BACKGROUND Increasing tobacco taxes to increase price is a proven tobacco control measure. This article investigates how smokers respond to tax and price increases in their choice of discount brand cigarettes versus premium brands. OBJECTIVE To estimate how increase in the tax rate can affect smokers' choice of discount brands versus premium brands. METHODS Using data from International Tob...

Models using the Rational Expectations Hypothesis (REH) are widely recognized to be inconsistent with the observed behavior of premia in financial markets, as well as other features of asset price dynamics. Moreover, many reasons have been advanced as to why the REH cannot generally represent, even approximately, the expectations behavior of individually rational agents. In this paper, we devel...

The theory of Rational Belief Equilibria (RBE) offers a unified paradigm for explaining market volatility by the effect of "Endogenous Uncertainty" on financial markets. This uncertainty is propagated within the economy (hence "endogenous") by the beliefs of asset traders. The theory of RBE was developed in a sequence of papers assembled in a recently published book (Kurz [1997]) and the presen...

Oversight of private insurance, including health insurance, is primarily a state responsibility. Each state establishes its own laws and regulations regarding insurer activities, including premium increases for the insurance products within its purview. The authority that state regulators have to review and deny requests for premium changes varies from state to state, as do the amount of resour...

Current theories of the discount rate have a theoretical basis focused on risk; risk-free and risk premium. The basic component rate, as purely empirical has natural infirmity which consequently weakens final theory. Similarly, premium category is not theoretically perfect. fundamental shortcoming that theory does relate to knowledge capital its potential growth. Therefore, purpose discussion j...

OBJECTIVE To promote managed competition in Dutch health insurance, the insured are now able to change health insurers. They can choose a health insurer with a low flat-rate premium, the best supplementary insurance and/or the best service. As we do not know why people prefer one health insurer to another, we investigated their reasons for selecting their health insurer and assessed the importa...

This paper studies how information disclosure affects the cost of equity capital (i.e., risk premium) and investors welfare in a dynamic setting with overlapping generations of investors. Our analysis demonstrates that a firm’s cost of capital decreases (increases) in the precision of public disclosure if the firm’s growth rate is below (above) a certain threshold. The threshold growth rate is ...

The determination of stock prices and equilibrium expected rates of return in a general equilibrium setting is still imperfectly understood. In particular, as Grossman and Shiller (1981) and others have argued, stock returns appear to be too volatile given the smooth process for dividends and consumption growth. Mehra and Prescott (1985) claim that this smoothness in consumption and dividend gr...

SUMMARY The Myers-Cohn Net Present Value model and NCCI's IRR model are the two leading cash flow models used in ratemaking. This paper presents simple parameter and structural changes which demonstrate their equivalency. The " fair " premium produced by both models is shown to be identical given rational and consistent rules for setting parameter values, control of the flow of surplus, and dis...

In evaluating proposals for reforming Social Security that involve stock investments, the Office of the Chief Actuary (OCACT) has generally used a 7.0 percent real return for stocks. The 1994-96 Advisory Council specified that OCACT should use that return in making its 75-year projections of investment-based reform proposals. The assumed ultimate real return on Treasury bonds of 3.0 percent imp...