Delegation and polarization of platforms in political competition

Summary. We consider a model of political competition among two ideological parties who are uncertain about the distribution of voters. The distinguishing feature of the model is that parties can delegate electoral decisions to candidates by nomination. It is shown that if the credible platform commitments of the candidates is feasible, then at least one of the parties nominates in equilibrium to a candidate who has an ideology that is more radical than the delegating party's ideology. In a variety of circumstances, this, in turn, yields a polarization of equilibrium policy choices of the candidates. It is thus argued formally here that strategic nomination of the candidates may well be one of the major reasons behind the well documented observation that the platforms associated with the political parties in two-party democracies are often surprisingly polarized. Received: January 10, 2002; revised version: May 8, 2002 RID="*" ID="*" We thank Alberto Alesina, Levent Ko?kesen, Antonio Merlo, Ronny Razin, Vijay Krishna, Alessandro Lizzeri, and seminar participants at Alicante, Columbia, Copenhagen, and NYU for helpful comments. We also thank an anonymous referee for its useful suggestions. A good fraction of this research was conducted while Ok was a visitor in the Department of Economics at University of Alicante; he thanks for the kind hospitality of this institution. We gratefully acknowledge the financial support from the Spanish Ministry of Education through grant CICYT BEC2001-0535 (Faulí-Oller) and BEC2001-0980 (Ortu?o-Ortín). Correspondence to:I. Ortu?o-Ortin     

Effects of rollover strategies and information stability on the performance measures in options markets: An examination of the KOSPI 200 index options market

One of the most widely used option valuation models among practitioners is the ad hoc Black–Scholes (AHBS) model. The main contribution of this study is methodological. We carefully consider two rollover strategies (nearest‐to‐next strategy and next‐to‐next) used in the AHBS model to investigate their effect on pricing errors. We suggest a new rollover strategy, next‐to‐next strategy, and demonstrate that our rollover strategy produces more consistent estimates between in‐sample market and model option prices. Probably even more important is that our new rollover strategy makes more accurate out‐of‐sample forecasts for 1‐day or 1‐week ahead prices. Prior literature has documented some anomalies associated with the use of AHBS model, for example, an overfitting problem. A secondary contribution is that our new rollover strategy does not suffer from this overfitting critique. Third, this study uses the mean square error for out‐of‐sample pricing and price changes to determine how the options investors are influenced by moneyness. The results indicate that underpricing (or overpricing) by the AHBS model for the near‐the‐money category is more likely to be maintained for the next several trading days but that such a phenomenon is disappeared for the deep out‐of‐the‐money category. Finally, we suggest the ratio of the number of option contracts to differences in strike prices available for trading between the current day and the previous day(s) as a good categorizing factor for options, such as moneyness. © 2011 Wiley Periodicals, Inc. Jrl Fut Mark     

Dividend‐Rollover Effect and the Ad Hoc Black‐Scholes Model

One of the most widely used option‐valuation models among practitioners is the ad hoc Black‐Scholes (AHBS) model. The main contribution of this study is methodological. We carefully consider three dividend strategies (No dividend, Implied‐forward dividend, and Actual dividend) for the AHBS model to investigate their effect on pricing errors. We suggest a new dividend strategy, implied‐forward dividend, which incorporates expectational information on dividends embedded in option prices. We demonstrate that our implied‐forward dividend strategy produces more consistent estimates between in‐sample market and model option prices. More importantly our new implied‐forward dividend strategy makes more accurate out‐of‐sample forecasts for one‐day or one‐week ahead prices. Second, we document that both a “Return‐volatility” Smile and a “Return‐pricing Error” Smile exist. From these return characteristics, we make two conclusions: (1) the return dependency of implied volatility is an important explanatory variable and should be controlled to reduce the pricing error of an AHBS model, and (2) it is important for the hedging horizon to be based on return size, that is, the larger the contemporaneous return, the more frequent an option issuer must rebalance the option's hedge. © 2012 Wiley Periodicals, Inc. Jrl Fut Mark 32:742‐772, 2012     

The measurement of income mobility: A partial ordering approach

Summary. Given a set of longitudinal data pertaining to two populations, a question of interest is the following: Which population has experienced a greater extent of income mobility? The aim of the present paper is to develop a systematic way of answering this question. We first put forth four axioms for income movement-mobility indices, and show that a familiar class of measures is characterized by these axioms. An unambiguous (partial) ordering is then defined as the intersection of the (complete) orderings induced by the mobility measures which belong to the characterized class; a transformation of income distributions is “more mobile” than another if, and only if, the former is ranked higher than the latter for all mobility measures which satisfy our axioms. Unfortunately, our mobility ordering depends on a parameter, and therefore, it is not readily apparent how one can apply it to panel data directly. In the second part of the paper, therefore, we derive several sets of parameter-free necessary and sufficient conditions which allow one to use the proposed mobility ordering in making unambiguous income mobility comparisons in practice. Received: July 12, 1995; revised version: May 13, 1997     

Fuzzy measurement of income inequality: Some possibility results on the fuzzification of the lorenz ordering

