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The current paper proposes analytical solution of the problem of optimal allocation of resources in the game of two parties, based on the production function of Cobb-Douglas with constant returns under changing scale of production. The Edgeworth box is used to derive the main scientific findings of this research, namely: the analytic representation of Contract Curve; Community indifference curve, a production possibility frontier curve under Cobb-Douglas production function, analytical representation of the solution of maximization income in solving resource allocation problem. The proposed technique is more suitable for practical applicability compared with prevailing theoretical resource allocation models based on Cobb-Douglas production function.

Two problems appear to be most topical in conjunction with mortgage valuation practices during an economic crisis: the assessment of sustainable long-term mortgage values and the assessment of liquidation discounts to prevailing market values which would provide for the most advantageous liquidation/quick sale strategy. This paper addresses the latter issue, which has traditionally proven intractable to analytical modeling. Apart from reviewing some research devoted to the subject of liquidation value modeling, predominantly from the Eastern European perspective, where this issue has, for years, commanded a particular economic interest, this paper synthesizes the best features of this research and builds on it to propose its own model, which lays equal emphasis on both the sellerside and demand-side perspectives. The first perspective accounts for the financial interests of a lender in forced sale disposals, while the latter perspective engages economic analysis on the side of market feasibility of identified efficient lender disposal strategies. By negotiating both perspectives, an optimal analytic solution to the issue of liquidation value discounts can be obtained. This is achieved by what we call a SI-MI framework which is developed throughout the paper.We also adapt this framework specifically to the mortgage banking context where we use it to bring to light some rarely discussed linkages between the LTV policies of a bank and its mortgage liquidation strategies. This also allows us to propose a model and an LTV formula which can help organize thinking about optimal LTV policies in credit issuing processes.We hope that, with the re-appearance of liquidation value basis/premise of valuation as a recognized international basis of valuation in the new edition of the International Valuation Standards (IVS 2017), the findings of this paper will become topical.

Agricultural intensification in rural areas of developing countries compromises the provision of ecosystem services. Social conflict arises among landholders with different preferences for ecosystem services and land-use practices in agricultural frontiers of the Argentine Dry Chaco. We explored policy and management options by assessing the actual and potential outcomes of alternative land-use systems and scenarios. We first constructed the efficiency frontier for avian habitat and agricultural productivity to analyze the combinations of ecosystem services that can be achieved under different land-use intensities. A nonlinear, concave efficiency frontier indicated opportunities to achieve large gains for production with small losses for conservation, for instance, by transitioning from low- to intermediate-intensity systems. Second, we projected production and conservation outcomes, which can be achieved through the implementation of five alternative policy options. The land sharing with conservation scenario, 70% of the landscape covered by intermediate-intensity systems and 30% by undisturbed forests, yielded the higher combination of avian habitat and agricultural productivity. Third, we constructed indifference curves of three landholder groups, i.e., preproductivist, multifunctional, and productivist, by assessing their intentions (proxies for preferences) to conserve and convert remnant forests in their landholdings. Multifunctional landholders showed balanced preferences for conserving and converting forests in their landholdings, and maintaining intermediate-intensity systems. A general willingness to conserve forests coexisted in preproductivist landholders with the intention to clear some portions of the landholding and intensify landuse, indicating the potential of an endogenously motivated transition toward a multifunctional regime. Such transition may increase their productivity by 35-65% without compromising avian habitat. Productivist landholders showed a strong inclination toward converting forests for pasture cultivation, despite the observation that they can increase their conservation outcomes by 30-50% without significantly reducing productivity by transitioning toward a multifunctional regime. Promoting this transition will require exogenous incentives and regulations tailored to the behavior of this landholder group.

