Happiness Maintenance and Asset Prices

This paper explores the implications of investors’ everyday mild feelings for aggregate asset returns. To this end, it introduces a novel class of state dependent preferences - happiness maintenance preferences - into the standard Mehra and Prescott (1985) economy by allowing investors’ coefficient of relative risk aversion to depend partly on their current feelings, which, in turn, are a function of the current state of the economy. Consistent with recent evidence from experimental psychology (see for example Isen (1999)), good times bring about a positive mood for investors and a heightened pain from any potential loss. In an attempt to maintain their good mood, investors become less willing to bear any portfolio risk, i.e. they become more risk averse. Extremely mild procyclical changes (a standard deviation of about one percentage point) in investors’ risk aversion are sufficient to bring the implications of a simple dynamic model of asset pricing in line with the historically observed stylized features of asset returns, without relying on unreasonable values of the behavioral parameters. With a realistic consumption process, the model is capable of accounting for a sizable equity premium in line with the one observed in the US data. It also performs well with respect to other financial statistics, such as the average risk-free rate, the volatility and predictability of stock returns and the Sharpe ratio. Being able to match the equity premium, it implies that aggregate fluctuations have important welfare costs.consumption-based asset pricing behavioral finance state- dependent risk aversion equity premium puzzle affect and decision making

Water footprint of Ischia Island: preliminary evaluation

Mestrado Vinifera Euromaster - Instituto Superior de Agronomia - ULWe are witnessing in recent years to a climate change due to a number of operations carried out by man. In this sense, agriculture is a strategic sector if we want to tackle this situation, more and more unsustainable as modern agriculture, also called "intensive", is causing more of a problem is the surface layer of the earth's crust, that the biosphere. The following work is part of a larger project, called VA.RIVI, applied on the island of Ischia, and is designed to specifically consider the components that form the basis for the calculation of the Water Footprint, which indicates the environmental impact of a product, a process or an entire company working on water resources. The WF is a relatively new tool, whose standard (ISO14046) was published not more than three months ago, on November 2014, so this does not always work considers the water footprint, but often refers to other indicators of the environmental impact, such as the Carbon Footprint, Ecological Footprint, or the Life Cycle Assessment. Will be analyzed the guidelines of the new ISO 14046, also reporting a sample calculation made possible thanks to the publications present in the bibliography, and will be compared to the production of organic wine. The work is complemented by a number of best practices to reduce the water footprint, but also to reduce the environmental impact of a company or a business process through small and large measures to be implemented at all levels.N/

Evaluating the Surgeons' Perception of Difficulties of Two Techniques to Perform STARR for Obstructed Defecation Syndrome: A Multicenter Randomized Trial.

BACKGROUND After initial enthusiasm in the use of a dedicated curved stapler (CCS-30 Contour Transtar) to perform stapled transanal rectal resection (STARR) for obstructed defecation syndrome (ODS), difficulties have emerged in this surgical technique. OBJECTIVE First, to compare surgeons' perception of difficulties of STARR performed with only Transtar versus STARR performed with the combined use of linear staplers and Transtar to cure ODS associated with large internal prolapse and rectocele; second, to compare the postoperative incidence of the urge to defecate between the 2 STARR procedures. DESIGN AND SETTING An Italian multicenter randomized trial involving 25 centers of colorectal surgery. PATIENTS Patients with obstructed defecation syndrome and rectocele or rectal intussusception, treated between January and December 2012. INTERVENTIONS Participants were randomly assigned to undergo STARR with a curved alone stapler (CAS group) or with the combined use of linear and curved staplers (LCS group). MAIN OUTCOME MEASURES Primary end-points were the evaluation of surgeons' perception of difficulties score and the incidence of the "urge to defecate" at 3-month follow up. Secondary end-points included duration of hospital stay, rates of early and late complications, incidence of "urge to defecate" at 6 and 12 months, success of the procedures at 12 months of follow-up. RESULTS Of 771 patients evaluated, 270 patients (35%) satisfied the criteria. Follow-up data were available for 254 patients: 128 patients (114 women) in the CAS group (mean age, 52.1; range, 39-70 years) and 126 (116 women) in LCS group (mean age, 50.7 years; range, 41-75 years). The mean surgeons' perception score, was 15.36 (SD, 3.93) in the CAS group and 12.26 (SD, 4.22) in the LCS group (P < .0001; 2-sample t test). At 3-month follow-up, urge to defecate was observed in 18 (14.6%) CAS group patients and in 13 (10.7%) LCS group patients (P = .34; Fisher's exact test). These values drastically decrease at 6 months until no urge to defecate in all patients at 12 months was observed. At 12-month follow-up, a successful outcome was achieved in 100 (78.1%) CAS group patients and in 105 (83.3%) LCS group patients (P = .34; Fisher's exact test). No significant differences between groups were observed in the hospital stay and rates of early or late complications occurring after STARR. CONCLUSIONS STARR with Transtar associated with prior decomposition of prolapse, using linear staplers, seems to be less difficult than that without decomposition. Both procedures appear to be safe and effective in the treatment of obstructed defecation syndrome resulting in similar success rates and complications

