In this dissertation, I examine two research questions. In chapters 2 and 3, based on idea of reference value that was first proposed by Kahneman and Tversky, I look at a potential house seller’s pricing strategy when the reference value plays a role. In chapter 2, I focus on the reference-dependence and its implications on loss aversion behavior, and I compare model predictions with documented empirical findings in the literature. In particular, I show that the stylized empirical evidence in the literature has relatively limited power on testing loss aversion, and I provide new specifications that aim to correctly test the loss aversion effect. In chapter 3, I examine a reference-dependent seller’s pricing strategy in a less heterogeneous housing market such as the multi-unit residential market. Acknowledging the fact that units in the same building serve as close substitutes for each other, I show that the recent transaction price on a unit in the same building may generate two signaling effects. First, the average willingness to pay among buyers is positively correlated with the observed price, which generates a spatio-temporal autocorrelation effect; second, after observing the prior price, the heterogeneity of the potential buyer’s willingness to pay decreases, inducing house sellers to mark down their asking prices. In chapter 4, I examine the power of monitoring and forcing contract on improving the managerial efficiency of REITs. I put particular emphasis on its implications regarding the choice of advisor type in REITs. I show that, for both internal and external advisors, increasing levels of monitoring power will increase their equilibrium effort under a stochastic forcing contract. Furthermore, I show that a crucial driving force regarding advisor choice is the heterogeneity of monitoring power between internal and external advisors and across REIT firms. Provided that the gap of monitoring power is large enough between internal and external advisors, shareholders could make use of the heterogeneity, and induce higher effort from external advisors. Hence, I am able to provide a theoretical justification regarding the potential appeal of an external managerial structure, which is usually regarded as being inferior to an internal managerial structure.

In this dissertation, I examine two research questions. In chapters 2 and 3, based on idea of reference value that was first proposed by Kahneman and Tversky, I look at a potential house seller’s pricing strategy when the reference value plays a role. In chapter 2, I focus on the reference-dependence and its implications on loss aversion behavior, and I compare model predictions with documented empirical findings in the literature. In particular, I show that the stylized empirical evidence in the literature has relatively limited power on testing loss aversion, and I provide new specifications that aim to correctly test the loss aversion effect. In chapter 3, I examine a reference-dependent seller’s pricing strategy in a less heterogeneous housing market such as the multi-unit residential market. Acknowledging the fact that units in the same building serve as close substitutes for each other, I show that the recent transaction price on a unit in the same building may generate two signaling effects. First, the average willingness to pay among buyers is positively correlated with the observed price, which generates a spatio-temporal autocorrelation effect; second, after observing the prior price, the heterogeneity of the potential buyer’s willingness to pay decreases, inducing house sellers to mark down their asking prices. In chapter 4, I examine the power of monitoring and forcing contract on improving the managerial efficiency of REITs. I put particular emphasis on its implications regarding the choice of advisor type in REITs. I show that, for both internal and external advisors, increasing levels of monitoring power will increase their equilibrium effort under a stochastic forcing contract. Furthermore, I show that a crucial driving force regarding advisor choice is the heterogeneity of monitoring power between internal and external advisors and across REIT firms. Provided that the gap of monitoring power is large enough between internal and external advisors, shareholders could make use of the heterogeneity, and induce higher effort from external advisors. Hence, I am able to provide a theoretical justification regarding the potential appeal of an external managerial structure, which is usually regarded as being inferior to an internal managerial structure.

In this dissertation, I examine two research questions. In chapters 2 and 3, based on idea of reference value that was first proposed by Kahneman and Tversky, I look at a potential house seller’s pricing strategy when the reference value plays a role. In chapter 2, I focus on the reference-dependence and its implications on loss aversion behavior, and I compare model predictions with documented empirical findings in the literature. In particular, I show that the stylized empirical evidence in the literature has relatively limited power on testing loss aversion, and I provide new specifications that aim to correctly test the loss aversion effect. In chapter 3, I examine a reference-dependent seller’s pricing strategy in a less heterogeneous housing market such as the multi-unit residential market. Acknowledging the fact that units in the same building serve as close substitutes for each other, I show that the recent transaction price on a unit in the same building may generate two signaling effects. First, the average willingness to pay among buyers is positively correlated with the observed price, which generates a spatio-temporal autocorrelation effect; second, after observing the prior price, the heterogeneity of the potential buyer’s willingness to pay decreases, inducing house sellers to mark down their asking prices. In chapter 4, I examine the power of monitoring and forcing contract on improving the managerial efficiency of REITs. I put particular emphasis on its implications regarding the choice of advisor type in REITs. I show that, for both internal and external advisors, increasing levels of monitoring power will increase their equilibrium effort under a stochastic forcing contract. Furthermore, I show that a crucial driving force regarding advisor choice is the heterogeneity of monitoring power between internal and external advisors and across REIT firms. Provided that the gap of monitoring power is large enough between internal and external advisors, shareholders could make use of the heterogeneity, and induce higher effort from external advisors. Hence, I am able to provide a theoretical justification regarding the potential appeal of an external managerial structure, which is usually regarded as being inferior to an internal managerial structure. / Business, Sauder School of / Graduate

