Minimum cost arborescences

In this paper, we analyze the cost allocation problem when a group of agents or nodes have to be connected to a source, and where the cost matrix describing the cost of connecting each pair of agents is not necessarily symmetric, thus extending the well-studied problem of minimum cost spanning tree games, where the costs are assumed to be symmetric. The focus is on rules which satisfy axioms representing incentive and fairness properties. We show that while some results are similar, there are also significant differences between the frameworks corresponding to symmetric and asymmetric cost matrices.     

Low price guarantees as signals of lowest price: The moderating role of perceived price dispersion

This article presents two experimental studies examining the effects of a low price guarantee on consumers’ pre-purchase evaluations and behavioral intentions. The authors first examine how the effects of a low price guarantee are moderated by consumer perception of market price dispersion. The results show that low price guarantee effects are likely to be attenuated when consumers perceive market price dispersion for a product to be high. The second study shows that higher levels of penalty can help restore a low price guarantee's effectiveness. Specifically, a low price guarantee with progressively higher levels of penalty leads to incrementally more favorable effects on key consumer outcomes when perceived price dispersion is high. Interestingly, penalty level has no such incremental benefit in case of low perceived price dispersion. Theoretical and managerial implications of the authors’ findings, the limitations of the studies, and future research opportunities are discussed.     

India's missing girls: biology, customs, and economic development

We review the evidence on the sex ratio among children belowthe age of six. International evidence shows that the sex ratioat birth is slightly biased towards boys, but boys suffer greatermortality, a pattern consistent with Darwinian evolution. Witheconomic development, the male bias in the child sex ratio increases.South and East India show levels and trends in the child sexratio that are consistent with this evidence. However, unbalancedsex ratios in the northern and western states since the firstcensuses indicate discrimination against girls. Technologicaldevelopments permitting sex-selective abortions have seriouslyaggravated the imbalances in these states. Economic modellingof parental choice regarding a child's gender suggests thatgender imbalances may be consistent with individual maximizationand marriage-market equilibrium. Nevertheless, these choiceshave adverse welfare consequences, which will be aggravatedby the decline in population growth and consequent relaxationof the ‘marriage squeeze’.     

Revenue Recognition in a Multiperiod Agency Setting

This paper examines how various revenue recognition rules affect the incentive properties of accounting information in a stewardship setting. Our analysis demonstrates that if revenues are recognized according to the realization principle, a single performance measure based on aggregated accounting information can be used to provide desirable production and effort incentives to the manager. In contrast, mark-to-market accounting does not provide efficient aggregation of raw information to solve the stewardship problem. Mark-to-market accounting, though sensible from a valuation perspective, fails to provide desirable incentives because it relies on the anticipated, rather than the actual, performance of the manager. We also consider a setting in which the manager can control the timing of the firm's sales. It then becomes desirable to modify the realization principle and apply the lower-of-cost-or-market valuation rule. The desirable accounting thus exhibits a conservative bias.     

Leading Indicator Variables, Performance Measurement, and Long-Term Versus Short-Term Contracts

In this article we develop a multiperiod agency model to study the role of leading indicator variables in managerial performance measures. In addition to the familiar moral hazard problem, the principal faces the task of motivating a manager to undertake “soft” investments. These investments are not directly contractible, but the principal can instead rely on leading indicator variables that provide a noisy forecast of the investment returns to be received in future periods. Our analysis relates the role of leading indicator variables to the duration of the manager's incentive contract. With short‐term contracts, leading indicator variables are essential in mitigating a holdup problem resulting from the fact that investments are sunk at the end of the first period. With long‐term contracts, leading indicator variables will be valuable if the manager's compensation schemes are not stationary over time. The leading indicator variables then become an instrument for matching the future investment return with the current investment expenditure. We identify conditions under which the optimal long‐term contract induces larger investments and less reliance on the leading indicator variables as compared with short‐term contracts. Under certain conditions, though, the principal does better with a sequence of one‐period contracts than with a long‐term contract.     

Stable risk-sharing

We analyze the evolution of contract participation and evaluate the selection of risk-sharing contracts in the presence of moral hazard. Organizations specify rules for sharing output among producers, and so affect the extent of private investment in production. Organizations are rigid, as some details of the contract are fixed, but people are free to move around. In the presence of rigidity, equilibrium displays coordination failure because potentially efficient contracts can fail to attract participants. Methods of evolutionary stability are used to select equilibria when organizations compete for members. We identify stable contracts which survive competition against any other. Stable contracts need not be efficient, but for large groups the loss becomes small.     

