Call Options, Points, and Dominance Restrictions on Debt Contracts

We analyze the impact of a contract's length, callability, amortization, and original discount by arbitrage methods. Among instruments that are callable without penalty, longer instruments command a higher interest rate because the borrower possesses the option of repaying relatively more slowly. However, the rate on longer self-amortizing loans cannot be substantially larger than for shorter ones because the payments decrease with contract length. Bounds on the trade-off between points and rate for callable debt are characterized using the trade-off for noncallable debt and the property that the value of the prepayment option increases with the loan's interest rate.     

On Work and Authority: Issues in Job Enlargement, Job Enrichment, Worker Participation and Shared Authority

Abstract . Continued debate over the nature of work is adding to an existing vast literature in labor economics, business and personnel administration, industrial sociology and social psychology. Both theory and experience indicate that the authoritarian workplace results in social costs through reduced labor productivity and increased worker dissatisfaction. But progress toward shared authority and worker participation in the administration of the production process promises to be slow. Management generally preserves a legitimized authority, defending it with the misplaced rationale of elitism, i.e., the presumed functional superiority of managers. Unions will not press for shared authority, for to do so would undermine their basic and formal function of organizational restraint of managerial authority. Thus, while management and union logically protect their traditional roles, the worker and society are denied the potential benefits of basic changes in work and authority.     

Effects of the 1979 gasoline shortages on Philadelphia housing prices

Conventional theory predicts that transportation cost to a big-city central business district is an important determinant of housing prices. If this is true, the sudden rise in gasoline price following the Iranian revolution in 1979 could have caused a relative housing-price shift in central and peripheral neighborhoods. This paper looks for such an effect by fitting hedonic price functions in selected neighborhoods at varying distances from downtown Philadelphia, and testing for a relative shift at the time of the gasoline shortage. The results suggest that the energy shortage's effects may have been focused disproportionately on a few already revitalizing neighborhoods.     

Effect of supervisor–subordinate guanxi on supervisory decisions in China: an empirical investigation

As China is becoming an important market and there are a lot of foreign ventures operating there, different lines of research have been providing useful information for foreign ventures to manage effectively in China. In this paper, we discuss one of the critical factors leading to successful management of Chinese subordinates, i.e. building and maintaining good guanxi (i.e., interpersonal connection) with them. We conducted an empirical investigation to illustrate (1) the supervisor-subordinate guanxi concept is different and unique when compared to other similar concepts in the Western literature such as leader-member exchange (LMX) and commitment to supervisor; (2) the supervisor-subordinate guanxi will affect the Chinese supervisor's administrative decisions; (3) guanxi can be measured by concrete behaviour/activities. Data on 189 supervisor-subordinate dyads were collected in the People's Republic of China (PRC). Results indicated that supervisor-subordinate guanxi is a distinct concept from LMX and commitment to supervisor. It also has additional explanatory power over supervisory decisions on promotion and bonus allocation after controlling for performance. Implications for foreign ventures and expatriates are discussed.     

Digging deeper or piling it higher? Implicit measurement in organizational behavior and human resource management

Organizational researchers can dig deeper into peoples' thoughts, attitudes, and self-concepts to understand how automatic processes may impact judgment and social behavior in organizations. Measures of these automatic processes, including the Implicit Association Test (e.g., IAT; Greenwald, McGhee, & Schwartz, 1998), Semantic Priming (e.g., SP; Wittenbrink, Judd, & Park, 1997), Affect Misattribution Procedure (e.g., AMP; Payne, Cheng, Govorun, & Stewart, 2005), Word Completion Tasks (e.g., WCT; Johnson & Saboe, 2011), among many others, deserve greater attention as alternatives or supplements to traditional self-report measures of variables important in organizations (e.g., job satisfaction, personality and trait measurement, diversity attitudes). In this paper, we first provide a primer on implicit social cognition and its relationship to automatic and controlled cognitive processes, discussing major types of implicit measures, how these might operate, criticisms of this approach, and how these implicit constructs may give rise to behavior in organizations. Second, we discuss models of automatic processes and explore their validity and how these may predict behavior. Third, we offer advice for selecting, constructing, and improving implicit measurements when used in organizational research to enhance human resources and organizational functioning.     

The asymmetry of judgemental confidence intervals in time series forecasting

In forecasting a time series, one may be asked to communicate the likely distribution of the future actual value, often expressed as a confidence interval. Whilst the accuracy (calibration) of these intervals has dominated most studies to date, this paper is concerned with other possible characteristics of the intervals. It reports a study in which the prevalence and determinants of the symmetry of judgemental confidence intervals in time series forecasting was examined. Most prior work has assumed that this interval is symmetrically placed around the forecast. However, this study shows that people generally estimate asymmetric confidence intervals where the forecast is not the midpoint of the estimated interval. Many of these intervals are grossly asymmetric. Results indicate that the placement of the forecast in relation to the last actual value of a time series is a major determinant of the direction and size of the asymmetry.     

Fifteen Theses on Classroom Teaching

The Southern Economic Association initiated a lecture series on teaching to be presented at its annual meeting. This paper, given on November 24, 2000, was the first such lecture. The editor invited the author to publish the lecture in Southern Economic Journal. Portions of the paper are the fruits of the author's more than 30 years of experience teaching economics. Parts of the paper are based on writings regarding pedagogy outside the discipline of economics. The paper puts forward 15 theses about teaching economics in the classroom. The theses range from propositions about why economics is a particularly difficult subject to teach to suggestions about how the classroom teaching of economics can be improved.     

A Dynamic Model of Export Competition, Policy Coordination, and Simultaneous Currency Collapse

This paper shows that the "price wars during booms" logic of Rotemberg and Saloner ( American Economic Review , vol. 76, 1986, 390–407) provides an explanation of contagious currency crises. The idea is as follows. When a group of countries relies on exports to a common foreign market, pressures for competitive devaluations arise. In response, competing exporters peg their exchange rates to the currency of their export market. However, it must be in each country's self-interest to adhere to its peg, and a common adverse external shock can make an existing (implicitly) cooperative arrangement unenforceable. Maintaining the arrangement requires a collective devaluation that reduces the unilateral incentive to devalue.