The inverse relationship between land productivity and farm size is an old and puzzling empirical regularity. Most explanations for this relationship rely on market imperfections that jointly determine the farm size and the household's shadow price of some productive inputs. We use plot-level data from the ICRISAT/VLS to assess whether these household-specific theories can explain the puzzle. The data exhibit plots of different sizes being simultaneously cropped by the same household. The inverse relationship is shown to hold true with the same magnitude across the plots of each household, thus cross-household heterogeneity does not suffice to explain the puzzle.

We use data from a Brazilian social program to investigate the existence of gender bias in intrahousehold allocations of resources. The program makes cash transfers to mothers and pregnant women in poor households. Bureaucratic mistakes, beyond the control of the applicants, have inadvertently excluded many households that had applied and were accepted to the program. This unintentional natural experiment is used to identify the impact of an exogenous variation in female nonlabor income over household consumption. We find that program participation led to an increase in food expenditure, but this effect is not due to women being the benefit recipients.

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Ever since Adam Smith, share contracts have been condemned for their lack of incentives. Sharecropping tenants face incentives to undersupply productive inputs since they receive only a fraction of the marginal revenue. The empirical literature reports that lands under sharecropping are indeed less productive and employ inputs less intensively than those operated by owners. This paper shows that (1) sharecropping and fixed-rent tenancy are both associated with low-quality lands, (2) plots under sharecropping and fixed rent present (on average) the same unconditional productivity, (3) controlling for observed land quality and input use, their average productivities are also identical to those of owner-operated plots, and (4) the input choices satisfy the same profit maximization conditions for all land contracts. These results challenge the conventional wisdom connecting sharecropping to incentive distortions. They support an alternative view that farmers optimally employ more input resources into good-quality lands, which are typically managed by owners. (c) 2008 byThe University of Chicago. All rights reserved..

Summary.It is widely believed that call options induce risk-taking behavior. However, Ross (2004) challenges this intuition by demonstrating the impossibility of inducing managers with arbitrary preferences to always act as if they were less risk averse. If preferences and price distributions are unknown, risk-taking behavior cannot be always induced by an option contract. Here, we prove a new result showing that, with no information about preferences and some knowledge about prices, one can write a call option that makes all managers prefer riskier projects to safer ones. This points out that in order to design options that induce risk taking it is sufficient to have information about price distributions.

This paper studies a class of general equilibrium economies in which the individuals’ endowments depend on privately observed effort choices and the financial markets are endogenous. The environment is modeled as a two-stage game. Individuals first make strategic financial-innovation decisions. They then act in a Radner-type economy with the previously designed securities. Consumption goods, portfolios, and effort levels are chosen competitively (i.e., taking prices as given). An equilibrium concept is adapted for these moral hazard economies and its existence is proven. It is shown through an example how incentive motives might lead to the endogenous emergence of financial incompleteness. Copyright Springer-Verlag Berlin/Heidelberg 2005General equilibrium, Moral hazard, Endogenous incomplete markets, Non-exclusive securities.,

Summary.It is widely believed that call options induce risk-taking behavior. However, Ross (2004) challenges this intuition by demonstrating the impossibility of inducing managers with arbitrary preferences to always act as if they were less risk averse. If preferences and price distributions are unknown, risk-taking behavior cannot be always induced by an option contract. Here, we prove a new result showing that, with no information about preferences and some knowledge about prices, one can write a call option that makes all managers prefer riskier projects to safer ones. This points out that in order to design options that induce risk taking it is sufficient to have information about price distributions.

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