Optimal strategy for a fund manager with option compensation

I consider the problem of portfolio optimization for a manager whose compensation is given by the sum of a constant and a variable term. The constant term is a fixed percentage of the managed funds that is payed to the manager independently of his performance. The variable term is a premium that is proportional to the profit earned by the manager over a benchmark at a certain evaluation date. I find the optimal strategy and the optimal portfolio value in the Black–Scholes setting when the benchmark is a linear combination of the risky asset and the money market account.     

A study of the relationships among sensory experience,emotion, and buying behavior in coffeehouse chains

Studies that simultaneously explore the effects of sensory experience on consumer emotions and behavior are rare. This paper builds a model of buying behavior based on sensory experience, 570 valid questionnaires were obtained from coffeehouse customers. Using structural equation modeling and multiple regression analysis, this paper validates the concept model and verifies that sensory experience is a significant antecedent to buying behavior. This study indicates that certain sensory experiences significantly influence emotion. Emotion also plays a mediating role in the relationship between sensory experience and behavioral intentions. The findings are theoretically and practically profound as they address the relationships among sensory experience, consumer emotions, behavioral intentions, and buying behavior, as well as explore how the five senses affect emotions and buying behavior. This paper concludes by indicating managerial implications and research limitations.     

Brexit: How Will UK Agriculture Fare?

There is little doubt that Brexit would have significant implications for UK agriculture, a sector with strong trade links to the EU and strong reliance on CAP income support. This article reports preliminary results from employing a Computable General Equilibrium Model, a Partial Equilibrium Model and Farm Level Models to explore selected trade and domestic policy scenarios post‐Brexit. These allow for the estimation of changes in producer prices, production and farm incomes against a baseline scenario of continued EU membership. Under a Free Trade Agreement with the EU, agricultural impacts are relatively modest. By contrast, unilateral removal of import tariffs has significant negative impacts on prices, production and incomes. Adoption of the EU's WTO tariff schedule for all imports favours net importers (e.g. dairy) and harms net exporters (e.g. sheep). Given the strong dependence of most UK farms on direct payments, their removal worsens negative impacts of new trade arrangements and offsets positive impacts. Impacts vary across different types and sizes of farm, but also regionally. However, the period of adjustment to new trade and domestic policy conditions may prove very challenging for a large number of farm businesses.     

NETWORK SEARCH: CLIMBING THE JOB LADDER FASTER

We introduce an irregular network structure into a model of frictional, on‐the‐job search in which workers find jobs through their network connections or directly from firms. We show network‐found jobs have higher wages, and thus better‐connected workers climb the job ladder faster. The mean field approach allows us to formulate heterogeneous workers' recursive problem tractably. Our calibration is consistent with several empirical findings because of a composition—not information—effect. We also introduce new model‐consistent evidence: Job‐to‐job switches at higher ladder rungs are more likely to use networks.     

Scanning for discounts: examining the redemption of competing mobile coupons

Coupons research has typically focused on single-coupon redemption, with scant attention devoted to multiple, competing coupons. To bridge this gap, we observe supermarket shoppers who used their smartphones to scan products in-store, receiving both coupons for the scanned product and several others as a result. We model the determinants of redemption in this context, particularly net price range (NPR), coupon value, brand loyalty, and number of coupons. Latent class analysis uncovers two consumer segments: brand-focused shoppers (79.9%), who use internal reference prices, and deal-prone shoppers (20.1%), who use stimulus-based reference prices. Targeting by means of segment membership, NPR, and loyalty is indispensable: the same $0.50 coupon can have a redemption probability as low as 30% and as large as 80%, depending on these characteristics. Overall, the study sheds light on drivers of redemption under competition and provides managers with a blueprint to improve redemption rates by targeting shoppers with customized coupons.     

Using matrices of specifications,factors and concepts to assist design-engineering students

In this work a matrix-type tool is used to assist design-engineering students to develop product design projects. The ‘specifications-factors-concepts matrix’ or SFCM is proposed as a specific tool to organize and relate product requirements, design factors and projected solutions. Taking into account the early stages of the design process, two types of projects that are denominated, respectively, with imposed specifications and with derived specifications, are differentiated. In each case, SFCM conveniently integrates the main contents of the project in order to carry out a comprehensive study of the design problem. SFCM was implemented in higher education, particularly in Degree of Engineering of Industrial Design and Product Development. The design of a hydraulic front brake handle for motorcycles (imposed specifications approach) and a waking up enabler for children (derived specifications approach), were proposed. The process of creation as well as the resulting matrix is shown in each case. In addition, the development and results of the experience are exposed. Students assessed by means of a survey how it helped them to develop the main tasks involved in the design projects giving, globally, a positive opinion about its usefulness.