Interactions between Preemptive Competition and a Financing Constraint

We develop an investment and financing model in which two identical firms compete for first‐mover advantage in an opportunity to invest. We investigate the interactions between preemptive competition and a financing constraint. We show that a medium‐intensity financing constraint can play a positive role in mitigating the preemptive competition and improving firm value in equilibrium. This positive effect is in sharp contrast with the conventional negative effects of the financing constraint. The positive effect is strong, especially for IT venture businesses because of the following characteristics: severe preemptive competition, a lack of internal funds, high uncertainty regarding future project value, and high bankruptcy costs.     

INTRODUCTION TO A STUDY OF INTRAHOUSEHOLD RESOURCE ALLOCATION AND GENDER DISCRIMINATION IN RURAL ANDHRA PRADESH,INDIA

In this special issue, we use unique household data which was collected exclusively for our study in Andhra Pradesh, India, with the help of an NGO. We estimate and test the intrahousehold resource allocation rules, incidence of child labor, and the effects of credit constraints on time allocation among household members. Three empirical papers of this issue indicate the overall support for the collective model against the unitary model of households, clarified the role of household structure, and show the nature of mother‐child labor substitution under a binding credit constraint. In addition, a survey paper discussing the recent trends on educational attainment and the empirical strategies in identifyng the policy effects are included.     

Importance of blanket testing in promoting US beef for Japanese consumers

We carried out and analysed a questionnaire survey on consumer attitudes to verify the effectiveness of blanket testing of US beef in Japan. Applying an ordered probit model to the data yielded the following findings: blanket testing dramatically increases purchase probabilities, so it is one of the most important tools for reviving Japanese consumers’ meat demand. The effect of blanket testing is especially large in the region where the consumers traditionally ate more beef (the Kansai area). Purchase probability is lower in households with awareness of country‐of‐origin of beef before the BSE crisis than households without it. Purchase probability of the households that had eaten US beef before the BSE outbreak is higher than those that had not. Purchase probability is not affected by family structure.     

International Price Linkage within a Region: The Case of East Asia

This paper investigates how “prices” in East Asian economies correlate with those in Japan and the United States. The analysis is particularly noteworthy because although the East Asian economies are geographically close to Japan, their currencies have been tied more closely to the U.S. dollar. In this paper, we analyze two different types of “prices”: overall price levels in terms of the same currency and relative prices among different commodities. We demonstrate that overall price levels in the East Asian economies are more closely related to those in the United States. However, the relative prices in East Asia, especially those in Taiwan and Korea, are more closely correlated with those in Japan. These price correlation patterns are in marked contrast with those in other regions.J. Japan. Int. Econ.December 1993,11(4), pp. 643–666. Faculty of Economics, The University of Tokyo, Tokyo, Japan; and Department of Economics, The University of British Columbia, Vancouver, Canada, and Graduate School of Economics, Hitotsubashi University, Japan.     

Correlated quantal responses and equilibrium selection

This paper considers incomplete information games with payoffs subject to correlated random disturbances. It explains the connection between the uniqueness of quantal response equilibria, where large noise is required, and the uniqueness of equilibria in global games, where small noise is required.     

An optimal execution problem with market impact

We study an optimal execution problem in a continuous-time market model that considers market impact. We formulate the problem as a stochastic control problem and investigate properties of the corresponding value function. We find that right-continuity at the time origin is associated with the strength of market impact for large sales; otherwise the value function is continuous. Moreover, we show the semigroup property (Bellman principle) and characterise the value function as a viscosity solution of the corresponding Hamilton–Jacobi–Bellman equation. We present some examples where the form of the optimal strategy changes completely, depending on the amount of the trader’s security holdings, and where optimal strategies in the Black–Scholes type market with nonlinear market impact are not block liquidation but gradual liquidation, even when the trader is risk-neutral.     

Important attributes of lodgings to gain repeat business: A comparison between individual travels and group travels

The purpose of this study is to investigate the attributes of the satisfaction that are related to the lodging-guests’ tendency to revisit the lodgings and to compare these attributes among the different travel styles, such as individual travel, travel with friends or as a couple, and travel with family. We examine 6351 guest evaluations from a highly popular travel reservations website. Multinomial logistic regression analyses are performed and they show that the important attributes for lodgings to gain repeat business vary among their guest's travel styles.     

Investment Literacy and Individual Investor Biases: Survey Evidence in the Japanese Stock Market

In this paper, we analyzed the results of our survey on Japanese stock investor’s asset risk management and empirically examined the effect of their investment literacy on their decision-making biases. This paper revealed that the higher the investors’ investment literacy, the lower their overconfidence bias. This suggests that high investment literacy can prevent investors from being influenced by an overconfidence bias and consequently making biased decisions in investment. Therefore, efforts to improve investors’ investment literacy by enhancing social systems such as investment education could be beneficial in guiding investors to make unbiased investment decisions.     

Weather Risk, Wages in Kind, and the Off-Farm Labor Supply of Agricultural Households in a Developing Country

This article investigates the effects of weather risk on the off-farm labor supply of agricultural households in a developing country, distinguishing different types of off-farm labor markets. A multivariate two-limit tobit model is applied to data from India. The regression results show that the share of the off-farm labor supply increases with weather risk, the increase is much larger in the case of nonagricultural work than in the case of agricultural wage work, and the increase is much larger in the case of agricultural wages paid in kind than in the cash wage case, suggesting farmers' considerations of food security.