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on Utility Models and Prospect Theory |
| By: | Thai Ha Huy (University Paris 1, CNRS CES, Paris, France); Cuong Le Van (PSE, University Paris 1, CNRS CES, Paris, France); Manh Hung Nguyen (Toulouse School of Economics, LERNA-INRA) |
| Abstract: | We consider a general equilibrium model in asset markets with a countable set of states and expected risk averse utilities. The agents do not have the same beliefs. We use the methods in Le Van - Truong Xuan (JME, 2001) but one of their assumption which is crucial for obtaining their result cannot be accepted in our model when the number of states is countable. We give a proof of existence of equilibrium when the number of states is inï¬nite or ï¬nite. |
| Keywords: | No-arbitrage Conditions, the two-period wealth model, No Unbouded Arbitrage, Weak No Market Arbitrage |
| JEL: | C62 D50 D81 D84 G1 |
| Date: | 2008–07 |
| URL: | http://d.repec.org/n?u=RePEc:dpc:wpaper:2008&r=upt |
| By: | Tu Thuy Anh (Foreign Trade University, Hanoi, Vietnam); Dao Nguyen Thang (National Economics University, Hanoi, Vietnam); Hoang Xuan Trung (National Economics University, Hanoi, Vietnam) |
| Abstract: | <p>In this paper, we explore employment decision of Vietnamese farmers as having five choices: staying on the farm exclusively, staying in the village but partially engaging in local off-farm activities, and working outside the home region for a certain period, in which destination options are Hanoi, Ho Chi Minh City and Other which combines the remaining places. This choice model departs from the existing literature in several aspects. Firstly, previous papers focused mainly on the population that takes off-farm jobs or migrate, that are dichotomous employment choice. More importantly, most existing papers using the random utility model ignore factors in the destination areas. They assume implicitly that either migrants choose their destination randomly or that all migrants face exactly the same migration choices. In our paper, we allow multi-destination possibility, and examine impacts of distance, wages and social network on migrants' decisions. The indirect utility of a given migration option is modeled as a function of choice attributes and individual specifics. Choice attributes for each migration option include wage in destination area, transport between origin and destination area which is proxied by the corresponding distances, and social network of the migrants, while those for farm and non-farm option mainly include agricultural prices and local job creation opportunities. Individual specific include age, education, gender, marital status, share of children and elderly in the household.</p><p> The data used in this research are the Vietnam Living Standard Survey (1998) which is until now the only available data set that provides information on the migrant destinations. We start by estimating determinants of wage in destination areas using full information maximum likelihood to overcome selection bias. Then, we predict wages of those who do not currently work for wage. Finally, we run a conditional logit estimation with predicted wage being one of the explanatory variables to examine probability of migration to each location choice and of taking off-farm employment. Our results show that wage and network have significantly positive effects on all migration choices, while distance negatively affects them. Impact magnitude however differs across destination locations.</p> |
| Keywords: | Migration, choice attributes, off-farm employment, random utility model, conditional logit |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:dpc:wpaper:2208&r=upt |
| By: | Parimal Bag (National University of Singapore, Singapore.); Santanu Roy (Southern Methodist University, Dallas, Texas.) |
| Abstract: | Under incomplete information about (independent) private valuations of a public good, we establish sufficient conditions under which, despite the incentive to free ride on future contributors, the expected total amount of voluntary contributions is higher when agents contribute sequentially (observing prior contributions) rather than simultaneously. We establish this in a conventional framework with quasi-linear utility where agents care only about the total provision of the public good (rather than individual contribution levels) and there is no non-convexity in provision of the public good. We allow for arbitrary number of agents and fairly general distribution of types. |
| Keywords: | Contribution games, public good, incomplete information. |
| JEL: | D73 H41 L44 |
| Date: | 2008–08 |
| URL: | http://d.repec.org/n?u=RePEc:smu:ecowpa:0805&r=upt |
| By: | Das, Sanghamitra; Mukhopadhyay, Abhiroop; Ray, Tridip |
| Abstract: | Using primary household data from India we estimate family utility function parameters that measure the relative importance of consumption, schooling of children and health (both physical and mental) and find that mental health is far more important than consumption or children’s schooling in determining household utility. We then estimate that the monetary equivalent of the welfare loss to an HIV family is Rs. 66,039 per month, whereas the losses to an HIV male and female are Rs. 67,601 and Rs. 65,120 per month respectively. These figures are huge given that the average per capita consumption expenditure of the families in our sample is just Rs. 1,019 per month. This huge magnitude is not surprising as it includes private valuation of one’s own life as well as the cost of stigma for being HIV positive. In addition, the annual loss from external transfers (through debt, sale of assets and social insurance) accounts for 2.6% of annual health expenditure and 0.12% of GDP in 2004. The significance of mental health in welfare evaluation can be gauged from the fact that, for an average HIV family, a whopping 74% of the welfare loss comes from aspects of mental health. |
| Keywords: | HIV/AIDS; Mental Health; Physical Health; Welfare Loss; Family Preference. |
| JEL: | C10 O10 D10 I10 |
| Date: | 2008–02–27 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:9946&r=upt |