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Category Archives: 2009

A Bargaining Theory of the “Edwards’ Effect” in the 2007-8 Democratic Presidential Primary

By Alex Li

2008’s Democratic Presidential Primary will go down as one of the most competitive races in recent history. Two candidates, Senators Barack Obama (Illinois) and Hillary Clinton (New York), fought a see-saw battle to obtain enough delegates/vote-shares for the Democratic nomination. Although the race eventually dwelled down to these two players, for a while it was a dynamic three-player-race with Senator John Edwards (North Carolina) in the fold. During that time, many people were puzzled by Edwards’ insisting on staying in the race even when he had no foreseeable chance of becoming the party’s eventual nominee. In this honors thesis, I construct a theoretical model to explain Edwards’ reason for staying in the race. My model found that if Edwards attains a certain amount of vote-shares, depending on the external circumstances, he could have pushed the election into a backroom negotiation phase. In this phase, he would have become the most pivotal player as his relatively low amount of vote-shares would ironically turn him into the player with the greatest negotiating power. This could have allowed him to come out of the backroom negotiation with a final prize value that would have exceeded the efforts he inputted. My paper coins this as “The Edwards Effect” and explores the ramifications and conditions for its existence.

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Advisor: Huseyin Yildirim

Running Head: GENDER DIFFERENCES IN ASSET ALLOCATION: Rational Lifetime Investment Strategies: Gender Differences in the Allocation of Assets in

By Chase Lancaster

Previous research has demonstrated that women have greater risk aversion than men. Controlling for age, education, family size, income, self-reported financial risk tolerance, and occupation, this study examines the impact of gender on asset allocation decisions in retirement accounts. Our findings suggests that after accounting for a large number of factors, single women tend to choose more conservative investment allocations in their retirement accounts than do single men. However, within married households, no significant gender differences in asset allocation were found. Spousal influence within married couples was examined and seemed to explain away gender differences for married households.

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Advisor: Marjorie McElroy

Individual Incentives within Team Competitions

By Lisa Lam

This paper develops a theoretical model to show the effects of simultaneously having both a competition between groups and one among the individuals of a tournament. The players are divided up among teams and compete for a at bonus for winning the team competition. At the same time, their efforts also determine if they will win another at bonus from winning the individual game among all
the tournament’s players. With the use of a specific team production function demonstrating substitution among the player’s efforts, the individual award seems to garner more overall group output than the group award. Under a specific production function demonstrating complementary efforts, players seem to be indifferent between the group and individual award. Lastly, a general production function that incorporates a variable measuring the degree of substitution was analyzed. The analysis showed that an individual award was beneficial to increasing overall team effort. The results imply that the payment scheme should be structured in a way that allocates larger individual rewards when the team efforts are more substitutable.

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Advisor: Huseyin Yildirim

Do Medical Malpractice Reforms Affect Health Care Costs and Outcomes?

By Matt Johnson

The impact of medical malpractice reforms on the cost and quality of health care is of great interest to policy makers. This study examines national data on malpractice reforms implemented and health care provided to Medicare beneficiaries between 1995 and 2004. State-level reforms’ effect on health care expenditures and outcomes is determined in four disease-based populations. Reforms are shown not to have any meaningful impact on six-month expenditures or outcome measures in the majority of cases. Policymakers considering tort reforms to restrain the growth of health care expenditures are advised to concentrate on alternative measures.

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Advisor: Frank Sloan

Testing the Relationship between Oil Equities and Oil Futures with High-Frequency Data: A Look at Returns, Jumps, and Volatility

By Brian Jansen

This paper looks at simultaneous returns, jumps, and volatilities of oil futures, oil equities, and other equities in the S&P 100 using high-frequency data. Through this method, a market factor is found to affect the overall level of returns across the equities and the likelihood that two given equities to jump simultaneously. A second factor is found to affect the returns and jumps that uniquely describes the variation in the oil equity and futures data. Volatility in oil futures and equities is not found to have a common factor due to the differences in types and motivations of traders.

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Advisor: George Tauchen

Is Public Expenditure on Primary Education Effective? Evidence from Districts Across India

By Tara Lyer

Against the background of international commitment to the Millennium Development Goal (MDGs) for the universalization of primary education, this paper investigates the effectiveness of public spending on primary education outcomes in 115 districts across three states in India – Uttar Pradesh, Andhra Pradesh and Karnataka. Controlling for factors including per capita income, student-teacher ratio, and ratio of government to private primary schools, we find that primary educational spending has a negligible impact on enrollment rates, primary school transition rates, and performance of students on exams. Instead, districts with greater proportions of private primary schools are found to have consistently better outcomes. Higher per capita income is also correlated with some improved performance measures. Reducing the student-teacher ratio has no effect, a phenomenon possibly explained by rampant teacher absenteeism and lack of teacher motivation. Evidence from this study indicates that policymakers should seek alternatives to improve the quality of primary education, and determine how to achieve a more efficient and equitable allocation of educational funds.

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Advisor: Alessandro Tarozzi

The Miscommunications and Misunderstandings of Nicholas Georgescu-Roegen

By Samuel Iglesias

If there is any takeaway from 1971’s The Entropy Law and the Economic Process, it’s this: beneath every intersection of the supply and demand curve, there’s a slow, but steady, process of environmental degradation. Try as you will to recycle waste materials, the book argues—this process cannot be reversed. A formulation of economics backed with this insight was the life vision of Nicholas Georgescu-Roegen, whose work on environmental economics has recently received a new round of academic scrutiny. But one might ask, why wasn’t Georgescu well received the first time around, during his time? This paper explores that topic.

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Advisor: E. Roy Weintraub

Cell Phones and Cattle: The Impact of Mobile Telephony on Agricultural Productivity in Developing Nations

By Daniel Houghton

This paper examines the impact of mobile telephony on productivity in developing nations. Previous studies have suggested that mobile phones have real impacts on economic outcomes in these countries. Using micro-data from Swaziland, Cambodia, and Honduras, this study looks to identify the effects of mobile phone ownership on household productive outcomes in a two-stage regression. The results provide significant evidence that mobile phone ownership does indeed improve productivity at the household level.

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Advisor: Charles Becker

The Significance of Higher Education on the Racial Gap in Marriage Rates

By Kristin Hamb

In this paper, I examine the effect higher education has on the age of marriage and how this differs between black and white women. Becker’s theory of positive assortative mating in marriage markets lead me to predict higher levels of education would decrease the probability of being married by 30 and 40 for black women more than white women. My probit regressions showed that, despite an initial delay in marriage, increased education had a positive effect on the probability of marriage for black women confirming that lesser educated black women are more at risk of falling into the racial marriage gap.

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Advisor: Marjorie McElroy


Oil, Population Growth, and the Resource Curse

By Tim Gu

I find indications that an increase in a country’s oil endowment results in an increase in its population growth rate, an increase in its fertility and birth rates, and a decrease in its mortality rate. To explain these results, I conjecture that an increase in oil endowment results in reduced female labor force participation, which increases the population growth rate. Additionally, I find no significant, negative relationship between a country’s per capita GDP growth rate and its oil endowment, when variations in the population growth rate are controlled. This result and others affect the interpretation of the “resource curse” concept.

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Advisor: Michael Alexeev, Robert F. Conrad


Undergraduate Program Assistant
Jennifer Becker

Director of the Honors Program
Michelle P. Connolly