An information-based adaptive strategy for resource exploitation in competitive scenarios

Given an exploitation problem, in which a number of agents compete for a limited renewable resource, the optimal harvesting strategy depends on the ratio between resource availability and exploitation effort. For scarce resource a purely competitive, greedy strategy outperforms a more collaborative approach based on the Collective Intelligence, while for more abundant resource the opposite holds. The rationale for this behaviour lies in the amount of information each strategy is able to provide and a combined strategy is possible according to which agents choose dynamically the most informative strategy according to a minimum entropy criterion. This approach, which provides best performance for both under and over-exploited scenarios, can be used to monitor the resource status for management purposes and is effective in both centralised and decentralised decision making.     

Home-field advantage or a matter of ambiguity aversion? Local bias among German individual investors

This paper investigates whether familiarity induced by ambiguity aversion can help explaining the local bias phenomenon among individual investors. Using geographic closeness as a proxy for investor familiarity, we find that investors pull out of (unfamiliar) remote stocks and pour into (familiar) local stocks during times of increased market uncertainty. Moreover, the magnitude of this ‘flight to familiarity’ increases in the spread of an investor's ambiguity (about expected returns) between local and remote stocks. Our results prove robust to a number of alternative explanations of local bias. Specifically, we rule out a ‘home-field advantage’, where investors are able to translate information advantages about nearby companies into excess returns on their local stockholdings. We conclude that individual investors’ local bias is induced by ambiguity aversion in the portfolio selection process rather than a trading strategy based on superior information about local companies.     

On the competition enhancing effects of exclusive dealing contracts

Antitrust scholars have argued that exclusive contracts have anticompetitive, or at best neutral effects, if no efficiencies are generated. In contrast, this paper shows that exclusive contracts can have procompetitive effects, provided buyers are imperfect downstream competitors and contract breach is feasible. In that case, an efficient entrant is not necessarily foreclosed through exclusive contracts but induces buyers to breach. Because breaching buyers have to pay expectation damages to the incumbent, the downstream profits they obtain when breaching must be large enough. Therefore, the entrant needs to set a lower wholesale price than absent exclusive contracts, leading to lower final consumer prices and higher welfare.     

EU–Finanzverhandlungen gescheitert: Chance zum Nachdenken

Nach den gescheiterten Referenden zur EU-Verfassung in Frankreich und in den Niederlanden wurde den Verhandlungen über eine neue finanzielle Vorausschau für die Jahre 2007 bis 2013 eine neue Bedeutung beigemessen. Gerade auf dem ohnehin schwierigen Feld der Finanzen sollte die in die Krise geratene EU Handlungsfähigkeit beweisen. Dieses Ziel wurde offenbar gründlich verfehlt. Woran sind die EU-Finanzverhandlungen gescheitert? Wie könnte eine Einigung erreicht werden?

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Dr. Markus Euler, 30, ist wissenschaftlicher Mitarbeiter am Institut für Finanzwissenschaft der Universität Mainz.     

Die Pfandpflicht für Einweggetränkeverpackungen

Am 20. Januar 2005 wurde die dritte Novellierung der Verpackungsverordnung vom Bundestag beschlossen und die Pfandpflicht für Einweggetränkeverpackungen neu geregelt. Sind Mehrwegverpackungen immer umweltfreundlicher als Einwegverpackungen? Dient die neue Regelung langfristig als Vorbild für eine europaweite Pfandpflicht?Markus Groth, 29, Dipl.-Ökonom, ist wissenschaftlicher Mitarbeiter am Forschungs- und Studienzentrum Landwirtschaft und Umwelt (ZLU) an der Georg-August-Universität in Göttingen.     

Business Alignment: Versicherungsfachwissen als Kernkompetenz der IT

Information technology (IT) of insurance companies refers to the variety of organizational units that are in charge of development, implementation and operation of the specific entrepreneurial IT-applications. Our analyses follow the notion that nowadays information technologies departments face increasing cost pressure and the modern reflex of introducing outsourcing-and offshoring-measures does not necessarily lead to cost reductions. Therefore a closer cooperation of IT departments and other organizational units is crucial and strengthens the improvement of competitiveness of the entire insurance company. Furthermore a method leading to a gradual Business Alignment of IT departments within insurance companies will be introduced.     

