The Brand Choice Model of Wine Consumers: A Multinomial Logit Model

The objective of this study is to determine factors influencing brand preferences of wine consumers in the Marmara region where viniculture and wine production is so important in Turkey. First, the consumers’ preferences survey has been conducted with 1022 persons in the region randomly selected and evaluated. Then, the informative factors influencing brand preferences collected in these surveys have been determined by the multinomial logit model. A lot of independent variables have been used in the multinomial logit model, but, because some independent variables were not found as significant according to Likelihood Ratio test, these variables are not included in the multinomial logit analysis. Six important factors influencing wine brand preferences have been determined. These factors are brand change causes of consumers, occupation of consumers, marital status of consumers, birthplace of consumers, income of consumers and gender of consumers. In addition, whether the wine brand preferences are independent, has been tested with Testing Independence of Irrelevant Alternatives of Hausman. According to this test, it has been found that the wine brand preferences are independent.     

Linear cumulative prospect theory with applications to portfolio selection and insurance demand

Abstract The present paper combines loss attitudes and linear utility by providing an axiomatic analysis of corresponding preferences in a cumulative prospect theory (CPT) framework. In a sense we derive a two-sided variant of Yaari’s dual theory, i.e., nonlinear probability weights in the presence of linear utility. The first important difference is that utility may have a kink at the status quo, which allows for the exhibition of loss aversion. Also, we may have different probability weighting functions for gains than for losses. We apply the model to both portfolio selection and insurance demand. Our results show that CPT with linear utility has more realistic implications than the dual theory since it implies only a weakened variant of plunging. Mathematics Subject Classification (2000): 91B08, 91B28, 91B30 Journal of Economic Literature Classification: D81, G11, G22     

Capacity constrained firms in (labor) markets with adverse selection

Summary. We discuss a competitive (labor) market where firms face capacity constraints and individuals differ according to their productivity. Firms offer two-dimensional contracts like wage and task level. Then workers choose firms and contracts. Workers might be rationed if the number of applicants exceeds the capacity of the firm. We show that under reasonable assumptions on the distribution of capacity an equilibrium in pure strategies (by the firms) exists. This result stands in contrast to the case of unlimited capacity. The utility level is uniquely determined in equilibrium. No rationing occurs in equilibrium, but it does off the equilibrium path. Received: December 29, 1999; revised version: November 30, 2000     

Vertical Integration and Market Foreclosure with Convex Downstream Costs

Received December 14, 2000; revised version received July 16, 2001     

Revisiting Savage in a conditional world

Summary. I present an axiomatization of subjective expected utility and Bayesian updating in a conditional decision problem. This result improves our understanding of the Bayesian standard from two perspectives: 1) it uses a set of axioms which are weak and intuitive; 2) it provides a formal proof to results on the relation between dynamic consistency, expected utility and Bayesian updating which have never been explicitly proved in a fully subjective framework. Received: December 1, 2000; revised version: February 26, 2001     

The Practice Boundaries of Advanced Practice Nurses: An Economic and Legal Analysis

The purpose of this study is to examine the effects of State regulation that determines the extent of professional independence of advanced practice nurses (APNs). We find that in States where APNs have acquired a substantial amount of professional independence, the earnings of APNs are substantially lower, and those of physicians assistants (PAs) are substantially higher, than in other States. These results are striking since PAs are in direct competition with APNs; the only real operational difference between these groups is that PAs are salaried employees who must work under the supervision of a physician. The implication is that physicians have responded to an increase in professional independence of APNs by hiring fewer APNs and more PAs. The finding that earnings of APNs decline when they attain more professional autonomy vis-à-vis physicians reinforces work by Sass and Nichols on physical therapists.The content is the responsibility of the authors and does not represent official positions of the Federal Reserve Bank of St. Louis or the Federal Reserve SystemJEL classification: I11, I18, J31, J44, L51     

Sectoral Energy- and Labour-Productivity Convergence

This paper empirically investigates the development of cross-country differences in energy- and labour productivity. The analysis is performed at a detailed sectoral level for 14 OECD countries, covering the period 1970–1997. A σ-convergence analysis reveals that the development over time of the cross-country variation in productivity performance differs across sectors as well as across different levels of aggregation. Both patterns of convergence as well as divergence are found. Cross-country variation of productivity levels is typically larger for energy than for labour. A β-convergence analysis provides support for the hypothesis that in most sectors lagging countries tend to catch up with technological leaders, in particular in terms of energy productivity. Moreover, the results show that convergence is conditional, meaning that productivity levels converge to country-specific steady states. Energy prices and wages are shown to positively affect energy- and labour-productivity growth, respectively. We also find evidence for the importance of economies of scale, whereas the investment share, openness and specialization play only a modest role in explaining cross-country variation in energy- and labour-productivity growth.      

Prizes for basic research: Human capital,economic might and the shadow of history

We study the distribution of basic scientific research across countries and time, and explain the process that resulted in the United States becoming the undisputed leader in basic research. Our study is based on the records of scientific awards, and on the data of global economic trends. We investigate the degree to which scale/threshold effects account for the number of prizes won. We constructed a stylized model, predicting a non-linear relationship with lagged relative GDP as an important explanatory variable of a country’s share of prizes. Our empirical research findings find support for these predictions and the presence of a “winner-takes-all” effect.      

Climate Change Taxes and Energy Efficiency in Japan

In 2003 Japan proposed a Climate Change Tax to reduce its CO₂ emissions to the level required by the Kyoto Protocol. If implemented, the tax would be levied on fossil fuel use and the revenue distributed to encourage the purchase of energy efficient equipment. Analysis using the MIT Emissions Prediction and Policy Analysis (EPPA) model shows that this policy is unlikely to bring Japan into compliance with its Kyoto target unless the subsidy encourages improvement in energy intensity well beyond Japan’s recent historical experience. Similar demand-management programs in the US, where there has been extensive experience, have not been nearly as effective as they would need to be to achieve energy efficiency goals of the proposal. The Tax proposal also calls for limits on international emission trading. We find that this limit substantially affects costs of compliance. The welfare loss with full emissions trading is 1/6 that when Japan meets its target though domestic actions only, the carbon price is lower, and there is a smaller loss of energy-intensive exports. Japan can achieve substantial savings from emissions trading even under cases where, for example, the full amount of the Russian allowance is not available in international markets.