Summary This paper starts from the premise that the concept of income inequality is ill-defined, and hence, it studies the measurement of income inequality from a fuzzy set theoretical point of view. It is argued that the standard (fuzzy) transitivity concepts are not compatible with fuzzy inequality orderings which respect Lorenz ordering. For instance, we show that there does not exist a max-min transitive fuzzy relation on a given income distribution space which ranks distributions unambiguously according to the Lorenz criterion whenever they can actually be ranked by it. Weakening the imposed transitivity concept, it is possible to escape from the noted impossibility theorems. We introduce some alternative transitivity concepts for fuzzy relations, and subsequently, construct a class of fuzzy orderings which preserve Lorenz ordering and satisfy these alternative transitivities. It is also shown that fuzzy measurement can be used to construct confidence intervals for the crisp conclusions of inequality indices.I wish to thank Ashish Banerjee, Kaushik Basu, Larry Blume, Gary Fields, Semih Koray, Tapan Mitra, Antony Shorrocks, Sinan Unur and two anonymous referees of this journal for insighthul comments and suggestions. I am also grateful to the participants of the 1993 Midwest Mathematical Economics Conference held in University of Wisconsin at Madison and the 2nd International Meeting of the Society for Social Choice and Welfare held in University of Rochester.     

Do Conspicuous Consumers Pay Higher Housing Premiums? Spatial and Temporal Variation in the United States

This study is the first to examine the relationship between conspicuous demand and housing price dynamics. We hypothesize that conspicuous consumers would want high‐end homes to signal their wealth and this housing consumption behavior would induce greater deviations from fundamental house prices. We test this by using a unique dataset that matches the consumers’ appetite for nonhousing luxury goods from Google Insights for Search to housing premiums that they pay for high‐end houses in U.S. Metropolitan Statistical Areas (MSAs) during 2004–2011. The estimation results demonstrate that controlling for a wide range of MSA demographic and economic characteristics, conspicuous demand has a significant, positive relationship with housing premiums. This relationship varies spatially and temporally. Conspicuous demand has a stronger relationship with a price increase in high‐end homes in MSAs with a steady, higher housing premium than in MSAs with a volatile, lower premium during the boom period. In MSAs with a steady, higher housing premium, the relationship remains significant even during the bust period, potentially contributing to maintaining higher housing premiums.     

Using Twitter Data for Cruise Tourism Marketing and Research

The need to understand how social media affect the hospitality and tourism field has increased. This paper discusses and demonstrates social media analytics using Twitter data referring to cruise travel. This research also includes an in-depth analysis of tweets by three types of user groups: commercial, news/blogs, and private. The results show that not only were words related to travel, destination, industry, and emotion most frequently used in composing tweets, but celebrities, professional bloggers, cruise lines, and travel agencies actually led major subgroups on cruise topics on Twitter. Based on such findings, this study provides feasible marketing strategies.     

Linking emotion and place on Twitter at Disneyland

ABSTRACT

This study suggests a research framework for social network analytics and demonstrates the process of integrating data and applying methodologies to understand visitor experiences at a destination. We applied both social media analytics and geographic information system (GIS) analysis to identify major topics and emotional expressions in a social network. A total of 56,418 tweets sent from Disneyland in California was used for analysis. The results identified three hot spots in the park where significantly pleasant tweets were posted. How to apply the research framework is discussed, and suggestions to researchers and marketers are given.     

Preferences for tourist information centres in the ubiquitous information environment

The rapid development of information communication technology has encouraged tourism authorities to carefully consider the typical duties of tourist information centres (TICs), wherein visitors acquire various kinds of travel information about a particular destination. This study aims to provide useful management implications to help tourism organisations develop feasible TIC operational strategies and implement alternative services in the ubiquitous information environment. To provide a richer understanding of tourists' heterogeneous preferences for TICs, this study makes use of the stated preference choice method with a sample of South Korean domestic tourists. Despite the widespread use of personal mobile devices, our study results suggest that South Korean domestic tourists still prefer to visit various types of TICs to acquire travel information. Results indicate that the TIC visitor group is less sensitive than the non-visitor group to advanced information communication technology and more satisfied with the availability of WIFI signals to facilitate the use of personal mobile devices or laptops. Our respondents also demonstrate their preferences for some TICs constructed with container structures, whereas they showed a strong aversion to visiting booth-styled TICs inside larger buildings. Based on these findings, this study provides several management strategies to fulfil tourists' ever-changing needs.     

Formation of interdependent regional trade agreements and production networks

Production networks (PNs) can be defined as a determinant of trade partnership. Deepening PNs may generate positive welfare effects and lead to a proliferation in the formation of interdependent regional trade agreements (RTAs). This paper theoretically develops the link between PNs and the formation of RTAs and empirically investigates the link by applying a qualitative choice model estimation methodology (probit) with panel data that covers bilateral country‐pairs among 147 countries between 2000 and 2010. We find that the RTA formation has been strongly driven by deepening PNs between members as well as with third countries. We also find that production network‐driven RTA interdependence is member specific.