Changing investment styles: style creep and style gaming in the hedge fund industry

Notwithstanding their common features, hedge funds remain an extremely diverse asset class. Information on fund styles is important for numerous purposes, such as portfolio construction, performance attribution and risk management. With fund self‐declaration being prone to (strategic) misclassification, return‐based taxonomies grouping funds along similarities in realized returns provide a useful alternative. We provide a consistent classification system of homogeneous groups of hedge funds based on self‐organizing maps. Whereas some fund categories such as managed futures are largely consistent in their self‐declared strategies, others, especially so‐called ‘equity hedge’ funds, display no or very limited return similarities. Furthermore, we also find evidence of fund managers performing undisclosed changes of their trading style over time. Those funds that misclassified themselves once are particularly likely to change their trading style again. Although style self‐declaration can, therefore, be quite misleading, our results indicate that hedge funds do not misdeclare their style strategically to improve their relative performance. Copyright © 2006 John Wiley & Sons, Ltd.     

Managing Dispersed Knowledge: Organizational Problems,Managerial Strategies,and Their Effectiveness

While there has been much progress in understanding organizational knowledge and knowledge management practices, some questions still remain unresolved. This paper argues that at least one important driver of knowledge‐related organizational problems has been rather neglected so far: that is, the dispersed nature of organizational knowledge. The paper analyses the organizational problems and managerial responses arising from dispersed knowledge. It identifies three drivers by which the dispersedness of knowledge leads to management problems: namely, it creates large numbers, asymmetries, and uncertainty. A number of managerial strategies for dealing with the different components of the problems created by the dispersedness of knowledge are identified and their effectiveness analysed, thereby informing managers as to how best to deal with dispersed knowledge. The analysis of uncertainty‐related implications of dispersed knowledge uncovers an overlooked distinction that is helpful for understanding dispersed knowledge and its managerial implications. This is the distinction between uncertainty and ambiguity, i.e. a strong form of uncertainty that cannot be remedied by the standard strategy of increasing the information available.     

Product Market Competition,Managerial Incentives and Firm Valuation

This paper contributes to the very small empirical literature on the effects of competition on managerial incentive schemes. Based on a theoretical model that incorporates both strategic interaction between firms and a principal agent relationship, we analyse the relationship between product market competition, incentive schemes and firm valuation. The model predicts a nonlinear relationship between the intensity of product market competition and the strength of managerial incentives. We test the implications of our model empirically based on a unique and hand‐collected dataset comprising over 600 observations on 200 Swiss firms over the 2002–2005 period. Our results suggest that, consistent with the implications of our model, the relation between product market competition and managerial intensive schemes is convex indicating that above a certain level of intensity in product market competition, the marginal effect of competition on the strength of the incentive schemes increases in the level of competition. Moreover, competition is associated with lower firm values. These results are robust to accounting for a potential endogeneity of managerial incentives and firm value in a simultaneous equations framework.     

Ökonomische Bewertung des Repowering von Onshore-Windenergieanlagen in Deutschland

Wind power takes a leading role among the renewable energy sources. Whereas in offshore wind power utilization large technical challenges still need to be tackled for commercial exploitation, the replacement of obsolete plants (repowering) in the onshore sector provides an interesting alternative. This paper first provides an overview of the technical, legal and social development concerning wind power utilization in general, and repowering in particular, in Germany. In a next step, by means of model-based analysis, the technical potential for wind power by means of repowering is determined. The theoretical potential is valuated against social aspects. Due to the large heterogeneity of candidate sites for repowering, general potential studies are not suitable for concrete investment decisions. Instead, a detailed economic feasibility study is required. In our study, we performed scenario analysis, also taking into account the repowering-specific risks. The parameter values varied are those for the quality of the site, the size of the wind park, and the age of the wind turbines to be replaced. Finally, we discuss the results and provide an outlook on the development of repowering in light of the novelized EEG. We find that, until now, the repowering potential could not be fully exploited. An intensified realization of repowering projects in the coming years can be expected, due to the technical potential, simplifications in the commissioning process, rising acceptance on the side of the communities due to changes in the tax legislation and, above all, thanks to the incentives for almost all onshore wind parks.