A Principal-Agent Model for Investigating Traceability Systems Incentives on Food Safety

This article investigates the effects of contingent payments and a traceability system's expected traceback rate of success on the food safety effort exerted by raw material suppliers. This sheds light on when contingent payments and the reliability of a traceability system are substitutes and complements to each other in terms of inducing raw material suppliers to exert higher food safety effort. In addition, the effect of higher penalties and costs of food safety crisis on the effort to be induced by buyers (principal) on suppliers (agents) is investigated under a symmetric information setting. Finally, the asymmetric information setting is formalized as a principal-agent model and left to be explored in a future work. Some numerical exercises are carried out to illustrate main findings. It has been found that more reliable traceability systems might induce higher food safety efforts by suppliers. However, this same effect could be accomplished either with higher payments whenever no food safety crisis occurs or with lower payments whenever a food safety crisis occur both assuming the traceability system works. Finally, it is shown that without a traceability system in place no incentive scheme could be implemented.Information Asymmetry, Identity Preservation, Food Traceability, Supply Chain Management., Food Consumption/Nutrition/Food Safety, D82, D86, C61,

Third Party Contingency contracts in settlement and litigation

We present, for the first time, a model of recent institutional developments in litigation funding across several European jurisdictions. Recognizing the financing constraints that British cost rules may impose on litigants, these new contractual arrangements combine contingency fees with third party cover for cost in the event of losing the case: we call these “Third Party Contingency” (TPC) contracts. Signing a TPC contract can make filing a suit credible and may increase settlement amounts. This does not, however, increase the likelihood of going to trial, since TPC contracts are only of mutual benefit to the plaintiff and the third party when the case settles out of court. We also find that the mere availability of TPCs may generate the above strategic effect.Contingent fees, British cost allocation rule, Legal Cost Insurance, strategic moves.,

Comparing third party financing of litigation versus legal expenses insurance

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"Third Party Contingency" contracts in settlement and litigation

We present, for the first time, a model of recent institutional developments in litigation funding across several European jurisdictions. Recognizing the financing constraints that British cost rules may impose on litigants, these new contractual arrangements combine contingency fees with third party cover for cost in the event of losing the case: we call these ?Third Party Contingency? (TPC) contracts. Signing a TPC contract can make filing a suit credible and may increase settlement amounts. This does not, however, increase the likelihood of going to trial, since TPC contracts are only of mutual benefit to the plaintiff and the third party when the case settles out of court. We also find that the mere availability of TPCs may generate the above strategic effect. -- Das Paper enthält die erste Analyse einer neuen Institution zur Prozeßkostenfinanzierungs im Bereich der "britischen" Regel: Verträge, bei denen eine dritte Partei dem Kläger zusagt, im Falle der Klageabweisung die gesamten Prozeßkosten zu tragen. Im Gegenzug erhält diese dritte Partei einen Teil der durch Vergleich oder Urteil vom Beklagten erlangten Summe. Solche "TPC Verträge" (third party contingency contracts) überwinden die finanziellen Hürden bei der gerichtlichen Verfolgung von Ansprüchen. Sie machen die Drohung mit einer Klage auch dann glaubwürdig, wenn (ohne TPC Vertrag) der erwartete Wert des Prozesses für den Kläger negativ wäre. Dadurch erhöhen sie die Vergleichsbereitschaft des Beklagten und die Vergleichszahlungen. Wir zeigen, daß schon die reine Verfügbarkeit von TPC Verträgen diesen strategischen Effekt erzeugen könnte.Contingent fees,British cost allocation rule,Legal Cost Insurance,strategic moves

Statistical strategies for pruning all the uninteresting association rules

We propose a general framework to describe formally the problem of capturing the intensity of implication for association rules through statistical metrics. In this framework we present properties that influence the interestingness of a rule, analyze the conditions that lead a measure to perform a perfect prune at a time, and define a final proper order to sort the surviving rules. We will discuss why none of the currently employed measures can capture objective interestingness, and just the combination of some of them, in a multi-step fashion, can be reliable. In contrast, we propose a new simple modification of the Pearson coefficient that will meet all the necessary requirements. We statistically infer the convenient cut-off threshold for this new metric by empirically describing its distribution function through simulation. Final experiments serve to show the ability of our proposal.Postprint (published version

INTERTEMPORAL PERMIT TRADING FOR STOCK POLLUTANTS WITH UNCERTAINTY

This paper explores the efficiency of tradable permit markets for stock pollutants. With uncertainty about the future stock level or damages, a market with banking and borrowing is inferior, in terms of efficiency, compared to a market without banking and borrowing if the regulator commits to an initial allocation of permits. This result occurs because, with banking and borrowing and commitment, the regulator needs to specify the total allowable amount of emission over time at the initial time period before the uncertainty with the pollution stock is resolved. An alternative banking and borrowing scheme is proposed, where the regulator can update the allocation of permits to firms over time and achieve the efficient pollution accumulation.Environmental Economics and Policy,

Chi-squared tests of interval and density forecasts and the Bank of England's fan charts

This paper reviews recently proposed likelihood ratio tests of goodness-of-fit and independence of interval forecasts. It recasts them in the framework of Pearson chi-squared statistics, and considers their extension to density forecasts and their exact small-sample distributions. The use of the familiar framework of contingency tables will increase the accessibility of these methods. The tests are applied to two series of density forecasts of inflation, namely the US Survey of Professional Forecasters and the Bank of England fan charts. This first evaluation of the fan chart forecasts finds that whereas the current-quarter forecasts are well-calibrated, this is less true of the one-year-ahead forecasts. The fan charts fan out too quickly, and the excessive concern with the upside risks was not justified over the period considered JEL Classification: C53, E37interval and density forecasts