Repeated Dichotomous Choice Formats for Elicitation of Willingness to Pay: Simultaneous Estimation and Anchoring Effect

Repeated dichotomous choice contingent valuation data are generated from responses to a succession of binary questions regarding alternative prices for an environmental good. In this paper we propose a simultaneous equation model that allows for endogeneity and error correlation across the responses at each stage of the bidding process. The model allows us to study the evolution of anchoring effects after the second dichotomous choice question. Estimation involves the Bayesian techniques of Gibbs sampling and data augmentation, and the application focuses on the preservation value of a natural area. The results for a data set involving up to four successive dichotomous choice questions show that restricted multiple-bounded models are rejected by the data with the general model. In addition, willingness to pay tends to stabilize after the second stage in the elicitation process for the general unrestricted model. When taking anchoring effects into consideration, it is revealed that individuals’ responses in the latter stages are influenced by the sequence of bid prices offered in earlier questions. Nevertheless, they do not have a significant effect on welfare estimates.      

Applications of Fuzzy Regression in Actuarial Analysis

In this article, we propose several applications of fuzzy regression techniques for actuarial problems. Our main analysis is motivated, on the one hand, by the fact that several articles in the financial and actuarial literature suggest using fuzzy numbers to model interest rate uncertainty but do not explain how to quantify these rates with fuzzy numbers. Likewise, actuarial literature has recently focused some of its attention in analyzing the Term Structure of Interest Rates (TSIR) because this is a key instrument for pricing insurance contracts. With these two ideas in mind, we show that fuzzy regression is suitable for adjusting the TSIR and discuss how to apply a fuzzy TSIR when pricing life insurance contracts and property‐liability policies. Finally, we reflect on other actuarial applications of fuzzy regression and develop with this technique the London Chain Ladder Method for obtaining Incurred But Not Reported Reserves.     

Strategy and structure redux

Forty years on from Alfred Chandler's seminal book Strategy and Structure , in the following pages contemporary strategists examine the book's impact and Chandler's contribution to business theory.     

Disentangling Alliance Management Processes: Decision Making, Politicality, and Alliance Performance

abstract    Using a sample of 106 organizations engaged in strategic alliances, we develop and test a framework of alliance-related organizational decision-making processes and their impact on alliance performance. With regard to direct effects, our results show a negative impact of decision-making recursiveness and no significant relationship for openness and procedural rationality. Acknowledging the importance of the organization's micropolitical context in which these decision processes are embedded, we also test the moderating influence of politicality. Our findings provide support for our hypotheses that in a context of low politicality, the decision-making characteristics of openness and procedural rationality have a positive influence, whereas recursiveness negatively affects alliance performance. In a context of high politicality, however, openness and procedural rationality exert a negative influence, and the negative impact of recursiveness is aggravated. We suggest that alliance-related decision making cannot be adequately understood without explicitly considering the micropolitical context in organizations.     

LABOR INCOME DIFFERENTIALS WITHIN THE LATIN AMERICAN FREE TRADE AREA (LAFTA)

This article considers the major results of a study of relative wage structures in the LAFTA region. It first discusses the nature and methodology of the study, which was undertaken for ECIEL. Data on the size of labor income differences are introduced, and an attempt is made to determine the causes of such differences, and to relate them to various wage differentials. The main findings of the study are then summarized, with discussions of inter-country, intra-country, and occupational labor income differentials and their causes. Finally, the results of the study are updated to the end of 1970, and some conclusions are derived regarding the inter-temporal behavior of wages in LAFTA.     

Currency diversification and export competitiveness: A model of the ‘Dutch disease’ in Egypt

The paper presents a dynamic portfolio model under currency inconvertibility which rationalizes the recent Egyptian experience of real exchange rate appreciation and currency diversification following the increase in oil exports and the partial financial liberalization that took place after 1976. The two shocks are linked because the relative price of manufacturing exports in terms of oil is also the premium of the ‘gray’ market rate over the official exchange rate. The effects of various official exchange rate policies on the temporary equilibrium values of the premium and the real wage and on the steady-state values of asset stocks are examined. A review of the Egyptian experience in light of the model results suggests that the unification of 1979 was ineffective against this variant of the ‘Dutch disease’ but that the restoration in 1981 of a parallel rate closer to the ‘gray’ market rate applicable to competitive exports may be more effective.     

The international diffusion of biotechnology: the arrival of developing countries

According to conventional economic theory, countries tend to converge in economic and technological terms towards the leader. More recently, empirical approaches by economic historians (Abramovitz, Landes, Madison, Reinert) have found that while some countries are catching up, others are falling increasingly behind. Several theories compete to explain the precise mechanisms that explain how technological diffusion takes place. The paper reviews them and draws testable hypotheses for the study of international biotechnology diffusion. Biotechnologies are one of the leading sets of technologies developed in the late 20th century. They encompass applications in agriculture, chemicals, environment and pharmaceuticals. The United States has led the way in both scientific and industrial development of biotechnologies and these have quickly spread to Canada, Japan and Western Europe. Are the main developing countries adopting biotechnology? A study of the adoption of human health biotechnology in eight developing countries in Asia (China, India, Korea, and Singapore) and Latin America (Argentina, Brazil, Chile and Mexico) was conducted, based on the analysis of in situ interviews, patents and scientific publication. The study shows a marked process of adoption and learning in science: each of the above-mentioned developing countries is increasing its share of world publication between 1996 and 2008. However, their share of biotechnology patents for the same period has barely increased. There are also regional differences in terms of sectoral concentration; Latin America, Argentina and Brazil are eager adopters of agricultural biotechnology and are moving up in the pharmaceutical records. Several Argentinean, Chinese, Indian, and South Korean pharmaceutical companies have been particularly active in the development of biogenerics.