On reproducible econometric research

Recent software developments are reviewed from the vantage point of reproducible econometric research. We argue that the emergence of new tools, particularly in the open‐source community, have greatly eased the burden of documenting and archiving both empirical and simulation work in econometrics. Some of these tools are highlighted in the discussion of two small replication exercises. Copyright © 2009 John Wiley & Sons, Ltd.     

More is not always better: The impact of relationship functions on customer-perceived relationship value

Customer–supplier relationships have been promoted as a source of value for customers and as a way for suppliers to differentiate. Customer-perceived relationship value (i.e., a customer's overall assessment of the benefits and sacrifices of a given relationship with a supplier) is driven by relationship functions (i.e., the co\ntributions a supplier makes to a customer's value-creation processes). Earlier research categorizes relationship functions into two groups: direct, operation-related functions and indirect, change-related functions. This research finds that indirect functions have less impact than direct functions. Given the widely discussed advantages of supplier involvement in customer innovation, and the importance of information, access to market actors and motivation, this study analyzes why change-related functions have less of an impact than operation-related functions. The empirical results reveal that change-related relationship functions have a non-linear, inverted u-shaped impact on relationship value, and that the degree of customer innovativeness moderates this impact. Thus, while an analysis of all relationship functions is necessary, suppliers wishing to optimize business relationships should pay particular attention to customer innovativeness. The non-linear impact of change-related relationship functions gives rise to several interesting avenues for further research.     

How to subcontract?

Firms compete for a contract and subcontract part of the work. If subcontracting takes place before the award of the contract, the revenue equivalence result breaks down, as subcontractors anticipate that their bids influence the probability of the firm winning the contract. Properties of the optimal subcontracting mechanism are discussed.     

On the Role of Patience in an Insurance Market With Asymmetric Information

We analyze a two-period competitive insurance market that is characterized by the simultaneous presence of moral hazard and adverse selection with regard to consumer time preferences. It is shown that there exists an equilibrium in which patient consumers use high effort and buy an insurance contract with high coverage, whereas impatient consumers use low effort and buy a contract with low coverage or even remain uninsured. This finding may help to explain why the opposite of adverse selection with regard to risk types can sometimes be observed empirically.     

Functions of industrial supplier relationships and their impact on relationship quality

Although recent scholarly work on business relationships often discusses relationship quality as a major issue, especially with regard to the phenomenon of vendor stratification, there is still little empirical research on this important construct. In this paper, the authors provide a thorough conceptualization of relationship quality and its possible antecedents, i.e., the direct and indirect functions of the relationship for the customer. Drawing on an empirical base of 230 buyer questionnaires, the authors show that the extent to which a supplier fulfills direct and indirect functions in a relationship has a direct positive impact on the relationship quality perceived by the customer. This impact is especially strong when the customer can easily replace the supplier or, in other words, when the supplier faces competition. The findings are discussed and the authors provide managerial implications for decision-makers from both buyer and supplier organizations.     

Information acquisition during a descending auction

We compare the effects of information acquisition during a descending auction with its static counterpart, the first-price sealed-bid auction. In a framework with heterogeneous prior information, we show that an equilibrium with information acquisition exists in both auction formats. We show that everything else equal information acquisition is more desirable in the dynamic auction. Moreover, we characterize a set of parameter values where more information is acquired in the dynamic auction in equilibrium. If the costs of information acquisition are sufficiently low, the sealed-bid auction generates more revenue although the descending auction is more efficient.     

Distribution and determinants of lifetime unemployment

The empirical literature on unemployment almost exclusively focuses on the duration of distinct unemployment spells. In contrast, we use a unique administrative micro data set for the time span 1975-2004 to investigate individual lifetime unemployment — defined as the cumulative length of all unemployment spells over a 25-year period. This new perspective enables us to answer questions regarding the long-term distribution and determinants of unemployment for birth cohorts 1950-1954. We show that lifetime unemployment is highly concentrated on a small part of the population. With censored quantile regressions we investigate the long-lasting influence of bad luck early in the professional career: Controlling for individual and firm characteristics we find that choosing at a young age what turns out to be an unfavorable occupation significantly increases the predicted amount of lifetime unemployment.