Optimal nutritional management of growing pigs is constrained by lack of quantitative information on the response of animals between 30 and 110 kg live weight to dietary energy content. Under 'ideal' conditions modern genotypes appear to adjust feed intake to maintain a constant DE intake over a much wider range of dietary energy concentrations than previously thought (Mullan et al, 1998). However, under commercial pen conditions, voluntary feed intake is lower, pigs respond in terms of both growth rate and feed conversion to dietary DE density considerably above the levels currently thought to maximise biological and economic responses. The present study was designed to provide information on the response of growing pigs to dietary energy content under ideal and commercial housing conditions for two growth periods 30-60kg liveweight and 60-100kg liveweight. The results of the pigs kept under individual (ideal) housed conditions were consistent with the literature in that they adjusted their voluntary feed intake with digestible energy density to maintain a constant energy intake. The results of the pigs kept in groups (commercial) housing conditions tended to increase their daily energy intake as the energy density of the feed increased. This increase in energy intake improved the growth rate of the pigs and increased the fat deposition of those pigs. Economic analysis of the experiments involving pigs in groups indicates that formulating diets to a least cost per megajoule of digestible energy is not the most profitable point to set the digestible energy density. Modelling programs need to be used to determine where the least cost per unit of growth of the pig occurs. This is the most economical digestible energy density to formulate too. This will have major impact on the cost of production of piggery operations as the cost of energy is the single most important parameter in the cost of producing a pig.

Optimal nutritional management of growing pigs is constrained by lack of quantitative information on the response of animals between 30 and 110 kg live weight to dietary energy content. Under 'ideal' conditions modern genotypes appear to adjust feed intake to maintain a constant DE intake over a much wider range of dietary energy concentrations than previously thought (Mullan et al, 1998). However, under commercial pen conditions, voluntary feed intake is lower, pigs respond in terms of both growth rate and feed conversion to dietary DE density considerably above the levels currently thought to maximise biological and economic responses. The present study was designed to provide information on the response of growing pigs to dietary energy content under ideal and commercial housing conditions for two growth periods 30-60kg liveweight and 60-100kg liveweight. The results of the pigs kept under individual (ideal) housed conditions were consistent with the literature in that they adjusted their voluntary feed intake with digestible energy density to maintain a constant energy intake. The results of the pigs kept in groups (commercial) housing conditions tended to increase their daily energy intake as the energy density of the feed increased. This increase in energy intake improved the growth rate of the pigs and increased the fat deposition of those pigs. Economic analysis of the experiments involving pigs in groups indicates that formulating diets to a least cost per megajoule of digestible energy is not the most profitable point to set the digestible energy density. Modelling programs need to be used to determine where the least cost per unit of growth of the pig occurs. This is the most economical digestible energy density to formulate too. This will have major impact on the cost of production of piggery operations as the cost of energy is the single most important parameter in the cost of producing a pig.

In the first chapter, I investigate the welfare effect of the government subsidizing medical insurance. To that extent, I construct and simulate a partial equilibrium computational model of medical care consumption and choice of insurance contracts. I use the overall utility of agents as a welfare measure and find that it is not welfare improving to subsidize uninsured agents by taxing insured ones. In addition I use the framework to verify the insurance contract choice effect and find a strong insurance contract choice effect. In Chapter 2, I investigate the effect of the price setting process under managed health care plans, such as HMOs and PPOs, on prices, profits of insurance companies and medical care providers, and household’s welfare compared to the indemnity plans prevalent before the advent of managed care. I construct a simple game played between a representative insurance company and a medical care provider to determine the price of medical care paid by insured and uninsured households. In addition, insurance companies set premiums not through solving the usual principal-agent problem which forces a zero profit condition, but rather and more realistically by optimizing profits. The outcome of this game is compared to the outcome of the indemnity plans where no price negotiations would occur. In Chapter 3, I investigate the effect of the suggested reform to the United States’ tax code in treatment of housing assets. In particular, I study the effect of the abolishment of the preferential tax treatment of housing assets (tax deductible mortgage interest payments and tax-free imputed rents) on the ownership and foreclosure rates in the housing market. I construct a model where heterogeneous agents decide on housing tenure in which default on housing mortgages occurs in equilibrium. I use this model to quantify the effect of this preferential tax treatment. I find that the elimination of the preferential tax treatment of housing assets results in a 33.4% reduction in foreclosures. Specifically, only eliminating the tax deductibility of interest on mortgage payments leads to a 12.4% reduction in foreclosure rates, while only taxing imputed rents generates a 32.5% reduction in foreclosure rates. / text

