The Emergence of Biometrics and Its Effect on Consumers

Biometric authentication systems are becoming increasingly common. Though their use offers important advantages to governmental agencies, business, and consumers, the widespread use of biometric technology has the potential for serious negative consequences. In this paper, the authors explore the effects on consumers of the incorporation of biometric authentication into mainstream commerce, specifically focusing on privacy concerns of consumers in the context of the fair information practice principles of notice/awareness, choice/consent, access/participation, integrity/security, and enforcement/redress.     

Subjective Performance Indicators and Discretionary Bonus Pools

Key indicators of managerial performance are frequently subjective, that is, they are difficult to specify and/or verify for contracting purposes. When a principal must rely on subjective information to create incentives for a group of agents, discretionary bonus pools are shown to be optimal mechanisms. Despite their optimality, however, discretionary bonus pools entail an additional agency cost relative to the benchmark of optimal contracts based on objective and verifiable information. Our analysis identifies circumstances under which this additional agency cost is small, for example, the subjective information signals are precise, or the number of agents participating in the bonus pool increases. When incentive schemes can be based on both objective and subjective performance indicators, the relative weights to be placed on alternative signals are shown to differ from the ones predicted by models with objective signals only. We also demonstrate that correlation in measurement errors has a different impact on the structure of optimal incentive schemes when the performance indicators are merely subjective.     

USING COMMERCIAL DISCIPLINE TO IMPROVE AUSTRALIAN DEFENCE PROCUREMENT: MISPLACED ENTHUSIASM?

Australia, like other democracies, has long sought to improve the efficiency and effectiveness of procurement for national defence. A recent review exhorted Defence procurement managers to exert greater “commercial discipline.” Similar calls have been made in other countries. This paper tests such public sector emulation of commercial practice by comparing the relative effectiveness of procurement via in‐house arrangements; a public procurement agency detached from Defence; and privatized provision. We show that what matters is not public or private ownership but how ownership and management are integrated and what incentive structures are applied. (JEL H44)     

Spaces of Difference: Reflections from Toronto on Multiculturalism,Bourgeois Urbanism and the Possibility of Radical Urban Politics

What explains the lack of what Mike Davis famously called ‘magical urbanism’— referring to the increasingly influential and potentially radical role played by Latino immigrants in US politics — in such diverse Canadian cities as Toronto, Montreal and Vancouver? This article points out how the Canadian legacy of multiculturalism constitutes one key cause of the failure of left urban politics in Canada to produce yet anything approaching the promise of ‘magical urbanism’ south of the border, especially by underlining how this bulwark of liberal ideology lends itself so readily to some resilient variations of bourgeois urbanism — including the commodification of difference, most recently under the auspices of Richard Florida's ‘creative class’. Against the pluralism of the food court and the shopping mall, both in its official multicultural and seemingly oppositional ‘hybrid’ forms, are radical approaches to difference in the city still possible — in Canada or elsewhere? The authors argue that the concepts of ‘maximal’ and ‘produced’ (vis‐à‐vis ‘minimal’ and ‘induced’) difference and the politics of ‘the right to the city’ elaborated by Henri Lefebvre — in conjunction with the reflections on subaltern experiences of difference by critics such as Himani Bannerji and Ambalavanar Sivanandan — indeed provide a starting point for radical urban politics. Comment expliquer, dans des villes canadiennes aussi différentes que Toronto, Montréal ou Vancouver, l’absence de ce que Mike Davis a appelé‘l’urbanisme magique’ en parlant du rôle de plus en plus influent, voire radical, des immigrants latinoaméricain dans la politique des États‐unis? L’héritage canadien du multiculturalisme explique d’abord pourquoi la politique urbaine de gauche n’a encore rien pu produire au Canada qui s’approcherait de la promesse d’un ‘urbanisme magique’ comme au sud de la frontière. L’article souligne notamment comment ce rempart d’idéologie libérale se prête si facilement à quelques variantes résistantes d’urbanisme bourgeois, dont la banalisation de la différence, tout récemment sous les auspices de la ‘classe créative’ de Richard Florida. Face au pluralisme de l’aire de restauration et du centre commercial, tous deux sous des formes ‘hybrides’ multiculturelles et aparemment contradictoires, des approches radicales de la différence dans la ville sont‐elles encore possibles, au Canada ou ailleurs? Les concepts de différence ‘maximale’ et ‘produite’ (par opposition à‘minimale’ et ‘induite’) et la politique du ‘droit à la ville’ conçue par Henri Lefebvre — alliés aux réflexions sur des expériences de différence subalternes émanant de critiques tels que Himani Bannerji et Ambalavanar Sivanandan — offrent indubitablement un point de départ pour une politique urbaine radicale.     

External and Internal Pricing in Multidivisional Firms

Multidivisional firms frequently rely on external market prices in order to value internal transactions across profit centers. This paper examines market‐based transfer pricing when an upstream division has monopoly power in selling a proprietary component both to a downstream division within the same firm and to external customers. When internal transfers are valued at the prevailing market price, the resulting transactions are distorted by double marginalization. The imposition of intracompany discounts will always improve overall firm profits provided the supplying division is capacity constrained. Under certain conditions it is then possible to design discount rules so that the resulting prices and sales quantities are efficient from the corporate perspective. In contrast, the impact of intracompany discounts remains ambiguous when the capacity of the selling division is essentially unlimited. It is then generally impossible to achieve fully efficient outcomes by means of market‐based transfer pricing unless the external market for the component is sufficiently large relative to the internal market.     

Hedge Funds and the Technology Bubble

This paper documents that hedge funds did not exert a correcting force on stock prices during the technology bubble. Instead, they were heavily invested in technology stocks. This does not seem to be the result of unawareness of the bubble: Hedge funds captured the upturn, but, by reducing their positions in stocks that were about to decline, avoided much of the downturn. Our findings question the efficient markets notion that rational speculators always stabilize prices. They are consistent with models in which rational investors may prefer to ride bubbles because of predictable investor sentiment and limits to arbitrage.