Expectations in Austrian Business Cycle Theory: An Application of the Prisoner's Dilemma

The standard account of Austrian Business Cycle theory posits that central bank manipulations of interest rates fool bankers and investors into believing that there has been an increase in the real supply of loanable funds available for capital investment. However, reliance on foolishness ignores the entrepreneurial emphasis within the Austrian tradition and fails to produce the strongest possible case for Austrian Business Cycle theory. We use the prisoner's dilemma framework to model the profit maximizing behavior of bankers and the investors under uncertainty when the market rate of interest is below the underlying rate of time preference.     

Mean-Variance Preferences and Investor Behaviour

We study the comparative statics implications of mean-variance preferences for optimal portfolios. Specifically, we show that all risk-averse mean-variance investors raise their investment in a risky asset in response to a change in that asset's return distribution if and only if the change lowers both the mean and standard deviation of the return by the same percentage. Besides being of interest in its own right, our results allow us to compare some comparative statics implications and the expected utility and mean-variance models systematically.     

Primary vs secondary prophylaxis with pegfilgrastim for the reduction of febrile neutropenia risk in patients receiving chemotherapy for non-Hodgkin’s lymphoma: cost-effectiveness analyses

Objective:

Evaluate the cost-effectiveness of primary vs secondary prophylaxis (PP vs SP) with pegfilgrastim to reduce the risk of febrile neutropenia (FN) in Non-Hodgkin’s Lymphoma (NHL) patients receiving myelosuppressive chemotherapy from a US payer perspective.

Methods:

A Markov model was used to compare PP vs SP with pegfilgrastim in a cohort of patients receiving six cycles of cyclophosphamide, vincristine, doxorubicin, and prednisone (CHOP) or CHOP plus rituximab (CHOP-R) chemotherapy. Model inputs, including efficacy of pegfilgrastim in reducing risk of FN and costs, were estimated from publicly available sources and peer-reviewed publications. Incremental cost-effectiveness was evaluated in terms of net cost per life-year saved (LYS), per quality-adjusted life-year (QALY) gained, and per FN event avoided over a lifetime horizon. Deterministic and probabilistic analyses were performed to assess sensitivity and robustness of results.

Results:

Lifetime costs for PP were $5000 greater than for SP; however, PP was associated with fewer FN events and more LYs and QALYs gained vs SP. Incremental cost-effectiveness ratios (ICERs) for PP vs SP for CHOP were $13,400 per FN event avoided, $29,500 per QALY gained, and $25,800 per LYS. CHOP-R results were similar ($15,000 per FN event avoided, $33,000 per QALY gained, and $28,900 per LYS). Results were most sensitive to baseline FN risk, cost per FN episode, and odds ratio for reduced relative dose intensity due to prior FN event. PP was cost-effective vs SP in 85% of simulations at a $50,000 per QALY threshold.

Limitations:

In the absence of NHL-specific data, estimates for pegfilgrastim efficacy and relative risk reduction of FN were based on available data for neoadjuvant TAC in patients with breast cancer. Baseline risks of FN for CHOP and CHOP-R were assumed to be equivalent.

Conclusions:

PP with pegfilgrastim is cost-effective compared to SP with pegfilgrastim in NHL patients receiving CHOP or CHOP-R.     

Environmental Kuznets Curve: Conclusive Econometric Evidence for CO2

This paper begins with a statistical formulation of the Environmental Kuznets Curve (EKC) and discusses the major econometric problems raised in the literature in testing this hypothesis using panel data. A simple t‐test is then presented that avoids these econometric problems. The result from applying the t‐test confirms conclusively the EKC for CO₂ as formulated.     

Provision Point Mechanisms and Field Validity Tests of Contingent Valuation

Past field validity tests of contingent valuation have relied on voluntary contribution mechanisms to elicit actual willingness to pay, and may overestimate hypothetical bias because of free riding in the actual contributions. This paper argues that provision point mechanisms are a preferred alternative for field validity tests of contingent valuation because they increase the proportion of demand revealed in cases in which public goods can be provided in a step function. The results of a contingent valuation validity study of participation in a green electricity pricing program that uses a provision point mechanism are reported, and hypothetical open-ended and dichotomous choice responses are compared to actual participation. Calibration of hypothetical responses is also explored.     

Have Casinos Contributed to Rising Bankruptcy Rates?

This paper examines the relationship between casino gambling and bankruptcy rates in U.S. counties using a panel of U.S. county-level data from 1990 through 2005. We contribute to the literature in several ways, perhaps most notably by examining the possibility that the effect of a casino on bankruptcy may differ over the casino’s lifespan. Results confirm this possibility, indicating that the impact of casinos on bankruptcy follows a “U-shaped” curve over the life of the casino. More specifically, regression analysis indicates the existence of a casino in a county increases the bankruptcy rate by more than 9% in the first year of operation. The percentage of additional bankruptcies then decreases through the third year after the casino opens. Bankruptcy rates in casino counties then slightly fall below that of non-casino counties during the fourth through seventh years after opening, increasing once again in the eighth year and thereafter. This cycle corresponds closely to the 6 year statute of limitations period applicable to Chapter 7 bankruptcies.     

Urban economic base as a catalyst for movements in real estate prices

We examine the relation between housing prices in an MSA and its urban economic base. We create and employ new forward-looking employment growth indices that measure the urban economic strength of an MSA and find that it accounts for a significant and sizeable portion of the house price movements in that MSA. We argue that the forward looking measure is an indicator of future agglomeration growth for the MSAs. We further partition the urban economic growth into growth by various industries and track the attribution of their growth to housing prices over time. We find that for some MSAs, home prices are driven by the same set of industries over time, whereas for others, home prices are driven by a totally new set of industries in the later quarters, due to the birth of new industries. We also analyze the impact of the diversification of an urban economic base on home price volatility and observe that diversification decreases home price volatility. The result has larger implications for urban policymakers in selecting the appropriate type of industries relative to their existing mix of industries.     

Interpreting Value at Risk (VaR) forecasts

Value at Risk (VaR) forecasts have been increasingly accepted globally by both risk managers and regulators as a tool to identify and control exposure to financial market risk. However, modern portfolios are characterized by a constantly changing composition of security holdings that reflect portfolio managers’ strategies, expected prices, and net cash flows into the portfolio. As a result of these factors, portfolio returns are time-varying mixtures of distributions which are unlikely to be well approximated by conventional methods.     

The joint influence of technology uncertainty and interorganizational interaction on external technology integration success

This paper empirically examines the acquisition of a technology from a source outside the firm and its incorporation into a new or existing operational process. We refer to this key activity in process innovation as external technology integration. This paper develops a conceptual framework of external technology integration based on organizational information processing theory and technology management literature. The primary hypothesis underlying the conceptual framework is that external technology integration will be most successful when the level of interaction between the source of the technology and recipient of the technology is appropriately matched, or fit, to the characteristics of the technology to be integrated. The conceptual framework also develops other hypotheses relating to contextual factors that may also influence the success of external technology integration. A cross-sectional survey methodology is employed to test the four hypotheses of the conceptual framework, with the results indicating strong support for the fit hypothesis and general support for the contextual hypotheses. The paper closes with a discussion of the implications of this study for both theory and practice.