Is diversity in Delphi panelist groups useful? Evidence from a French forecasting exercise on the future of nuclear energy

This paper further enhances the analytical power of Delphi methodology by identifying the advantages, disadvantages and challenges presented by increasing diversity among panel groups. Using Delphi survey data on the future of nuclear energy in France, we analyze the origins of the variety of judgments within and between two panels: one of experts and one of laypeople. We investigate the determinants of the stability of those opinions both in one given round and over several rounds of opinion-formation. We reach an apparently paradoxical conclusion: that non-expert judgment is less stable, but not necessarily less accurate, than that of experts, judgments on the part of experts sometimes being clouded by self-interest. Apart from highlighting some factors underlying the controversy over nuclear power, our paper calls for greater participatory democracy in Delphi panels, but also demonstrates the limits of such an extension.     

The effect of climate change on optimal wetlands and waterfowl management in Western Canada

Warmer temperatures and a decrease in precipitation in the 21st century could severely deplete wetlands in the prairie pothole region of western Canada. In this study, we employ linear regression analysis to determine the casual effect of climate change on wetlands in this region, with temperature, precipitation and the standardized precipitation index (SPI) used to predict the effect of potential climate change on wetlands. We then use a waterfowl-wetlands bioeconomic model to solve for socially optimal levels of duck harvests and wetlands retention under current climate conditions and various climate change scenarios. The model maximizes benefits to hunters plus the amenity values of ducks to non hunters and the non-market ecosystem benefits of wetlands. Results indicate that climate change could decrease wetlands by between 7 and 47%, and that the optimal number of wetlands to retain could decrease by as much as 38% from the baseline climate.     

Oil Price Formation: Measuring Economic and Political Factors

In this article the different factors which influence the oil price are introduced and tested for their influence on two crudes, namely Arab Light and Bonny Light, a Saudi Arabian and a Nigerian crude respectively in the time period between 1990 and 2004. It is argued that in accordance with Efficient Market Hypothesis the decisions made by investors on different oil markets are incorporating publically available information into prices. This information is represented by events, with a focus on international political events, but also OPEC-decisions, development of the US-Dollar, and catastrophes. The analysis is accomplished by using the method of Time Series Analysis. This tool allows for testing the influence on the mean as well as the variance of oil price returns. The results show a startlingly low influence of OPEC-decisions, a strong influence of the US-Dollar, a strong influence of catastrophes in oil-producing countries on the volatility, a relationship between the location where a political event takes place and its impact on crude oil returns, as well as a rising influence of terrorism on oil.     

The Year in Economics at the FCC, 2010–11: Protecting Competition Online

The past year in economics at the Federal Communications Commission focused on protecting competition in developing online markets. Our review discusses important economic issues that are raised by the FCC’s Open Internet rulemaking (which is commonly referred to as “net neutrality”) and its review of Comcast’s programming joint venture with General Electric’s NBC Universal affiliate. The Open Internet rule focused on established online markets, while the Comcast/NBCU transaction addressed nascent competition online along with competition in video programming and distribution offline.     

Transaction cost economics and corporate governance: the case of CEO age and financial stake

Agency theory provides a valuable lens for understanding the role and importance of many varied governance mechanisms. We argue that transaction cost economics (TCE) provides a complementary theoretical lens for studying corporate governance because it illuminates the various contingencies that moderate the importance of alternative governance mechanisms. Using agency theory, we argue and find evidence that the confluence of advancing CEO age and large CEO stock holdings will cause the CEO to become overly risk‐averse. Moreover, we use TCE to more fully explicate the ensuing performance consequences as well as the contextual factors that critically moderate this relationship. Copyright © 2010 John Wiley & Sons, Ltd.     

Identity in Franchise Systems: The Role of Franchisee Associations

Utilizing theories of identity this article presents findings from a qualitative study regarding the significant role independent franchisee associations play within franchise systems. The data reveal that successful franchisee associations help manage the inherent tension that exists between cooperation and conflict in franchise relationships. A distinctive adaptive organizational identity provides an association the capability necessary to reframe its relationship with the franchisor as either combative or cooperative in response to changes in a franchisor's identity. Challenging the views of both franchisor stability and the dyadic form that franchisee–franchisor relationships assume, behavioral insight is provided into the actual functioning of franchise systems and new avenues are suggested for theory building in franchising.     

Convertible security design and contract innovation

This paper studies convertible security design for a sample of 814 issuers over the years 2000 through 2007. Using a nested logit model, we examine how firms choose fixed income claims and the method of payment. We find that fixed income claims are chosen to reduce corporate income taxes, minimize refinancing costs, and help mitigate managerial discretion costs. The method of payment choice frequently includes cash settlement features because they increase reported diluted earnings per share. Some of the cash settlement issuers also adopt other innovative financial strategies (share repurchase programs and call spread overlays) that inflate reported earnings per share. We find that firms needing debt capacity include mandatory conversion features.     

The Use of Postloss Financing of Catastrophic Risk

Catastrophic risk financing is a critical issue for many states. At the epicenter of the debate is the role of the state government in helping homeowners finance catastrophic storm risk. In general, states have used a variety of pre‐ and postloss strategies, including rate regulation, residual markets, guaranty funds, and postloss assessment structures. However, several states, including Florida, Louisiana, Mississippi, and Texas have used strategies that involve potentially large postloss funding of hurricane risk. In some cases, the structure of the postloss financing mechanism is likely to create significant assessments and subsidies. This article examines the role of state government in catastrophe financing, focusing primarily on postloss financing methods. Specifically, the article provides a discussion of the advantages and disadvantages of the postloss catastrophe financing as well as the political forces that motivate the use of this approach. Further, given the potential magnitude of postloss assessments and related subsidies, we use the Florida homeowners market to illustrate the implications of the state's decisions. This allows for a concrete discussion of the impact and viability of postloss financing mechanisms.     

Are Territorial Rating Models Outdated in Residential Property Insurance Markets? Evidence From the Florida Property Insurance Market

The fundamental shift in rating methodology from historical loss costs to catastrophe modeling for windstorm coverage calls into question the accuracy of rates developed using rating territories. Using premiums and modeled average annual loss (AAL) estimates from Citizens Property Insurance Corporation (Citizens) in Florida, this article analyzes the use of distance to coast (DtC) as a rating variable in providing coverage for the windstorm peril in homeowners insurance. Catastrophe models used to generate AAL costs do not rely on the same application of the law of large numbers as using historical loss costs and thus allows for more granular pricing of the windstorm peril. The results show that DtC, a rating variable that is property specific, more closely aligns premiums and AALs than territorial rating, and allows more granular pricing of the windstorm peril. More granular risk based pricing provides better incentives for homeowners regarding location and mitigation choices and may help reduce aggregate exposure to windstorm damages in the long run.