Organizations & Markets

We examine the hypothesis that dividend taxes are capitalized into share prices by focusing on investors? implicit valuations of retained earnings versus paid-in equity. Retained earnings are distributable as taxable dividends, whereas paid-in equity is distributable as a tax-free return of capital. Consistent with dividend tax capitalization, firm-level results for the United States indicate that accumulated retained earnings are valued less per unit than contributed capital. In addition, differences in dividend tax rates across U.S.

The nation's spending for prescription drugs has grown dramatically in recent years. Previous studies have shown that the replacement of older drugs by newer, more expensive, drugs is the single most important reason for this increase, but they did not measure how much of the difference between new and old drug prices reflects changes in quality as better, newer drugs replace older, less effective medications.

The common image of a lone folk scientist laboring to make sense of a single agent's behavior is helpful but incomplete in its recognition of social context as it surrounds the perceiver and as it is reflected in the perceiver's folk theories. In this chapter, we review insights from social and cultural psychology that both confirm and expand the perceiver-as-scientist view. We proceed in three parts.

Many tendencies in social perceivers' judgments about individuals and groups can be integrated in terms of the premise that perceivers rely on implicit theories of agency acquired from cultural traditions. Whereas American culture primarily conceptualizes agency as a property of individual persons, other cultures conceptualize agency primarily in terms of collectives such as groups or nonhuman actors such as deities or fate.

The seemingly quick global recovery from the Asian financial crisis and its limited effect on industrial countries produced far less sould searching about capitalism's basic principles than the Great Depression. The author argues that the global economic arrangements were inadequate in both instances and that the IMF requires serious reform to ensure a more stable global economic environment.

The paper "Whence Reform?" by the Polish economists Marek Dabrowski, Stanislaw Gomulka, and Jacek Rostowski (DGR) is a welcome and revealing commentary on what is called the "Stiglitz Perspective." Our main response is gratitude at DGR's agreement with the main theses of "Whither Reform?" such as the critiques of voucher privatization and of the attempts to quickly install institutional reforms involving long agency chains. Our positions are not poles apart.

Amnesty International has long been an effective champion of free speech. Amartya Sen, the winner of the Nobel Prize in economics, has argued that famines do not occur in societies in which there is a free press. In this lecture, I want to set forth the case for greater openness and transparency in government.

In the field of economics, perhaps the most important break with the past - one that leaves open huge areas for future work - lies in the economics of information. It is now recognized that information is imperfect, obtaining information can be costly, there are important asymmetries of information, and the extent of information asymmetries is affected by actions of firms and individuals.

This paper focuses on how decisions about the role of the state are made. Part I reveiws current thinking on the appropriate role of the state, and Part II puts forward five new propositions for improving the processes that underlie government action.