Size and Power of Recent Tests for Homogeneity in Exponential Mixtures

The article investigates diagnostic procedures for finite mixture models. The problem is to decide whether given data stem from an exponential distribution or a finite mixture of such distributions. Recently, three new test approaches have been proposed, the modified likelihood ratio test (MLRT) by Chen et al. (2001 Chen , H. , Chen , J. , Kalbfleisch , J. D. ( 2001 ). A modified likelihood ratio test for homogeneity in finite mixture models . Journal of the Royal Statistical Society, B 63 : 19 – 29 .[Crossref] , [Google Scholar]), the ADDS test by Mosler and Seidel (2001 Mosler , K. , Seidel , W. ( 2001 ). Testing for homogeneity in an exponential mixture model . Australian and New Zealand Journal of Statistics 43 : 231 – 247 . [Google Scholar]), and the D-test by Charnigo and Sun (2004 Charnigo , R. , Sun , J. ( 2004 ). Testing homogeneity in a mixture distribution via the l ² distance between competing models . Journal of the American Statistical Society 99 : 488 – 498 .[Taylor & Francis Online], [Web of Science ®] , [Google Scholar]). The size and power of these tests are determined by Monte Carlo simulation and their relative merits are evaluated. We conclude that the ADDS test shows always not much less and under some alternatives, in particular lower contaminations, considerably more power than its competitors. Also, new tables for the ADDS test are provided.     

Long‐Term Risk: An Operator Approach

We create an analytical structure that reveals the long‐run risk‐return relationship for nonlinear continuous‐time Markov environments. We do so by studying an eigenvalue problem associated with a positive eigenfunction for a conveniently chosen family of valuation operators. The members of this family are indexed by the elapsed time between payoff and valuation dates, and they are necessarily related via a mathematical structure called a semigroup. We represent the semigroup using a positive process with three components: an exponential term constructed from the eigenvalue, a martingale, and a transient eigenfunction term. The eigenvalue encodes the risk adjustment, the martingale alters the probability measure to capture long‐run approximation, and the eigenfunction gives the long‐run dependence on the Markov state. We discuss sufficient conditions for the existence and uniqueness of the relevant eigenvalue and eigenfunction. By showing how changes in the stochastic growth components of cash flows induce changes in the corresponding eigenvalues and eigenfunctions, we reveal a long‐run risk‐return trade‐off.     

Can higher life expectancy induce more schooling and earlier retirement?

In this paper, we show that it may be optimal for individuals to educate more and retire earlier when life expectancy increases. This result reconciles the findings of Hazan (Econometrica 77:1829–1863, 2009) with theory. Further, the paper contributes to a better understanding of the conflicting empirical findings on the causal effect on income per capita from increased life expectancy.     

Free triples,large indifference classes and the majority rule

We study classes of voting situations where agents may exhibit a systematic inability to distinguish between the elements of certain sets of alternatives. These sets of alternatives may differ from voter to voter, thus resulting in personalized families of preferences. We study the properties of the majority relation when defined on restricted domains that are the cartesian product of preference families, each one reflecting the corresponding agent’s objective indifferences, and otherwise allowing for all possible (strict) preference relations among alternatives. We present necessary and sufficient conditions on the preference domains of this type, guaranteeing that majority rule is quasi-transitive and thus the existence of Condorcet winners at any profile in the domain, and for any finite subset of alternatives. Finally, we compare our proposed restrictions with others in the literature, to conclude that they are independent of any previously discussed domain restriction.     

RESERVE PRICE EFFECTS IN AUCTIONS: ESTIMATES FROM MULTIPLE REGRESSION‐DISCONTINUITY DESIGNS

We present evidence from 260,000 online auctions of second‐hand cars to identify the impact of public reserve prices on auction outcomes. We exploit multiple discontinuities in the relationship between reserve prices and vehicle characteristics to present causal regression‐discontinuity estimates of reserve price impacts. We find an increase in reserve price decreases the number of bidders, increases the likelihood the object remains unsold, and increases expected revenue conditional on sale. We then combine these estimates to calibrate the reserve price effect on the auctioneer's ex ante expected revenue. This reveals the auctioneer's reserve price policy to be locally optimal. (JEL D44, L11, L62)     

FISCAL FEDERALISM,DECENTRALIZATION, AND ECONOMIC GROWTH: A META‐ANALYSIS

The theoretical literature on fiscal federalism has identified several channels through which government decentralization could affect economic growth. Much of the literature focuses on the efficiency aspects of a decentralized provision of public services, but decentralization may also increase growth by raising the ability of the political system to innovate and carry out reforms. In contrast, some authors argue that decentralization increases corruption and government inefficiency, and thus may diminish growth. Given this theoretical ambiguity, several studies have attempted to identify the effect of decentralization on economic growth empirically over the last two decades. We review and conduct a meta‐analysis of this empirical literature. Based on our analysis, we point out open questions and discuss possible ways to answer them. (JEL H77, O43, C52)     

Privacy encounters in Teledialogue

Privacy is a major concern when new technologies are introduced between public authorities and private citizens. What is meant by privacy, however, is often unclear and contested. Accordingly, this article utilises grounded theory to study privacy empirically in the research and design project Teledialogue aimed at introducing new ways for public case managers and placed children to communicate through IT. The resulting argument is that privacy can be understood as an encounter, that is, as something that arises between implicated actors and entails some degree of friction and negotiation. An argument which is further qualified through the philosophy of Gilles Deleuze. The article opens with a review of privacy literature before continuing to present privacy as an encounter with five different foci: what technologies bring into the encounter; who is related to privacy by implication; what is entailed by the spaces of Teledialogue; how privacy relates to projected futures; and how privacy is also an encounter between authority and care. In the end, it is discussed how privacy conceptualised as an encounter is not already there surrounding people or places but rather has to be traced in the specific and situated relations between implicated actors, giving rise to different normative concerns in each case.     

Perspectives on determinants of social welfare: introduction

In this commentary we discuss and elaborate on a number of topics that have been raised in the articles in this issue. The first topic treated is causality. All scientists are aware of the difficulties of making causal inferences in non‐experimental settings, and in many cases arguments are forwarded that support the causal interpretation of the reported relationships. Questions of bi‐directional causality, nonlinear relationships and the importance of omitted variables are discussed, as is the supporting evidence that in some cases comes from experimental studies. The second topic is the level of analysis employed in the empirical analyses and the difficulty of interpreting findings at a different level of aggregation than the level applied in these analyses. In this context, the importance of applying a person‐orientation is pointed out to ensure that the findings are interpretable at the level of the single individual. Even in individual‐level analyses, this can be problematic if one relies on group statistics produced within a variable‐oriented framework. The third topic concerns how to handle interactions and nonlinear relationships. The fourth topic concerns the importance of improving measurements so that a good correspondence is achieved between them and the theoretical conceptualisations. The fifth and last topic is concerned with the argument that different ways of investigating the generalisability of the results to different populations should be tried.     

Probabilistic allocation rules and single-dipped preferences

We consider the problem of allocating an infinitely divisible endowment among a group of agents with single-dipped preferences. A probabilistic allocation rule assigns a probability distribution over the set of possible allocations to every preference profile. We discuss characterizations of the classes of Pareto-optimal and strategy-proof probabilistic rules which satisfy in addition replacement-domination or no-envy. Interestingly, these results also apply to problems of allocating finitely many identical indivisible objects – to probabilistic and to deterministic allocation. Received: 23 November 1998/Accepted: 20 October 2000