A portmanteau experiment on the relevance of individual decision anomalies for households

Although households are responsible for many important decisions, they have rarely been the subject of economics experiments. We conduct a series of linked and incentivized experiments on decision-making, designed to see if the anomalies typically found in individual choice experiments are found when the subjects are couples from long-term relationships. Specifically we investigate the endowment effect, the compromise effect, asymmetric dominance and the ‘more is less’ phenomena. Comparing the results with two control groups (students and non-student individuals) we find broadly the same pattern of anomalies in individuals as we do in couples. Thus behavioural patterns that appear in individual choices appear relevant for decisions made by established couples.     

About the authors

This article is inspired by a somewhat counter-intuitive phenomenon that has recently been highlighted in the contemporary business literature, but which does not appear to have been examined within a peer-reviewed environment. We are witnessing increasing successes by domestic brands in China, often at the expense of established multinational brands. Given that China is the world's largest national market in terms of population, this trend is worthy of investigation. Our approach is neither causal nor confirmatory. Instead, we undertake an exploratory review of robust secondary data sources. Our goal is to shed empirical light on what appears to be a ‘Sinosyncratic anomaly’, and then to provide a framework and springboard for future research in this domain. Clearly, our approach is not without limitations, which we do consider. However, there is a pressing need for global marketers to recognise and understand the reasons behind the mixed fortunes being experienced by some of the world's most admired (Western) brands in China, with a view to making empirical generalisations to other emerging markets.     

Deregulation of wholesale petrol prices: what happened to capital city petrol prices?

Wholesale petrol prices were deregulated in August 1998. This paper will quantify the effect associated with the deregulation of wholesale petrol prices on relative retail prices for unleaded petrol in Adelaide, Melbourne and Sydney. This is done through Box–Jenkins autoregressive integrated moving average methodology coupled with Box and Tiao intervention analysis. Weekly price data will be used for Adelaide, Melbourne, and Sydney. It finds that from the beginning of 1999, deregulation coincided with relatively lower retail petrol prices for all three cities. In the absence of any other possible alternative explanation for the simultaneous fall in relative retail petrol prices across all three cities, it is concluded that this change was most likely associated with deregulation. These results suggest that regulation of wholesale petrol prices were ineffectual in terms of constraining capital city retail petrol prices at the very least and may have actually contributed towards relatively higher retail petrol prices. This also suggests that future policy interventions designed to constrain prices in the downstream petroleum industry should be very carefully considered.     

The construction of US utility accounting: 1882–1944

This paper seeks to contribute to a longstanding tradition in accounting research which attempts to understand accounting within its social and historical context. The topic of this historical narrative is the creation and role of accounting in the formation of the electricity industry in the US between 1882 until 1944. The paper is divided into three parts. In the first part we examine how early electrical engineers struggled to understand the nature and behavior of the costs of generating and distributing electricity at the turn of the 19th Century. In doing so, these engineers established a relationship between costs and the engineering concepts of load factor and diversity and developed pricing structures which would recover both standing (fixed) and running (variable) costs. In the second phase, we examine how this accounting knowledge was deployed by early “inventor entrepreneurs” and businessmen in their attempts to dominate the early electric markets in the US and how investor owned regulated utilities emerged out of these strategies as a uniquely North American institution. In the final phase, we examine how accounting became the center of intense conflict between regulatory commissions and investor owned utilities in the US court system – including the Supreme Court – as representatives of these entities vied with each other over the chart of accounts, allowable expenses, the valuation of assets and depreciation. Here we contend that utility accounting did not simply grow to reflect a regulatory process but rather worked to shape utility regulation in the US. In 1944 a legal ruling displaced the primacy of accounting in the regulatory process and shifted its focus from asset valuation to rate of return determination. The space once dominated by accountants was ceded to regulatory economists. After that, accounting became taken-for-granted and matter-of-fact.     

Uncertainty,Learning and Heterogeneity in International Environmental Agreements

This paper concerns the formation of International Environmental Agreements under uncertainty about environmental damage with different models of learning (complete learning, partial learning or no learning). The results of the existing literature are generally pessimistic: the possibility of either complete or partial learning generally reduces the level of global welfare that can be achieved from forming an IEA relative to no learning. That literature regards uncertainty as a parameter common to all countries, so that countries are identical ex ante as well as ex post. In this paper we extend the literature to the case where there is no correlation between damage costs across countries; each country is uncertain about a particular parameter (in our case the benefit-cost ratio) drawn from a common distribution but, ex post, each country’s realized parameter value is independently drawn. Consequently, while countries remain identical ex ante, they may be heterogeneous ex post. We show that this change reinforces the negative conclusions about the effects of partial learning on international environmental agreements, but, under certain conditions, moderates the negative conclusions about the effects of complete learning.     

Bridging the divides of online reporting

This paper looks at the possibilities of improving online reporting by closing the ‘digital divide’ through a ‘digitalised revolution’ and by narrowing the ‘accounting divide’ through the sharing of power and the expansion of membership in the International Accounting Standards Board (IASB). Paradoxically, whilst the IASB may have contributed to the ‘accounting divide’ it may very well possess the potential to close it and thus improve online reporting. The potential to bridge the ‘accounting divide’ rests with the greater participation by developing country members to exert influence and ownership of the accounting standards setting process.     

Communicating Food-Safety Risks to Key Stakeholders

In recent years, the public has become increasingly concerned about the safety of the food they eat. Anxieties are augmented each time there is a food crisis, with each new disease and resultant food safety concern adding to the perception that our food is no longer safe. Bridging the gap between the scientist/veterinarian, economist, farmer and consumer requires effective communication strategies. This article uses the example of paratuberculosis (Johne's disease) in cattle to illustrate the difficulties of communicating food-safety risks when considerable uncertainty exists. Scientific data linking this disease to Crohn's disease in humans is contradictory and far from conclusive. We show how the Codex Alimentarius system can be used as a template for communicating risk in such situations. This is a four-stage process that addresses public perceptions of the risk and the public's related information requirements. One aim is to give peoples' concerns as much emphasis as the risk statistics in an open and honest debate. The example highlights the difficulty of deciding when and how best to instigate the process. However, positive collaboration between epidemiologists, public health specialists, economists, food marketers and policy-makers to work in conjunction with consumers of both food and animal health products and services is essential for a satisfactory outcome.     

Six Sigma – at your service

Lean Six Sigma is the bedrock of quality initiatives in manufacturing companies. Can this approach be used in service companies? It already is, and Peter Guarraia, Gib Carey, Alistair Corbett and Klaus Neuhaus show how techniques long used by Motorola and Toyota can be used in your company.     

Enabling, enacting and maintaining action at a distance: An historical case study of the role of accounts in the reduction of the Navajo herds

The role of accounting in enabling action at a distance has received considerable attention in the accounting literature. In this paper we examine the role of accounts in the actions taken by government officials in Washington, DC to reduce the size of the Navajo livestock holdings on their reservation in the southwestern United States in the 1930s. We examine the role of accounts in three acts: first in enabling action at a distance, second in enacting action in the local setting and finally, in shoring up, or maintaining action when things go wrong. We argue that in order to understand the role of accounts in these three acts, it is necessary to examine the conditions of possibility within which they emerge, the network of agents who adopt and give them life and the way in which they become entwined with various and shifting strategies. We also examine how action taken in Washington, DC had profound consequences for the Navajo when attempts were made to enact actions taken at a distance on the reservation.