The risk-opportunity cleavage and the transformation of Europe’s main political families

Analyses of the last two rounds of general elections in the EU (old) 15 member-states, as well as of the 1999 and 2004 European elections, reveal some of the symptoms of what Key and Burnham called "critical elections": elections that mark a sudden, considerable and lasting realignment in the electorate, leading to the formation of new electoral majorities. I explore the hypothesis that these series of critical elections at the turn of the century are triggering a radical realignment under the pressures of a new fault-line of conflict aggregation -- one shaped by attitudes to globalization. As a result, an opportunity-risk cleavage is emerging which is challenging, and opting out to replace, the capital-labor dynamics of conflict that have shaped the main political families in Europe over the 20th century. This paper traces the dynamics of realignment in terms of shifts at four levels: 1) The public agenda of political mobilization; 2) The social composition of electoral constituencies 3) the ideological basis of party competition. On this basis, an alignment is taking place, on the one hand between the centre-left and centre-right midpoint around an "opportunity" pole and, on the other, the circumference of far-right and radical-left parties around a "risk" pole. To what extend will these pressures of realignment manage to unfreeze (in reference to Rokkan and Lipset) the established party-political constellations in nation-states remains to the determined. However, tensions between the analyzed pressures of realignment and existing institutionalized forms of political representation go a long way in explaining the current crisis within both Social Democracy and European Conservatism, as well as the rise of new forms of populism in Europe

How to restructure the international financial architecture

To lower the likelihood of financial crises: Securitisation should be regulated to restore proper incentives for banks. The euro area should adopt a regulatory system based on objectives. The short-comings of the Basel II accord should be addressed. While difficult, ways must be found to incentivise financial firms to change the way they compensate employees. The euro area should have a single supervisor and regulator charged with ensuring financial stability. To prevent liquidity crises: There should be good systems of deposit insurance. Countries without important reserve currencies should not have large internationally exposed banking systems. To decrease the likelihood of exchange rate crises, the powers in Brussels and Frankfurt should allow potential future members of the euro area to unilaterally adopt the euro without jeopardising their chances of future membership in the euro area. should not enforce the exchange rate criterion of the Maastricht Treaty. Early warning of a financial crisis is unlikely to be best provided by the IMF might be provided by an independent committee of experts and individual market participants International cooperation in developing crisis management measures and disseminating this knowledge is desirable; funding these measures must be left to the national governments. Managing a crisis Requires writing off bad assets: Central banks should learn how use auctions to value non-traded securities. Requires short-term liquidity provision to and recapitalisation of viable financial firms: Countries should not have banking sectors that are to big to rescue. International coordination to avoid beggar-thy-neighbour regulatory anpolicies and exchange rate policies

Thought and Behavior Contagion in Capital Markets

Prevailing models of capital markets capture a limited form of social influence and information transmission, in which the beliefs and behavior of an investor affects others only through market price, information transmission and processing is simple (without thoughts and feelings), and there is no localization in the influence of an investor on others. In reality, individuals often process verbal arguments obtained in conversation or from media presentations, and observe the behavior of others. We review here evidence concerning how these activities cause beliefs and behaviors to spread, affect financial decisions, and affect market prices; and theoretical models of social influence and its effects on capital markets. Social influence is central to how information and investor sentiment are transmitted, so thought and behavior contagion should be incorporated into the theory of capital markets.capital markets; thought contagion; behavioral contagion; herd behavior; information cascades; social learning; investor psychology; accounting regulation; disclosure policy; behavioral finance; market efficiency; popular models; memes

Motivation, Expectations and the Gender Pay Gap for UK Graduates

Focussing on recent UK graduates, a wage gap of 12% is found. The unexplained component of the gap is small and a large fraction of the gap can be explained by subject choice, job characteristics, motivation and expectation variables. Motivation and expectations account for 44% of the explained gap, thus most studies over-estimate the unexplained component of the gender wage gap. Following stereotypes, women tend to be more altruistic and less career oriented than men, character traits that are less rewarded by employers. The principal component of the gender wage gap is expectations about childrearing. These conservative attitudes affect women’s wages even at an early stage of their career. Without a change in attitude, the gender wage gap is likely to remain.gender wage gap, attitude

Experts, Conflicts of Interest, and the Controversial Role of Reputation

This paper studies the impact of reputation on the reporting strategy of experts that face conflicts of interest. The framework we propose applies to different settings involv- ing decision makers that rely on experts for making informed decisions, such as financial analysts and goverment agencies. We show that reputation has a non-monotonic effect on the degree of information revelation. In general, truthful revelation is more likely to occur when there is more uncertainty on an expert's ability. Furthermore, above a certain threshold, an increase in reputation always makes truthful revelation more difficult to achieve. Our results shed light on the relationship between the institutional features of the reporting environment and informational efficiency.

CONTRACT MARKET VIABILITY

Academia and the finance industry generate many proposals for new contract markets. Unfortunately, many proposed markets lack the critical attributes that promote success. We examine these attributes, and evaluate the potential of several announced proposals. We find that proposals emanating from the academy generally fail to consider the full suite of integrated financial services necessary to support a viable market, while proposals put forward by practitioners are much more likely to do so.Marketing,

Five Open Questions About Prediction Markets

Interest in prediction markets has increased in the last decade, driven in part by the hope that these markets will prove to be valuable tools in forecasting, decision-making and risk management -- in both the public and private sectors. This paper outlines five open questions in the literature, and we argue that resolving these questions is crucial to determining whether current optimism about prediction markets will be realized.