Happiness maintenance and asset prices

This paper constructs a simple dynamic asset pricing model that incorporates recent evidence on the influence of immediate emotions on risk preferences. Investors derive direct utility from both consumption and financial wealth and, consistent with the happiness maintenance feature documented by Isen (1999) and others, become more cautious toward their wealth in good times. Mild pro-cyclical changes in risk aversion over wealth cause large pro-cyclical fluctuations in the current price-dividend ratio which, due to general equilibrium restrictions, translate into counter-cyclical variation in the current consumption-wealth ratio and, in turn, in expected future returns. With a realistic consumption growth process and reasonable preference parameters, the model generates a sizable equity premium, a low and stable risk-free rate, volatile and predictable stock returns, and price-dividend and Sharpe ratios in line with the data.State-dependent utility Affect and decision making Equity premium puzzle

Happiness maintenance and asset prices

This paper constructs a simple dynamic asset pricing model which incorporates recent evidence on the influence of immediate emotions on risk preferences. Investors derive direct utility from both consumption and financial wealth and, consistent with the happiness maintenance feature documented by Isen (1999) and others, become more cautious toward their wealth in good times. Mild pro-cyclical changes in risk aversion over wealth cause large pro-cyclical fluctuations in the current price-dividend ratio which, due to general equilibrium restrictions, translate into counter-cyclical variation in the current consumption-wealth ratio and, in turn, in expected future returns. With a realistic consumption growth process and reasonable preference parameters, the model generates a sizable equity premium, a low and stable risk-free rate, volatile and predictable stock returns, and price-dividend and Sharpe ratios in line with the data.Asset pricing ; Uncertainty ; Financial markets

Corporate Governance Institutions, Investment, and the Macroeconomy

This paper evaluates quantitatively the macroeconomic implications of corporate governance institutions within a model where the size and distribution of firms and the structure of financial markets are jointly determined. If firms adapt their financing modes to economic conditions, aggregate shocks change the aggregate composition of financing, which, in turn, is shown to be a key determinant of firm growth and aggregate volatility. We construct a search-theoretic stochastic dynamic general equilibrium model of security design with two distinguishing features: (i) firms’ decision to issue different types of securities, i.e. private (bank) versus public (bond) debt, is modeled explicitly as a dynamic choice between long-term imperfectly enforceable contracting regimes; (ii) bonds are an imperfect substitute for bank debt, since, while being more effective than bond holders at preventing managerial misconduct, banks face occasionally binding capital adequacy constraints imposed by prudential regulation. We derive a recursive characterization and show that bank and market lending co-exist in equilibrium. Plausibly calibrated numerical solutions reveal that capital adequacy requirements have sizable consequences for aggregate welfare. At the micro level, the model is consistent with the stylized fact that larger firms have a bigger share of securities in their financial structure (e.g. Petersen and Rajan, 1994). At the macro level, the model is consistent with key regularities of financial systems and the business cycle. Most notably, it implies that aggregate volatility is higher in market-based financial systems and bank capital plays a crucial role in the macroeconomic transmission of interest rate shocksFirm Dynamics, Optimal Security Design, Limited Commitment, Long-term Contracts, Bank Regulation

Paying to Make a Difference: Executive Compensation and Product Dynamics

This paper develops an agency model of executive compensation in dynamic industry equilibrium. Firms differ in the quality of their products, and managers can make a difference as higher effort brings about product improvement. I show that there is an inverse relationship between the magnitude of the performance-based component of optimal compensation contracts and the degree of product differentiation, as managerial effort is less likely to make a difference for firms with more differentiated products. Empirically, I find strong evidence of this inverse relation in the compensation of US executives. In particular, I find that pay-performance sensitivity depends negatively on industry- and firm-level measures of product differentiation, even after controlling for industry fixed effects and standard measures of product market competition. Moreover, industry leaders have weaker pay-performance sensitivity than laggards, even after controlling for firm size. My findings suggest that industry is an important determinant of executive compensationIncentives, Optimal Contracts, Executive Compensation, Industry Dynamics