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An optimal control model shows how a jurisdiction can tax tourists in a way that maximizes its revenues net of its costs in serving tourists: By relating its tax rate to its popularity with tourists. When its popularity waxes, it should raise the tax rate; when its popularity wanes, it should lower the tax rate. Extensions consider the effects on the tax of the discount rate, tourist prices, tourist congestion, and of the rise in the relative cost of services that is due to rising productivity in manufacturing. Computer simulations generate a concave tax path for a small city launching a tourism program.

This paper investigates the behaviour of bodies or organizations, operating in a stochastic environment, where there is a delegated decision maker. A crucial decision is when to delegate to another decision maker. The problem may be intrapersonal, as occurs when there are endogenously changing tastes, or interpersonal where delegation is intuitionally necessay or where decison making is 'as if' there is delegation. This is possible if decision making is through voting - an existence theorem is given. Decisions lead to shifts in control involving option losses; forward-looking recognition of this leads to the endogenous creation of hysteresis. The fact that the behaviour of other agents leads to hysteresis makes it optimal for any single agent to introduce more hysteresis. Organisations or bodies with many possible decision makers operate, in subsets of the state space, in one of two regimes, one where hysteresis is small and the other where hysteresis is large.

We study how natural resources can feed corruption and how this effect depends on the quality of the democratic institutions. Our game-theoretic model predicts that natural resources lead to an increase in corruption if the quality of the democratic institutions is relatively poor, but not otherwise. We use panel data covering the period 1980 to 2004 and 99 countries to test this theoretical prediction. Our estimates confirm that the relationship between resource abundance and corruption depends on the quality of the democratic institutions. In particular, resource abundance is positively associated with corruption only in countries that have endured a nondemocratic regime for more than 60 percent of the years since 1956. Our main results hold when we control for the effects of income, time varying common shocks, regional fixed effects and various additional covariates. They are also robust to various alternative measures of natural resources, corruption and the quality of the democratic institutions. These findings imply that democratization can be a powerful tool to reduce corruption in resource-rich countries.

This paper argues that rural opposition to land reform in transition Russia is a consequence of individually rational decisions by members of former state and collective farms about whether to support further land reform, or preserve the status quo, collective farming. Evidence from survey data shows that despite the government’s efforts to promote a land market and independent farming in the 1990s, preferences in 1996 still favoured the largely unreformed status quo. The observed retention of collective farming is so widespread as to block both the development of a land market and restructuring. The visible consequence of stalemated reform has been persistent agricultural output decline and widespread bankruptcy of large farm entities, without any significant rise of independent farming. This paper formalises a dynamic argument for rational opposition to land reform, given the existence of uncertainty about the costs that individual cultivators will incur. It turns out that the consequences of initial decisions could have decisive impact on rejection of reform later on. The paper discusses, further, the relevance of the historical parallel during the post-Emancipation and Stolypin eras when peasant communes resisted enclosures and restructuring of rights to land. Opposition, seemingly irrational, recurred and lasted throughout the reform era. It can be seen that opposition to reform at that time, too, was individually rational, given incomplete property rights reform; the state also bears responsible in contemporary and historical times for policies that tended to help preserve the status-quo. The state failed to improve the unclear property rights which dampened reform incentives early on in the reform process both historically and in the rural transition environment.

There are a number of single-profile impossibility theorems in social choice theory and welfare economics that demonstrate the incompatibility of unanimity/dominance criteria with various nonconsequentialist principles given some rationality restrictions on the rankings being considered. This article is concerned with examining what they have in common and how they differ. Groups of results are identified that have similar formal structures and are established using similar proof strategies.

Using a unique set of electoral rules present in the Austrian state of Vorarlberg, we explore the question ofwhether direct election of the mayor affects the size of local governments. Using difference-in-differences estimation and propensity score matching, we find evidence that direct elections of the mayor are associated with less expenditure on public administration and public personnel and higher expenditure in the visible categories of spending, i.e., transportation infrastructure and economic subsidies to firms and individuals.

