Hope against Hope: Strike Activity in Canada, 1920-1939

The received view is that, across countries and time, strike dimensions trace an empirical regularity. The incidence and duration of contract strikes move in opposite directions over the business cycle: incidence is procyclical and duration countercyclical. The Canadian experience in the interwar years was different. Strike incidence was independent of the business cycle and strike durations fell steadily over the period. A distinct pattern emerged. The 1920s saw a decline in strike activity and steady losses for workers; in the 1930s strike activity gained momentum and there were more worker wins. Our interpretation of this extraordinary episode is based on a new data set collected for the period 1920 to 1939. We evaluate strikes in the context of a war-of-attrition model and estimate the probability of strike outcomes (success, failure, or compromise) and capitulation times (for firms and workers) as functions of firm and striker characteristics. We find that workers capitulated first in the 1920s because firms used replacement workers as part of a larger strategy to break the union movement. In the 1930s, it was firms' turn to capitulate first because they had cut back on resources to fight strikes, even as workers became more belligerent.     

Fluctuating Efforts and Interdependencies in Collaborative Work

We present a dynamical model of cooperative efforts comprised of concurrently performed, interrelated tasks. The model contains a stochastic component to account for temporal fluctuations both in task performance and in the effect of a given unit of work on the project as a whole. We show that as the number of concurrent tasks increases, so does the average completion time. Also, for fixed system size, the dynamics of individual project realizations can exhibit large deviations from the average when fluctuations increase past a certain threshold, causing long delays in completion times. These effects are in agreement with empirical observation. We also show that the negative effects of both large groups and long delays caused by fluctuations may be mitigated by arranging projects in a hierarchical or modular structure. Our model is applicable to any arrangement of interdependent tasks, providing an analytical prediction for the average completion time as well as a numerical threshold for the fluctuation strength beyond which long delays are likely. In conjunction with previous modeling techniques, it thus provides managers with a predictive tool to be used in the design of a project’s architecture.     

International competition in the first wave of globalization: new evidence on the margins of trade

We pose a seemingly ageless question in economic history. To what extent did new entrants in the late nineteenth‐century cotton‐textile industry threaten the customary markets of the European core? Exploiting a newly constructed dataset on textile imports to Spain, we find that as trade costs fell, new rivals began to sell a greater variety of products. Along this dimension, competition can be said to have increased. In response, producers in Europe adjusted the type and number of goods exported. By 1914, specialization mapped onto endowments of skilled labour, capital, and access to raw materials. While firms in new industrializing countries exported low‐end varieties, incumbents in the core shipped high‐end goods, unit values increasing with levels of development.     

Talk and Action: What Individual Investors Say and What They Do

Combining survey responses and trading records of clients of a German retail broker, this paper examines some of the causes for the apparent failure to buy and hold a well-diversified portfolio. The subjective investor attributes gleaned from the survey help explain the variation in actual portfolio and trading choices. Self-reported risk aversion is the single most important determinant of both portfolio diversification and turnover; other things equal, investors who report being more risk tolerant hold less diversified portfolios and trade more aggressively. Less experienced investors similarly tend to churn poorly diversified portfolios. The effect of perceived knowledge on portfolio choice is less clear cut; holding other attributes constant, investors who think themselves knowledgeable about financial securities indeed hold better diversified portfolios, but those who think themselves more knowledgeable than the average investor churn their portfolios more. We thank Carol Bertaut, Anne Dorn, Larry Glosten, Will Goetzmann, Charles Himmelberg, Wei Jiang, Alexander Ljungqvist, Theo Nijman, Paul Sengmüller, Ralph Walkling, Elke Weber, and participants at the 2003 European Finance Association meetings in Glasgow for their comments.     

A methodology for managing risk in electronic transactions over the Internet

The explosive growth of the Internet has made possible an economic transformation in which commerce will become largely electronic. In this vision, the medium of communication and negotiation becomes a distributed network of computers equipped with robust, secure and trusted “cash” mechanisms. It is thus of paramount importance to design mechanisms that will ensure timely and reliable transactions in cyberspace. In this paper we present a methodology for quantitatively managing the risk and cost of executing transactions in a distributed network environment by exploiting an analogy with modern financial portfolio theory. We illustrate the methodology with several concrete examples under different pricing schemes, as well as with empirical measurements of Internet traffic. This revised version was published online in June 2006 with corrections to the Cover Date.     

SYSTEMATIC LIQUIDITY

Most of the market microstructure literature focuses on the liquidity of individual securities, whereas much of the asset pricing literature examines the association between systematic risk and return. We document the presence of a systematic, time‐varying component of liquidity. At the moment, neither the inventory nor the asymmetric information‐based approach to liquidity explains the systematic, time‐varying component of liquidity. JEL classification: G10, G12