An Economic Approach to the Psychology of Change: Amnesia, Inertia, and Impulsiveness

This paper examines the effect of memory loss on the continuity of behavior. We consider a player (individual or firm) who remembers previous actions but not underlying rationales. In a stable environment, relative to a full-recall scenario, memory loss increases the probability of following old policies (inertia). In a volatile environment, memory loss can decrease this probability (impulsiveness). The model provides a memory-loss explanation for some documented psychological biases, implies that inertia and organizational routines should be more important in stable environments than in volatile ones, and provides empirical implications relating memory and environmental variables to economic decisions.     

Building a knowledge-based society: The case of South East Europe

Dangers, threats and challenges facing South East European countries are analyzed in the context of the salient features of the contemporary world and of the development program of the European Union (EU). This analysis leads to the conclusion that building a knowledge-based society is an imperative for each country. A roadmap of tasks to be done during the next few decades is outlined.     

Firm Size, Industry Mix and the Regional Transmission of Monetary Policy in Germany

Abstract. This paper estimates the impact of interest rate shocks on regional output in Germany over the period from 1970 to 2000. We use a vector autoregression (VAR) model to obtain impulse responses, which reveal differences in the output responses to monetary policy shocks across ten German provinces. Next, we investigate whether these differences can be related to structural features of the regional economies, such as industry mix, firm size, bank size and openness. An additional analysis of the volatility of real GDP growth for the period 1992–2000 includes the Eastern provinces. We also present evidence on the interrelationship between firm size and industry, and compare our measure of firm size with those used in previous studies. We conclude that the differential regional effects of monetary policy are related to industrial composition, but not to firm size or bank size.     

The Global Determinants of Direct Office Real Estate Returns

We investigate the determinants of direct office real estate returns by analyzing rents, capital appraisals, and total returns. A recently compiled global database of major cities in Asia, Europe, and the United States provides a unique opportunity to give a macro-view on the effects of economic growth and supply and demand factors on nominal real estate returns. The global database provides quarterly observations from 1986 to 1999. To address the smoothness problem of appraisal-based price data and regulated rents, we employ the Generalized Method of Moments to estimate a dynamic panel-data model. The model allows us to combine the cross-sectional and time-series dimension in our quarterly data. We find that gross domestic product, inflation, unemployment, vacancy rate, and the available stock all have an effect on real estate returns.     

Consumers’ Willingness to Pay for Sustainable Seafood Made in Europe

Sustainability of increasing relevance also for seafood markets. The aim of this contribution is to analyze consumer preferences and their willingness to pay (WTP) for different sustainability claims, and to identify consumer segments according to their WTP. The contingent valuation method was applied to elicit consumers’ WTP in eight European countries. The WTP varies between seven and almost 20%, depending on attribute and country. Three consumer groups become apparent: the largest group without any additional WTP, a smaller group with a moderate additional WTP of plus 17%, and a very small group with an additional WTP of more than 40%. Clear differences between countries are obvious regarding preferences for different sustainability attributes, particularly in the segment with the highest WTP. A fraction of the consumers is willing to pay significantly higher prices for sustainably produced fish from Europe: given that trustful standards are applied and well communicated.     

Relationships among healthy lifestyle beliefs and body mass index in urban China

Consumption is a major driving force in China's economy. The consumer society is particularly emerging in the more urbanized and affluent regions in China. Given the rise of consumerism on the one hand, and the rise of overweight and obesity on the other, this study explored whether the proliferating consumer culture is a threat to the traditional health culture in China. The lifestyle‐oriented approach used in this study does not confirm a straightforward relationship between an upward trend in Chinese with (economic) assets to join the consumer society and a downward trend in health interest among urban Chinese. The result that the rise of the consumer society is not directly accompanied by a devaluation of health issues does not imply that lifestyle research is of no use. On the contrary, this paper successfully identified four dimensions of health‐related lifestyle for urban China, namely Food‐health Belief, Perceived Knowledge, Health Careless and Group Conformity. This result is informative with respect to the complexity of sociocultural factors influencing the increasing prevalence of overweight and obesity.     

Earnings Management and the Long-Run Market Performance of Initial Public Offerings

Issuers of initial public offerings (IPOs) can report earnings in excess of cash flows by taking positive accruals. This paper provides evidence that issuers with unusually high accruals in the IPO year experience poor stock return performance in the three years thereafter. IPO issuers in the most "aggressive" quartile of earnings managers have a three-year aftermarket stock return of approximately 20 percent less than IPO issuers in the most "conservative" quartile. They also issue about 20 percent fewer seasoned equity offerings. These differences are statistically and economically significant in a variety of specifications.     

Leading global teams

Global teams that are characterized by national, cultural and linguistic heterogeneity and operate in a globally dispersed virtual environment are becoming an established form of organizing work in multinational organizations. As global team leadership research is rather limited, we review the literature on leading multicultural and virtual teams in a global context, focusing on leadership competencies, styles, strategies and modes. We also examine the emergent concepts of biculturalism, global mindset and cultural intelligence with respect to team leaders. Our aim is to add to our knowledge of leading global teams, highlight recent trends and suggest directions for future research. Three themes for global team leadership emerged: leaders as boundary spanners, bridge makers and blenders; people-oriented leadership; and leveraging diversity. We discuss implications for research and practice.     

Wage inequality and the labor market impact of economic transformation: Croatia, 1970–2008

In this paper, we examine wage inequality and wage differentials in Croatia from 1970 to 2008 using two long aggregate time series on the distribution of income. We focus especially on changing income inequality related to educational and vocational attainment, changing income inequality within those groups, and how these two components of inequality were affected by the economic transformation from socialism to capitalism. We find that income inequality between groups rose moderately post-transformation, while overall inequality increased more sharply. This finding is consistent with a growing importance of individual rather than group productivity in labor market compensation, a change broadly consistent with the economic transformation of the Croatian labor market.     

Classical Swine Fever Changes the Way Farmers Value Pigs in South Africa

Although there is growing demand for animal products in Africa, production is stagnating. Appropriate management of livestock diversity could help reinvigorate production, contribute to food security and improve farmers’ livelihoods, particularly in subsistence‐oriented systems. We assess differences in farmers’ preferences and economic values for pig traits across different production systems and across areas that have been affected and unaffected by classical swine fever (CSF). Not surprisingly, market‐oriented farmers derived higher values from the productive traits such as heavy slaughter weight and large litter size found in exotic pig genotypes. Subsistence‐oriented farmers, particularly in swine fever affected areas, placed high value on tolerance to disease. We found that CSF changed farmers’ preferences for adaptive traits, and less so for productive traits. Therefore, indigenous breeds become more valuable for subsistence farmers and crossbreeds for market‐oriented farmers if CSF is a risk. Our results can have implications for breeding and conservation strategies and for compensation strategies after culling, and will become increasingly relevant if, as predicted, heat waves and disease outbreaks become more frequent in pig production systems in South Africa with climate change.