Bargaining and markets: complexity and the competitive outcome

Rubinstein and Wolinsky (Rev. Econ. Stud. 57 (1990) 63-78) consider a simple decentralised market game in which agents meet randomly or voluntarily and bargain over the terms of trade. They show that any individually rational price can be sustained as a sequential equilibrium even though the model has a unique competitive outcome. Here, I consider Rubinstein and Wolinsky's model and show that if complexity costs of implementing strategies enter players’ preferences, together with the standard payoff in the game, then every equilibrium is stationary/Markov and induces the unique competitive price. Thus, I demonstrate that aversion to complexity may provide a justification for the competitive outcome.     

A New Approach to Currency Depreciation

Currency depreciation has been studied conventionally in terms of three hypotheses—the elasticities approach, the monetary approach and the absorption approach. In this paper we offer another hypothesis called the price approach, wherein the balance of payment disequilibrium results from an inappropriate price level. Specifically, a country has a trade surplus if the equilibrium price level is below that compatible with balanced trade; by contrast, it has a trade deficit if the price level is above that compatible with balanced trade. We illustrate the price approach with the experience of currency devaluations that have occurred in emerging markets since 1997.     

UNIFORM TECHNICAL PROGRESS: CAN IT BE HARMFUL?

Abstract.  In a model incorporating trade in final goods, intermediate goods and capital, we show how 'uniform' technical progress across sectors can lead to immiserization. The condition for immiserizing technical progress crucially depends on the pattern of specialization. Our results tend to hold in a more general specification of the basic structure.     

The design of an integrated group decision support system for technology assessment

Responding to the challenges of the marketplace compels firms to employ new production methods to improve product quality and delivery reliability, to reduce costs, and above all, to achieve greater flexibility. This paper outlines the system design of a group decision support system, developed to guide management through the process of new technology evaluation and adoption. The advantages of the proposed architecture include the opportunity to integrate a variety of independently developed components, the localisation of components (which leads to simplified maintenance) and the flexibility in the future for expanding and modifying the system.     

Exploring the link between household debt and income inequality: an asymmetric approach

We investigate the relationship between household debt and income inequality in the USA, allowing for asymmetry, using data over the period 1913–2008. We find evidence of an asymmetric cointegration between household debt and inequality for different regimes. Our results indicate household debt only responds to positive changes in income inequality, while there is no evidence of falling inequality significantly affecting household debt. The presence of this asymmetry provides further empirical insights into the emerging literature on household debt and inequality.     

The effects of cultural orientations on preferred compensation policies

This study aims at examining the relationship between cultural orientations and preferences for compensation policies. The study involves two concepts: culture and compensation. In the first part of this article, these concepts are framed; and in the second part, after direct measurement of both cultural traits and compensation preferences, their relationships are tested and discussed. Our findings suggest that while culture represents an important factor in human resource management, its effects on compensation preferences should be viewed as partial and moderate. Further analysis reveals that the effects of culture on preferred compensations may vary from one orientation to another. While some cultural orientations are more likely to affect pay policies, others seem to be of lesser importance. Similarly, it is found that compensation policies are not affected equally by cultural orientations. By analyzing the extent and direction of cultural effects, the study provides some insights into designing compensation policies and points out the managerial implications.     

Foreign Capital and Urban Congestion in Emerging Markets

Traditional literature emphasizes the role of foreign capital, especially foreign direct investment (FDI) in explaining the high growth rates that many emerging economies have enjoyed during 1990s and 2000s. The present paper accepts this conventional wisdom but argues that the FDI has also created problems of urban sprawl and congestion that would not be so intense if economic development had primarily come from domestic sources. This is because the FDI is typically concentrated in urban areas that abound in manufacturing and it neglects the rural areas where agriculture predominates. The paper suggests that a small tax on foreign capital tends to mitigate the side effects of foreign investment.