This analysis deals with reform obstacles in general and with the particular challenges of institutional change under the conditions of Southern Europe in particular. It presents a survey on the possible drivers of reform resistance. This includes very different qualities of approaches ranging from classical economics and political-economic explanations to more innovative explanations linked to behavioral econom-ics. This classifying approach on potential reform obstacles is novel with respect to its broadness and systematization and offers a basis for the measurement and empirical testing. The subsequent part analyzes qualitatively and quantitatively to which extent the “Southern European regime” may imply a particular relevance of some of the potential reform obstacles classified before. While a generalization on common factors is always at risk of oversimplification, the literature clearly points towards some relevant similar-ities which contrast the southern EU member countries with the rest of Europe. Reform ability profiles quantify several of the reform obstacles (or reform drivers) to compare EU countries in their likely reform predisposition. These profiles confirm par-ticular Southern European weaknesses which tend to reduce the political-economic feasibility of long-term reforms: a low effectiveness in poverty protection, high inter-temporal discounting and uncertainty avoidance, a poor information level of the popu-lation and deeply shattered trust in national institutions. In a microeconometric analysis based on Eurobarometer survey data, the analysis leaves the highly aggregated level and looks into the individual heterogeneity in reform acceptance. It is shown that several of the reform obstacles identified in theory are also empirically correlated with the individual inclination to accept reforms. The perception of procedural fairness (i.e. satisfaction with the way democracy works) to-gether with trust are the keys for the acceptance of reforms. The impression that out-siders, contrary to theoretical expectations, do not push hard for institutional change is confirmed by the micro-data. These findings are not only helpful to understand the difficulties and constraints of reform strategies. They may also back the development of more convincing crisis strategies. At least for those countries where the trust in national elites, public admin-istration and the democratic system is almost fully eroded, a strong European in-volvement in guiding the reform process may help to foster acceptance. Of course, this only holds as long as the EU institutions have a trust advantage over national institu-tions – which empirically seems to be the case for some Southern European countries. Furthermore, there is a clear priority for a particular reform of the Southern European welfare state which should accompany the otherwise required cutback of benefits and privileges. This priority relates to a system of an effective poverty protection. Without a credible minimum insurance system it is unrealistic to expect that important groups of the population are willing to give up their old privileges. Finally, an important chal-lenge is to win the support of current outsiders whose reform supporting potential is so far not being realized.

This paper studies the political economy of a basic income (BI) versus a means tested welfare scheme. We show in a very simple setting that if society votes on the type of system, its generosity as well as the "severity" of means testing (if any), a BI system could only emerge in the political equilibrium under very strong and empirically implausible conditions. Instead, the political process leads to a means tested system. The necessity to draw political support does affect the design of the system, but it only implies that means testing becomes less severe so that benefits are extended also to the middle classes. However, a fully universal system is rejected by a majority.

This paper studies the role of direct democracy in ensuring efficient and cost- effective provision of goods and services in the public sector. The sample consists of the population of municipalities in the German State of Bavaria, where in the mid-1990s considerable direct democratic reforms granted citizens with wide opportunities to directly participate in local affairs through binding initiatives. Using information on the municipal resources and the municipal provision of public goods, and applying a fully non-parametric approach to estimate local government overall efficiency, the analysis shows that more direct democratic activity is associated with higher government efficiency. This result suggests that more inclusive governance through direct decision-making mechanisms may induce more accountable and less inefficient governments.

For over twenty years the Conference of the Parties (COP) to the United Nations Framework Convention on Climate Change (UNFCCC) have been discussing and negotiating over who should do what about the ever-increasing emissions of greenhouse gases (GHGs). This year the COP meeting in Paris will see another attempt to reach a binding international agreement on the reduction of GHG emissions, along with deciding on measures to respond to the now inevitable damages from human induced climate change. Policy failure is perhaps most evident in the designation of 2 degreesC as an acceptable target for global warming, associated by the UNFCCC with stabilising GHGs at 450 part per million (ppm) CO2 equivalent, a level which has in fact already been exceeded. Response now means substantive adaptation, and that raises issues of compensation for those having costs imposed upon them including dislocation.

