Economics Insights @ CBS

Risk free asset demand in the classic portfolio problem is shown to decrease with income if and only if the consumer's uncertainty preferences over assets satisfy the preference condition that the risk free asset is more readily substituted for the risky asset as the quantity of the latter increases. In this case, the risky asset is said to be "urgently needed" following the terminology of the classic certainty analysis of Johnson (1913). The urgently needed property tends to be more readily satisfied in uncertainty versus certainty settings.

Understanding country differences in temporal discounting is critical for extending incentive-based environmental policies successfully from developed countries to developing countries. We examined differences between Chinese and Americans in discounting of future financial and environmental gains and losses. In general, environmental use value was discounted significantly more than the monetary values, but environmental existence value was discounted similarly to the monetary values. Confirming previous research, we found that participants discounted gains significantly more than losses.

The article describes the potential negative consequences of the courses about academia, and especially the danger of weakening research and the innovation system of research universities. The MOOC courses may disrupt the structure of higher education because their business model is effective in de-linking the three components of an active University: teaching, research, and approval of credit for degree-granting courses. In the end, the article offers universities several ways to deal with the negative consequences of these MOOC courses.

Tens of millions of people are currently choosing health coverage on a state or federal health insurance exchange as part of the Patient Protection and Affordable Care Act. We examine how well people make these choices, how well they think they do, and what can be done to improve these choices. We conducted 6 experiments asking people to choose the most costeffective policy using websites modeled on current exchanges. Our results suggest there is significant room for improvement.