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The Real Estate Market Index in The Real Estate Finance Journal Fall 2010: 77–91.
Abstract: The Real Estate Market Index (“REMI”) combines sales price, sales volume and days on market into a summary measure of market activity or liquidity. The REMI, which rises with price or volume and falls with days on market, is more sensitive to market sentiment than indices based on price alone, e.g., the Case-Schiller Index. The REMI is useful to people who want a measure of market liquidity. Data from over 19,000 sales that occurred between January 2000 and November 2009 in Mission Viejo, California illustrate the calculation, calibration and application of the REMI.
Press Releases 2008: Mar Sep Oct Nov Dec 2009: Jan Feb Mar. Excel file with data, showing calculation of REMI.

An auction market for journal articles (with Jens Prufer) in Public Choice (forthcoming)
Abstract: We recommend that an auction market replace the current system for submitting academic papers and show a strict Pareto-improvement in equilibrium. Besides the benefit of speed, this mechanism increases the average quality of articles and journals and rewards editors and referees for their effort. The "academic dollar" proceeds from papers sold at auction go to authors, editors and referees of cited articles. nonpecuniary income indicates the academic impact of an article — facilitating decisions on tenure and promotion. This auction market does not require more work of editors.
An overview article [PDF] on the AMJA (in German)

Teaching economic principles: algebra, graph or both? [pdf] (with Carlo Russo and Navin Yavapolkul) in The American Economist 55(1): 123–131.
Abstract: We find that student performance on questions posed in the standard heterogeneous combination of algebraic direct demand and graphic inverse demand is significantly worse than their performance on questions posed in homogeneous combinations. Since this performance deficit persists with advanced students, it seems that economists’ canonical presentation of demand may hinder, rather than help, learning. We recommend that Principles students begin with the homogenous, direct combination of algebra and graph before turning to the standard direct-inverse combination. This modification would create benefits on the extensive margin — reducing attrition from confusion — and intensive margin — increasing comprehension for all students.

Water Reallocation in California: A Broken Hub Will Not Wheel [pdf] in the Journal of Contemporary Water Research and Education 144: 18–28.
Abstract: California's water transfer system depends on the Sacramento-San Joaquin Delta to move water. Unfortunately, the Delta's ecosystem appears to be suffering from this use -- and other uses. After discussing the stakeholders in the Delta, the causes of ecological decline, and the choices for change (including a radical political-economic market), I conclude that business-as-usual is over, that any solution is costly, and that the politicians and bureaucrats in the middle of this process benefit from conflict and inaction. The Delta will remain broken for the foreseeable future.
[NB: This article went to press with two typos: p23: "(discussion actions and costs in Section “Fight and Compromise”)." should have been deleted. p27, note 9: should say "Desalination and reclamation cost about $1,200 and $600, respectively."]

The end of abundance: How water bureaucrats created and destroyed the southern California oasis in Water Alternatives 2(3): 350–369
Abstract: This paper describes how water bureaucrats shaped Southern California’s urban development and put the region on a path of unsustainable growth. This path was popular and successful until the supply shocks of the 60s, 70s and 80s made shortage increasingly likely. The drought of 1987–1991 revealed that the norms and institutions of abundance were ineffective in scarcity. Ever since then, Southern California has teetered on the edge of shortage and economic and social disruption. Despite the risks of business as usual, water bureaucrats, politicians and developers continue to defend a status quo management strategy that serves their interests but not those of citizens. Professional norms, control of the discourse, and insulation from outside pressure slow or inhibit the adoption of management techniques suitable to scarcity. Pressure from increasing population and politically and environmentally destabilised supplies promise to make rupture more likely and more costly.

