Using the compensating and equivalent variations to define the Slutsky Equation under a discrete price change

In our experience, all textbook presentations of the Slutsky Equation under a discrete price change use a compensation scheme based on the compensating variation. Our students have sensed this convention is arbitrary in that they have asked, why consider this compensation scheme, and not one based on the equivalent variation? The present paper outlines how one might address this matter analytically, and then discusses how our findings provide a new insight into the Giffen Paradox.Compensating Variation

RESERVATION PRICES AND PRE-AUCTION ESTIMATES: A STUDY IN ABSTRACT ART

Using a sample of European abstract art we show that reservation prices constrain pre-auction estimates in such a way that we are more likely to observe overestimation relative to the midpoint of the estimation window. At the same time, we also find that the low pre-auction estimate is a more powerful, accurate and precise predictor of hammer prices than the high estimate.Art Auctions, Abstract Art, Pre-auction Estimates, Reservation Price, Bias

A simple test for the violation of the non-satiation axiom under uncertainty: The theory

The validity of most axioms which underlie the expected utility model has been the object of intense empirical testing. These include the independence, betweenness, transitivity, monotonicity, reduction, and non-satiation axioms. The sole, present-day test for the non-satiation axiom is predicated on the first-degree stochastic dominance theorem. This paper outlines the theory for a new, alternative test – one that is predicated on a mean-variance-preserving transformation of a one-trial binomial distribution.Von Neumann-Morgenstern Utility Function, Expected Utility Hypothesis, Non-Satiation Axiom, Binomial Trial, Mean-variance-preserving transformation

Hedonic Models and Pre-Auction Estimates: Abstract Art Revisited

We investigate the predictive power of hedonic models compared to that of pre-auction estimates in the context of art auctions. We use a panel data consisting of abstract paintings and a methodology that employs the estimates as instrumental variables in the framework of a hedonic regression model. The results suggest that hedonic models have no better predictive power than that of the estimates. Pre-auction estimates appear to fully account for the available public information on works of art.

The student evaluation of teaching: its failure as a research program, and as an administrative guide

This paper points up the methodological inadequacy of the "student evaluation of teaching" as a research program. We do this by reference to three, interrelated arguments. The first is that the student evaluation of teaching cannot claim to capture the wisdom of a crowd because, as a research program, it fails to meet Surowiecki's conditions for the existence and articulation of the wisdom of a crowd. The second argument extends the first, by stating: (a) the "student evaluation of teaching" research program fails to provide the methodological controls needed to differentiate cause from effect, or put differently (b) the methodological underpinnings of this research program is tantamount to the misapplication of a closed-system paradigm to an open social system. The third argument has two parts. These are that this research program is predicated on: (a) a false analogy between the workings of a business and a university, and therefore (b) on a mischaracterization of the student-professor relationship. These three arguments, these three failures, suggest that the "student evaluation of teaching" research program is methodologically ill-conceived and incoherent, and therefore cannot, with any credulity, serve as a guide to the administration and governance of a university.Student evaluation of teaching, validity, biases, fallacies

The Delimitation of Giffenity for The Wold-Juréen (1953) Utility Function Using Relative Prices: A Note

In the study of Giffen behavior or “Giffenity”, there remains a paradox. On one hand, the Wold-Juréen (1953) utility function has been touted as the progenitor of a multi-decade search for those two-good, particular utility functions, which exhibit Giffenity. On the other hand, there is no evidence that the Wold-Juréen (1953) utility function has ever been fully evaluated for Giffenity, with perhaps one minor exception, Weber (1997). But there, Weber (1997) showed that the Giffenity of Good 1 depends upon the relative magnitude of income vis-à-vis the price of Good 2. Weber’s precondition is so vague that it lacks broad appeal. This paper offers a new and a clear cut precondition for Giffen behavior under the Wold-Juréen (1953) utility function. That is, we show that if the price of Good 1 is greater than or equal to the price of Good 2, then Good 1 is a Giffen good

Is the research agenda for calendar anomalies “much do about nothing”?

Calendar anomalies are a class of financial market phenomena which links periodic, time-specific dummy variables and variations in the market price of an asset. Prior studies which report a calendar anomaly are seen by some as refutations of the efficient market hypothesis. In this paper, we estimate, test for the presence of, and find no evidence of, the day-the-week effects in the S&P 500, 2013-2023. That is, in this paper, we show that the daily-dummy variables (both individually and collectively) are independent of the S&P 500. This finding supports those who have argued that the day�the-week effects, and (by extension) all calendar anomalies, are “chimera delivered by intensive data mining” or, quite simply, such anomalies are “much ado about nothing.

In Search of A Giffen Input: A Comprehensive Analysis of The Wold-Juréen (1953) Production Function

The Wold-Juréen (1953) functional form has proven to be invaluable to the development of consumer theory, and to the general search for utility functions which have the potential to yield a Giffen good. Because of this success, it seems only natural to ask about the value of Wold-Juréen (1953) functional form to the development of producer theory, and to the general quest for production functions which have the potential to yield a Giffen factor input. To date, this set of research questions remains unanswered, aside from one unenlightening comment by Weber (2001, page 622). The present paper answers these questions by offering a comprehensive analysis of the Wold�Juréen (1953) production function in the ongoing search for production functions which have the potential to yield a Giffen factor

A Precondition-Free Demonstration That the Wold-Juréen (1953) Utility Function (Always) Generates a Giffen Good

Both Weber (1997) and Sproule (2020) offered a precondition for the existence of Giffenity when the decision maker's utility function is the Wold-Juréen (1953) utility function. The purpose of this paper is to show that all preconditions (including those due to Weber (1997) and Sproule (2020)) are superfluous, in the present demonstration that the inferior good in the Wold-Juréen (1953) utility function is also a Giffen good. Our success relies upon our use of both of the Marshallian demand functions, rather than just one, as is the case in both Weber (1997) and Sproule (2020). In brief, the present paper offers a precondition-free demonstration that the Wold-Juréen (1953) utility function will (always) generate a Giffen good

Two Conditions Which Induce Giffen Behavior In Any Numerical Analysis When Applied To The Wold-Juréen (1953) Utility Function

The present paper extends the existing literature on the relationship between the Wold-Juréen (1953) utility function and Giffen behavior, by extending the recent contribution by Sproule (2020) to the domain of numerical methods. In particular, this paper offers an analytical framework, by which a numerical analysis can used to induce the Wold-Juréen (1953) utility function to exhibit Giffen behavior. Our framework also demonstrates the instructional value to the Wold-Juréen (1953) utility function, especially in those microeconomics courses, in which calculus is not employed or is not emphasized