Richter, Francisca G.-C.

August, 2003

Using Both Sociological and Economic Incentives to Reduce Moral Hazard

By: Richter, Francisca G.-C.; Diaz, Edgar F. Pebe; Brorsen, B. Wade; Currier, Kevin
Economists tend to focus on monetary incentives. In the model developed here, both sociological and economic incentives are used to diminish the apparent moral hazard problem existing in commodity grading. Training that promotes graders' response to sociological incentives is shown to increase expected benefits. The model suggests this training be increased up to the point where the marginal benefit due to training equals its marginal cost. It may be more economical to influence the grader's behavior by creating cognitive dissonance through training and rules rather than by using economic incentives alone.
Download Full Article

December, 2002

AIDS VERSUS THE ROTTERDAM DEMAND SYSTEM: A COX TEST WITH PARAMETRIC BOOTSTRAP

By: Dameus, Alix; Richter, Francisca G.-C.; Brorsen, B. Wade; Sukhdial, Kullapapruk Piewthongngam
A Cox test with parametric bootstrap is developed to select between the linearized version of the First-Difference Almost Ideal Demand System (FDAIDS) and the Rotterdam model. A Cox test with parametric bootstrap has been shown to be more powerful than encompassing tests like those used in past research. The bootstrap approach is used with U.S. meat demand (beef, pork, chicken, fish) and compared to results obtained with an encompassing test. The Cox test with parametric bootstrap consistently indicates the Rotterdam model is preferred to the FDAIDS, while the encompassing test sometimes fails to reject FDAIDS.
Download Full Article

July, 2001

FEEDER CATTLE PRICE SLIDES

By: Brorsen, B. Wade; Coulibaly, Nouhoun; Richter, Francisca G.-C.; Bailey, DeeVon
A theoretical model is developed to explain the economics of determining price slides for feeder cattle. The contract is viewed as a dynamic game with continuous strategies where the buyer and seller are the players. The model provides a solution for the price slide that guarantees an unbiased estimate of cattle weight. An empirical model using Superior Livestock Auction (SLA) data shows price slides used are smaller than those needed to cause the producer to give unbiased estimates of weight. Consistent with the model's predictions, producers slightly underestimate cattle weights.
Download Full Article