Keyword auctions with budget-constrained bidders

We study a keyword auction model where bidders have constrained budgets. In the absence of budget constraints, Edelman et al. (Am Econ Rev 97(1):242–259, 2007) and Varian (Int J Ind Organ 25(6):1163–1178, 2007) analyze “locally envy-free equilibrium” or “symmetric Nash equilibrium” bidding strategies in generalized second-price auctions. However, bidders often have to set their daily budgets when they participate in an auction; once a bidder’s payment reaches his budget, he drops out of the auction. This raises an important strategic issue that has been overlooked in the previous literature: Bidders may change their bids to inflict higher prices on their competitors because under generalized second-price, the per-click price paid by a bidder is the next highest bid. We provide budget thresholds under which equilibria analyzed in Edelman et al. (Am Econ Rev 97(1):242–259, 2007) and Varian (Int J Ind Organ 25(6):1163–1178, 2007) are sustained as “equilibria with budget constraints” in our setting. We then consider a simple environment with one position and two bidders and show that a search engine’s revenue with budget constraints may be larger than its revenue without budget constraints.     

Core equivalence with differentiated commodities

This paper presents improved core equivalence results for atomless economies with differentiated commodities in the framework of Ostroy and Zame (1994). Commodity bundles are elements of the space $M\left(K\right)$ of signed Borel measures on a compact space $K$ of commodity characteristics. Ostroy and Zame provide two sufficient conditions for core equivalence: It is sufficient that markets are “physically thick”, so that there are many suppliers of every commodity, or that markets are “economically thick”, so that consumers are sufficiently willing to substitute commodities with a similar composition for each other. The sufficient conditions in Ostroy and Zame (1994) all imply that there are “many more agents than commodities”, an idea of Aumann that was formalized and discussed in Tourky and Yannelis (2001) and Greinecker and Podczeck (2016). We generalize the framework in Ostroy and Zame (1994) and weaken their sufficient conditions to not imply the presence of “many more agents than commodities”. In particular, we drop the requirement that $K$ is metrizable from the basic model, the requirement of an uniform bound on endowments from the condition of “physically thick markets”, and the requirement that preferences are weak${}^1$-continuous from the condition of “economically thick markets”. Core equivalence still holds, showing that “many more agents than commodities” are not needed for core equivalence in models of commodity differentiation.     

Camouflaged Indicators of Earnings Management†

Abstract

We argue that, in response to increased scrutiny and greater attention to accruals versus sales, firms become more likely to engage in accrual conversion (AC) cash management aimed at aligning cash and accruals with earnings and sales (e.g. by factoring of receivables). In doing so, they reduce the statistical power of standard indicators of accrual-based earnings management – in effect, camouflaging their earnings management activity. This proposition is of interest because many influential papers on earnings management have utilized accrual-based indicators to reach their conclusions. Our results indicate that firms indeed became more likely to engage in AC cash management after the passage of the Sarbanes-Oxley Act (SOX), and that this tendency was particularly pronounced among firms with strong incentives (or enhanced ability) to perform and hide earnings management. In particular, our findings suggest that the post-SOX decrease in standard measurements of accrual-based earnings management, identified in prior research, is partially attributable to firms’ increased engagement in AC cash management activity.     

The StoNED age: the departure into a new era of efficiency analysis? A monte carlo comparison of StoNED and the “oldies” (SFA and DEA)

Based on the seminal paper of Farrell (J R Stat Soc Ser A (General) 120(3):253–290, 1957), researchers have developed several methods for measuring efficiency. Nowadays, the most prominent representatives are nonparametric data envelopment analysis (DEA) and parametric stochastic frontier analysis (SFA), both introduced in the late 1970s. Researchers have been attempting to develop a method which combines the virtues—both nonparametric and stochastic—of these “oldies”. The recently introduced Stochastic non-smooth envelopment of data (StoNED) by Kuosmanen and Kortelainen (J Prod Anal 38(1):11–28, 2012) is such a promising method. This paper compares the StoNED method with the two “oldies” DEA and SFA and extends the initial Monte Carlo simulation of Kuosmanen and Kortelainen (J Prod Anal 38(1):11–28, 2012) in several directions. We show, among others, that, in scenarios without noise, the rivalry is still between the “oldies”, while in noisy scenarios, the nonparametric StoNED PL now constitutes a promising alternative to the SFA ML.     