Drawing on the recognition that questions of discourse and power are vital components in analysing the public participation in environmental governance, this paper examines the ways in which dominant scientific discourses about the Earth's climate inform the types of public talk facilitated in and by mini-publics, particularly when they are 'scaled up' to address environmental issues such as climate change. World Wide Views on Global Warming (WWViews) serves as a case study. Conceived and organised by the Danish Board of Technology, WWViews was a historically unprecedented public forum in which participants, invited from a range of nations, were given the opportunity to deliberate on key themes addressed in the negotiations taking place during the United Nations Convention on Climate Change in Copenhagen (COP 15). The overarching purpose of this analysis is to invite reflection on the practices and assumptions that serve to make up publics in relation to issues that have been framed, predominantly, as scientific, universal and global.

There are many goals an instructor may wish to accomplish in a course on economic principles. For us one goal should be the education of a generation of sensible and active members of civil society. This is an ambitious goal: it requires that students internalize the economic way of thinking and learn to exercise active citizenry. After experimenting with a variety of methods, we have concluded that requiring students to write an op-ed is the most conducive to the development of the economic way of thinking. Here we share what we have learned in the process, hoping that the pedagogical capability of writing an op-ed will encourage others to adopt the assignment into their classrooms.

Producción Científica, In this paper we study to what extent majorities based on difference in support leads to triple-acyclic collective decisions. These majorities, which take into account voters’ intensities of preference between pairs of alternatives through reciprocal preference relations, require to the winner alternative to exceed the support for the other alternative in a difference fixed before the election. Depending on that difference, i.e., on the threshold of support, and on some requirements on the individual rationality of the voters, we provide necessary and sufficient conditions for avoiding cycles of three alternatives on the collective decision., Ministerio de Economía, Industria y Competitividad (ECO2012-32178), Junta de Castilla y León (programa de apoyo a proyectos de investigación – Ref. VA066U13)

Whether and how to intervene in nature to maintain or restore values is a contested issue among scholars within ecological restoration, protected area management and environmental ethics, but also among the practitioners and public officials who shape how nature is actually managed. This article analyses how the issue of intervention is debated in the case of protected forest area management in Sweden, a country with a traditionally strong preservationist discourse centred on maintaining areas as ‘untouched’ as possible. The analysis shows how this traditional view is challenged by a more interventionist discourse centred on adaptive management for biodiversity, but also how there are still attempts to reaffirm a preservationist discourse and practice. The implications of this as-yet-unsettled debate are discussed, concluding by pointing to a need to examine critically not only the older preservationist discourse and ‘naturalness’, but also the ascendant interventionist discourse and ‘biodiversity’.

When individuals trade with strangers, there is a temptation to renege on contracts. In the absence of repeated interaction or exogenous enforcement mechanisms, this problem can impede valuable exchange. Historically, individuals have solved this problem by forming institutions that sustain trade using group, rather than individual, reputation. Groups can employ two mechanisms to uphold reputation that are generally unavailable to isolated individuals: information sharing and in-group punishment. In this paper, we design a laboratory experiment to distinguish the roles of these two mechanisms in sustaining group reputation and increasing gains from trade. We nd that information sharing encourages path dependence via group reputation; good (bad) behavior by individuals results in greater (fewer) gains from exchange for the group in the future. However, the mere threat of in-group punishment is enough to discourage bad behavior, even if punishment is rarely employed. When combined, information sharing and in-group punishment work as complements; the presence of ingroup punishment encourages cooperation early on, and information sharing reinforces this behavior over time.

Preston's (2011) challenge to the moral presumption against geoengineering is applied to carbon dioxide capture and storage (CCS) in Scotland, United Kingdom. Qualitative data is analysed to assess if and how Preston's arguments play out in practice. We argue that the concepts of 'lesser evil' and prioritising human well-being over non-interference in natural processes do bring different value positions together in support of CCS, but that not all people see short-term carbon abatement as the 'least worst' option or a suitable way to prioritise human well-being.

