Incentive Constrained Risk Sharing, Segmentation, and Asset Pricing

Incentive problems make securities’ payoffs imperfectly pledgeable, limiting agents’ ability to issue liabilities. We analyze the equilibrium consequences of such endogenous incompleteness in a dynamic exchange economy. Because markets are endogenously incomplete, agents have different intertemporal marginal rates of substitution, so that they value assets differently. Consequently, agents hold different portfolios. This leads to endogenous markets segmentation, which we characterize with optimal transport methods. Moreover, there is a basis going always in the same direction: the price of a security is lower than that of replicating portfolios of long positions. Finally, equilibrium expected returns are concave in factor loadings. (JEL D51, D52, G11, G12)

Opening Up Transactive Systems: Introducing TESS and Specification in a Field Deployment

Transactive energy systems (TS) use automated device bidding to access (residential) demand flexibility and coordinate supply and demand on the distribution system level through market processes. In this work, we present TESS, a modularized platform for the implementation of TS, which enables the deployment of adjusted market mechanisms, economic bidding, and the potential entry of third parties. TESS thereby opens up current integrated closed-system TS, allows for the better adaptation of TS to power systems with high shares of renewable energies, and lays the foundations for a smart grid with a variety of stakeholders. Furthermore, despite positive experiences in various pilot projects, one hurdle in introducing TS is their integration with existing tariff structures and (legal) requirements. In this paper, we therefore describe TESS as we have modified it for a field implementation within the service territory of Holy Cross Energy in Colorado. Importantly, our specification addresses challenges of implementing TS in existing electric retail systems, for instance, the design of bidding strategies when a (non-transactive) tariff system is already in place. We conclude with a general discussion of the challenges associated with “brownfield” implementation of TS, such as incentive problems of baseline approaches or long-term efficiency.

ncentive Effects Analysis on Primary and Secondary Teacher Incentive Policies in China

In recent years, many policies issued by central and local governments for primary and secondary school teachers in China are closely related to the incentive problems in their work. Based on the policy texts and empirical studies about teachers’ incentives, this paper discusses the incentive effects of teacher incentive policies. The outlines of this study are as follows: 1.Teacher incentive policies; 2. The incentive methods of teacher incentive policies; 3. Incentive effects of teacher incentive policies; 4. Teachers’ workloads and the effects of teacher incentive policies; and 5. Suggestions on teacher incentive policies.

Threat of policy alienation: Exploring the implementation of Open Science policy in research practice

Many European countries have introduced Open Science (OS) policies to improve the quality and efficiency of science and to increase economic and societal growth. Researchers’ perceptions and experiences of OS policies remain relatively under-investigated. This explorative study applies the policy alienation perspective to understand researchers’ perceptions of OS policy implementation. Analysis of survey responses indicates that researchers have difficulties in coping with OS policy and that they feel policy alienation from OS policy. Hence, researchers may be less willing to try to support OS policy implementation despite the fact that OS policies are motivated by the desire to enhance the excellence and quality of research. The findings address how the incentive problems lie not only in the research evaluation and academic credit systems but also in the policy–practice divide. These problems need to be solved in terms of participation in policymaking and in the knowledge production of ‘openness’ itself.

Beyond state capacity: bureaucratic performance, policy implementation and reform

There is a broad consensus that state capacity is central to economic and institutional development. But while the concept originated as a tool for macro-historical and comparative analysis, its success has led the term ‘capacity’ to become a default metaphor for discussing the quality of government bureaucracies. This paper discusses the limitations to conceiving of narrower questions of bureaucratic performance and policy implementation through the lens of the broad, aggregate concept of capacity. Whereas capacity refers to bureaucracies' hypothetical potential, this usually differs from their actual actions due to internal information and incentive problems created by bureaucracies' collective nature, and the constraints and uncertainty imposed by their multiple political principals. Capacity is a convenient shorthand term and is appropriate for some purposes, but it achieves this convenience by abstracting away from the mechanisms that determine bureaucratic performance and policy implementation. To advance the study of bureaucratic quality, researchers should seek to understand the implications of bureaucracies' collective nature, engage with contextual specificity and contingency in policy implementation, and focus measurement and reform efforts more towards actual performance than hypothetical capacity.

Asymmetric Reporting Timeliness and Informational Feedback

We examine the effects of asymmetric timeliness in reporting good versus bad news on price informativeness when prices provide useful information to assist firms’ investment decisions. We find that a reporting system featuring more timely disclosure of bad news than of good news encourages speculators to trade on their private information. Consequently, it generates a higher expected investment level and firm value. Our analysis generates predictions consistent with empirical findings and provides a justification for the more timely reporting of bad news in the absence of managerial incentive problems. This paper was accepted by Brian Bushee, accounting.

The Treatment of Horizontal Agreements Aimed at Solving Incentive Problems

If a group of horizontal rivals gets together to agree on a way to structure efficient production, are they violating competition law? The issue could arise where a group of producers of agricultural products gets together to form a cooperative or even where professionals in the same field get together in a partnership. On the face of it, each supply agreement between the producer and the cooperative or partnership is vertical, but the design of the collective rules, which govern for all, involves horizontal coordination. This article takes as the starting point the example of dairy cooperatives as they emerged in the later part of the nineteenth century as a solution to a challenge offered by new technology. We use the landmark contract law case of McEllistrim v. Ballymacelligott Cooperative to illustrate the ways in which competition law could be engaged when cooperatives are formed. Comparisons of Ireland and Denmark in the period leading up to the decision suggest that not only might the restraint be ancillary, but if not, it reduced costs, increased quality, and was welcomed by consumers (though these were in England rather than in Denmark or Ireland). The restraint also appears essential in some form, suggesting that either ancillarity or the application of Art. 101(3) Treaty on the Functioning of the European Union would have allowed the restraint to be used.