Valuations and dynamics of negotiations

This paper analyzes three‐party negotiations in the presence of externalities. We obtain a closed‐form solution for the Markov perfect equilibrium of a multilateral non‐cooperative bargaining model, yielding an equilibrium value and dynamics of negotiations that are supported by experimental studies. Players’ values are monotonically increasing (or decreasing) in the amount of negative (or positive) externalities that they impose on others. Moreover, players’ values are continuous and piecewise linear on the worth of bilateral coalitions, and are inextricably related to their negotiation strategies: the equilibrium value is the Nash bargaining solution when no bilateral coalitions form; the Shapley value when all bilateral coalitions form; or the nucleolus, when either one bilateral coalition among “natural partners” or two bilateral coalitions including a “pivotal player” form.     

Unobserved Heterogeneity,Exit Rates,and Re‐Employment Wages

Exit rates from unemployment and re‐employment wages decline over a period of unemployment, after controlling for worker observable characteristics. We study the role of unobserved heterogeneity in an economy with asymmetric information and directed search. We show that the unique equilibrium is separating and that skilled workers have more job opportunities and higher wages. The composition of the unemployed varies with the duration of unemployment, so average exit rates and wages fall with time. The separating equilibrium relies on performance‐related pay schemes and the ability of firms to commit to renting an input that is complementary to worker skills.     

Heterogeneous wage setting and endogenous macro volatility

In order to strengthen the debate on the foundations of aggregate business cycles, the science of macroeconomics has recently benefited from a series of contributions that emphasize the complex nature of collective human action. Progressively, agent heterogeneity, local interaction, sentiment formation and out-of-equilibrium dynamics are becoming central pieces on the analysis of short-term business fluctuations. This paper offers a contribution to this new literature by exploring a macro framework where endogenous fluctuations emerge regardless from the occurrence of shocks to technology or preferences. The proposed setting separates firms into two groups, which follow different wage setting strategies. The firms may systematically change from one class of wage setters to the other following local interaction rules and by making a global assessment of the profitability of each of the wage setting alternatives. Under reasonable parameterizations, long-term large periodicity cycles are generated; these cycles might constitute a meaningful component of the observed output gap and price level volatility, a component that complements the typical view on exogenous disturbances over an otherwise stable economy.     

Reviewing and improving performance measurement systems: An action research

Reviewing and updating performance measurement systems (PMS) based on internal and external environmental changes are as important as developing and implementing them. The results of an action research study carried out to improve the PMS of an energy company's maritime transportation area are presented. The findings of this longitudinal study illustrate the difficulty and complexity of reviewing and updating an energy company's PMS for its maritime transportation area. This difficulty is due to the involvement of PMS users, the assessment of performance measures, the establishment of targets, and data availability. The complexity is related to the changes in information technology when implementing changes in procedures for computing performance measures. This article contributes to a better understanding of the process of reviewing and updating a company's existing PMS.     

Climate perceptions and the customer orientation of frontline service employees

Satisfaction of customers' needs is particularly dependent upon the customer orientation of frontline employees. Understanding the drivers of such orientation is, therefore, a key issue in current research. Research relating perceptions of organisational values with the customer orientation of employees is rather sparse. This topic is approached by investigating the role of selected dimensions of psychological climate in promoting the customer orientation of frontline service employees. A structural equations model is developed and empirically tested, indicating that perceptions of customer, ethical, and innovation climates exert an indirect effect on the adoption of customer-oriented behaviours by frontline employees.     

Role of education and extension in the adoption of technology: a study of upland rice and soybean farmers in Central-West Brazil

This paper explores reduced form determinants of the adoption of certain technologies by upland rice and soybean farmers in the Center-West region of Brazil. We merge community level data on the availability and quality of publicly provided infrastructure, principally extension, to the farm level data containing information on farmer human capital as well as land quantity and quality. By using community level measures of availability and quality of extension, we avoid problems of endogeneity of farm level measures of extension use. We find positive impacts of farmer education on the diffusion process, in accordance with other studies. We also isolate effects of the quality in regional extension investment as measured by the average experience of technical extension staff. These results indicate that investments in human capital of extension workers does have a payoff in terms of farmer adoption of improved cultivation practices.     

US‐style contingent fees and UK‐style conditional fees: agency problems and the supply of legal services

Under contingent fees, the attorney gets a share of the judgment; under conditional fees, the lawyer gets an upscale premium if the case is won which is, however, unrelated to the adjudicated amount. We compare conditional and contingent fees in a principal–agent framework where the lawyer chooses unobservable effort after she has observed the amount at stake. Contingent fees provide better incentives than conditional fees independently of whether upfront payments are restricted to be non‐negative or not. Under contingent fees, the attorney uses her information about what is at stake more efficiently. Copyright © 2006 John Wiley & Sons, Ltd.     

Intra-Industry Trade: A Static and Dynamic Panel Data Analysis

This study examines the features and determinants of intra-industry trade (IIT), horizontal IIT (HIIT) and vertical IIT (VIIT) between Portugal and the European Union in the period 1996–2002, using a static and a dynamic panel data analysis. The findings indicate that Portuguese VIIT increased significantly during the period in accordance with the values expected for a developed country. The regression results show that there is evidence supporting the explanation of VIIT by Heckscher–Ohlin’s (HO) theory and that Portugal has comparative advantages in low-quality differentiated products. The findings support the theory that, in general, there is no positive statistical association between HIIT and HO variables. The central theme of this paper is to show that it may be preferable to use the GMM approach in empirical studies of IIT rather than pooled OLS, fixed effects or random effects estimators. The results also suggest that the GMM system estimator obtains more reasonable parameter estimates than the first-differenced GMM estimator.

An assessment of Portuguese banks’ efficiency and productivity towards euro area participation

This paper analyses the production technology of Portuguese banks during the 1992–2006 period through the estimation of a translog cost frontier. This period is of major interest because it covers Portugal’s euro area accession and its impact on the banking system. Hence, critical factors impacting the banking system are identified against the background of increasing financial integration prior to the financial crisis that started in 2007 and later translated into strains in some European sovereign debt markets. Banks are modelled as firms which produce loans and other earning assets, choosing the cost minimizing combination of labour, capital and interest bearing debt, subject to holding a predetermined level of equity. According to the results of this study, technological progress has shifted the cost frontier downwards throughout the period under consideration, whereas the distance at which banks have operated from the frontier seems to have remained constant. Further, increases in production under scale economies have also contributed to the recorded increase in productivity.