Fall 2017 Seminars

For more information contact Christine Crago (ccrago "at" resecon.umass.edu, 545-5738).

On Thin Ice: Risk, Return and Crash
Friday September 15
3:30-5:00 pm  • 303 Stockbridge Hall
Dr.Tobias Rötheli, University of Erfurt

Abstract 
This paper describes results from a new experiment studying determinants and effects of economic risk-taking. In each session four subjects choose three slots for ice fishing on their portion of a frozen lake. The farther out on the lake the higher are the returns but also the higher is the risk of a crash and a loss. This setup permits us to investigate how transparency and incentive structures – two issues intensively debated in policy circles – affect risk taking and vulnerability to crashes. Our results indicate that increasing transparency of choices raises output and reduces the frequency of crashes whereas introducing a steeper return-risk profile has the opposite effects. Bounded rationality in the sense of naïve risk taking does not explain crashes. Instead, behavioral traits of subjects regarding risky choices and their distribution across subjects help to understand economic performance and frequency of crises.

Download paper HERE

License Complementarity and Package Bidding: The U.S. Spectrum Auctions
Friday September 29
3:30-5:00 pm  • 303 Stockbridge Hall
Dr. Mo Xiao, University of Arizona

The Environmental Bias of Trade Policy
Friday October 20
3:30-5:00 pm  • 303 Stockbridge Hall
Dr. Joe Shapiro, Yale University

Abstract
This paper documents a striking and new fact, then analyzes its causes and consequences: in most countries and years, import tariffs and non-tariff barriers are substantially lower on dirty than on clean industries, where an industry's “dirtiness” is defined as its carbon dioxide (CO2) emissions per dollar of output. In other words, current trade policy within most countries creates a global implicit subsidy to CO2 emissions, and so contributes to climate change. The greater protection of downstream industries, which are relatively clean, effectively accounts for this implicit subsidy. The downstream pattern can be explained by a model where industries lobby for low tariffs on their intermediate inputs but final consumers are less well organized.

Using Random Utility Structural Demand Models to Infer the Value of Quality Information
Friday October 27
3:30-5:00 pm  • 303 Stockbridge Hall
Dr. Sofia Villas-Boas, University of California Berkeley

Information and Environmental Disasters: Valuing Public Risk Perception Regarding the Deepwater Horizon Oil Spill with Patrick Walsh

December 8
3:30-5:00 pm | 303 Stockbridge Hall  
Kelly Hellman (PhD job market candidate), Resource Economics

Abstract
Environmental disasters impose immense costs on society. While many studies seek to estimate the magnitude of such costs, few consider losses arising from the perceived risk of damages that are ultimately unrealized. The Deepwater Horizon oil spill provides a unique setting to analyze losses in the real estate market resulting from the perceived risk of oil damage to local shorelines. We examine the sale price and volume responses to information regarding the risk of oil wash-ups in the real estate market of a Gulf county that ultimately experienced no oil wash-ups. By comparing sales of  properties that derive substantial value from their proximity to the coast to sales of properties further inland using a difference-in-differences approach, we find that while sale volumes are unaffected, coastal homes sold for 4% less due to the risk of oil wash-ups from two to eight months after the spill. The specific timing of these price impacts is consistent with information’s relevant and authoritative nature being the main factors that drive perceived risk levels. In addition, these demonstrated losses suggest that market impacts resulting from public perception of risks are an important component of valuing damages associated with environmental disasters.