Implementation of EU initiatives on gender diversity and executive directors’ pay in municipally-owned enterprises in Germany and The Netherlands

A popular topic in the assessment of the functioning of municipally-owned enterprises is the corporate governance (CG) of such organizations. The results of the comparative study presented in this paper indicate that European Union initiatives on gender diversity and executive directors’ pay are often not implemented in public CG codes and in practice in municipally-owned enterprises in Germany and The Netherlands. The paper proposes that EU initiatives should specifically target municipally-owned enterprises and shows concrete hard and soft regulation options for national and international policy-makers and future research perspectives.     

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Towards a brain-to-society systems model of individual choice

Canonical models of rational choice fail to account for many forms of motivated adaptive behaviors, specifically in domains such as food selections. To describe behavior in such emotion- and reward-laden scenarios, researchers have proposed dual-process models that posit competition between a slower, analytic faculty and a fast, impulsive, emotional faculty. In this paper, we examine the assumptions and limitations of these approaches to modeling motivated choice. We argue that models of this form, though intuitively attractive, are biologically implausible. We describe an approach to motivated choice based on sequential sampling process models that can form a solid theoretical bridge between what is known about brain function and environmental influences upon choice. We further suggest that the complex and dynamic relationships between biology, behavior, and environment affecting choice at the individual level must inform aggregate models of consumer choice. Models using agent-based complex systems may further provide a principled way to relate individual and aggregate consumer choices to the aggregate choices made by businesses and social institutions. We coin the term “brain-to-society systems” choice model for this broad integrative approach.     

Preferences of Scotch malt whisky consumers for changes in pesticide use and origin of barley

In a case study related to Scotch malt whisky production, this study analyses consumers’ perceptions and preferences regarding two aspects that have emerged in the debate on sustainable production and consumption, and on environmentally responsible food choice, namely (i) the use of pesticides in agriculture, and (ii) the provenance of food ingredients. We carried out a choice experiment to investigate preferences and estimate Willingness to Pay of Scotch malt whisky consumers for pesticide use restrictions and the potential impact on the production of one of its essential ingredients, barley. Using latent class models, we find that about half of the respondents are non-demanders with respect to both attributes, and only a third of the sample population are willing to pay for further pesticide restrictions. Demand for more environmentally responsible production of Scotch malt whisky is therefore limited, indicating that in the case of Scotch malt whisky, consumers are not likely to be key to driving sustainable production. With respect to barley provenance, being able to claim a 100% Scottish product could be a plausible commercial option for some producers to pursue in a competitive market. Methodologically, the scale-adjusted latent class model proved to be successful in uncovering preference heterogeneity and its sources, in including non-demanders in the analysis and in accounting for differences in scale amongst respondents.     

Test–Retest Reliability of Choice Experiments in Environmental Valuation

The paper presents the results of the first test–retest study on choice experiments in environmental valuation. In a survey concerning landscape externalities of onshore wind power in central Germany, respondents answered the same five choice sets at two different points in time. Each choice set comprised three alternatives described by five attributes, and the time interval between the test and the retest was eleven months. The analysis takes place at three different levels, investigating choice consistency at the choice task level and repeatability of the latent construct utility at the level of parametric models as well as at the level of willingness-to-pay estimates. At the choice task level we observed 59?% identical choices. The parametric analysis shows that the test and retest estimates are not equal, even when we control for scale, that is, differences in the error variance. However, comparing the marginal willingness-to-pay estimates among test and retest reveals only a statistically significant difference for one of the attributes. Overall, this indicates a moderate test–retest reliability taking into account that consistency at the choice task level overlooks the stochastic nature of the process underlying discrete choice experiments.     

Cost-based transfer pricing

This paper compares the performance of alternative cost-based transfer pricing methods. We adopt an incomplete contracting framework with asymmetric information at the trading stage. Transfer pricing guides intra-company trade and provides incentives for value-enhancing specific investments. We compare actual-cost transfer prices that include a markup over marginal costs with standard-cost transfer prices that are determined either by the central office ex ante (centralized standard-cost transfer pricing) or by the supplying division at the trading stage (reported standard-cost transfer pricing). For the actual-cost methods, we show that markups based on the joint contribution margin (contribution-margin transfer pricing) dominate purely additive markups (cost-plus transfer pricing). We obtain the following results. (1) Centralized standard-cost transfer pricing dominates the other methods if the central office and the divisions ex ante face low cost uncertainty. (2) The actual-cost methods dominate the other methods if the central office and the divisions ex ante face high cost uncertainty and later, at the trading stage, the buying division receives sufficient cost information. (3) Reported standard-cost transfer pricing dominates the other methods if the central office and the divisions ex ante face high cost uncertainty, and the buyer has insufficient cost information at the trading stage.     

Co‐owned Local Government Organisations: Conditions for Strategy Development

Local governments tend to join resources and create co‐owned organisations to solve the supply of public services. From a strategic perspective on local government cooperation, this paper analyses the conditions for strategy development in a co‐owned municipal organisation. The empirical data stem from a longitudinal case study of a Swedish provider of water and sewerage services. We show that difficulties in formulating and agreeing upon strategies are not dependent on the structural form. Instead, there is an intrinsic dilemma when municipalities are to create a joint strategy at the same time as each municipality is sovereign to decide on all local matters.     

Solvency II – towards a new insurance supervisory system in the EU

This article describes the current state of affairs in the EU Solvency II project. The background and international context of the project is discussed, as well as the general outline of a future EU solvency system. In particular, several areas where further technical work is needed are outlined. These topics could provide interesting objects of study for professionals of actuarial sciences as well as to those of other related sciences.