The criticality of risk factors in customer relationship management projects

Customer relationship management (CRM) remains an area of considerable interest in contemporary project management literature, due to its association with high failure rates. This research examined the criticality of four risk factors. Quantitative data analyzed using PASW17 were collected from a sample of 250 CRM project practitioners. Although we found strong evidence to support the focus on these risk factors, which include “user training,” “top management support,” “business strategy and technology alignment,” and “effective project feedback,” the authors found that, although some risk factors may be identified as “critical,” their criticality is dependent on the context of the project.     

The analysis of risk perception with fuzzy means-end approach

Visitors’ risk perceptions have been found to influence the on-site behavior of tourists and their intention to return to a destination or to recommend it to others. This study discusses how the uses of a means-end approach with fuzzy conceptualization in eliciting the perception of tourism risks in a better understanding of the visitors’ perceptual orientation toward the tourism values. We provide a hierarchy value map that fuses the attribute–consequence–value (A–C–V) and fuzzy linguistics to effectively and efficiently understand vacation risks and risk characteristics. Fuzzy logic is also adopted to deal with the ill-defined nature of the tourist linguistic judgments required in the proposed means-end chain. This research findings suggest that additionally to managing the most likely risks, tourist resorts should be prepared to cope with worst case scenarios such as “Thunderstorm”, “Bus accident”, “Food poisoning” and “Cable car accident”. From an overall risk perceptive, tourists are most concerned with dominant perceptual orientation of risk delivers being “Bus accident” → “Decrease of trust in the safety management as a result of the event of damage” → “Anger”.     

The Industrial Statistics Divide: Are Statisticians Really Relevant to Business and Industry?

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On the choice of measures of reliability and validity in the content-analysis of texts

The paper discusses several reliability measures: Scott’s pi, Krippendorff’s alpha, free marginal adjustment (Bennett, Alpert and Goldstein’s \(S\) ), Cohen’s kappa, and Perreault and Leigh’s \(I\) and the assumptions on which they are based. It is suggested that correlation coefficients between, on one hand, the distribution of qualitative codes and, on the other hand, word co-occurrences and the distribution of the categories identified with the help of the dictionary based on substitution complement the other reliability measures. The paper shows that the choice of the reliability measure depends on the format of the text (stylistic versus rhetorical) and the type of reading (comprehension versus interpretation). Namely, Cohen’s kappa and Bennett, Alpert and Goldstein’s \(S\) emerge as reliability measures particularly suited for perspectival reading of rhetorical texts. Outcomes of the content analysis of 57 texts performed by four coders with the help of computer program QDA Miner inform the analysis.     

Throwing good money after bad

An “investment bubble” is a period of “excessive, and predictably unprofitable, investment” (DeMarzo et al. in J Financ Econ 85:737–754, 2007). Such bubbles most often accompany the arrival of some new technology, such as the tech stock boom and bust of the late 1990s and early 2000s. We provide a rational explanation for investment bubbles based on the dynamics of learning in highly uncertain environments. Objective information about the earnings potential of a new technology gives rise to a set of priors or a belief function. A generalised form of Bayes’ rule is used to update this set of priors using earnings data from the new economy. In each period, agents—who are heterogeneous in their tolerance for ambiguity—make optimal occupational choices, with wages in the new economy set to clear the labour market. A preponderance of bad news about the new technology may nevertheless give rise to increasing firm formation around this technology, at least initially. To a frequentist outside observer, the pattern of adoption appears as an investment bubble.     

The two faces of Nordic management? Nordic firms and their employee relations in the Baltic States

This study examines Nordic management styles in union and non-union industrial enterprises in the Baltic States (Estonia, Latvia, Lithuania) through case studies of nine Nordic subsidiary companies, based on on-site interviews with management and employees.1 1. Here, I refer to ‘Nordic’ countries denoting Denmark, Finland and Sweden, for the companies chosen for research are from these three countries and for the sake of common social and economic characteristics among these three countries, basing on the varieties of capitalism (VoC) literature. That is why Norway, a country seen usually in the composition of the Nordic countries, is left out of this investigation. The entity ‘Baltic States’ or ‘Baltic countries’ refers here to the three countries on the eastern shore of the Baltic Sea: Estonia (population 1.4 million), Latvia (2.3 million) and Lithuania (3.4 million). This analysis construes the ‘Nordic model’ of management style as ‘bargained constitutional’ or ‘sophisticated consultative’, following Purcell and Ahlstrand's (1994) matrix of management styles in the highly unionized countries of origin, characterized as coordinated market economies. The case studies reveal that in the Baltic liberal-market environment, Nordic employers exhibit a variety of management styles, ranging from sophisticated human relations or paternalistic relations styles in non-union contexts, to an adversarial bargained style or modern paternalistic style in unionized subsidiary firms. The Nordic model's ‘bargained constitutionalism’ only occurs in those cases in the sample in which Soviet-era trade union structures survive, or where an in-firm union has fought for recognition and collective bargaining.     

