Do people behave in experiments as in the field?—evidence from donations

Laboratory experiments are an important methodology in economics, especially in the field of behavioral economics. However, it is still debated to what extent results from laboratory experiments are informative about behavior in field settings. One highly important question about the external validity of experiments is whether the same individuals act in experiments as they would in the field. This paper presents evidence on how individuals behave in donation experiments and how the same individuals behave in a naturally occurring decision situation on charitable giving. While we find evidence that pro-social behavior is more accentuated in the lab, the data show that pro-social behavior in experiments is correlated with behavior in the field.      

Adaptive Foresight: Navigating the complex landscape of policy strategies

Adaptive Foresight has been developed at the crossroads of foresight and adaptive strategic planning. Innovation is seen as increasingly complex, interdependent and uncertain and therefore in need of broad and multi-disciplinary exploration and participation. The adaptive planning paradigm provides a natural guide for navigation of this complex landscape: one should consider whether strategic decisions should be deferred until more information is available and simultaneously whether to invest in (real) options which would facilitate the implementation of such decisions if taken some future time. This does not mean that all strategic decisions should be deferred. Rather it is the careful combining of commitment and opportunism that best enables actors to pursue their super-ordinate values and objectives. Compared to conventional foresight, Adaptive Foresight thus favours a more modest interpretation of the collective ability to “shape the future” and stresses the need to adapt to actions by others. Here it is equally important to be able to exploit the upside of uncertainty as to abate its downside. The purpose of this paper is to achieve a conceptual consolidation of Adaptive Foresight, to review in a fairly hands-on way methodological experience thus far, and to outline the substantial methodological challenges ahead.     

A Simple Model of Hysteresis in Employment under Exchange Rate Uncertainty

A model leading to employment hysteresis due to sunk hiring- and firing-costs is proposed. A potential mechanism based on a band of inaction that could account for a 'weaker' relationship between employment and its determinants is augmented by exchange rate uncertainty. As a result of option value effects the band of inaction is widened. Thus, the hysteresis effects are strongly amplified by exchange rate uncertainty (as numerical examples demonstrate). Non-linearities in the employment-relation are implied, i.e. 'spurts' in new employment or firing may occur after an initially weak response to a reversal of the exchange rate.     

IT Competence in Internet Founder Teams

In the Net Economy, numerous start-ups relying on Internet-based business models have been founded in the recent years. In these ventures IT experts are confronted with different requirements to those of traditional software development. It can thus be assumed that founders in the Net Economy prefer IT experts with a different competence profile. Based on an elaborate competence model for IT experts in Internet-based ventures, founder preferences are empirically analyzed and related to the novelty of the venture’s product. An adaptive conjoint analysis is applied to obtain utility values for single components of competence. Using cluster analysis, four different competence profiles are identified which correspond to prototypical IT experts bearing different core functions. Data analysis suggests that founders with more innovative products differ from founders with less innovative products in their perception of the optimal IT expert’s competence profile. The results have implications both for career decisions of IT experts and for founders of Internet start-ups who are looking for co-founding IT experts. This study is one of the first to explicitly focus on IT competence in Internet-based ventures. It therefore extends existing research on IT competence to a new and dynamic industry.     

Transparency and Regional Integration in the Asia Pacific

We show in this paper that increasing the transparency of the trading environment can be an important complement to traditional liberalisation of tariff and non‐tariff barriers. Our definition of transparency is grounded in a transaction cost analysis. We focus on two dimensions of transparency: predictability (reducing the cost of uncertainty) and simplification (reducing information costs). Using the Asia Pacific Economic Cooperation (APEC) member economies as a case study, we construct indices of importer and exporter transparency for the region from a wide range of sources. Our results from a gravity model suggest that improving trade‐related transparency in APEC could hold significant benefits by raising intra‐APEC trade by approximately US$148 billion or 7.5 per cent of baseline trade in the region. Action to improve transparency measures examined could be undertaken in many forms, including within the current APEC framework or future talks on a Free Trade Area in the Asia Pacific.     