A group of individuals is choosing an individual (the winner) among themselves, when the identity of the deserving winner is a common knowledge among individuals. A simple mechanism of voting by veto is proposed as an alternative to the mechanism studied by Amorós (2011). Like Amorós'(2011), the suggested mechanism implements the socially desirable outcome (the deserving winner is chosen) in subgame perfect equilibria.

We present an analytical framework to compare media bias under direct and indirect government control. In this context, we show that direct control can lead to a smaller bias and higher welfare than indirect control. We further show that the size of the advertising market affects media bias only under direct control. Media bias, under indirect control, is not affected by the size of the advertising market.

Within the EU, Germany took a pioneering role in the production and promotion of biofuels. To explain this role the article analytically examines public discourses on biofuels. The analysis points out how the subject is interpreted and positioned by relevant actors and thus results in a specific public perception of biofuels in Germany. This perception in turn influences political decision-making processes. Since the analysis of discourses contributes to a better understanding of today's biofuel policy in Germany, the article characterises the biofuel discourse during the genesis of this policy. Additionally, it analytically traces changes of discourse constellations in the course of the biofuel policy path.

The Borda method is a form of preference voting where the rankings by the voters are converted into scores using weights for the ranks, and the society's preference order on the alternatives is determined by the order on the scores obtained by each alternative. In this paper we show that once the individuals' preference orders are given there is at least one preference order that cannot be the societal preference order whatever is the choice of weights for the ranks.

Condorcet's paradox is one of the most prominent results in social choice theory. It says that there may not exist any alternative that a net majority prefers over every other alternative. When outcomes need not be deterministic alternatives, we show that a similar paradox still exists even if preferences are dichotomous. Thus relaxing the requirement of discrete alternatives does not help in circumventing Condorcet's paradox. On the other hand, we show that a fractional/randomized version of Black's Median Voter Theorem still holds for single-peaked preferences.

The notion of 'resilience' is rapidly emerging as a research topic in its own right, with the notion of 'social resilience' rapidly gaining importance. Yet, due to the relative novelty of the research field, discussions about processes of social resilience are not yet fully developed, especially with regard to how the inbuilt 'memory' of a local community helps shape resilience pathways (social memory). Interlinkages between social memory and community resilience are the focus of this study, with emphasis on analysis of the importance of rites, traditions and social learning processes for shaping community resilience/vulnerability.

Happiness is increasingly named as a target of policy measures. Apart from the confusing fact that the attention-grabbing catchword ‘happiness’ refers to ‘life satisfaction’ in most cases, this approach appears preferable to alternatives as utility functions, magic polygons or to the opaque decisions of politicians. A life-satisfaction-oriented policy would prove welfare-improving, focusing on fair distribution of income and wealth, social goals and institutional goals such as health, freedom and social capital. However, these advantages would come at a price: medium-term life satisfaction goals would clash with longer-term aspects resulting from behaviour which is not aimed at sustainability, yet has a direct impact on it. The second problem is that the respondents can misjudge the satisfaction resulting from their choices, and may not be aware of the (longer-term) consequences of their decisions. Furthermore, policy cannot control some of the central elements of life satisfaction, which means that citizens will sooner or later discover that policy cannot live up to its promise. ‘Happiness’ as a policy goal cannot relieve politicians from constantly assessing trade-offs and sustainability and searching for compromises among the conflicting ideological positions.

Empirical models of retrospective voting primarily employ standard monetary and financial indicators to proxy for voters’ utility and to explain voters’ behavior. We show that subjective well-being explains variation in voting intention that goes beyond what is captured by these monetary and financial indicators. For example, individuals who are satisfied with their life are 1.6% more likely to support the incumbent; by contrast, a 10% increase in family income leads to a 0.18% increase in an individual’s support of the incumbent. We use difference-in-differences analysis to identify how voter intention is affected by a negative shock to well-being: the death of a spouse. Individuals who experience the death of a spouse are around 10% less likely than those in the control group to support the incumbent. The results hold even if elected officials’ policies (health care, social welfare) cannot reasonably be blamed for the death.

