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Ms. Aude Pommeret and Ms. Anne Epaulard
This paper aims to measure the risk premium on French equities during 1960-92 and to evaluate how well theoretical models based on various representations of agents' preferences can explain it. Aside from the standard, time-additive utility function with constant relative risk aversion, three other utility functions are reviewed: a recursive utility function, a habit formation utility function, and a utility function that accounts for the interdependence of preferences. Both calibration and econometric estimations show that none of the studied marginal changes in the representation of agents' preferences are sufficient to solve both the equity premium puzzle and the risk-free rate puzzle.
Ms. Aude Pommeret and Ms. Anne Epaulard

fluctuations in consumption is valid under the very same set of assumptions that are incapable of explaining the equity premium. Yet it would be reasonable to expect that the premium demanded by stockholders for holding risky assets and the “welfare cost of fluctuations” would be based on the same economic mechanisms and the same characteristics of agentspreferences. Thus several solutions to these puzzles have been proposed since Mehra and Prescott published their article. Some solutions use a different formulation of agentspreferences; others cite financial market

Boriana Yontcheva
This paper presents a dynamic game of strategic delegation between a principal and an agent. The principal can choose between two organizational designs: a traditional hierarchy where she retains authority over the choice of projects to be implemented or a delegation where she allows her agent to select the project. The key objectives of this model are to identify the long-run determinants of the principal’s choice and verify the impact of the authority allocation on the agent’s effort levels and on the principal’s payoffs. We apply the model to the relationships between institutional donors and nongovernmental organizations.