites sociales de type primaire et centrées sur l'organisation, est une réaction aux contraintes professionnelles et aux orientations spécifiques provenant de dispositions de travail fortement bureaucratiques, de travaux automatisés et de carrières déréglées. A l'aide d'analyses de classification multiples (Multiple Classification Analysis) on a examiné ces hypothèses avec des données portant sur 105 unités familiales à salaire unique de la région de York Est, à Toronto. Les données ont confirmé ces hypothèses alternatives. Il y a eu un certain appui pour les hypothèses de statut socio-économique, mais aucune conclusion définitive n'est ressortie de l'hypothese du réseau. Les resultats de cette recherche indiquent le besoin de remplacer les études conventionnelles centrées sur le statut socio-économique et les réseaux communautaires par d'autres qui se pencheraient sur la participation sociale relativement aux différentes composantes de l'expérience de travail. Les implications de ces résultats sont discutées en réponse à certaines opinions qui semblent minimiser les répercussions des pressions du travail sur la vie de famille dans les communautés industrielles qui vivent dans l'abondance. Studies that have attempted to explain segregation in community-related social activities of the family by concentrating on its SES and network connectedness have been largely inconclusive. Following a critical evaluation of these two approaches, this paper explores an alternative argument that suggests that an explanation of social segregation may be sought in the work experience of wage-earners which they carry over to their family life. Several theoretical and empirical studies are reviewed to hypothesize that segregation in both primary and organization-focused social activities occurs in response to occupational constraints and specific orientations that stem from highly bureaucratic work settings, mechanically-paced jobs and disorderly work careers. Using Multiple Classification Analysis, these hypotheses are examined with data on 105 intact, single-earner families of East York, Toronto. The data showed a greater support for these alternative hypotheses. There was some support for the SES hypothesis but no definitive findings emerged on the network hypothesis. The findings of this study indicate a need for shifting the conventional focus from SES and social networks to studies of social participation in relation to different components of the work experience. The implications of these findings are discussed for certain competing views that seem to underplay the impact of work pressures on family life in affluent industrial societies.     

THE LAW OF DEMAND, POSITIVE SLOPING MARGINAL REVENUE, AND MULTIPLE PROFIT EQUILIBRIA

This paper demonstrates that the conditions for a positively sloping marginal revenue curve are much less stringent than is generally recognized. Simple transformations of any well-behaved convex demand function can easily result in a demand for which marginal revenue is positively sloping. For this reason, positively sloping marginal revenue functions must be considered whenever convex demand functions are analyzed. The existence of positively sloping marginal revenue makes multiple profit equilibria for the firm a very real possibility.     

NON-AGGRESSIVE BIDDING BEHAVIOR AND THE "WINNER'S CURSE"

Previous authors have noted a curious result that arises within the context of sealed-bid auctions: in certain situations it is in the bidder's interest to respond non-aggressively to increased competition. We consider a decision-theoretic formulation of the bidder's problem, and derive necessary conditions for the choice of a non-aggressive bidding strategy. The resulting conditions relate closely to a phenomenon that has been described rather loosely by bidding practitioners as the "winner's curse.' In the course of this paper we develop a specific definition of the winner's curse, and demonstrate how it affects the firm's competitive behavior.