Sources of family income and expenditure on children's private,after‐school education in Korea

This paper examines the relationship between sources of family income and household expenditure on private, after‐school education for children in secondary schools in Korea in the context of educational ‘credentialism’, which values evidence of college education highly. Data from a survey of 514 parents of secondary school students are used. Estimated ordinary least squares coefficients indicate that the wife's income, but not the husband's, was positively associated with the amount of spending on children's education at private, after‐school programmes. This finding suggests that some married women with children in Korea seek employment in order to earn the money needed for their children's private, after‐school education.     

Comparing Cournot and Bertrand equilibria in an asymmetric duopoly with product R&D

We compare the Cournot and Bertrand equilibria in an asymmetric duopoly with product R&D competition. If a firm’s marginal cost is lower than that of its rival, then this firm (its rival) is referred to as the more (less) efficient firm. Under each mode of competition, there are three types of equilibria: blockaded-entry, deterred-entry, and accommodated-entry. Moreover, the presence of R&D investment makes it harder for the less efficient firm to survive. Cournot competition entails a unique equilibrium, whereas Bertrand competition may yield two equilibria. It is harder for the less efficient firm to survive under Bertrand competition than under Cournot competition. Versus Cournot competition, Bertrand competition yields higher industry output, and it shifts production from the less efficient firm to the more efficient firm. This result, together with the known size effect, explains the following three findings. First, the more efficient firm has a normal output ranking, whereas the less efficient firm may demonstrate an output reversal. Second, the more efficient firm may demonstrate a R&D reversal, whereas the less efficient firm has a normal R&D ranking (its Cournot R&D effort exceeds its Bertrand R&D effort). Third, Bertrand competition is more welfare-efficient than Cournot competition.     

Racial Earnings Disparities and Family Structure

One explanation for the widening of racial earnings gaps among family heads during the 1980s is that black families were increasingly headed by females during that period. This explanation is tested using data on black and white family heads in 1976 and 1985 from the Institute for Research on Poverty's Current Population Survey. Log-earnings equations, corrected for selection bias and for the endogeneity of labor force participation, are estimated for blacks and whites in 1976 and 1985. If the impact of rising female-family headship on labor force participation is ignored, one finds support for the family structure explanation. But support for alternative explanations is also found. There are substantial impacts of within-race gender discrimination and of market racial discrimination. When the endogeneity of family structure is taken into account, further support is found for the view that endowment differences only explain a modest portion of the rising gap in earnings between black and white family heads.     

Modelling Risk Perceptions of Stakeholders in Public–Private Partnership Toll Road Contracts

This paper investigates the risk perceptions of key stakeholder groups typically involved in public–private partnership (PPP) toll roads. Risk perceptions have an important impact on these PPP schemes for investing in public infrastructure. However, the nature and extent of risk associated with the specification of a PPP contract that commits contracting parties to deliver on their obligations remain unclear. In the context of major transport infrastructure, such as a new toll road, the often‐cited key risk to investors is the traffic (and hence demand) risk. There are, however, other risks, including political risk and media risk, the latter often causing untold harm resulting in modifications to the planned infrastructure. This paper develops a method to capture evidence on how public sector and private sector partners involved in previous PPPs perceive the levels of risk associated with each risk attribute, as a way of identifying the ex ante risk setting brought to negotiations in PPP toll road investments. Using a sample of 101 experts with contract experience in 32 countries, we develop a stated choice experiment and estimate a discrete choice model to quantify a risk profile index (RPI) to capture the perceived (relative) influence of each dimension of risk, and then identify sources of systematic differences in the RPI as a way of understanding the influence of personal traits and contextual and contractual factors.     

