Over time, productivity and education have increased, while hours worked have not. Cross-sectionally, higher-wage individuals have more schooling, more hours worked in the market, fewer hours worked at home, and a lower variance of market hours. Over the life cycle, older individuals have higher wages, more hours worked both in the market and at home, a lower variance of market hours, and almost the same amount of education as younger agents. These and other facts are documented, and a simple overlapping-generations model with skill acquisition and home production that delivers most of these properties is constructed.

This paper concerns the regulation of hazardous economic activities. Economists have generally viewed ex ante regulations (safety standards, Pigouvian fees) that regulate an activity before an accident occurs as substitutes for ex post policies (exposure to tort liability) for correcting externalities. This paper shows that where there is uncertainty, there are inefficiencies associated with the exclusive use of negligence liability and that ex ante regulation can correct the inefficiencies. In such a case it is efficient to set the safety standard below the level of precaution that would be called for if the standard were used alone.

This paper reports the results of an evaluation of partial-equilibrium welfare measures of the effects of large multisector shocks to an economic system. A nine a developed economy was used in the analysis. The findings indicate that the errors in single-sector, partial-equilibrium welfare measures depend on the consistency in the signs and approximate magnitude of indirect price effects. Disparities in either the direction or size of price changes in the indirectly affected markets can lead to large errors in the partial-equilibrium welfare measures.

The Combinatorial Clock Auction (CCA) is an important recent innovation in auction design which has been adopted for many spectrum auctions worldwide. Since its inception, the CCA has been in almost continual evolution. We begin by reviewing some important changes which have already occurred. Despite these enhancements, we observe that the performance of the CCA is still limited by weak activity rules, suboptimal price feedback, and a missing-bid problem. We then describe further evolutionary changes, including new activity rules, new approaches to pricing, and an integration of non-mutually-exclusive bids, which will help to address these issues.

Many federal government housing policies began during the New Deal of the 1930s. Many claim that minorities benefitted less from these policies than whites. We estimate the relationships between policies in the 1920s and 1930s and black and white home ownership in farm and nonfarm settings using a pseudo-panel of repeated cross-sections of households in 1920, 1930, and 1940 matched with policy measures in 460 state economic areas. The policies examined include FHA mortgage insurance, HOLC loan refinancing, state mortgage moratoria, farm loan programs, public housing, public works and relief, and payments to farmers to take land out of production.

This paper provides experimental evidence on forward induction as a refinement criterion. In the basic extensive form, one of the two players chooses to play a battle-of-the-sexes game or to receive a certain payoff. According to forward induction, choosing to play the game is a signal about intended action. Though the presence of the outside option changes play, we find only limited support for the forward-induction hypothesis. The effects of the outside option also reflect the creation of a focal point through the asymmetry created by offering the outside option to one of the two players.

We explain the use of legally unenforceable, discretionary financial contracts in circumstances where legally enforceable contracts are feasible. A discretionary contract allows a contracting party to choose whether or not to honor the contract. It is shown that such a contract liquefies reputational capital by permitting it to be depreciated in exchange for the preservation of financial capital and information reusability in financially impaired states. In addition, discretionary contracts foster the development of reputation. This explains discretion among highly confident letters, holding-company relationships, mutual-fund contracts, bank loan commitments, and other financial and nonfinancial contracts.

Recently several economists (Richard Thaler, 1980; Jack Knetsch and J. A. Sinden, 1984), following suggestions of psychologists (Daniel Kahneman and Amos Tversky, 1979), have argued that current economic models of consumer behavior fail to explain observed asymmetries in how individuals respond to gain vs. losses in perceived entitlements. Attention to their arguments is increasing because they relate to many current policy issues-especially those associated with undesirable land uses. Most of the papers suggesting this limitation with the conventional economic framework have been motivated by the large differences between the estimates of willingness to pay vs. willingness to accept as measures of the change in individual well-being that would result from a change in the conditions of access to (or the quality of) a commodity.' In this paper we report the first evidence of a sizable property rights effect using only willingness-to-pay measures. This change is potentially important because both the recent appraisal of contingent valuation surveys (see Ronald Cummings et al.. 1986), an important source of the available empirical evidence, and laboratory experiments suggest that individuals may have difficulty in dealing with the concept of compensation. This is especially true when there is no opportunity for individuals to learn about transactions that involve compensation through experience. Based on a contingent valuation survey of households in suburban Boston, we found that respondents bid significantly more to reduce risk than they indicated they were willing to pay to avoid an equivalent risk increase. While our findings support suggestions that changes in the implied entitlements (to safety) can lead to large differences in welfare measures for risk changes, several of these earlier arguments would have implied that individuals were willing to pay more to avoid a risk increase-the opposite to our results. Thus, these differences imply that the determinants of individuals' valuations for risk changes are more complex than past studies have acknowledged.