Manchester School最新文献

This article analyzes the agency relationship in a setting where principal and agent have asymmetric priors on output. These differing priors stem from distinct information sets regarding the (unknown) output distribution, being assumed that both principal and agent rely on the maximum-entropy principle to estimate the respective distributions. The main conclusions obtained are the following. (1) Additional information on output does not necessarily lead to an improved equilibrium. (2) If the principal holds an ex ante piece of private information, it may be optimal for her to hide it and design the agency contract ignoring the additional information. (3) If the agent holds an ex ante piece of information, the contract may fail to be incentive-compatible; in such a case both parties improve if the agent shares his information and the principal ascribes to it, which justifies the common prior assumption.

This paper analyzes the impact of lottery wins on household labor supply in the United Kingdom, using data from the British Household Panel Survey. We show that lottery wins do not have significant effects on hours of work of males, while female hours of work decrease in response to lottery wins. When we control for different lottery prize amounts, we find that large lottery wins reduce female annual hours of work by 120 h one and 2 years after the prize. The estimates are heterogeneous across age groups, levels of educational attainment, and household composition. These results suggest that shocks in unearned income may take some time to appear but have a lasting impact.

This study aims to conduct an in-depth analysis of the complex nonlinear dependence relationships between cryptocurrencies and gold within the stocks of BRICS countries. The study employs a GARCH-EVT-Vine-Copula and wavelet coherence models to evaluate the interconnectedness, tail risk and Co-movement pattern of these assets before and after the outbreak of COVID-19. The findings reveal that, prior to COVID-19, significant tail dependence existed between China's stock market, the cryptocurrency index, and the indices of India and Russia, while other indices exhibited only weak dependence. However, after the outbreak of COVID-19, the tail dependence among variables became more pronounced. The South African stock market appears to have emerged as the center of extreme lower-tail risk spillovers among the studied variables. During the COVID-19 outbreak, cryptocurrency markets demonstrated stronger coherence with global stock markets than gold, especially in the US market, potentially compromising their diversification effectiveness. Furthermore, our empirical results were validated by the Kupiec test and the Christoffersen test. The results of this study not only enhance the theoretical understanding of risk management in emerging markets during periods of extreme market crises but also provide valuable insights for policymakers in formulating strategies to ensure financial market stability.

This study sheds light on the interaction between COVID-19 vaccinations and economic recovery from the pandemic crisis. Using London Stock Exchange data (Jan 10, 2021, to Feb 24, 2022) and fixed-effects regression methods, this study assesses COVID-19 vaccine effects on UK stock returns. Initial protocol doses have a strong positive impact on returns, while boosters have a modest positive impact. A logarithmic unit increase in daily vaccine doses corresponds to a 0.07 percentage point increase in daily stock return. Stringent closure policies strengthen the positive influence of the vaccine on returns. Sector-wise, healthcare responds most positively, while basic resources and food/beverage industries show positive but muted effects.

In this study, we argue that the result of maximal differentiation by d’Aspremont et al. (1979) is not robust against all variations in qualities. The result that two firms are located at opposite ends of a linear city holds only when the product qualities are identical or similar. Sufficiently large quality differences lead to minimal differentiation with firms choosing identical locations. If quality differences are moderate, both maximal and minimal differentiation can emerge as equilibrium outcomes. If firms possess common private information about qualities unknown to consumers, their location choices may signal quality. However, these firms may attempt to jam unfavourable signals from rival firms. We demonstrate that a separating equilibrium exists in which such cross-signal jamming does not succeed. Equilibrium locations can be distorted to prevent a significantly lower-quality firm from mimicking a moderately lower-quality one, ensuring survival in competition. Consequently, intermediate differentiation, unattainable under complete information, may arise in equilibrium when firms possess common private quality information.

This study examines the impact of price discrimination on the investment decisions of downstream firms in an intermediate good market. The setting consists of two downstream firms with different marginal costs—one lower than the other—and a monopolistic supplier. The firms decide whether to invest in reducing their marginal costs, with investment costs becoming sunk after the decision. Once these costs are revealed, the supplier offers discriminatory two-part tariff contracts. Under discriminatory pricing, a unique equilibrium emerges in which the hold-up problem prevents any investment. However, prohibiting price discrimination mitigates this issue, enabling the more efficient downstream firm to invest in equilibrium. The ban on price discrimination has mixed effects on social welfare. We demonstrate that in some cases, the positive effects of the ban outweigh the negative ones, ultimately enhancing social welfare.