Information costs, which comprise costs of gathering and processing information about stock values and costs of deciding how to respond to this information, induce a consumer to remain inattentive to the stock market for finite intervals of time. Whether, and how much, a consumer transfers assets between accounts depends on the costs of undertaking such transactions. In general, optimal behavior by a consumer facing both information costs and transactions costs is state-dependent, with the timing of observations and the timing and size of transactions depending on the state. Surprisingly, if the fixed component of the transactions cost is sufficiently small, then eventually, with probability 1, a time-dependent rule emerges: the interval between observations is constant and on each observation date, the consumer converts enough assets to liquid assets to finance consumption until the next observation. If the fixed component of transactions costs is large, the optimal rule remains state-dependent indefinitely.

We characterize generalized disappointment aversion (GDA) risk preferences that can overweight lower-tail outcomes relative to expected utility. We show in an endowment economy that recursive utility with GDA risk preferences generates effective risk aversion that is countercyclical. This feature comes from endogenous variation in the probability of disappointment in the representative agent's intertemporal consumption-saving problem that underlies the asset pricing model. The variation in effective risk aversion produces a large equity premium and a risk-free rate that is procyclical and has low volatility in an economy with a simple autoregressive endowment-growth process.

Extremes of the Edgeworth box concern corner allocations and their relationship to the contract curve in a two-good, two-agent exchange economy. In the standard pure-exchange setting with well-behaved preferences, the contract curve comprises all Pareto-efficient allocations, including interior tangencies and boundary corners, where no mutually beneficial trade remains. When money is introduced as a numéraire (a medium of exchange only), real feasibility and preferences are unchanged, so the contract curve remains the benchmark for efficiency. When money provides liquidity services (is valued for holding), agents may rationally abstain from trade even near interior tangencies; short-run outcomes can therefore include inaction at corners. This entry defines these objects, outlines the efficiency conditions at boundaries, and summarizes how monetary interpretations affect short-run behavior in general equilibrium and monetary economics. The Edgeworth geometry remains a real-exchange depiction; when we discuss money as a store of value, we use it as a short-run, reduced-form outside option that proxies intertemporal motives. This does not “fix” the box; it clarifies why no-trade at or near corners can be individually rational when liquidity is valued.

Professional lobbyists are among the most experienced, knowledgeable, and strategic actors one can find in the everyday practice of politics. Nonetheless, their behavioral patterns often appear anomalous when viewed in the light of existing theories. We revisit these anomalies in search of an alternative theory. We model lobbying not as exchange (vote buying) or persuasion (informative signaling) but as a form of legislative subsidy—a matching grant of policy information, political intelligence, and legislative labor to the enterprises of strategically selected legislators. The proximate political objective of this strategy is not to change legislators' minds but to assist natural allies in achieving their own, coincident objectives. The theory is simple in form, realistic in its principal assumptions, and counterintuitive in its main implications. Empirically, the model renders otherwise anomalous regularities comprehensible and predictable. In a later section, we briefly bring preferences back in, examining the important but relatively uncommon conditions under which preference-centered lobbying should occur.

Effective management of ecosystem services requires understanding the biophysical relationships governing the trade-offs, as well as stakeholder preferences for the trade-offs. However, useful tools to guide the complex decision-making process are often lacking. This study demonstrates an approach that combines biophysical and economic models to identify socially preferred solutions. We demonstrate in the context of dam-removal decisions across thousands of dams in Maine, U.S. The results demonstrate the practical usability of this framework for identifying key trade-offs, areas in which people are in agreement and conflicted, along with solutions that are more preferred by society overall. The results also reveal a 30–47% welfare gain from optimizing across all ecosystem services, compared to a more common, visual approach of optimizing two services at a time. This approach may be useful to identify restoration projects that are likely to garner broad public support, particularly when there are trade-offs between ecosystem services, numerous potential solutions, and communities with diverging preferences.

We discuss the terms-of-trade effects of the import tariffs imposed by the US administration. Import tariffs benefit a large nation by suppressing the export price of the good it imports and by improving its terms of trade. This allows the large nation to move to a higher consumption point without the need for actual economic growth. The terms-of-trade gain is substantive for a large nation, while there is none for a small open economy. Borrowing on international trade theory we argue that the purpose of the import tariffs imposed by the USA is not merely to resolve trade balance issues, but rather to effortlessly improve the consumption position of the country.