The envelope theorem for locally differentiable Nash equilibria of finite horizon differential games

Envelope theorems are established for a ubiquitous class of finite horizon differential games. The theorems cover open-loop and feedback information patterns in which the corresponding Nash equilibria are locally differentiable with respect to the parameters of the game. Their relationship with extant envelope results is discussed and an application of them to a generalized capital accumulation game is provided. An important implication of the theorems is that, in general, the archetypal economic interpretation of the costate vector, namely, as the shadow value of the state vector along the Nash equilibrium, is valid for feedback Nash equilibria, but not for open-loop Nash equilibria.     

The intrinsic comparative dynamics of locally differentiable feedback Nash equilibria of autonomous and exponentially discounted infinite horizon differential games

The comparative dynamics of locally differentiable feedback Nash equilibria are derived for the ubiquitous class of autonomous and exponentially discounted infinite horizon differential games. The resulting refutable implications are intrinsic to the said class of differential games, and thus form their basic, empirically testable, properties. Their relationship with extant results in the optimal control theory and the static game theory is discussed. Separability conditions are identified on the instantaneous payoff and transition functions under which the intrinsic comparative dynamics collapse, in form, to those in optimal control problems. Applications of the results to capital accumulation and sticky-price games are provided.     

Consumers' valuation of food quality labels: the case of the European geographic indication and organic farming labels

This paper assesses consumers' preferences and willingness to pay for European Union geographical indication quality labels [Protected Designation of Origin (PDO) and Protected Geographical Indications (PGI)], organic farming label and other product quality cues. Using a choice experiment, random parameter logit model and olive oil as product of interest, results suggest that respondents are willing to pay the highest premium price for a product with a PDO label, followed by organic farming label, a quality cue describing the product as extra‐virgin olive oil and then a PGI label.     

Trait Recognition: An Alternative Approach to Early Warning Systems in Commercial Banking

The present study reports the empirical results of trait recognition (TR) as an alternative early warning system for identifying failing US commercial banks. TR has previously been employed in the sciences, and unlike previous statistical and nonparametric models, incorporates a large number of interaction variables based on the independent variables taken two and three at a time. Discriminatory original and interaction variables (or traits) are selectively retained for use in classifying observations based on a voting procedure. Comparative results for failed and nonfailed US commercial banks using Call Report data indicate that the TR model generally outperformed logit regression models, in some cases by a considerable margin. A major implication of these results is that TR could be useful in other binary choice problems in business finance and accounting, including predictions of nonbank failures, bond rating changes, and other firm events.     

A nearly complete test of a capital accumulating,vertically integrated,nonrenewable resource extracting theory of a competitive firm

A new approach to testing a generalized Hotelling theory of a nonrenewable resource extracting firm is developed. In contrast to approaches extant, it (i) permits empirical testing of all the refutable implications of the theory, (ii) does not require estimates of, or data on, the shadow value of the resource stock, (iii) does not require estimation of the feedback control functions or the necessary conditions associated with the underlying optimal control problem, and (iv) treats the capital stock in a theoretically sound manner in the econometric model. Because of certain limitations in the data, most, but not all, of the refutable implications of the theory are tested using a Bayesian approach. Other limitations in the data mean that the paper is better viewed as an illustration of how one would go about rigorously testing the extended Hotelling theory, rather than as one which presents convincing empirical evidence that supports or refutes it.     

The Slutsky matrix and homogeneity in intertemporal consumer theory

A dual vista of an intertemporal model of the consumer yields insights into its fundamental qualitative structure that previous research was heretofore unable to uncover. For example, the intertemporal Slutsky matrix and its properties of symmetry and negative semidefiniteness apply to the integral of the discounted open-loop demand and supply functions, not to the instantaneous open-loop demand and supply functions. The results are established in a general dynamic model of the consumer which accounts for durable and nondurable goods, installation costs for the durable goods, and a leisure/labor choice.     

Macroeconomic Consequences of Terms of Trade Episodes,Past and Present

The early‐twenty first century saw Australia experience its largest and longest terms of trade boom. This paper places the most recent terms of trade boom in its historical context. While similarities exist with previous episodes, the macroeconomic policy frameworks and settings prevailing were quite different to those of the past. These different frameworks and settings mitigated the broader macroeconomic consequences of the terms of trade upswing and may do likewise as it declines.     

Unveiling the role of entrepreneurial knowledge and cognition as antecedents of entrepreneurial intention: a meta-analytic study

Although entrepreneurial intention has been regarded as one of the most important drivers of creativity, innovation, and performance in firms, a comprehensive framework that integrates the relevant influential factors has yet to be developed. Drawing on the theory of planned behavior and the social cognitive career theory, this study investigates the critical antecedents, mediators, and moderators of entrepreneurial intention. A meta-analytic approach is employed to validate the proposed hypotheses, and 89 primary studies with a total sample size of 51,919 are analyzed. The results indicate the existence of differences in the manner in which entrepreneurial knowledge influences cognitive antecedents in the individuals who participate in new ventures. Furthermore, personal attitude and self-efficacy play a vital role in predicting entrepreneurial intention. Demographic characteristics (such as age, gender, and education background) significantly moderate the relationship between cognitive antecedents and entrepreneurial intention, indicating that men tend to adopt more entrepreneurial behaviors than women, that older individuals with more positive attitudes have a higher propensity to start ventures than younger ones, and that those with higher education attainment tend to have lower self-employment. These findings offer several recommendations. They could provide valuable references for further academic work, which should aim to extend and validate them. The findings are also very beneficial for professional experts tasked with the design of effective programs for enhancing entrepreneurial behavior.