Insurance Derivatives: A New Asset Class for the Capital Markets and a New Hedging Tool for the Insurance Industry

The number and severity of natural catastrophes has increased dramatically over the last decade. As a result, there is now a shortage of capacity in the property catastrophe insurance industry in the U.S. This article discusses how insurance derivatives, particularly the Chicago Board of Trade's catastrophe options contracts, represent a possible solution to this problem. These new financial instruments enable the capital markets to provide the insurance industry with the reinsurance capacity it needs. The capital markets are willing to perform this role because of the new asset class characteristics of securitized insurance risk: positive excess returns and diversification benefits.
The article also demonstrates how insurance companies can use insurance derivatives such as catastrophe options and catastrophe-linked bonds as effective, low-cost risk management tools. In reviewing the performance of the catastrophe contracts to date, the authors report promising signs of growth and liquidity in these markets.     

Econometric evaluation of asset pricing models

In this article we provide econometric tools for the evaluationof intertemporal asset pricing models using specification-errorand volatility bounds. We formulate analog estimators of thesebounds, give conditions for consistency, and derive the limitingdistribution of these estimators. The analysis incorporatesmarket frictions such as short-sale constraints and proportionaltransactions costs. Among several applications we show how touse the methods to assess specific asset pricing models andto provide non-parametric characterizations of asset pricinganomalies.     

Psychology and tourism management

As more people recognize that tourism is indeed an industry and so does require skilful and informed management, so it becomes apparent that depth of experience, rules-of-thumb and personal intuition, valuable as they are, are not enough for the successful development of the industry. As a consequence, the scientific study of human behaviour and experience—psychology—is being looked to for answers to many questions in tourism. This paper briefly reviews some of the ways in which psychology can be harnessed to benefit tourism management.     

Contingency variables for customer share of visits to full-service restaurant

This study sought to reveal the direct effect and/or moderating effects of contingency variables in relation to customer share of visits. The hypotheses of this study were tested based on responses from 277 general U.S. full-service restaurant customers, using a series of (moderated hierarchical) regression analyses. The direct effects of social switching costs, lost benefits costs, procedural costs, and intrinsic inertia were positive whereas that of intrinsic variety-seeking was negative on customer share of visits. Consumer involvement and perceived brand heterogeneity were found to enhance the effect of brand preference on customer share of visits.     

An Expectancy Theory Model for Hotel Employee Motivation: Examining the Moderating Role of Communication Satisfaction

ABSTRACT

The study investigated the role of communication satisfaction as a moderator strengthening the effect of three components of the expectancy theory (expectancy, instrumentality, valence) on work motivation in a hotel setting. High and low communication satisfaction groups respond differently to expectancy, instrumentality, valence, and work motivation. Employees who are highly satisfied with communication respond more positively toward motivation components, and they are more likely to perform well in their job when they are motivated. However, a series of confirmatory factor analyses of metric invariance indicated that there is no significant difference in the moderating effect between high and low communication satisfaction groups. Communication should be managed collectively to motivate employees. Implications and suggestions for future research are provided to better explain the process of decision-making when hotel employees are motivated.