Aid-for-trade facilitation

‘Aid for Trade’ is an ongoing and high-profile discussion associated with the Doha negotiations of the World Trade Organization. It also relates to questions of how best to achieve the Millennium Development Goals. Questions remain, however, about whether foreign aid spent on trade facilitation increases trade flows of developing countries. Does it work differently from aid in general? Using detailed data on aid flows from the OECD, the analysis here estimates the relationship between specific types of aid and trade flows, both globally and of the aid recipients. The findings indicate that aid spent on promoting trade is positively associated with global trade. For most types of such aid-for-trade facilitation, it is relatively more strongly associated with recipient exports than their imports. In contrast ‘other’ types of aid are more strongly associated with recipient imports. Based on elasticities estimated over 16 years of trade and aid data for 40 donor countries and about 170 country trading pairs, our results suggest that a 1% increase in aid-for-trade facilitation (of about US220 million in 2008) correlates to about US 220 million in 2008) correlates to about US 290 million of additional exports from the aid receiving countries.     

Low cost country sourcing and its effects on the total cost of ownership structure for a medical devices manufacturer

In this paper, we describe a total cost of ownership (TCO) method as an activity-based costing (ABC) application along the value chain to measure and analyse the costs of international sourcing activities. We further describe the method's implementation for a manufacturer of high-tech medical devices. For this case study, we analyse the effects of shifting purchasing volume from traditional procurement market suppliers to low cost country suppliers on the cost structure of purchasing projects. We find that particularly costs at component and supplier level gain importance over traditionally dominating unit level costs. Furthermore, we identify low cost country sourcing as a decision with extensive impact on value chain entities other than purchasing. Finally, a considerable part of costs in low cost country sourcing accrue at the beginning of a purchasing project due to problems stemming from unsatisfactory initial quality, language barriers and intercultural communication.     

Can satellite‐based weather index insurance improve the hedging of yield risk of perennial non‐irrigated olive trees in Spain?*

Olive oil yields fluctuate strongly due to their dependence on sufficient precipitation. An interesting option to hedge the yield risk in olive cultivation could be satellite‐based weather index insurance. Therefore, we implement index insurance as a hedging alternative for non‐irrigated olive groves using MODerate‐resolution Imaging Spectroradiometer (MODIS) satellite data. For this purpose, we focus on the Spanish region of Andalusia, given its importance in olive production at the international level. We calculate three satellite indices: the Vegetation Condition Index (VCI), the Temperature Condition Index (TCI) and the Vegetation Health Index (VHI). Meteorological indices related to temperature and precipitation are used as benchmarks. Firstly, we estimate the periods that have the greatest influence on the critical vegetative phase of olives, which extends from March to September. Based on the indices, insurance contracts are designed using a copula approach, which is then employed to evaluate their hedging effectiveness. On average, the hedging effectiveness of VCI‐, VHI‐ and TCI‐based weather index insurance contracts amounts to 38 per cent, 38 per cent and 29 per cent, respectively. Moreover, VCI‐ and VHI‐based weather index insurance contracts outperform traditional weather index insurance contracts based on precipitation (by 29 per cent) and temperature (by 16 per cent) indices.     

Optimal allocation of the sample size to strata under box constraints

In stratified random sampling without replacement boundary conditions, such as the sample sizes within strata shall not exceed the population sizes in the respective strata, have to be considered. Stenger and Gabler (Metrika, 61:137–156, 2005) have shown a solution that satisfies upper boundaries of sample fractions within the strata. However, in modern applications one may wish to guarantee also minimal sampling fractions within strata in order to allow for reasonable separate estimations. Within this paper, an optimal allocation in the Neyman-Tschuprov sense is developed which satisfies upper and lower bounds of the sample sizes within strata. Further, a stable algorithm is given which ensures optimality. The resulting sample allocation enables users to bound design weights within stratified random sampling while considering optimality in allocation.