This is rooted in the findings in Kageyama
（2012） , which empirically showed that the relationships between LEGAP and these happiness indicators are bidirectional. In one direction, LEGAP negatively affects both HPN and HPGAP . An increase in LEGAP raises women ’ s widowhood ratio, and, since widows are, on average, less happy, it lowers women ’ s average happiness, HPN, and HPGAP . We call this effect the “ marital-status composition effect ” as the marital-status composition plays a central role.
The rationale for this finding comes from behavioral ecology studies that, in pre-modern hu- man population, social standing affects lifetime reproductive success through reproduction, which depends on both fertility and the survival of offspring, rather than through one’s own survival. In- corporating this effect into a biological model, Kageyama (2012a) shows that, as resources increase, reproduction and, thus, relative standing become more decisive to lifetime reproductive success, leading to the spread of preferences that induce greater concerns for relative standing when income increases.
This paper also contributes to the empirical literature on the effect of financial con- straints on firm investment (e.g., Fazzari et al. (1988) ; Hoshi et al. (1991) ; Kaplan and Zin-
gales (1997) ). Empirical papers on the effect of financial constraints use various observed
measures of financial constraint, such as cash flow, firm size, and years of establishment, to examine their effect on investment. It is often difficult, however, to interpret these em- pirical results because such measures of financial constraint can be viewed as endogenous variables and correlated with the firm’s efficiency measure, which also explains investment. For example, a positive estimate of the cash flow coefficient could just reflect its positive correlation with firm efficiency. This paper examines how the BCR of the bank with which a firm has a relationship influences the firm’s investment decisions. To the extent that the BCR measure is viewed as more exogenous than other measures of financial constraint, this paper’s results shed further light on the impact of financial constraints on investment.
• We have assumed that there is only one hedge fund style. What might change if we consider multiple hedge fund styles in the model industry? If the manager’s talent also involves an aptitude for one style over another, then this would be equivalent to having several styles calibrated independently. Since the policy results hinge on broad features of the model and the data, the outcomes of policy experiments are unlikely to change much. The only difference is that some styles tend to rely more heavily on leverage than others, so those are more likely to be hurt by leverage limits. In the working version of the paper, we show that most styles have reported leverage around 1. Out of the fourteen styles considered, four report leverage of around 2 (Convertible Arbitrage, Fixed Income, Equity Market Neutral and Relative Value), and three styles report leverage higher than 2 (Fixed income arbitrage, CTAs and CPOs). Table 8 shows the impact of a leverage cap of 1 on the industry
are expected profit maximizers who will exercise their market power in a unilateral, noncooperative fashion, we can then estimate the willingness-to-pay/demand that rationalizes the observed bid.
3 Model of Bidding
Our analysis is based on the share auction model of Wilson (1979) with private information, in which both quantity and price are assumed to be continuous. Wilson’s model was modified to take into account the discreteness of bidding (i.e., finitely many steps in bid functions) as in Kastl (2011). In Horta¸csu and Kastl (2012), we further adapted this model to allow primary dealers to observe the bids of others, hence allowing for “indirect bidders,” whose bids are routed by primary dealers.
“participate,” and make the preference dependent on the number of “participants,” which is the externalities we consider.
To the best of our knowledge, Sasaki and Toda (1996) and Hafalir (2008) are the only papers that investigate a two-sided matching model with externalities. Both papers consider a very general form of externalities. Analyzing such matching models is di¢cult because preference is de…ned over the set of assignments rather than matchings. Hence, regular de…nition of “stability” or “deviation” are not su¢cient to analyze such a model because a deviating pair’s preference also depends on how other agents would react to their deviation, not just their matching. To model how other agents would react to a player’s deviation, both papers use what they call the estimation function approach. Estimation functions specify the expectations on the assignment (i.e., what the matching among all players would be) after each deviation. They prove that a strong requirement on the estimation function is necessary in order to guarantee the existence of stable matching. Based on their estimation function approach while considering a particular form of externalities (the payo¤ depends only on the number of operating …rms in the market), we show the existence and provide characterizations.
III.B. Search Costs/Information Frictions
An additional (but not mutually exclusive from product dif- ferentiation) possible explanation for the observed price disper- sion is the influence of search/information frictions faced by in- vestors. A large theoretical literature shows that costly search can sustain price dispersion in homogeneous product markets (e.g., Burdett and Judd , Carlson and McAfee , and Stahl ). Given the very large number of mutual funds offered, it seems reasonable to presume that investors must make some information-gathering investments before deciding between fund alternatives. The presence of a sizable market to reduce investor search costs supports this notion. Several commercial mutual fund ranking services and information aggregators exist (Morningstar, Lipper, Valueline, Yahoo!Finance, etc.). There is even a commercial Internet site (IndexFunds.com) devoted to providing information about index funds. Many fund companies spend considerable sums on marketing and distribution, also consistent with (although neither necessary nor sufficient for) the presence of limited investor information. Survey evidence also suggests considerable information-gathering. The Investment Company Institute  reports that surveyed investors con- sulted a median of two source types (four for those who had consulted a fund-ranking service) and reviewed a median of four- teen different information items (gross returns, relative perfor- mance, etc.) before their most recent purchase. 14 To the extent
2.2 (2 points). Use the INTERNET to find monthly unemployment rate from January 1973 to March 2010. Draw a graph of the unemployment rate (use seasonally ad- justed data).(Hint: A good place to look for data is the Web site of the Statistics Bureau, Director-General for Policy Planning (Statistical Standards) and Statis- tical Research and Training Institute.