This paper establishes a theoretical framework to characterise the optimal behaviour of individuals who receive income periodically but make consumption decisions at frequent points during that period, when there is uncertainty with respect to prices and imperfect credit markets. We simulate the...

Models in behavioural finance have been developed to explain apparent anomalies in stock returns. A property common to a number of these models is that agents under react in the short run to public signals about future earnings. This contrasts sharply with the popular informal belief that stock...

This paper addresses the issue of how regulatory constraints affect firm's investment choices when the firm has the option to delay investment. The "RPI-x" rule is compared to a profit sharing rule, which increases the x factor in case profits go beyond a given level. It is shown that these...

Using microdata from a field survey of children in rural Andhra Pradesh, India, we estimate econometric models which aim to identify the key explanatory factors in the school versus out-of-school dichotomy. The approach differs from that of many other previous studies of child schooling, by...

The paper investigates the relationship between the policy of export requirements and special features of China's inward foreign direct investment (FDI), and examines how trade-related investment measures affect the investment decisions of multinational firms. A theoretical model is constructed...

Increasingly, in regional agreements, large economies offer lower trade barriers in exchange for cooperation in environmental, intellectual property and other issues by small economies. What is the effect of such agreements on multilateral trade liberalization? We show that, even in the absence...

This paper characterizes the conditions for risk aversion in cumulative prospect theory where risk aversion is defined in the strong sense (Rothshild Stiglitz 1970). Under weaker assumptions than differentiability we show that risk aversion implies convex weighting functions for gains and for...

The present paper investigates the portfolio allocation decisions of an investor with infinite horizon when available financial assets differ in their degrees of liquidity. A model with risk neutral agents allows us to endogenously determine the liquidity premium. With risk averse agents, we...

Economists wishing to analyse road congestion and road pricing have usually relied on link-based speed-flow relationships. These may provide a poor description of urban congestion, which mainly arises from delays at intersections. Using the simulation model SATURN, we investigate the second-best...