Preservation and exogenous uncertain future preferences

Summary. We extend the Beltratti, Chichilnisky and Heal's (1993) and (1998) continuous-time stochastic dynamic framework to analyze the optimal depletion of an asset whose consumption is irreversible, in the face of uncertainty about future preferences. Their model is rather general and so the results are general qualitative theorems. We show that in some interesting cases it is possible to solve their model analytically. The cases involve constant elasticity utility functions and the assumption of a Poisson process for the evolution of preferences. Received: September 13, 1999; revised version: November 23, 1999     

ATTAINABLE CLAIMS IN A MARKOV MARKET1

It is shown how, even when the market is incomplete, certain contingent claims are attainable: that is, they can be represented as stochastic integrals with respect to the process which describes the evolution of the asset prices.     

Compulsive buying: Concept and measurement

This article investigates the probable causes of compulsive buying, proposes a conceptual framework to explain the phenomenon, and develops an appropriate measuring scale. The results of the analysis testify to the reliability and validity of the scale which was administered to 76 consumers.

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Begriffliche und empirische Erfassung von zwanghaftem Kaufverhalten

Zusammenfassung Der Beitrag behandelt zwanghaftes Kaufverhalten als einen besonderen Verhaltenstyp, der aus dem Zusammenwirken dreier Kräfte erklärt wird, nämlich erstens einer starken emotionalen Aktivierung, zweitens einer hohen kognitiven Kontrolle und drittens einer hohen Reaktivität. Der wichtigste Unterschied zwischen zwanghaftem und impulsivem Kaufverhalten wird in den kognitiven Vorgängen gesehen, die eine Person dazu führen, die Wiedererlangung des affektiven Gleichgewichtes mit einem Kaufakt zu assoziieren. Genauere Unterschiede zwischen verschiedenen Kaufverhaltenstypen bietet Figur 1. Die Zusammenhänge, die zur Entstehung von zwanghaftem Kaufverhalten führen, werden in Figur 2 gezeigt. Aus diesen Zusammenhängen ergeben sich drei Hypothesen, die empirisch geprüft werden:1. Der zwanghafte Käufer ist im allgemeinen in höherem Maße ängstlich als ein durchschnittlicher Käufer. 2. Der zwanghafte Käufer hat tendenziell ein schwächeres Selbstbewußtsein. 3. Der zwanghafte Verbraucher hat häufiger ein Elternteil mit mißbräuchlichem Verbraucherverhalten.Zur Prüfung dieser Hypothesen wird eine Skala entwickelt, die in Tabelle I beschrieben ist und deren Reliabilität und Validität sich als befriedigend erweist. Außerdem dürfte sie eindimensional sein. Die Daten, die von 38 zwanghaften Käufern und einer gleichgroßen Zahl von durchschnittlichen Käufern stammen, stützen die erste und die dritte Hypothese, die zweite Hypothese konnte nicht bestätigt werden.

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Gilles Valence and Alain d'Astous are Professors of Marketing, and Louis Fortier a graduate student, at the University of Sherbrooke, Sherbrooke, Québec J1K 2R1, Canada. The authors would like to thank Mr. Claude Sevigny (A.C.E.F. Estrie) and Mr. Claude Boucher (C.L.S.C. SOC), as well as Mrs. Monique Croteau, for graciously helping to track down compulsive buyers.This paper was first presented at the XVIIth Annual Conference of the European Marketing Academy, Bradford, England, April 5–8, 1988. A French version of the paper will be published in Recherches et applications en Marketing.     

The greening of the EC agrochemical market: Regulation and competition

This paper analyses the process of harmonisation of national pesticides regulations in the EC. One of the outcomes of this process was, in 1991, the adoption of an EC regulation which includes new environmental requirements for pesticides to be sold on the EC market. This regulatory process shows an example of trade-off between competition policy and environmental policy. After having described the competition in the agrochemical sector, the paper examines this trade-off in two ways. Firstly, the behaviour of industrial interest groups throughout the process and their influence in the devising of the regulation is considered. Secondly, the impact of competitive issues on the implementation of part of the 1991 regulation (i.e. the re-registration of old pesticides commercialised in the EC) is analysed. This case study confirms some general results of the regulatory capture theory but it also points out some limits of these theories: firms seemed to be much more sensitive to negative pay-offs than to positive ones when deciding to become involved in this regulatory process. A second insight brought up by this case study concerns the link between competition policy and environmental policy and its influence on the efficiency of the latter. Environment-competition trade-off in the agrochemical sector confronts the regulator, when it adopts environmental policy, with two risks: a risk of changing the structure of the industry (from a differentiated and innovative one to a commodity one) if the regulator does not provide sufficient pay-offs for environmental R&D costs, or a risk of allowing part of the industry to increase monopoly rents. Both risks would affect environmental efficiency, either by reducing the innovation in the sector or by over-protecting ‘greener’ pesticides from competition on price.     

Making Conditional Cash Transfer Programs More Efficient: Designing for Maximum Effect of the Conditionality

Conditional cash transfer programs are now used extensivelyto encourage poor parents to increase investments in their children’shuman capital. These programs can be large and expensive, motivatinga quest for greater efficiency through increased impact of theprograms’ imposed conditions on human capital formation.This requires designing the programs’ targeting and calibrationrules specifically to achieve this result. Using data from theProgresa randomized experiment in Mexico, this article showsthat large efficiency gains can be achieved by taking into accounthow much the probability of a child’s enrollment is affectedby a conditional transfer. Rules for targeting and calibrationcan be made easy to implement by selecting indicators that aresimple, observable, and verifiable and that cannot be manipulatedby beneficiaries. The Mexico case shows that these efficiencygains can be achieved without increasing inequality among poorhouseholds.     

Wage and employment effects of a wage norm

Most transition countries used tax‐supported wage norms in the early 1990s, as a part of their market liberalization programmes. This article analyses how a firm‐level tax (or subsidy) on deviations from a pre‐set wage norm may promote employment by rotating the labour demand curve perceived by the workers’ union around the value of the norm. We derive the conditions under which it yields a positive employment effect. We test the effect of the norm on the wages on a sample of Polish firms in 1990 and 1991. The data support the role of the wage norm on the position of the perceived labour demand curve and the role of the tax rate on its slope.     

The derivation of the NPV variance of a risky capital investment project with first-order autoregressive cash flows and autoregressive conditional heteroscedastic variances

In this article, the authors develop a closed-form solution for assessing the capital investment project NPV variance when cash flows obey a first-order autoregressive process. A distinction is established between static and dynamic solutions as the authors focus on the case involving partial positive dependence between cash flows. Under a Markovian process, the NPV solution is stationary in mean but not strictly in variance. Constraining the process to become fully stationary will overestimate the NPV variance. Finally, the authors show that the Markovian NPV variance closed-form solution is robust to the introduction of autoregressive conditional heteroscedastic variances complying with a GARCH(1,1) process; it will, however, have its value increased and consequently the riskiness of the capital investment project.