Conflict and Cooperation within an Organization: A Case Study of the Metropolitan Water District of Southern California
Abstract: [PhD Dissertation] The Metropolitan Water District of Southern California (MET), a cooperative of retail and wholesale water utilities, serves 18 million people. This case study explains how MET - as a cooperative - is inefficient and how its member agencies suffer from this inefficiency. I show that MET is inefficient by demonstrating that its members have heterogeneous preferences over outcomes: Members that are more dependent on MET prefer policies that increase water supply; others prefer lower rates. Although heterogeneity had existed since at least the 1940s, MET avoided conflict well into the 1970s. I explore two possibilities for efficiency despite heterogeneity. First, MET had so much water that it could treat it as a club good, i.e., members did not need to agree on policies over non-rival water. Second, member agencies may have had social preferences (one for all and all for one). Shrinking subsidies and supplies in the 1960s changed water from a club to private good. The end of social preferences is not so obvious, so I asked MET's member agency managers to participate in public goods experiments. They do not appear to have social preferences. If MET is inefficient as a cooperative, we should see evidence of this inefficiency, and MET's pricing policies (setting annual prices in the prior year and selling water for the same price to all locations) provide this evidence. With increasing water scarcity, the damage from these policies is growing.

I use 60 years of panel data to show that water increases land value, dependency lowers it, and water may have been misallocated during the 1987-1991 drought. I describe how marginal water can be auctioned after inframarginal, lifeline water is allocated and present experimental results for water auctions in which water managers suffer endowment effects but compete more (relative to students). In addition to the analysis of MET, other contributions are a quantification of bargaining power within an organization (dependency), measurement of water manager cooperation, estimation of the value of water on urban land, and design of auctions for equity and efficiency.
NB: This dissertation was also published as a book by VDM Verlag (2009).

Working Papers on SSRN

Water Rights and Human Rights: The Poor Will not Need Our Charity if We Need Their Water
Abstract: Each year, about 2.8 million people die due to problems with poor water supply, sanitation and hygiene. Over three-quarters of the dead are children. Some argue that a human right to clean water would improve this situation. This paper shows that human rights are not sufficient to improve access to clean water and argues that it would be more productive to give people a property right to water. Because property rights --- unlike human rights --- are alienable, some portion of an individual's rights can be exchanged for access to clean water. Besides this basic equity outcome, property rights could enrich the poor, increase the efficient use of water, and improve water supply reliability in countries with poor governance.

Save the poor, shoot some bankers
Abstract: Bilateral or multilateral organizations control about 90 percent of official overseas development assistance (ODA), much of which is wasted. This note traces aid failure to the daisy chain of principal-agent-beneficiary relationships linking rich donors to aid bureaucrats to poor recipients. Waste results when aid middlemen (un)intentionally misdirect ODA. Waste can be reduced by clarifying domestic goals for ODA, using fewer middlemen with greater intrinsic motivation, empowering recipients, and/or replacing bureaucracy with markets.

Focal Points, Gender and Reciprocation in Public Goods Games
Abstract:Two treatments of a public goods game are compared. In the implicit treatment (Implicit), subjects do not see the average contribution of others in their group, but they can calculate it from the information available. In the explicit treatment (Explicit), subjects see the average contribution of others in their group. I type subjects as cooperators, free-riders or reciprocators by regressing their contribution decision on the (implicit or explicit) average contribution of others.

The share of reciprocators is 63 percent in Implicit, but 84 percent in Explicit, which has lower shares of both cooperators and free-riders. Interestingly, this difference is the result of different female behavior (treatments are between subject): The share of female reciprocators drops (significantly) from 85 to 49 percent; the male share drops (insignificantly) from 83 to 74 percent.

Why do women behave so differently? Although women behave similarly to men in Explicit, more women pursue unconditional strategies of free-riding or cooperation in Implicit - either because it is easier (the "lazy'" explanation) or because they see no focal point (the "strategic" explanation). Either way, females appear to be the channel of ecological rationality: Their different behavior maintains earning parity across treatments.

The Effects of Endogenous Exchange Rates on Behavior in Public Goods Experiments
Abstract: We test whether endogenous exchange rates have an impact on behavior in a linear public good experiment. Paying participants based on endogenous exchange rates (which basically means paying shares of a known quantity to participants according to how well they do relative to others) can simplify an experimenter's budgeting decisions but creates tournament incentives - participants do not need to do as well as possible, but just better than other participants.

