Uncertainty behind the veil of ignorance

This paper argues that the decision problem in the original position should be characterized as a decision problem under uncertainty even when it is assumed that the denizens of the original position know that they have an equal chance of ending up in any given individual's place. It argues for this claim by arguing that (a) the continuity axiom of decision theory does not hold between all of the outcomes the denizens of the original position face and that (b) neither us nor the denizens of the original position can know the exact point where discontinuity sets in, because the language we employ in comparing different outcomes is ineradicably vague. It is also argued that the account underlying (b) can help proponents of superiority in value theory defend their view against arguments offered by Norcross and Griffin

Belief heterogeneity and survival in incomplete markets

In complete markets economies (Sandroni [16]), or in economies with Pareto optimal outcomes (Blume and Easley [10]), the market selection hypothesis holds, as long as traders have identical discount factors. Traders who survive must have beliefs that merge with the truth. We show that in incomplete markets, regardless of traders’ discount factors, the market selects for a range of beliefs, at least some of which do not merge with the truth. We also show that impatient traders with incorrect beliefs can survive and that these incorrect beliefs impact prices. These beliefs may be chosen so that they are far from the truth

论一种度量通货膨胀的正确方法

劳工统计局的消费价格指数（CPI）和商务部的国民生产总值折算指数是两种常被引用而且是有报道价值的价格指数。这两种指数已经变成经济信息的重要部份而且常常被认为是经济学家所称的“价格水平”的操作对应物。因此，它们经常被用来作为作通货膨胀的测度，而且经常是货币政策与财政政策的目标或指标。不过，这些价格指数（它们代表对当期消费服务与当期产出价格的测度）就其通常被赋予的作用从理论上说是不适当的。本文的分析是以基于费雪传统的正确定义的跨期消费的价格指数为基础的，得出的结论为用于测度通货膨胀的价格指数必须包含资产价格。对给定效用水平的名义货币成本的变化的正确测度是财富价格指数。如果货币冲击通过对服务流动和资产产生短暂的相对价格变化（如产生实际利率的短期变化）传导至经济实际部门，那么，通常所使用的、不完整的现行流动价格指数会提供“货币购买力”变动的有偏短期测度。主导一般文献和专业文献和分析的不适当的价格指数使货币理论研究与政策得出有显著误差的结果。 　　译者单位：厦门大学经济学院金融学系（361005

Trade costs, quality and the skill premium

We develop a monopolistic competition model with non-homothetic factor input bundles where increasing quality requires increasing use of skilled workers. As a result more skill abundant countries export higher quality, higher priced goods. Using a multi-country dataset, we test and confirm the findings in Schott () of a positive effect of skill abundance on unit values identified with US data. We extend the core model with per unit trade costs leading to the Washington apples effect that goods shipped over larger distance are of higher quality. The combination of high-quality goods being relatively skill intensive with the Washington apples effect implies that countries at a larger distance from their trading partners display a higher skill premium. Simulating our model, we find that a doubling of distance of a country relative to all its trading partners raises the skill premium in a country by about 1.6%

Employee Stock Ownership and Financial Performance in European Countries: The Moderating Effects of Uncertainty Avoidance and Social Trust

This study investigates how the effect of employee stock ownership on financial performance may hinge on the diverse cultural and societal contexts of European countries. Based on agency and national culture theories, we hypothesize that the positive relationship between employee stock ownership and return on assets (ROA) is stronger in those nations with lower uncertainty avoidance and higher social trust. Using a multisource, time‐lagged, large‐scale dataset of 1,741 firms from 21 countries in Europe, our multilevel, random coefficient modeling analysis found evidence for these hypotheses, suggesting that uncertainty avoidance and social trust serve as important contextual cues in predicting the linkage between employee stock ownership and financial performance. Our supplemental analysis with distinction between the managerial and nonmanagerial employee stock ownership further indicates managerial employee stock ownership has a direct positive effect on ROA. Although nonmanagerial employee stock ownership had a nonsignificant association with ROA, the relationship was positive and significant when uncertainty avoidance was low and social trust was high. This research contributes to the existing literature by illuminating some of the contextual influences altering the effectiveness of employee stock ownership. Our findings also offer practical suggestions for effectively using employee stock ownership

Shareholder Theory/Shareholder Value

Shareholder theory states that the primary objective of management is to maximize shareholder value. This objective ranks in front of the interests of other corporate stakeholders, such as employees, suppliers, customers, and society.Shareholder theory argues that shareholders are the ultimate owners of a corporate’s assets, and thus, the priority for managers and boards is to protect and grow these assets for the benefit of shareholders. Shareholder theory assumes that shareholders value corporate assets with two measurable metrics, dividends and share price. There-fore, management should make decisions that maximize the combined value of dividends and share price increases. However, shareholder theory fails to consider that shareholders and corporates may have other objectives that are not based on financial performance. For example, as early as1932, Berle and Means argued that corporations have a variety of purposes and interests including encouraging entrepreneurship, innovation, and building communities. This wider view is gaining more traction in recent decades as evidenced by an increased interest in ethical investment funds.This suggests that shareholders and potential shareholders are not only interested in financial gains but are also interested in corporates being socially responsible (Kyriakou2018). Therefore shareholder value creation is important; however,it needs to be balanced with other stakeholders’ interests. This is referred to as an enlightened approach to shareholder value maximization