This thesis consists of four self-contained essays in economics. Their abstracts are presented below: Exit, Voice and Political Change: Evidence from Swedish Mass Migration to the United States. We study the political effects of mass emigration to the United States in the 19th century using data from Sweden. To instrument for total emigration over several decades, we exploit severe local frost shocks that sparked an initial wave of emigration, interacted with within-country travel costs. Our estimates show that emigration substantially increased the local demand for political change, as measured by labor movement membership, strike participation and voting. Emigration also led to de facto political change, increasing welfare expenditures as well as the likelihood of adopting more inclusive political institutions. Mass Migration, Cheap Labor, and Innovation. Migration is often depicted as a major problem for struggling developing countries, as they may lose valuable workers and human capital. Yet, its effects on sending regions are ambiguous and depend crucially on local market responses and migrant selection. This paper studies the effects of migration on technological innovation in sending communities during one of the largest migration episodes in human history: the Age of Mass Migration (1850-1913). Using novel historical data on Sweden, where about a quarter of its population migrated, we find that migration caused an increase in technological patents in sending municipalities. To establish causality, we use an instrumental variable design that exploits severe local growing season frost shocks together with within-country travel costs to reach an emigration port. Exploring possible mechanisms, we suggest that increased labor costs, due to low-skilled emigration, induced technological innovation.                                                    On the Right Track: Railroads, Mobility and Innovation During Two Centuries. We study the construction of the 19th-century Swedish railroad network and estimate its effects on innovation during two centuries. To address endogenous placement of the network, our analysis exploits the fact that the main trunk lines were built with the overarching aim to connect particular city centers, while at the same time considering construction costs. Estimates show that innovative activities increased substantially in areas traversed by the railroads. The number of active innovators increased and, moreover, they became more productive. Exploring potential mechanisms, we highlight the importance of knowledge diffusion across space by studying spatial patterns of collaboration between innovators. Our analysis shows that innovators residing in areas connected by the railroad start to collaborate more and over longer distances, especially with other innovators located along the railroad network. Finally, we show that the differences in innovative activities were intensified over the 20th century. Areas traversed by the historical railroads exhibit much higher rates of innovation in the present day.                           Homeownership, Housing Wealth and Socioeconomic Outcomes: Evidence from Sweden 1999-2007. This paper studies a government supported homeownership wave in Sweden, where tenants bought their apartments at prices below the market value in the ownership market. Using detailed administrative register data paired with a difference-in-differences strategy, it compares individuals subject to an ownership transfer to similar individuals who never got the opportunity to buy their homes. After establishing that the new homeowners instantly increased their net wealth, the effects of homeownership and housing wealth on a set of socioeconomic outcomes are measured over time. Although the lump-sum transfer is large, the average individual only modestly adjusts her behavior in terms of labor market participation and demographic decision-making. Studying differences across age, younger tenants increase childbearing and decrease labor income, although modestly. Individuals near their retirement age decrease their labor market participation.

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This diploma work is about real estate market in the Czech Republic and Great Britain. For comparison of these two markets and understanding how the current economic crisis has influenced them, I tried to compare the following indicators: house prices, inflation, average earnings, balance of trade, interest rates, homeownership and mortgage approvals. Housing bubbles in the USA have deliberately created the damage inflicted by companies shifting production abroad in an attempt to boost profits. As these bubbles burst, economic growth in many developed countries will inevitably tumble. Interviews with real estate and development Company in the Czech Republic and Great Britain helped me find out trends affecting property investment and its potentials. The marked factors which, I believe, will affect property investment prices now and in the future, are socio-economic trends, demographics, infrastructure, jobs and regeneration of the area. The property market has been changed from the market of supplier to the market of demander. Real estate and development Companies have to change their way of selling and offer complex and professional services. It is expected the real estate market will recovery slowly.