BOUNDARY CONDITION TESTS OF BID AND ASK PRICES OF INDEX CALL OPTIONS

Boundary conditions are established and tested for call options on the S&P 100 Index. The data consist of daily closing bid and ask quotes for the first four months of 1984. Four types of tests—the immediate exercise, European lower bound, vertical spread, and butterfly spread (convexity rule)—are performed on both an immediate and delayed execution basis. Violations are infrequent and those that occur tend to reverse by the end of the following day. Index options, therefore, are priced consistently with rational boundary conditions.     

Immigration,international capital flows,and long run income distribution in Canada

Conclusion This study derives long-run income distributional impacts of immigration and capital flows in a general equilibrium model of Canada. While each factor is its own enemy, results indicate that capital and skilled professional labor are enemies as well. Both of these productive inputs are friends of other labor groups, which are common enemies. Factor friendship patterns are useful in evaluating income distributional impacts of a variety of policies designed to influence the international flow of productive labor and capital.     

Market Efficiency, Bounded Rationality, and Supplemental Business Reporting Disclosures

The AICPA Special Committee on Financial Reporting has urged disclosure of relevant forward-looking information on risks and opportunities to supplement conventional financial statements. We conduct a laboratory market experiment to assess the effects of such disclosures on capital allocation decisions. We develop two sets of competing hypotheses regarding how capital markets react to supplemental disclosures. One set is based on the assumption of semi-strong market efficiency, while the other posits that the bounded rationality of individual traders leads to inefficient market prices. We find that explicit disclosure of management's best estimate of an uncertain quantity improves market efficiency, even though this disclosure is redundant with information in financial statements. Second, we find disclosure of an upper bound of management's estimate has the potential to bias security prices upward, while informationally equivalent disclosure of both upper and lower bounds removes this bias. These results suggest that experimental market reactions to these supplemental disclosures are inconsistent with market efficiency. Supplemental analyses of individuals' price predictions and trading behavior support our conclusion that inefficiencies are at least partially attributable to individual information processing biases.     

US agricultural research politics: Utopians,utilitarians, copians

Political support for US public agricultural research institutions has come from first users within the industry and from those interested in the long-run consequences of improved agricultural technology. Public funding for agricultural research was initially supported by ‘utopians’, who envisioned technology development as a route to food abundance and reduced labour. Recently, ‘dystopian’ groups have urged reform in the development process and have suggested alternative scenarios for coping with food needs in the twenty-first century. Major contemporary support comes from first users, including regional and commodity producer groups, and also from innovative farmers. These ‘utilitarians’ have also produced a scenario for coping with future food needs. Unsuccessful efforts have been made to reconcile the research agendas of these contrasting scenarios.     

Influence of catalog vs. store shopping and prior satisfaction on perceived risk

This paper presents the results of a study which examines the overall amount and types of risk consumers perceive when purchasing the same products by direct mail as compared to retail stores. The effect of prior catalog shopping experience on perceived risk is also examined. The results indicate that despite the gains achieved by the direct mail industry, consumers continue to perceive this shopping mode as being significantly more risky. Differences were also found with respect to the individual types of risk perceived. A significant relationship between perceived risk and the satisfaction/dissatisfaction derived from prior catalog purchase experience was also identified.     

Clarification and Extension of Beaver's Definitions of Market Informational Efficiency: A Note

Beaver (1981a, 1981b) provides sound conceptual definitions of market informational efficiency. Recently, his definitions have been operationalized in experimental-markets studies dealing with market informational efficiency. Given these successes, we extend Beaver's definitions to make apparent the relationships among the publicly available information system and the market information system and related signals. This extension provides a foundation for distinguishing between tests of semistrong-form and strong-form efficiency in the contexts of Beaver's definitions and related experimental-markets studies. We also provide a proof which identifies the necessary and sufficient condition for the convergence of these forms of market informational efficiency.     

Ecoefficiency: Defining a role for environmental cost management

This study investigates the relationship between environmental performance and productive efficiency in the United States electric utility industry before and after the 1990 Clean Air Act Amendments. Using Data Envelopment Analysis (DEA), cross-sectional examinations reveal lower polluting plants are more efficient than higher polluting plants. Longitudinal analyses indicate plants can simultaneously reduce pollution and increase relative efficiency. Collectively, these results are evidence that proactive environmental management can reduce environmental costs and thus, lends support for adopting an environmental cost management system.