I construct a theory of foreign interventions in which the political preferences of the foreign country are determined by its different economic ties with alternative local groups. Stronger economic ties make a group more influenceable from the outside, and thus more willing to grant economic and geopolitical concessions to the foreign country. In the model, foreign interventions in favor of the most influenceable group are counterweighted by a natural tendency of the home country's political system to bring to power the least influenceable group. While the foreign country can use its economic power to influence the geopolitical alignment of the home country, the outcome of this endeavor may be compromised by regime change. In particular, when concessions to the foreign country cannot be renegotiated efficiently (possibly because of reputational concerns in the foreign country), regime change may lead to a loss of geopolitical alignment, even if all groups are ex-ante identical in terms of their geopolitical preferences. These results may help interpret the pattern of Western interventions in the 20th century, as well as the role of economic nationalism in the political economy of regime change. In particular, they may help understand the role of the Cold War in strengthening the West's preference for the status quo in many countries. I provide historical evidence in favor of my arguments.

This paper develops a theory of sequential lending in groups in micro-finance that centers on the notion of dynamic incentives, in particular the simple idea that default incentives should be relatively uniformly distributed across time. In a framework that allows project returns to accrue over time, as well as strategic default, we show that sequential lending can help resolve problems arising out of coordinated default, thus improving project efficiency vis-a-vis individual lending. Inter alia, we also provide a justification for the use of frequent repayment schemes, as well as demonstrate that, depending on how it is manifested, social capital has implications for project efficiency and borrower default. We next examine the optimal choices for the MFI and derive conditions for the optimality of the group lending arrangement. Our framework also provides for some plausible hypotheses as to why there has been a recent transition from group to individual lending.

Aristotle’s economics of exchange: (a) Ideally, reciprocal justice in bilateral bargaining to minimize expenditure given utility levels results in Pareto-efficient, envy-free, equitable outcomes. (b) Practically, bargaining under the threat or actual recontracting may act as a surrogate of reciprocal justice, leading to an N-person (N-dimensional) contract topology. (c) But, recontracting is subject to practical limitations too, in which case near-reciprocal justice/general equilibrium outcomes may be fostered if, as a surrogate of recontracting, modesty in interaction is exhibited in an evolutionarily-stable-strategy fashion. (d) That is, incomplete recontracting amounts to asymmetric agent-type information, which in turn lays the ground for injustices; the same lack of information prevents rectificatory justice from being efficient and hence, modesty can be efficient only if it operates as a social norm and hence, only in a modest polity, which can be no other than democracy. The modern-day terminology used in connection with Aristotle sounds bizarre, but by this is meant that his thinking and answers on issues preoccupying social science for centuries, do not differ much from modern-day approaches to the same issues.

This study explores the relationship between people's values, loci of control and pro-environmental behaviours. 'Locus of control' refers to the extent to which people attribute control over events in life either to themselves or to external sources beyond their influence: in the former case, the individual is described as having an internal locus of control, and in the latter, an external one. The study hypothesised, and subsequently concluded, that self-transcendent values and internal loci of control were positively related to pro-environmental behaviours, and also that loci of control moderate the link between people's values and behaviour; people with a low degree of self-transcendence values behave pro-environmentally if they have an internal locus of control.

Transfers can do good; however, they can also result in massive failures. This paper presents a model that highlights the ambiguous nature of the impact of transfers on local endowments of social capital. It then describes an empirical investigation that illustrates that the receipt of EU structural funds causes a deterioration of the endowments of trust and cooperation in the subsidized regions.

This paper uses inter-country panel data from 1990 through 2010 to examine how the occurrence of natural disasters affects corruption within the public sector. For a closer analysis, disaster is classified into various categories, including general floods, other floods, tropical storms, other storms, earthquakes, volcanic eruptions, and landslides. Furthermore, this paper explores whether natural disasters have different impacts on corruption levels in developed and developing countries. The study reveals a number of novel findings. (1) Natural disasters that cause substantial damage increase public sector corruption in both developing and developed countries. (2) Natural disasters have a greater impact on public sector corruption in developed countries than in developing countries. (3) In developed countries, natural disaster frequency has a significant impact on the level of corruption. Hence, foreseeable disasters increase corruption in general. In developed countries, an incentive may exist to live within disaster-prone areas because of the potential for disaster compensation payments.

