STATE-DEPENDENT PREFERENCES AND FUTURES HEDGING: THE EFFECTS OF BASIS RISK

Abstract. This note incorporates basis risk into the futures hedging decision-making problem when the hedger has a state-dependent preference. It is shown that, in an unbiased futures market, a partial hedge is optimal when the marginal utilities in different states are moderately close to each other. Conditions for a Texas hedge or an overhedge are provided. Finally, it is demonstrated that basis risk always reduces the futures trading volume.     

Pacemaker complications and costs: a nationwide economic study

Abstract

Aims: Novel leadless pacemakers (LPMs) may reduce complications and associated costs related to conventional pacemaker systems. This study sought to estimate the incidence and associated costs of traditional pacemaker complications, in those patients who were eligible for LPM implantation.

Methods: A retrospective analysis was conducted on the French National Hospital Database (PMSI), including all patients implanted with a pacemaker in France in 2012, who could have alternatively received an LPM. Complication rates and their associated costs 3 years post-implantation were estimated from the perspective of the French social security system.

Results: From a total of 65,553 patients, 11,770 (18%) met the inclusion criteria. Overall, 618 patients (5.3%) had a record of pacemaker complications during follow-up, of which 89% were related to the lead and pocket. Most common were pocket bleeding, lead- or generator-related mechanical complications, and pneumothorax. Overall, the mean cost of pacemaker complications per patient was €6,674?±?3,867 at 3 years. Specifically, €7,143?±?2,685 for pocket bleeding, €5,123?±?2,676 for pneumothorax, and €6,020?±?3,272 for mechanical complications.

Conclusions: Major complications associated with the lead and pocket of conventional pacemaker systems are still common, and these represent a significant burden to healthcare systems as they generate substantial costs.     

Foreign investors in Taiwan: Their roles and government perspectives

This article describes the financial liberalization process in Taiwan and evaluates the effects of foreign institutional investors on Taiwan's stock market. Gradual liberalization allowed Taiwan to reap the benefits while reducing the harmful impacts of foreign participation during the Asian financial crisis. Overall, the liberalization policies proved to be effective as the stock market has become more stable and efficient. Foreign institutional investors contribute significant growth to the Taiwan stock market, and will continue to play a sizeable role in its future development.     

Does diversification add firm value in emerging economies? Effect of corporate governance

Using 205 Taiwanese firms spanning five years, this research examines how corporate governance factors specific to emerging economies determine the extent of diversification and moderate its performance. The analyses reveal that controlling family ownership is significantly associated with a greater extent of diversification, which impairs firm value. Conversely, domestic bank ownership significantly decreases diversification, which in turn increases diversification performance. These findings present the evidence of controlling family entrenchment through diversification and the significant role domestic banks play in the principal–principal corporate governance framework.     

Preference submission timing in school choice matching: testing fairness and efficiency in the laboratory

We investigate the relative merits of the Boston and Serial Dictatorship mechanisms when the timing of students’ preference submission over schools varies within the structure of the mechanism. Despite the well-documented disadvantages of the Boston mechanism Abdulkadiroglu and Sonmez (American Economic Review 93:729–747 2003), we hypothesize that a Boston mechanism where students are required to submit their preferences before the realization of their exam scores, can in fact have fairness and efficiency advantages compared to the often favored Serial Dictatorship mechanism. We test these hypotheses in a series of laboratory experiments which vary by the class of mechanism implemented, and the preference submission timing by students, reflective of actual policy changes which have occurred in China. Our experimental findings confirm the efficiency hypothesis straightforwardly, and lend support to the fairness hypothesis when subjects have the chance to learn with experience. The results have important policy implications for school choice mechanism design when students’ relative rankings by schools are initially uncertain.     

Model-Based Decision Support in Manufacturing and Service Networks

In this paper, we sketch some of the challenges that should be addressed in future research efforts for model-based decision support in manufacturing and service networks. This includes integration issues, taking into account the autonomy of the decision-making entities in face of information asymmetry, the modeling of preferences of the decision makers, efficiently determining robust solutions, i.e. solutions that are insensitive with respect to changes in the problem data, and a reduction of the time needed for model building and usage. The problem solution cycle includes problem analysis, the design of appropriate algorithms and their performance assessment. We are interested in a prototypical integration of the proposed methods within application systems, which can be followed up with field tests of the extended application systems. We argue that the described research agenda requires the interdisciplinary collaboration of business and information systems engineering researchers with colleagues from management science, computer science, and operations research. In addition, we present some exemplifying, illustrative examples of relevant research results.