We find that tournament incentives matter in some contexts but not in others: Participants contribute the least to their own group's public account when each participant's payment depends on her performance relative to participants in the same group. When payments depend on one's performance relative to participants in other groups, the intergroup competition effect, found in previous research, seems to kick in, and participants contribute the most to their group's public good. Participant contributions fall between these extremes when payment depends on a participant's performance relative to all participants (inside group and in other groups). Contributions are in this case not significantly different from contributions in the baseline treatment, a traditional linear public good experiment with exogenous exchange rates. This result implies that an experimenter who wants to use a fixed budget for a public good experiment might be able to do so without distorting participants' decisions.

Pointing Fingers: Monitoring, Evolution and Efficiency Among 15 Middlemen
Abstract: International aid travels from donor to recipient through a chain of middlemen. Middlemen play two roles: as agents delivering aid and as principals monitoring other middlemen delivering aid. As the quality of middlemen falls, shirking (theft) increases, and aid effectiveness falls. While quality has an unambiguous, positive impact, the relative effectiveness of different monitoring techniques is not obvious.

I compare different monitoring techniques in simulations of multiple middlemen interacting over many periods. Simulations improve our intuitive understanding of non-equilibrium dynamics and evolution; they also help us rank monitoring techniques. The most-efficient monitoring technique - tolerating some but not too much waste - performs better than either overly-strict or more-clever alternatives.

Killing the Golden Goose? Tourism and Deforestation in Nepal
Abstract: This paper analyzes economic forces in Nepal's tourism market. Market actors' utility maximization results in inefficient supply and demand outcomes and unsustainable ecotourism. This result is in direct contradiction to the stated goals of the actors, but predictable in the context of the tourism market structure. Proposed solutions include improved property rights and a change in government objectives.

Markets for Afghan Opium and US Heroin: Modeling the Connections
Abstract: This modeling project examines the short-run effects of a program wherein the United States becomes the primary buyer of opium produced in Afghanistan and thereby reduces the global supply of heroin (refined opium). The model graphically shows that supply-side intervention will result in a large decrease in short-run world heroin supply, as well as many beneficial side effects. The U.S. heroin market is neither adversely nor beneficially affected, despite a budget-neutral change in spending priorities.

Markets for Water: All-in-Auctions (Paper with Dafna DiSegni and Executive Summary) -- note that this project will have three parts: theoretical, lab and field.
Abstract. Although water markets hardly exist in many parts of the world, those that do exist suffer from illiquidity to the extent that potential sellers do not participate in markets (a participation effect) and those who do participate tend to ask too much for their water (an endowment effect). This paper describes an auction mechanism that will minimize these effects, maximizing water allocation efficiency and social welfare. In the final section, we briefly discuss our future plans to test the mechanism in the lab and field.

They Get You Coming and Going: University Market Power and Fees -- to be revised [old version]

Roundabouts in Davis
Abstract. In this analysis, I will examine traffic control alternatives that can improve situations like this using at two intersections in Davis as examples. My primary alternative is the roundabout design, which lowers top speeds, increases average speeds, and results in safer and more satisfying traffic flow for drivers, bicyclists, pedestrians and neighborhood residents. I recommend that the Davis City Council proceed to investigate the feasibility of converting Richards Boulevard and Olive (A Street and 3rd) from signal (stop sign) to urban single lane (min) roundabout.

The Rumormill
Abstract. Market competition provides price information and benefits consumers. Political competition should do the same thing, allowing citizens to reward (punish) politicians and bureaucrats for their good (bad) deeds. Unfortunately, complex political administration, lags between elections and limited resources of those who police civil society make policy efficiency is even less likely than economic efficiency. I propose a new check on political malfeasance, www.rumormill.com, where anonymous visitors could post rumors on the misbehavior of organizations, debate these rumors, vote on their validity, and receive positive (negative) feedback when they turn out to be true (false). The proposed mechanism promises to increase transparency in politics and empower the “little guy” against injustice.
Note: I set up a 501(c)3 non-profit corporation (Rumor Mill Inc.) and website [early version]. After some time, I rebranded the site "Whistle-safe," but the idea never took off [dormant site]. This was a sad failure for me.

Stop the Spork! A Proposal for Social Security Reform [1,600 words] [860 words]
Abstract. President Bush's proposals for social security reform ran into strong opposition and died. I outline a reform that would make social security sustainable, support private retirement accounts and guarantee security for the elderly.