The Effect of Friendly Persuasion and Gender on Tax Comliance Behavior

Friendly persuasion, in contrast to deterrent measures like tax audits and penalties on underreported taxes, is a positive and possibly a cost effective method of increasing taxpayer compliance. However, prior studies have failed to show that friendly persuasion has a significant impact on compliance (Blumenthal et al., 2001; McGraw and Scholz, 1991). In our study, in contrast to prior studies, we examine the impact of generating and reading reasons supporting compliance as friendly persuasion on individuals' income reporting behavior as well as control for gender effects. Specifically, we predict an interaction effect between friendly persuasion and gender on compliance behavior. We carried out a 2 (friendly persuasion and control) × 2 (men and women) full factorial experiment, where participants earned $30 by completing two questionnaires. Participants in the friendly persuasion group were required first to generate and second to read a list of reasons why they should comply fully. Afterwards, participants in both groups were asked to report the income they earned and pay tax on the reported income. The results show a significant main effect for gender as well as a significant interaction effect between gender and friendly persuasion on income reported. Women in the friendly persuasion group reported significantly higher income compared to men in that group. Other comparisons were not significant. Policy implications for increasing taxpayers' ethics and compliance are highlighted.     

Effect of Order of Contribution in a Sequential Public Goods Dilemma

This study examined how order of contribution in a sequential public goods dilemma affected cooperation. Under a sequential protocol of play, players of different levels of efficacy made decisions one after another. We contrasted a High-to-low versus Low-to-high Efficacy order in a nine-person game. Under a High-to-low order, high-efficacy players made decisions in positions 1–3, medium-efficacy players in positions 4–6, and low-efficacy players in positions 7–9. Under a Low-to-high order, the positions of high- and low-efficacy players were reversed. We hypothesized that cooperation rates would be higher in the High-to-low order that high-efficacy players (assigned in early positions), who would likely cooperate, would induce subsequent players to cooperate also. We found the anticipated effect that cooperation rate was higher in the High-to-low than the Low-to-high efficacy order. The efficacy order effect was the most prominent when people perceived that their group was becoming uncooperative. This study illustrates a new type of structural solution to social dilemmas that by systematically assigning people to different sequential positions, a group can be made more or less cooperative.     

Self-managers: Social contexts,personal traits,and organizational commitment

This study adopts self-determination theory to examine a path model that focuses on the effects of charismatic leadership and private self-consciousness on self-management, which in turn, leads to organizational commitment. We articulate that the relationships between self-management and each of charismatic leadership and private self-consciousness represent identified and integrated regulation, respectively. Thus, we test whether the relationship between self-management and private self-consciousness is stronger than that between self-management and charismatic leadership. The hypotheses are tested using data gathered from 981 employees. The result of the stronger path from private self-consciousness to self-management than the one from charismatic leadership is consistent with the literature on flow, organizational change, and followership. Moreover, our result of the mediating effects of self-management provides explanations for the little empirical research on follower processes in leadership effectiveness and on the association between private self-consciousness and organizational commitment.     

American option valuation under stochastic interest rates

By applying Ho, Stapleton and Subrahmanyam's (1997, hereafter HSS) generalised Geske–Johnson (1984, hereafter GJ) method, this paper provides analytic solutions for the valuation and hedging of American options in a stochastic interest rate economy. The proposed method simplifies HSS's three-dimensional solution to a one-dimensional solution. The simulations verify that the proposed method is more efficient and accurate than the HSS (1997) method. We illustrate how the price, the delta, and the rho of an American option vary between the stochastic and non-stochastic interest rate models. The magnitude of this effect depends on the moneyness of the option, interest rates, volatilities of the underlying asset price and the bond price, as well as the correlation between them. This revised version was published online in June 2006 with corrections to the Cover Date.     

Does the liquidity effect guarantee a positive term premium?

This paper examines the liquidity effect and the term structure in two versions of the limited participation model—an imperfect information model and an adjustment cost model. With a discrete-state solution approach, I find a striking contrast: while the imperfect information model successfully generates the liquidity effect and the positive term premium seen in the data; the adjustment cost model replicates only the liquidity effect. This is because the adjustment cost that drives the liquidity effect in the adjustment cost model also creates an adjustment cost effect, which leads to a negative term premium.