CONTRACT DELEGATION WITH BARGAINING

In the theoretical literature on contract delegation, it is assumed that the contractor has all the bargaining power when contracts are proposed to the subcontractee. In this case, the principal prefers centralized to decentralized contracting structures. This paper analyzes the consequences of relaxing this assumption. It is shown that when contracts are determined by bargaining, the principal might prefer decentralization to centralization. Furthermore, it is shown that this can happen even when subcontractees have very little bargaining power. The results explain, for example, the coexistence of centralized and decentralized contracting in public procurement. (JEL D23, D82, L22)     

GROUP SIZE AND SOCIAL TIES IN MICROFINANCE INSTITUTIONS

Microfinance programs provide poor people with small loans given to jointly liable self-selected groups. Follow-up loans provide incentives to repay. We experimentally investigate the influence of those features on strategic default. Each group member invests in an individual risky project, whose outcome is known only to the individual investor. Subjects decide whether to contribute to group repayment or not. Only those with successful projects can contribute. The experiment ends if too few repay. We investigate group size and social ties effects and observe robust high repayment rates. Group lending outperforms individual lending. Self-selected groups show high but less stable contributions. (JEL C90 , H41 , I38 , O16 , Z13 )     

LEADING WITH(OUT) SACRIFICE? A PUBLIC‐GOODS EXPERIMENT WITH A PRIVILEGED PLAYER

We analyze two team settings in which one member in a team has stronger incentives to contribute than the others. If contributions constitute a sacrifice for the strong player, the other team members are more inclined to cooperate than if contributions are strictly dominant for the strong player. (JEL C91, C92, H40, H41)     

DOMESTIC OR U.S. NEWS: WHAT DRIVES CANADIAN FINANCIAL MARKETS?

Using a generalized autoregressive conditional heteroscedasticity (GARCH) model, we study the effects of Canadian and U.S. central bank communication and macroeconomic news on Canadian bond, stock, and foreign exchange market returns and volatility. First, Canadian central bank communication is more relevant than its U.S. counterpart, whereas in the case of macro news, that originating from the United States dominates. Second, we find evidence that the impact of Canadian news reaches its maximum when the Canadian target rate departs from the U.S. target rate (2002–2004) and thereafter. The introduction of fixed announcement dates initially does not cause a noticeable break in the data. (JEL E52, G14, G15)     

Research Notes/Notes de recherche A dynamic typology of urban neighbourhoods: the case of Winnipeg

En 1978, la ville de Winnipeg a développé une typologie du changement urbain au niveau du quarter en se fondant sur un modèle du processus de développement urbain qui distingue trois stades: croissance, stabilité et déclin. Depuis lors, une ré-aggrégation au niveau du quarter des données du recensement est devenue disponible. Nous partons du principe que le quarter est ľunité spatiale la plus importante pour les planificateurs et pour beaucoup de citadins; conséquemment, nous proposons ici une typologie dynamique des quarters, basée sur ľanalyse factorielle des données des recensements de 1971 et 1981, au niveau ďaggrégation du quarter. Ensuite, nous évaluons ľimportance du choix du niveau ďaggrégation des données, et nous comparons ľutilité des deux typologies -celle développé par la ville de Winnipeg et la nôtre.
The process of urban development through the stages of growth, stability and decline was the foundation of a typology of neighbourhood change developed in 1978 by the City of Winnipeg. Since that time, Statistics Canada census data for Winnipeg reaggregated by neighbourhoods have become available. Because the neighbourhood is the most significant spatial unit for City Planners as well as for many residents, this paper first proposes to establish a dynamic typology of neighbourhoods based on a factor analysis of 1971 and 1981 census data aggregated by neighbourhood. A second goal is to evaluate the importance of the level of aggregation of the data, and to look at the relative usefulness of the typology developed by the City and the typology developed through factor analysis of census data.