A consumer faces list prices for commodities, but can buy one at a discount. Discounts vary randomly between sellers. The number of quotations sought depends on list prices, search costs and wealth. This function is homogeneous of degree zero, and, provided some sufficient conditions are satisfied, is; increasing in wealth; decreasing in search cost; independent of the list price of the discounted commodity if indirect utility is multiplicatively separable; increasing in the list price if the commodity is a necessity; increasing in the list price of substitutes. Slutsky's equation is generalized to include search.

THROUGH cross-sectional analysis of the asset holdings of individual households, this study adds to the evidence available on relative risk aversion. It utilizes the National Longitudinal Surveys (NLS)1 which have advantages over the data bases used in previous studies. Assumptions about relative risk aversion are made in a number of theoretical economic and financial models.2 An empirical study by Cohn, Lewellen, Lease, and Schlarbaum (CLLS, 1975) concluded that relative risk aversion declined as wealth increased across households, while a second empirical study by Friend and Blume (F&B 1975) concluded from mixed evidence that relative risk aversion remained relatively constant as wealth increased. The present study finds that by restricting the sample to higher wealth households and by defining wealth narrowly, patterns consistent with decreasing or constant relative risk aversion emerge and these are compatible with the earlier studies. However, the use of a broader based sample and a more comprehensive measurement of wealth alters the conclusions and a pattern indicative of increasing relative risk aversion emerges. Thus, the paper cautions that constant or decreasing relative risk aversion assumptions in theoretic models may not be realistic descriptions of the risk attitudes of typical U.S. households. First, the literature on relative risk aversion will be reviewed. Second, the model used to estimate the coefficient of relative risk aversion will be discussed. The third section will present empirical results and contrast them with those of earlier studies. Finally, the material will be summarized and the conclusions indicated.

W. S. Hopwood, J. C. Mckeown, P. Newbold, The Additional Information Content of Quarterly Earnings Reports: Intertemporal Disaggregation, Journal of Accounting Research, Vol. 20, No. 2, Part I (Autumn, 1982), pp. 343-349

[This paper proposes a simple theory to explain bargaining impasses, which is based on Schelling's view of the bargaining process as a struggle between bargainers to commit themselves to favorable bargaining positions. Because bargaining impasses are generally Pareto-inefficient, anything involving a positive probability of impasse is Pareto-inefficient as well. It is demonstrated that in spite of this avoidable inefficiency, when successful commitment is uncertain and irreversible it can still be rational for individuals to attempt commitment and thereby risk an impasse; in a leading special case, the model reduces to a Prisoner's Dilemma game, in which only strategic-dominance arguments are needed to establish this conclusion. Further, making commitment more difficult, or changing the costs of disagreement in a way that makes available a wider range of settlements that are better for both bargainers than disagreement, need not always lower the probability of impasse, in spite of the conventional wisdom to the contrary.]

In their article, “Beta as a Random Coefficient, ” Fabozzi and Francis [1] present evidence which suggests that beta is a random coefficient for a “significant minority” of NYSE stocks. They obtained their evidence first, by characterizing the market model as a random coefficient model of the type described by Theil and Mennes [7], and second, by estimating its parameters for a sample of NYSE stocks over the period December 1965 through December 1971. This paper describes weaknesses in Fabozzi and Francis' implementation of the estimation procedures of Theil and Mennes [7] and Hildreth and Houck [3]. Improvements are suggested and utilized in an analysis of the returns of 683 NYSE stocks over the period January I960 through December 1971. The results of the analysis indicate that Fabozzi and Francis have overstated the case for beta being a random coefficient of the form described by Theil and Mennes.

Examples are given which show that:(i) normality is not Necessary for the consistency of the quasi maximum likelihood estimator in the nonlinear simultaneous equations model (nonlinear FIML) even when there are major departures from linearity; and (ii) the lemma which is used extensively by Amemiya [2] in the theoretical development of the properties of nonlinear FIML under the assumption of normality is, as presently stated, incorrect.

Albert Fries, John P. Hutton, Peter J. Lambert, The Elasticity of the U.S. Individual Income Tax: Its Calculation, Determinants and Behavior, The Review of Economics and Statistics, Vol. 64, No. 1 (Feb., 1982), pp. 147-151