The model presented is proposing an approach that could verify the nonlinear behaviour during a crisis, such that to quantify and predict potential discontinuous behaviour. In this case, the crisis behaviour associated with financial funds reallocation among various credit instruments, described as memes with the sense of Dawkins, is shown to be of discontinuous nature stemming from a logistic penetration in the financial behaviour niche. Actually the logistic penetration is typical in creating cyclic behaviour of economic structures as shown by Marchetti and others from IIASA. A Fokker-Planck equation description results in a stationary solution having a bifurcation like solution with evolution trajectories on a ‘cusp’ type catastrophe that may describe discontinuous decision behaviour.

This paper is concerned with the manipulability of common voting rules, in particular with the Borda rule and other scoring rules. It is shown that, if one deviates from the assumption of complete information of the voters about the preference profile in the slightest possible manner, the Borda rule may "punish" a manipulator in the sense that the manipulation might lead to a worse outcome for the manipulator than had she told the truth. Voting rules showing this kind of behavior can be considered to be more manipulation resistant than other voting rules especially if we think about sufficiently risk averse voters.

We provide a new characterization of binary relations that have an open graph. This result is applicable to any binary relation on any topological space. The relationship of this new theorem to several known results for binary relations used for preference representation, namely strict partial orders (SPOs), weak orders (WOs), and preorders is described.

To examine the consequences of allowing individual to violate full rationality in collective decision making, this article discusses the possibility of aggregating quasi-transitive preferences in the Arrovian framework. Quasi-transitive valued aggregating functions are discussed and characterised. A characterisation of the weak Pareto extension rule is also achieved as a corollary.

In this note a new contest success function is derived that results in investments in equilibrium that are proportional to the square of the rent, which implies a dissipation rate that is not independent of, but increasing in the rent. Only for a contest success function with this property can it be optimal to use least squares regression models to determine transfers for a risk adjustment scheme (a regulatory means to reduce risk selection in health insurance markets). A second property of this new contest success function is that winning probabilities do not depend only on the ratio or only on the difference of investments, but on both the ratio and the difference; this may make it more suitable than common contest success functions for some situations like corruption or getting tenure at a university.

A special topic covered in the research done in recent years is related to SME innovation. Because information is the key resource and output, the intangible economy is the source of economic value which affects all the markets transactions. This study is an exploration of the dynamics of the present Romanian firm's valuation in the financial markets landscape. I offer first an overview of the characteristics of the market value of firms and of the general impact of the recent crisis on the Romanian SMEs. I further outline the main constraints faced by the firm's market value in the specific Romanian context and sketch current trends of Romanian small enterprises. I employ hereby a holistic and monetary method - Tobin's Q - which I state as rewarding when investigating the evolution of market value of the Romanian small enterprises, and apply it to a set of empirical data, in order to assess the evolution of these Romanian small enterprises during the period 2009-2013. Based on the results of this analysis, I formulate in the conclusions a set of recommendations which are aimed to support the consolidation of the Romanian firm's value in the marketplace. Practitioners and academicians can benefit from this study’s insights.

Reaching a decision on the policy interest-rate often requires members of a monetary policy committee (MPC) to form a consensus. To model this phenomenon, a formal deliberation mechanism that captures how committee members achieve consensus à la Morris DeGroot (1974) is employed. Numerical simulations demonstrate how DeGroot's framework informs how so-called autocratically collegial, genuinely collegial, and individualistic MPCs (Blinder, 2007) reach agreement.

The aim of this paper is to study the likelihood of violations of reversal symmetry under two common voting rules, plurality and instant runoff. We show that plurality is much more sensitive to this phenomenon.

In Italy, the corruption is a social phenomenon affecting the health sector. In this paper we show that the impact of corruption on Italian health expenditure is positive, along with ageing population, technological change and supply factors inducing demand in pharmaceuticals and hospitalization. Moreover, the empirical analysis shows that corruption affects pharmaceutical expenditure and conventionated private hospital expenditure, suggesting a relation between corruption and the governance of Italian health system.

