Introduction to Special Issue on the Economics of Information in Real Estate Markets

The articles featured in this issue are introduced, their relationships noted, and their key points highlighted.     

Poverty effects of food price escalation: The importance of substitution effects in Mexican households

Recent food price increases reportedly caused significant numbers of households to fall into poverty, particularly in the developing world. Most research into the welfare effects of these food price changes assumes constant demand or approximates second order substitution effects. Poverty forecasts with these assumptions may overestimate or underestimate the effect of food price increases in a nation where most households consume diverse food baskets. We account for full substitution by calculating a theoretically consistent food demand system, accounting for household responses to food price changes by decreasing some food purchases and increasing other food purchases. We use Mexican data to confirm the mitigation of adverse welfare effects from food price increases after accounting for country-specific dietary preferences in modeling demand. In comparison to previous literature, our welfare measures predict theoretically consistent numbers of Mexican households entering poverty due to recent food price changes.     

The Bakery: a cross-functional case study for introductory managerial accounting

This instructional case is designed to achieve four educational objectives: (1) to give students a more complete appreciation of the importance of considering accounting information along with marketing and economics-related information, avoiding a myopic focus on accounting data, (2) to give students practice in pricing, cost volume profit analysis (CVP) and outsourcing decisions, (3) to help students learn to build spreadsheets that are capable of what-if analysis, and (4) to provide an active learning experience that engages introductory accounting students. The Bakery is a non-profit organization whose primary function is to sell baked goods and beverages to students in a large campus residence hall complex. In completing the case, students utilize information provided about the costs and previous pricing structure of The Bakery, along with information they collect about competitors' product offerings, prices, and accompanying services, and their own knowledge of The Bakery's customers, college students and their parents, as a basis for making pricing decisions. Once they have completed the pricing analysis, students use the resulting variable costing income statement to perform CVP and to analyze a decision to potentially outsource The Bakery's operations.     

Full Steam Ahead or Abandon Ship? An Empirical Investigation of Complete Pivot Decisions

New products or services often misalign with customer preferences, and sometimes these initial offerings must be abandoned and replaced. Factors influencing these “complete pivot” decisions are poorly understood. We use behavioral decision theory to develop a theoretical model of pivot decisions that tests our predictions via a conjoint analysis experiment. We find that magnitude of the miss (revenues compared to plan), length of the runway (cash available/burn rate), and attribution for the miss (reason for customer misreads) significantly influence complete pivot decisions, and we simultaneously consider interactions. Individual grit and impulsiveness also shape the effects of some attributes.     

Human resource management in multinational and domestic enterprises: A comparative institutional analysis in Southeast Asia

This article looks at the relative impact of context on the role of senior managers. It compares HR directors of domestic enterprises (DEs) with those of multinational enterprises (MNEs), within an emerging market setting, based on a survey of HR directors in Brunei. We found that, with the exception of some aspects of selection and recruitment, HR directors of MNEs accorded a higher priority to strategic tasks but were more reluctant to delegate. This study confirms the importance of MNEs in pioneering more modern and integrated approaches to people management but also demonstrates the limitations to the extent where they might act as evangelists of new practices that are adopted by their local peers. In contrast, local firms were more likely to concentrate their attention on administrative, rather than strategic, issues. We draw out the implications of our findings for theory and practice.     

Because you're worth it? Determinants of Vice Chancellor pay in the UK

Wage inequality has increased across most developed nations; this has been manifested in a wide range of organisations and sectors, with implications for well‐being and sustainability; within UK universities, this has become increasingly visible. There is increasing pressure on universities to deliver social and economic impact in an increasingly market‐driven and metric‐driven environment. In the UK context, increasing financial pressure has led to both an escalation of student fees and constrained wage growth for faculty. In contrast, most Vice Chancellors have secured substantive pay packages raising concerns that regulatory failures may be contributing to the rise. We show that Vice Chancellors use their internal power within organisations to extract a disproportionate amount of the value created by the institution. However, we encountered much diversity according to the quality of governance, highlighting the extent to which not only contextual but also internal dynamics drive wage inequality.     

Do not swipe the small stuff: A randomized evaluation of rules of thumb-based financial education

We perform the first rigorous test of a rules of thumb-based approach to financial education on consumer behavior and outcomes. We test two rules of thumb that are targeted at reducing credit card revolving and deliver them in a randomized fashion via e-mail, online banner, and physical mailer. Using monthly administrative data and pre and postintervention credit data on almost 14,000 consumers, we find that the “Do not swipe the small stuff” rule of thumb reduces participants' targeted credit card balance by an average of 2% at a cost of around $0.50 per person. The “Credit keeps charging” rule shows a decline as well but the impact is not significant.