China's industrial revolution: challenges for a macroeconomic agenda

China's industrialization over the past 30 years has been an epochal event. As of 2000, the industrial sector's share of GDP has grown to be about two-third of the total. The share of agricultural sector of GDP has expectedly declined from 42.2% in 1970 to 11.9% in 2000. The sector's total output however continues to grow as productivity increases. Has the service sector grown enough to support the overall growth of the Chinese economy?China has earned her recognition as a foreign investment friendly economy. Foreign direct investment with 100% foreign ownership came in plenty, supported by a robust system of profit repatriation based on earnings in convertible currencies of exports of a part of newly manufactured products in China. China imported capital and paid for it by exports. China demonstrates a clear case of the import-export led model of industrialization and economic growth, not the simple export-led growth model, as discussed by some.This paper discusses that challenges ahead of China are overwhelming. We present three issues for immediate attention, (a) Can China sustain a rate of growth of GDP at an annual rate of 10% for an indefinite period? (b) How can China address the issues of income distribution across her 31 province and also amongst the various income groups in a given industrialized province/region? (c) Can China ensure progressive augmentation of high-tech oriented productivity of her workforce by way of ensuring building up of necessary human capital?It is argued that much of this can be accomplished by developing a macroeconomic framework with monetary and fiscal policy guidelines, well specified and transparent. Can China restructure its central bank, the Peoples Bank of China (PBOC)? A progressive money, banking and financial sector with ability to absorb shocks of an industrial economy must be in order. How about the fiscal policy management by the Government of China—its Ministry of Finance?Finally this paper argues that China's economic presence will help optimize the economic gains for the rest of the world. China has joined her Asian neighbors toward sponsoring Asian economic cooperation. Let the European Union paradigm be a learning model, and China has a leadership role to play in further developing Asia's continental economic regional model.     

Vulnerability to Low-Price Signals: An Experimental Study of the Effectiveness of Genuine and Deceptive Signals

Low-price guarantees help buyers make inferences about retailers’ prices. However, researchers are concerned that consumers might be vulnerable to relying on guarantees associated with high market prices. Furthermore, truly low-priced retailers that issue low-price guarantees might be vulnerable to consumers’ discounting of such guarantees. This article experimentally assesses these concerns and finds that the effects of adding a low-price guarantee to a low or high offer price on consumers’ pre-purchase perceptions depend on consumers’ confidence in their product category price knowledge and their decision involvement. The article explores the implications of the findings and provides directions for further research.     

Rural non‐farm diversification,agricultural feminisation and women's autonomy in the farm: evidence from India

This study contributes to the literature on the interlinkage between household non‐farm diversification (HND), agricultural feminisation and female autonomy in farming. The study uses unit‐level data from the Indian Human Development Survey for the years 2004 ‐ 2005 and 2011 ‐ 2012. The paper employs instrumental variable regression methods to study such interlinkages. The results show HND to be a significant factor contributing to the feminisation of agriculture. The study finds some evidence that the phenomenon is distress driven. Further, greater participation of women in agriculture, as well as women's access to land rights, significantly contributes to female autonomy in farm decision‐making. The results are robust to the use of alternative indicators of agricultural feminisation.     

Change in Consumer Patronage and Willingness to Pay at Different Levels of Service Attributes in Restaurants: A Study in India

Consumer patronage and consumer willingness to pay are the two most important criteria for business development. The current study investigates the changing preferences of consumers in a developing economy with respect to three major service attributes from the restaurant industry: food quality, service, and ambiance. Results indicated that consumers give greater preference to quality over service in high-end restaurants and prefer service compared with ambiance in quick-service restaurants. Food quality was found to have strong interaction effect with two other variables. When food quality was improved from low to high, consumer preferences for ambiance and service tended to change accordingly in the same direction, but not necessarily at the same level. Thus, restaurateurs have a strategic advantage when they choose high quality food and an appropriate level of service or ambiance. Consumer expectations are significantly different for high-end, full-service restaurants and quick-service restaurants in service attributes.