The robustness of the independent private value model in Bayesian mechanism design

Summary. In a Bayesian model of group decision-making, dependence among the agents' types has been shown to have a beneficial effect on the design of incentive compatible mechanisms that achieve the efficient choice associated with complete information. This effect is shown here to depend as much upon the use of large monetary transfers among the agents as it does upon dependence: if the transfers are bounded in magnitude, then nonexistence in the case of independence of an efficient, incentive compatible, ex ante budget-balanced and interim individually rational mechanism is robust to the introduction of a small amount of dependence among types. This robustness result supports the use of the simplifying assumption of independence in mechanism design. Received: October 28, 1996; revised version: May 28, 1997     

The Persistence of IPO Mispricing and the Predictive Power of Flipping

This paper examines underwriters' pricing errors and the information content of first-day trading activity in IPOs. We show that first-day winners continue to be winners over the first year, and first-day dogs continue to be relative dogs. Exceptions are "extra-hot" IPOs, which provide the worst future performance. We also demonstrate that large, supposedly informed, traders "flip" IPOs that perform the worst in the future. IPOs with low flipping generate abnormal returns of 1.5 percentage points per month over the first six months beginning on the third day. We show that flipping is predictable and conclude that underwriters' pricing errors are intentional.     

The development of purpose and strategy within British charitable organisations: historical impressions

This paper is based on research work undertaken as part of a PhD thesis. It considers the development of purpose and strategy within British charitable organisations. First, the historical path of charity in Britain is traced. Secondly, an assessment of the more fundamental forces that constitute the nature of charitable initiative are explored, much of which is applicable beyond ‘our island home’.[Churchill, W. (1957) ‘A History of the English Speaking Peoples’, Cassell and Company, London.] The historical relationship of charity to business is then examined, particularly in terms of the influence that business ‘culture’ is gaining in shaping charitable endeavour today. Finally, an initiative to link business and charity is presented and conclusions are noted. Copyright © 1999 Henry Stewart Publications     

Consideration of the social context of auditors’ reliance on expert system output during evaluation of loan loss reserves

Auditors are accountable for judgments made within the social context of the accounting firm. Tetlock (1985) states that decision makers often use the acceptability heuristic to cope with accountability. According to this heuristic, individuals make decisions which they are reasonably confident will be acceptable by others to whom they are accountable. When auditors form judgments with the aid of expert system output, they must determine the appropriate level of reliance on the expert system output. Since the expert system output is based on the input of experts, auditors may decide the output is ‘acceptable‘ and overrely on the output. In addition, because of the conservative nature of the accounting firm, expert system output which is negative may be viewed as more acceptable than positive output leading to greater overreliance. The results indicate that auditors do overrely on expert system output and rely to a greater degree on output which is negative versus output which is positive. Copyright © 1999 John Wiley & Sons, Ltd.     

The motives of off-the-books entrepreneurs: necessity- or opportunity-driven?

In recent years, it has become common to represent entrepreneurs as either necessity- or opportunity-driven. Drawing upon face-to-face interviews in England with 70 entrepreneurs trading wholly or partially off-the-books, this paper evaluates critically this dichotomous representation. The finding is that squeezing the motives of off-the-books entrepreneurs into one side or the other of this dichotomy not only over-simplifies their rationales since both necessity and opportunity motives are often involved but also obfuscates how their motives change over time. The outcome is a call to replace this either/or depiction with a richer and more nuanced both/and understanding of off-the-books entrepreneurs that recognises their diverse and dynamic motives.

R&D subsidiary isolation in knowledge-intensive industries: evidence from Austria

We investigate R&D subsidiary isolation within Multinational Corporations (MNCs) competing in knowledge-intensive industries. For such MNCs, accessing knowledge and nurturing the innovative potential of R&D subsidiaries is vital for on-going competitiveness. This, according to conventional thinking, requires integration of the subsidiary within the host country as well as internally within the MNC. Recent studies have shown, however, that overseas subsidiaries can become isolated (i.e., losing requisite integration), even in high-technology sectors. We tackle this issue by focusing on organizational factors at corporate and subsidiary levels that have the potential to explain subsidiary isolation. We analyze a sample of 45 foreign-owned Austrian subsidiaries undertaking R&D in knowledge-intensive industries using a combination of questionnaire and secondary data. The results suggest that parent and subsidiary experience, the degree of early-stage research conducted by the subsidiary and the use of training and rotation practices by the subsidiary, all act to counter isolation. Interestingly, we find that proximity between parent and R&D subsidiary does not play a significant role in predicting isolation. We also show how these factors influence communication frequency between the R&D subsidiary and various actors within the internal and the external networks in different ways.     

Paradigm Shifts in Economic Theory and Policy

In most countries, mainstream economic policy has not yet undergone any significant change, and there is little consensus on what, if anything, ought to replace it. However, there are some signs of an emerging transition, at several levels.     

Economic creativity and innovation implementation: the entrepreneurial drivers of growth? Evidence from 63 countries

This paper examines the effect of culture on national innovation and prosperity. Because culture shapes the way people think about and behave in regard to risk, opportunities, and rewards, it should influence the nature of entrepreneurial activity and, by extension, economic outcomes. Using structural equation modeling on a sample of 63 countries, we propose and test a comprehensive explanation of how culture as an umbrella construct (as opposed to an analysis of its constituent parts) affects innovation and national prosperity. We propose a two-stage model of innovation, and find support for our hypothesized relationship that “economic creativity” influences “innovation implementation.” At the national level, we find that culture does indeed influence economic creativity. We also find that innovation implementation explained some of the variation in prosperity across countries. By establishing that “big picture” culture matters to innovation, the door has opened for researchers to evaluate this relationship using data from any one of a number of rival culture frameworks. Moreover, these empirical finding buttress the theoretical arguments that culture powerfully shapes the character of national innovation.     

Early Experiences of the Enforcement of the Unfair Commercial Practices Directive in Scotland

This exploratory study examines the early impact of the Unfair Commercial Practices Directive 2005/29/EC on enforcers in Scotland within the context of current policy developments regarding the use of civil and criminal enforcement mechanisms within the UK. The Directive has been implemented in the UK by means of the Consumer Protection from Unfair Trading Regulations 2008 SI 1277 and the duty to enforce the Regulations falls primarily to local authority trading standards services. Twenty-one in-depth interviews were conducted with a range of officers employed within the trading standards service based in eight local authorities in Scotland on their perceptions of the new Regulations. The main findings were that officers’ views of the new Regulations and the civil and criminal enforcement routes available to them was affected by structural, operational, and cultural issues which varied from one authority to another. A number of officers were finding the Regulations a challenge to old ways and there was evidence that many felt unprepared for the Regulations. A number of positive views were expressed regarding the flexibility of the new Regulations and the advantages of the provisions relating to misleading omissions. Overall officers’ experiences of the Regulations were heavily influenced by the complaints received by their particular local authority service.