This article develops a theoretic analysis of the delicate relationship between wealth, economic confidence and preferences for redistribution. In our model, citizens are concerned with the risk of unemployment, but are also concerned about current income. A first result shows that this relationship depends basically on two aspects of individual's preferences. If individuals care most strongly about job security, then the poorer they are and the less confident in the economy they are, the more government they favor. Conversely, if individuals care most strongly about income, then the poorer they are and the less economic confidence they have, the less government they want. This new result suggests that the one-way result in Meltzer and Richard (1981) may not always be true. Therefore, whether citizens favor more or less government as the median voter's economic confidence changes becomes an empirical issue. Furthermore, the article analyzes what happens when there is an aggregate shock that affects overall confidence in the economy. In that case, regardless of the tradeoff job security-income, society unambiguously favors bigger government if it suffers an aggregate shock that reduces overall economic confidence. Conversely, if society receives an aggregate shock that improve overall economic confidence, it unambiguously favors smaller governments.

We consider the problem of finding a "fair" or "acceptable" spanning tree in an undirected graph when each member of a group of agents proposes a spanning tree. An "acceptable" spanning tree in that respect is a spanning tree which does not differ in more than a given number of edges from each of the single proposals. We show that, from a computational perspective, determining if such a spanning tree exists is a difficult (NP-complete) problem.

The purpose of this research is to examine the interaction between financial stress and conflict risk having impacts on fi nancial instruments in capital markets within an interdisciplinary frame. The Fuzzy TOPSIS method is applied in order to analyse effects of conflict hazard on capital markets and fi nancial instruments in the E7 economies and to demonstrate the best possible ranks of the E7 economies based on performance evaluation criteria. In order to obtain the dynamics of data as to develop a suffi cient reference bases for expert opinions, conflict hazard index and fi nancial stress index have been structured. The empirical results confirm that there is strong relation between fi nancial stress index and confl ict hazard index for the E7 economies. The fundamental conclusion demonstrates the effects of the financial and conflict risks for the stock selection in the E7 economies by the criteria derived from the Financial Stress Index and Confl ict Risk Index.

In this article authors tries to demonstrate specific factors that affect functioning of Internet pressure groups. The main thesis is that the pressure groups of the virtual sphere increase its impact through the network effect and asynchrony of the Internet. To support a theory with facts, authors presented some pressure groups that has been active during anti-ACTA protests and political turmoil in north Africa, known as “Arab Spring”.

The history of the world is strewn with the remains of societies whose institutions failed to adapt to ecological change, but the determinants of institutional fragility are difficult to identify in the historical record. We report a laboratory experiment exploring the impact of an exogenous ecological shock on the informal rules of property and exchange. We find that geographically-induced tribal sentiments, which are unobservable in the historical record, impede adaptation post shock and that inequality declines as wealth and sociableness increase. Quantitative measures of individual and group sociality account for some of the differences in successful or failed adaptation.

This article reviews 'Pillars of Prosperity' by Timothy Besley and Torsten Persson and 'Why Nations Fail' by Daron Acemoglu and James Robinson. Both books are focussed on the role of institutions in determining the wealth of nations and the review compares and contrasts the different approaches contained in the two texts. The review also attempts to locate the texts within the broader literature in development and political economics and to link them to other recent work in these areas.

We assess the effect of constituents’ preferences on legislators’ decisions within a quasiexperimental setting: In the Swiss referendum process, citizens and legislators reveal their preferences for legislative proposals. We match roll call votes of all Swiss legislators on 102 legislative proposals with revealed constituents’ preferences on exactly the same issues from 1996 to 2008. The setting allows us to quantify the quality of parliamentary representation and we identify conditions which affect convergence between constituents’ preferences and legislators’ decisions. Results show that a legislator’s probability to accept a law proposal increases by 16.8 percentage points when district voters accept the proposal.

Deliberative processes provide an important alternative input to environmental politics as they may, in contrast to often used market simulations, provide an arena for 1) discussion of lay participants' values, 2) articulating arguments grounded in other values than consequentialistic, and 3) capturing weakly comparable values. A case study of a Citizens' Jury (CJ) on genetically modified plants was used to investigate how the framing of the process affected the attitude formation among the citizens. The formal set up of this specific CJ made value discussions less relevant. While it opened for value plurality, it failed to facilitate the articulation of weakly comparable values.

