Reference group influence on binary choices dynamics

The recent literature has analyzed binary choices dynamics providing interesting results. Most of these contributions consider interactions within a single group. Nevertheless, in some situations the interaction takes place not only within a single group but also between different groups. In this paper, we investigate the choice dynamics when considering two populations where one serves as a reference group. Considering this influence effect enriches the dynamics. Although the structurally stable resulting dynamics are attracting cycles only, with any positive integer period, the reference group makes the dynamics of the influenced population much more complex. We considered both the possibility that the reference group has the same or the opposite attitude toward the distribution over the choices. We show how the dynamics and the bifurcation structure are modified under the influence of the reference group. Our results illustrate how the propensity to switch choices in the reference groups may, indirectly, affect choices in the first group.     

Leaders emergence in artificial populations: the role of networks

Social networks can be viewed as graphs in their basic form, but many networks of interest include positive and negative affect relations among nodes. The structural balance theory originally developed by Heider suggests how nodes may locally modify their relationships to maintain a sort of balance within sets of nodes. We analyze a model of leadership emergence in a social network and extend it by introducing structural balance among members when modeling the attitude toward the leader. This approach takes into account some of the mutual relationships among co-workers, including the adaptation process to achieve the balance. This component helps to explore differently the bounded rationality of agents when interacting, and prove the difficulty of finding a rapid and smooth covergent path to a social stable equilibrium.     

The implications of ineffective internal control and SOX 404 reporting for financial analysts

The mandatory reporting of firms’ internal control effectiveness continues to be debated by equity market participants, U.S. regulatory agencies and oversight committees. We investigate the implications of material weaknesses in internal control and SOX 404 required reporting of such for financial analysts because analysts are important intermediaries in the U.S. capital market and it is not known whether analysts’ forecasts or coverage decisions are affected by firms’ internal control problems or reporting, respectively. Results of our empirical tests indicate that analysts provide less accurate forecasts and there is greater forecast dispersion for firms with ineffective internal control. We also find that firms that disclose internal control problems have less analyst coverage and that analyst following declines after the material weakness in internal control is disclosed. The results are robust to controlling for potential self-selection bias and management earnings guidance. Our study documents the consequences of ineffective internal control for an important class of financial statement users and suggests the required reporting on the effectiveness of internal control is beneficial to understanding the properties of analysts’ forecasts.     

A comparison of different trading protocols in an agent-based market

We compare price dynamics of different market protocols (batch auction, continuous double auction and dealership) in an agent-based artificial exchange. In order to distinguish the effects of market architectures alone, we use a controlled environment where allocative and informational issues are neglected and agents do not optimize or learn. Hence, we rule out the possibility that the behavior of traders drives the price dynamics. Aiming to compare price stability and execution quality in broad sense, we analyze standard deviation, excess kurtosis, tail exponent of returns, volume, perceived gain by traders and bid-ask spread. Overall, a dealership market appears to be the best candidate, generating low volume and volatility, virtually no excess kurtosis and high perceived gain.     

Supply chain configurations in a global environment: A longitudinal perspective

In the last few years, companies have paid growing attention to the management of their supply chain at a global level. The need for better suppliers, international competition and research of specific competences have forced companies to improve their ability to cope with suppliers and customers located in different countries around the world. This paper aims to provide an overview of how manufacturing companies use global supply chains and how their behaviour changes over time. Longitudinal data from a sample of companies from the last two editions of the International Manufacturing Strategy Survey (IMSS) are used. A contingent analysis of manufacturing localization and globalization is also considered in order to identify factors influencing supply chain globalization strategies. Electronic supplementary material  The online version of this article (doi:) contains supplementary material, which is available to authorized users.

Optimality conditions¶and bubbles in sequential economies¶and bounded relative risk-aversion

We provide specific qualifications in order that Kuhn–Tucker type Euler equations and transversality conditions at infinity hold in stochastic equilibrium models with heterogeneous agents and where assets are traded in sequential markets. It is not assumed that uncertainty is modeled as an event-tree structure or that preferences are necessarily bounded. We also describe an important class of preferences based on bounded relative risk aversion which yields relevant simplifications. Our results are used to establish conditions that rule out asset pricing bubbles. Specific examples of economies with bubbles are also discussed. Received: 28 January 2002 / Accepted: 19 July 2002 We are grateful to the editor and an anonymous referee for their valuable comments. This research was partially supported by MURST (Italy), National Group on “Nonlinear Dynamics and Stochastic Models in Economics and Finance”.     

Envy effects on conflict dynamics in supervised work groups

Decisions in Economics and Finance - At the end of the last century, chaos theory principles have helped organizational theorists to analyze several aspects of organizations and to account for...     

Measuring knowledge persistence: a genetic approach to patent citation networks

The aim of this paper is to propose a new empirical method for identifying technologically important patents within a patent citation network and to apply it to the telecommunication switching industry. The method proposed is labelled the genetic approach, as it is inspired by population genetics: as geneticists are interested in studying patterns of migration and therefore the common origins of people, in innovation studies we are interested in tracing the origin and the evolution of today knowledge. In the context of patent and citation networks, this is done by calculating the patent’s persistence index, i.e., decomposing patent’s knowledge applying the Mendelian law of gene inheritance. This draws on the idea that the more a patent is related (through citations) to “descendent” patents, the more it affects future technological development and therefore its contribution persists in the technology. Results show that the method proposed is successful in reducing the number of both nodes and links considered. Furthermore, our method is indeed successful in identifying technological discontinuities where previous knowledge is not relevant for current technological development.     

Knowledge positions in high-tech markets: Trajectories,standards, strategies and true innovators

Essential patents refer to patents that are indispensable in order to make any product that complies with a technological standard. Portfolios of essential patents have often been used to indicate the strategic value of a firm's knowledge. We propose a range of alternative indicators based on a firm's position in patent citation network. Using a historical narrative and the actual licencing payments for the 3G W-CDMA standard in mobile telecommunications as a reference, we find that our alternative indicators provide better indicators for firms' knowledge positions and their long-term impact on technological change. Our proposed indicators can also be applied in markets that are not based on standards, and may not only be valuable to scholars but also to practitioners. Our findings also raise some concern over technology inclusion processes at standards bodies, and we recommend policy makers to consider our proposed method in order to critically look at these processes.