Getting Back in the Black

Details the commission's medium- and long-term recommendations for reforming the federal budget process and stabilizing the debt, including a Sustainable Debt Act, a credible multiyear budget plan, strong enforcement mechanisms, and greater transparency

NON-CREDIBLE INFORMATION FLOWS BETWEEN FOOD MANUFACTURERS AND RETAILERS

Asymmetric information between food manufacturers and retailers constrains the efforts of analysts studying the retail food chain. The problem may be especially pronounced during new product introductions. Manufacturers may have demand information about new products but have incentives to not credibly relay that information. Retailers often lack reliable demand information about new products. Understanding the roots of non-credible information flows within the manufacturer/retailer relationship is important to behavioral modeling in the food chain. This paper provides an analytic derivation to explain sufficient conditions for non-credible information flows leading to asymmetric information and adverse selection problems. Results provide insight about formation of information sharing mechanisms in the retail grocery channel.Agribusiness,

Categorizing Different Approaches to the Cosmological Constant Problem

We have found that proposals addressing the old cosmological constant problem come in various categories. The aim of this paper is to identify as many different, credible mechanisms as possible and to provide them with a code for future reference. We find that they all can be classified into five different schemes of which we indicate the advantages and drawbacks. Besides, we add a new approach based on a symmetry principle mapping real to imaginary spacetime.Comment: updated version, accepted for publicatio

The fourth sustainability, creativity: statistical associations and credible mechanisms

In this paper, it is argued that over and above the three city sustainabilities of energy, society and economics, there is a fourth: creativity. It poses the question: can credible mechanisms be identified through which cities are more creative than other forms of settlement, as statistical evidence suggests ? It proposes that just as mechanisms can be identified linking the generic form of cities to ‘spatial sustainability’ for the first three, mechanisms can also be identified for creativity through the ways cities generates social networks. But whereas the first three sustainabilities are consequences of the form of the city, the fourth sustainability, creativity, is argued to be the reason for the form

Evaluating targeted cash transfer programs: a general equilibrium framework with an application to Mexico

This report focuses on the indirect and direct effects of transfer programs. In particular, it shows how modelling results can be combined with information from standard household surveys to provide an integrated analysis of the direct distributional impact of such programs and the indirect distributional and efficiency impacts arising from domestic financing mechanisms. This approach reflects the view that any credible poverty alleviation strategy must have a credible financing strategy underlying it, and this need for domestic financing can have important consequences for both the level and the distribution of household incomes. To illustrate the approach, the report focuses on the recent introduction in Mexico of an innovative poverty alleviation transfer program called PROGRESA, which has been used as a prototype for similar programs that have recently been implemented in other developing countries.Economic assistance, Domestic Mexico Evaluation, Public welfare - Mexico Evaluation,

Information Transmission and Core Convergence in Quasilinear Economies

We study core convergence in interim quasilinear economies with asymmetric information, concentrating on core notions in which information is transmitted endogenously within coalitions and the incentive constraints are relevant. Specifically, we shall focus on the credible core and randomized mediated core concepts. We consider independent replicas of the basic economy: independent copies of the economy in which each individual’s utility only depends on the information of the individuals who belong to the same copy. We provide an example in which core convergence does not obtain for the Dutta-Vohra credible core and for Myerson’s randomized mediated core. On the other hand, we establish a positive convergence result for a refinement of Myerson’s core for which information disseminates across coalitions within a given random blocking mechanism. Under some conditions, this core converges to the set of incentive compatible ex-post Walrasian allocations.Core Convergence; Information Transmission; Coalitional Voting; Mechanisms; Mediation; Rational Expectations Equilibrium

Information transmission and core convergence in quasilinear economies

We study core convergence in interim quasilinear economies with asymmetric information, concentrating on core notions in which information is transmitted endogenously within coalitions and the incentive constraints are relevant. Specifically, we shall focus on the credible core and randomized mediated core concepts. We consider independent replicas of the basic economy: independent copies of the economy in which each individual's utility only depends on the information of the individuals who belong to the same copy. We provide an example in which core convergence does not obtain for the Dutta-Vohra credible core and for Myerson's randomized mediated core. On the other hand, we establish a positive convergence result for a refinement of Myerson's core for which information disseminates across coalitions within a given random blocking mechanism. Under some conditions, this core converges to the set of incentive compatible ex-post Walrasian allocations.core convergence; information transmission; coalitional voting mechanisms; mediation; rational expectations equilibrium

Ratifiability of Efficient Collusive Mechanisms in Second-Price Auctions with Participation Costs

We investigate whether efficient collusive bidding mechanisms are affected by potential information leakage from bidders' decisions to participate in them within the independent private values setting. We apply the concept of ratifiability introduced by Cramton and Palfrey (1995) and show that when the seller uses a second-price auction with participation costs, the standard efficient cartel mechanisms such as preauction knockouts analyzed in the literature will not be ratified by cartel members. A high-value bidder benefits from vetoing the cartel mechanism since doing so sends a credible signal that she has high value, which in turn discourages other bidders from bidding in the seller's auction.Auctions, collusion, ratifiability

"Tying the Manager's Hands": How Firms can make Credible Commitments that make Opportunistic Managerial Intervention Less Likely

We discuss and empirically examine a firm-level equivalent of the ancient problem of "tying the King s hands", namely how to maximize managerial intervention for "good cause", while avoiding intervention for "bad cause". Managers may opportunistically intervene when such intervention produces private benefits. Overall firm performance is harmed as a result, because opportunistic managerial intervention harms employee motivation. The central point of the paper is that various mechanisms and factors, such as managers staking their personal reputation, employees controlling important assets, strong trade unions, corporate culture, etc. may function as constraints on managerial proclivities to opportunistically intervene. Thus, firms can make credible commitments that check managerial proclivities to opportunistically intervene. We derive 5 hypotheses from these ideas, and test them, using path-analysis, on a rich dataset, based on 329 firms in the Spanish food and electric/electronic industries.managerial opportunism; credible commitments; organizational design; transaction cost eco