This paper examines whether exit favours maximal or minimal differentiation within an infinite horizon supergame with discounting played by three firms. With more than two firms, the problem of which firm exits the market is similar to a coalition formation one. Solving this coalition formation problem, we obtain that exit favours maximal differentiation when reentry is costless. When reentry is unprofitable, exit favours minimal (maximal) differentiation if firms' production capacity is large (small) as compared to the market size.

The oscillatory behavior of GDP and its components leads to a Fourier transform analysis that results in the eigen values of the dynamic economic system. The larger values are dominating the transient behavior of the GDP components and these transients are discussed along with the specific behavior of each component. The second order differential equations are determined, for each component, to describe the oscillatory behavior and the transient resulting from a step excitation. The natural frequencies are determined and the correlation of pairs of components’ cycles result in ‘beats’ process where the modulated wave cycles are compared and discussed. Based on these correlated influence terms the solutions of the differential equations of each component are determined along with their evolution in the phase space and with the specific Lagrangian. The possible occurrence of dynamical behavior basins for GDP is explored, associated to time interval least action considerations. Important conclusions are drawn from this analysis on the dynamics of GDP and its components, in terms of general versus local equilibriums and their evolution.

The intervention of local elites is often cited as an impediment to policy implementation in many developing countries. In this paper, we present initial results from an original primary household dataset from eight tehsils of rural Punjab, Pakistan. We examine descriptive statistics on patron-client interaction and correlations between household characteristics and that relationship. The study raises some key findings. First, households report connections with a range of officials; they interact most heavily with local officials, but a large number of households also report interacting with their provincial and national politicians. Second, many households report receiving active assistance both from local officials and from provincial and national politicians in accessing certain state services, in particular in applying for national identity cards. Third, households report links with many patrons outside their own biraderi or clan. Fourth, vulnerable households, such as landless and female-headed households, appear less likely to interact with and less likely to receive assistance from patrons, suggesting that patronage activity could increase the inequality of outcomes. Fifth, better-off households appear more likely to assist patrons in a range of areas. Finally, local officials and politicians had tended to recommend candidates in the last election, and rural households were strongly convinced that their vote was not secret from their patrons or officials. This is possibly consistent with patronage-based politics and bloc voting.Keywords: Patron, client, rural, Pakistan.JEL classification: P16, D7.1. IntroductionThe activity of local elites, such as powerful landlords, is frequently cited as a major challenge to social and development interventions in rural areas of many developing countries. Local elites are sometimes said to block efforts at rural development or social assistance because their power is threatened by others helping "their" villagers. Alternatively, they are described as diverting the benefits of social or government programs to those in their families or social networks (elite capture). They may also play a role in wider distribution while reaping the personal or political benefits of acting as a benefactor in securing goods and services from donors or the central government on behalf of their clients. Rural Pakistan is thought to be a prime example of such relationships: indeed, it is even frequently described as a "feudal" society. Analytical work in political economy substantiates these concerns: Cheema, Mohmand, and Patnam (2009) have demonstrated the importance of local elites in this context, and the persistence of their power to resolve disputes and mediate between citizens and the state from the colonial period to the present.However, donor and government programs often fail to take this apparently very significant feature of rural societies into account when designing interventions. For example, Mansuri and Rao (2004), in their critical review of community-driven development initiatives, point out that the question of how the "community" is represented in decision making is critical and underscrutinized. In general, the decisions taken are highly subject to local power dynamics that might completely escape the funder's attention. The relationships between local elites and other community members may, however, play a major role not only in these types of decentralized programs but also in the de facto distribution of more centralized state programs through patronage networks of interaction between political actors and local elites.Conversely, and potentially harder to observe, patrons may play a role in wider distribution while reaping the personal or political benefits of presenting themselves as benefactors providing goods and services. Thus, interventions can affect local power dynamics in ways that donors and central governments might not be sufficiently aware. …