Managerial style and the strategic choice of executive incentives

This paper analyzes a two-stage duopoly model where owners provide incentives to managers who then select output levels. Unlike the previous Cournot models on the strategic use of incentives (e.g. Fershtman and Judd, 1987; Sklivas, 1987), managers hold different beliefs about their rivals. Managers and executives are classified by ‘management style’ based on the aggressiveness of their beliefs. It is shown that many of the standard results of the strategic managerial incentive literature no longer hold when executives have differing managerial styles. For example, owners may ‘penalize’ their managers for sales, or they may optimally instruct their managers to maximize profits, in contrast to the standard Cournot findings. Indeed, the model yields a necessary and sufficient condition for compensation contracts to specify pure profit-maximizing behavior when managers have differing managerial styles. Thus, the analysis suggests that when ownership and control are separated, owners must carefully assess the belief structure (management style) of their executives before designing the compensation package.     

Nursing home choice,family bargaining,and optimal policy in a Hotelling economy

We develop a model of family bargaining to study the impact of the distribution of bargaining power within the family on the choice of nursing homes by families, and on the locations and prices chosen by nursing homes in a Hotelling economy. In the baseline (static) model, where the dependent parent cares only about the location of the nursing home, the markup of nursing homes is increasing in the bargaining power of the dependent parent, and nursing homes are located at the extreme periphery. We compare the laissez‐faire with the social optimum (which involves more central locations of nursing homes), and examine its decentralization in first‐best and second‐best settings. We explore the robustness of our results to introducing a bequest motive in a dynamic overlapping generations model, which allows us to study the joint dynamics of wealth accumulation and nursing home prices. If the bequest motive is strong, the markup is decreasing in the bargaining power of the dependent. However, wealth accumulation, by reducing interest rates, raises markup rates and nursing homes prices.     

Casinos,casino size,and crime: A panel data analysis of Michigan counties

Growth in legal gaming in the United States over the past quarter century or so is well-documented. One important factor fueling this growth was the passage of the Indian Gaming Regulatory Act of 1988, which permitted Native American tribes to establish, under agreements or “compacts” with the states in which they are located, casinos offering what is known as Class III gaming: slot machines, blackjack, roulette, and other games. Since the passage of the Act, there have been 21 Native American casinos established in Michigan. Also, three non-Native American casinos opened in Detroit in 1999 and 2000. This growth in the number of casinos has sparked a wide-ranging debate over the social and economic impacts of casino development.The purpose of this research is to focus on the crime issue in the broader casino debate. We investigate the impact of these Michigan casinos on the rates of burglary, robbery, larceny and motor vehicle theft (property crimes) in casino host counties as well as in nearby counties. We employ a panel data set with annual observations on all 83 Michigan counties for the period 1994–2010. The dataset includes crime rates taken from the FBI crime data series, variables for the presence of a casino in a county or in a nearby county, the scale of a casino's operations as measured by revenues, and a variety of control variables suggested by the broader literature investigating the factors that determine crime rates generally.Our results suggest that in most cases the property crime rates studied are not affected by the presence or size of a casino in a county or in a nearby county. The largest such impact, which is negative, is for motor vehicle theft. The size of a casino does have a small positive effect on the motor vehicle theft rate.     

BANKING LICENCES, BAILOUTS AND REGULATOR ABILITY

I analyse a model in which it is socially optimal for banks to manage depositor funds but in which concerns about fraud discourage depositing and justify regulation. The regulator screens bankers and decides the level of charter value which they will receive as incentive to prevent fraud. She can also encourage deposits by insuring them. The optimal policy depends upon the regulator's screening ability: high ability regulators rely upon charter value and low ability regulators rely upon deposit insurance. I relate these findings to the regulation of transition economy banks, to operational risk management, and to banking competition policy.     

Understanding the leadership perceptions of staff in China's hotel industry: Integrating the macro- and micro-aspects of leadership contexts

The objective of this paper is to understand the leadership perceptions of staff in China's hotel industry. This study integrates the macro- and micro-aspects of leadership contexts by identifying the contextual variables that affect leadership perceptions. In leadership research, industry setting, the hierarchical levels of an organization, and national culture are recognized as the contextual constraints that affect leadership perceptions, and these constraints were used in this empirical study. Four factors emerged from the factor analysis of a survey study: professionalism; integrity; masculinity or yang; and femininity or yin. A key finding indicates that both the industry setting and the hierarchical levels of an organization affect professionalism. Implications for the training and development of future international hospitality leaders and local staff are considered.     

If You Provide It,Will They Read It? Response Time Effects in a Choice Experiment

Substantial effort is expended in the design of surveys, including the amount and type of information they contain. However, we often do not know how involved respondents are in reading and processing the informational content of a survey and making choices, and whether different levels of involvement result in systematic differences in estimated models. To address this issue, we recorded response times for each respondent of an internet‐based choice experiment for stream restoration. Response times per survey section and for the entire survey were used as proxies for the amount of involvement in reading information provided or answering choice questions. Response times per survey section fell rapidly, possibly signaling learning, use of heuristics, or attempts to quickly dispel with the survey. Response times were found to be independent of demographics and attitudes. Log‐likelihood ratio tests failed to reject the null hypotheses of equal coefficients and scale parameters across response time‐partitioned data. However, there exists an association between response times and the increasing learning curve or difficult choice trade‐offs, suggesting a heuristic response. Additional research on response time effects and survey design is needed, especially with the rise in electronic surveying media. D'énormes efforts sont investis dans la conception de sondages, notamment pour déterminer la quantité et le type d'information présentée. Toutefois, nous ne savons pas combien de temps les répondants consacrent à la lecture et au traitement de cette information et au choix des réponses, ni si les divers degrés de participation entraînent ou non des différences systématiques dans les modèles estimés. Pour s'attaquer à cette question, nous avons chronométré les personnes qui ont répondu à un sondage en ligne sur la restauration des cours d'eau. Nous avons utilisé le temps de réponse pour chaque section et pour le sondage au complet comme mesure approximative de l'effort des participants pour lire l'information et répondre aux questions. Pour chaque section, le temps de réponse diminuait rapidement, soit en raison des connaissances heuristiques des répondants, soit en raison de leur désir d'effectuer le sondage le plus rapidement possible. Le temps de réponse s'est révélé indépendant des caractéristiques démographiques et des attitudes des répondants. Des tests du rapport de vraisemblance n'ont pas rejeté les hypothèses nulles de coefficients égaux et de paramètres d'échelle de l'ensemble des données cloisonnées. Toutefois, il existe un lien entre le temps de réponse et la courbe d'apprentissage croissante ou la difficulté des choix, ce qui laisse supposer une réponse heuristique. Il faudrait effectuer davantage de recherche sur les effets du temps consacré pour répondre à un sondage et pour le concevoir, en raison du nombre croissant de sondages en ligne.     

EU Policies on Bioenergy and their Potential Clash with the WTO

The paper outlines EU policy on bioenergy, including biofuels, in the context of its policy initiatives to promote renewable energy to combat greenhouse gas emissions and climate change. The EU’s Member States are responsible for implementing EU policy: thus, the UK’s Renewables Obligation on electricity suppliers and its Renewable Transport Fuel Obligation and road‐fuel tax rebates are examined. It is unlikely that EU policy is in conflict with the WTO Agreement on Agriculture or that on Subsidies and Countervailing Measures, but its provisions on environmental sustainability criteria could be problematic.