Cost-Benefit Analysis and the Democratic Ideal

In traditional cost-benefit analyses of public projects, every citizen’s willingness to pay for a project is given an equal weight. This is sometimes taken to imply that cost-benefit analysis is a democratic method for making public decisions, as opposed to, for example, political processes involving log-rolling and lobbying from interest groups. Politicians are frequently criticized for not putting enough emphasis on the cost-benefit analyses when making decisions. In this paper we discuss the extent to which using cost-benefit analysis to rank public projects is consistent with Dahl’s (1989) criteria for democratic decision-making. We find several fundamental conflicts, both when cost-benefit analysis is used to provide final answers about projects’ social desirability, and when used only as informational input to a political process. Our conclusions are illustrated using data from interviews with Norwegian politicians.

Selfish Bakers, Caring Nurses? A Model of Work Motivation

Work contributes to people’s self-image in important ways. We propose a model in which individuals have a preference for being important to others. This leads to the following predictions: 1) In fully competitive markets with performance pay, behavior coincides with the standard model (bakers). 2) In jobs where e¤ort is not rewarded according to its social marginal value, behavior is more socially bene…cial than predicted by the standard model (nurses). 3) Even if unemployment bene…ts provide full income compensation, many workers’ utility strictly decreases when losing their job. 4) Similarly, many workers will prefer to work rather than to live o¤ welfare, even with full income compensation. 5) To keep shirkers out of the public sector, nurses’wages must be strictly lower than private sector income. At this wage level, however, the public sector will be too small. 6) It is possible to attract motivated workers to the public sector, without simultaneously attracting shirkers, through capital input improving nurses’opportunity to do a good job.Homo Oeconomicus; Work Motivation; Labour Market

Clover seed production - in organic and conventional cropping systems

White clover (Trifolium repens L.) is an important component in grassland mixtures and as a green manure crop. Since Denmark has excellent conditions for white clover seed production and holds the position of the largest producer within the EU emphasis has been placed on developing an organic production of white clover seeds

Multiple Unit Auctions and Short Squeezes

This paper develops a theory of multiple unit auctions with short squeezes in the post- auction market. This is especially relevant for financial and commodity markets where players may enter the auction with established forward positions. We study how a potential short squeeze impacts on bidders' strategies and auction performance. Conversely, we also study how the design of the auction affects the incidence of short squeezes. In particular, we model both uniform price and discriminatory price auctions in a true multiple unit setting, where bidders can submit multiple bids for multiple units. Our model is cast in what appears to be a common value framework. However, we show that the possibility of a short squeeze introduces different valuations of the to-be-auctioned asset between short and long bidders.Multiple unit auction, uniform auction, discriminatory auction, treasury auction, repo auction, short squeeze, market manipulation, market power

The price of liquidity: bank characteristics and market conditions

We study differences in the price paid for liquidity across banks using price data at the individual bank level. Unique to this paper, we also have data on individual banks' reserve requirements and actual reserve holdings, thus allowing us to gauge the extent to which a bank is short or long liquidity. We find that the price a bank pays for liquidity depends on the liquidity positions of other banks, as well as its own. There is evidence that liquidity squeezes occasionally occur and short banks pay more the larger is the potential for a squeeze. The price paid for liquidity is decreasing in bank size and small banks are more adversely affected by an increased potential for a squeeze. Contrary to what one might expect, banks in formal liquidity networks do not pay less. --liquidity,banking,squeezes,money markets,repo auctions