Institutional convergence: exit or voice?

There is a small but growing literature on the determinants of economic freedom. This paper contributes to this literature in two ways. First, it is empirically shown that β-convergence in economic freedom occurred from 1980 to 2010. Countries with low levels of economic freedom in 1980 “catch up” at a rate of 0.7 percent a year on average, ceteris paribus. Second, the structural characteristics that contribute to this institutional convergence are documented. Conditional convergence estimates suggest democratic institutions do not con- tribute to conditional convergence. Exitability, a variable that captures how easy it is for citizens to “vote with their feet” is related to the change in economic freedom from 1980 to 2010 in a statistically significant manner across all specifications. This provides some preliminary evidence as to the importance of “exit” versus “voice” with respect to the question of institutional change.     

Information Management and Incentives

We ask how the incentives of an agent are affected by an information management system that lets the agent receive information about the performance of a colleague before (“transparent firm”) rather than after he provides effort (“nontransparent firm”). Transparency is detrimental for incentives if the performance of the colleague provides information on the relative impact of the agent’s effort on his success probability. The findings imply that firms in which comparisons between employees play a minor role for compensation are transparent. Firms in which they play a major role sometimes choose to be nontransparent despite the flexibility gains transparency provides.     

The Paradox of the Contented Female Worker: Why Are Women Satisfied with Lower Pay?

Although women in general are aware of and concerned about the gender wage gap, individual women do not report significantly greater dissatisfaction with their pay, which has been termed “the paradox of the contented female worker” (Crosby 1982). The current study proposes a model of the factors leading to pay satisfaction to explain this paradox based on Major’s (Advances in Experimental Social Psychology 26:293–355, 1994) work on entitlement. In general, support was found for the hypothesized relationships. The results of this study indicate that although women have lower pay, they do not necessarily feel entitled to higher pay, and thus are not dissatisfied with pay. Women also tended to select female referents who are lower paid, which may account for some of their lower feelings of entitlement. Additionally, although men and women did not differ in the value placed on pay, value of pay was found to relate negatively to pay satisfaction. Based on these findings, researchers interested in pay satisfaction are encouraged to investigate additional personal and situational characteristics that affect referent choice and perceptions of fair pay.     

Outstanding fundraising practice: how do nonprofits substantively increase their income?

• In this paper, we examine the characteristics of charities that have generated substantive increases in their fundraising income. We interviewed 25 fundraising directors and team members, from organizations experiencing rapid growth, adopting a “decoding the discipline” approach to identify how each organization had overcome key barriers to its success. We identify that fundraising leaders in these exceptional nonprofits focus particularly on matters connected to their team, organizational structures that support that team, and the development of an organization‐wide learning culture. We also find that these teams were successful because of the “systems” way in which they understood and coped with the complexities of decision making. They were exceptional in isolating the right problems and exceptional too in the processes they adopted to solve them.

Copyright © 2016 John Wiley & Sons, Ltd.     

In Sickness and in Health: Implications for Employers when Bipolar Disorders are Protected Disabilities

This paper explores the potential conflict between employment protections afforded to individuals with bipolar disorder, and employers’ obligations to maintain a safe working environment for others in the workplace. Both the Americans with Disabilities Act (ADA) and the Americans with Disabilities Act Amendments Act of 2008 (ADAA) provide workplace protections to those employees or applicants who are classified as qualified individuals with a disability. A disability is “a substantial impairment—a physical or mental impairment—in a major life activity that would substantially limit that major life activity.” ( 42 U.S.C. §§ 12102(1)(A)-(C)), and “mental impairment” is defined to include individuals with bipolar disorder (42 U.S.C. § 1630.2(h)(2)). These statutes further impose a requirement on employers to make reasonable accommodations for such individuals. In essence, they protect the bipolar employee from any discrimination in the workplace based on their disability, to include harassment by coworkers. However, employers may find themselves caught on the horns of a dilemma. Depending on the nature and severity of the bipolar employee’s conduct toward coworkers, they may also be exposed to liability for harm done to coworkers under negligent retention laws, or even the anti-harassment provisions of other equal employment statutes. If a bipolar employee’s negative behaviors toward coworkers are sufficiently severe or pervasive, they can result in coworkers suffering harassment sufficient to constitute actionable conduct under the ADA. To reduce exposure to litigation, employers must understand both their obligations under the ADA, and the nature of bipolar disorder.