Comparing Sunspot Equilibrium And Lottery Equilibrium Allocations: The Finite Case*

Sunspot equilibrium and lottery equilibrium are two stochastic solution concepts for nonstochastic economies. We compare these concepts in a class of completely finite, (possibly) nonconvex exchange economies with perfect markets, which requires extending the lottery model to the finite case. Every equilibrium allocation of our lottery model is also a sunspot equilibrium allocation. The converse is almost always true. There are exceptions, however: For some economies, there exist sunspot equilibrium allocations with no lottery equilibrium counterpart.     

The intraday liquidity management game

We use a game theoretical framework to analyze the intraday behavior of banks with respect to settlement of interbank claims in a real-time gross settlement setting. The game played by banks depends upon the intraday credit policy of the central bank and it encompasses two well-known game theoretical paradigms: the prisoner's dilemma and the stag hunt. The former arises in a collateralized credit regime where banks have an incentive to postpone payments when daylight liquidity is costly, an outcome that is socially inefficient. The latter arises in a priced credit regime where the postponement of payments can be socially efficient. Banks are risk neutral, but we show that most of the results are unaffected by risk aversion.     

Comparing the impact of management support on police officers’ perceptions of discretionary power and engagement: Australia,USA and Malta

Abstract

This paper uses Social Exchange Theory as a lens for comparing the impact of management support upon police perceptions of discretionary power and employee engagement, across three countries. A survey-based, self-report process collected data from 193 police officers in Australia, 588 from the USA, and 249 from Malta. Structural equation modelling was used to analyse the data. The findings suggest a significantly different management support context across the three countries, as well as significantly different perceptions of discretionary power. Across the three countries, police perceived relatively poor satisfaction with organizational management support and only some engagement levels. However, USA police perceived significantly more discretionary power than the other country samples. These findings provide greater clarity about the link between management support, discretionary power and engagement for the police officers. Since employee engagement likely affects policing outcomes, the findings suggest that poor management support of police officers could negatively affect the provided service. Potential strategies to enhance police engagement include (a) training police managers about how to manage so as to promote greater engagement, and (b) modifying police managers’ performance indicators in line with achieving better police engagement.     

Equity Risk, Conversion Risk, and the Demand for Insurance

Existing insurance theory fails when applied to real property because it does not account for variations in the economic environment. The article studies optimal property insurance in the presence of two sources of variation: equity risk and conversion risk. Equity risk is randomness of the value of a property. It tends to raise demand for conventional insurance. In contrast, conversion risk is randomness in the value the property would have if, after severe damage, it were converted to the highest‐valued use. It is distinct from equity risk because the highest‐valued use is typically not the current one. Under independent conversion risk, the optimum upper limit is a compromise among underlying conversion thresholds. Absent independence, the optimum can be quite different. Conversion risk can raise or lower the demand for property insurance. Insurance contracts that fail to address conversion tend to undermine the orderly disposition of obligations and reduce the gains from reallocation of risks through insurance.     

Competitive and Harmonized R&D Policies for International R&D Alliances involving Asymmetric Firms

We examine R&D policies when a national firm forms an R&D alliance with a foreign competitor. Firms differ in R&D capabilities, select among three forms of R&D alliance and adopt a profit‐sharing rule if they coordinate their R&D decisions. When firms coordinate their R&D decisions and governments choose R&D policies independently, R&D taxes are chosen, but if governments harmonize their policies, they decide not to intervene. These policy outcomes affect the types of R&D alliance chosen. Agreements to share R&D information can outperform those with both coordination and sharing as a result of the R&D tax that coordination attracts.     

PERIODIC SEQUENCES OF ARBITRAGE: A TALE OF FOUR CURRENCIES

This paper investigates arbitrage chains involving four currencies and four foreign exchange trader‐arbitrageurs. In contrast with the three‐currency case, we find that arbitrage operations when four currencies are present may appear periodic in nature, and not involve smooth convergence to a ‘balanced’ ensemble of exchange rates in which the law of one price holds. The goal of this article is to understand some interesting features of sequences of arbitrage operations, features which might well be relevant in other contexts in finance and economics.     

The Effects of Preferential Trade Agreements on Foreign Direct Investment: Evidence from the African Caribbean Pacific Region

Open Economies Review - Our empirical analysis utilises panel data on bilateral FDI stocks from 34 OECD countries into 45 ACP countries over the period 2000–2017 to consider the role of PTAs...     

Age and gender differences in risk-taking behaviour as an explanation for high incidence of motor vehicle crashes as a driver in young males

Risk-taking behaviour has been identified as a possible explanation for the high incidence of motor vehicle crashes involving young male drivers. This study examines the extent to which differences in risk-taking behaviour explain the differential crash rates by age and gender. A random sample of 689 adults aged 17-88 were selected from motor vehicle license holders within randomly selected geographical areas across Queensland. Participants completed a questionnaire covering their attitudes towards driving behaviour and general risk-taking behaviour, selected demographic characteristics and self-reported history of road crashes as a driver. Univariate analysis showed that males scored higher means than females in driver aggression and thrill seeking and in their general risk acceptance. Multivariate logistic regression analysis indicated that males were twice as likely (OR 2.46, CI 1.59-3.83) to have reported at least one crash as a driver compared to females and nearly three times as likely (OR 2.88, CI 1.84-4.49) to have reported two or more crashes. Drivers aged 17-29 were also twice as likely (OR 2.31, CI 1.10-4.19) to have reported at least one crash when compared to those aged over 50 years. When risk-taking behaviours were introduced into the logistic model the odds of males (OR 1.70, CI 1.29-3.30) or 17-29 year olds (OR 1.30, CI 0.93-3.91) being involved in at least one crash substantially reduced. An increased risk of a crash as a driver can, in part, be explained by the age and gender differential in risk-taking behaviour. The challenge for public health professionals is to determine suitable strategies to modify risk-taking behaviour in young or male drivers.     

Professionals' supervisor–subordinate relationships,autonomy and commitment in Australia: a leader–member exchange theory perspective

This article used leader–member exchange theory as a lens for comparing the impact of the supervisor–subordinate relationship on two types of professionals' perceptions of autonomy, and in turn upon their affective commitment. The reason for examining autonomy is because a characteristic of being a professional is having autonomy; however, we argued that such perceptions are affected by the quality of the supervisor–subordinate relationship. The findings confirmed this argument, although the trend was stronger for engineers than for nurses. Using the ordinary least square procedure, the goodness of fit of the model identified that supervision and autonomy accounted for approximately a third of the variance for engineers' levels of affective commitment and a fifth of the variance for nurses. That is, the impact of supervision practices was stronger on autonomy and commitment for engineers than for nurses in Australia. Moreover, statistically, the two groups of professionals were similar in their perceptions of the quality of their supervisor–subordinate relationship as well as in their perceptions of autonomy, and the qualitative findings supported similar factors impacting upon their perceptions. The only significant difference between the two groups was in their levels of affective commitment. The implications of these results include the need for those managing professionals to consider ways of improving workplace supervisor–subordinate relationships because of the impact upon perceived autonomy as well as commitment to their organisation, and hence the retention of such professionals.