Reactions to ethical dilemmas: A study pertaining to certified public accountants

This study discusses how perceptions of ethics are formed by certified public accountants (CPAs). Theologians are used as a point of comparison. When considering CPA ethical dilemmas, both subject groups in this research project viewed confidentiality and independence as more important than recipient of responsibility and seriousness of breach. Neither group, however, was insensitive to any of the factors presented for its consideration. CPA reactions to ethical dilemmas were governed primarily by provisions of the CPA ethics code; conformity to that code may well be evidence of higher stage moral reasoning.Gregory A. Claypool is Associate Professor of Accounting and Finance at Youngstown State University.David F. Fetyko is Professor of Accounting at Kent State University. Michael A. Pearson is Professor of Accounting at Kent State University. He is the author of Enhancing Perceptions of Auditor Independence, Journal of Business Ethics 4 (1985), 53–6, and Auditor Independence Deficiencies and Alleged Audit Failures, Journal of Business Ethics 6 (1987), 281–7.     

Are we nice(r) to nice(r) people?—An experimental analysis

We experimentally investigate whether individuals can reliably detect cooperators (the nice(r) people) in an anonymous decision environment involving “connected games.” Participants can condition their choices in an asymmetric prisoners’ dilemma and a trust game on past individual (their partner’s donation share to a self-selected charity) and social (whether their partner belongs to a group with high or low average donations) information. Thus, the two measures of niceness are the individual donation share in the donation task, and the cooperativeness of one’s choice in the two games. We find that high donors achieve a higher-than-average expected payoff by cooperating predominantly with other high donors. Group affiliation proved to be irrelevant. Electronic Supplementary Material Supplementary material is available in the online version of this article at . JEL Classification C91, C72, D3     

Optimal Environmental Policy Differentials in Open Economies under Emissions Constraints

Is there a case for preferential treatment of the exposed sector in an economy when compliance to an aggregate emissions constraint induced by an international environmental agreement is mandatory? This question is being debated in many countries in the context of the implementation of the Kyoto Protocol. We address the issue in a general equilibrium framework and theoretically cover several market structures, including perfect competition, the large country case and oligopoly. We identify the conditions under which preferential treatment of the exposed sector is not warranted from the point of view of maximizing social welfare. In addition, we demonstrate that in the case of oligopoly, instituting a more stringent environmental policy on the exposed sector might be profit-enhancing for this sector. This finding lends theoretical support to a specific interpretation of the Porter hypothesis.     

Convergence in West German Regional Unemployment Rates

Abstract. Differences in regional unemployment rates are often used to describe regional economic inequality. This paper asks whether changes in regional unemployment differences in West Germany are persistent over time. Understanding the persistency of regional unemployment differences helps us to assess how effective regional policy can be. While univariate tests suggest that changes in regional unemployment differences are persistent in West Germany, more powerful panel tests lend some support to the hypothesis that regional unemployment rates converge. However, these tests reveal a moderate speed of convergence at best. Because there is a structural break following the second oil crisis, we also use tests that allow for such a break. This provides evidence for both convergence and quick adjustment to an equilibrium distribution of regional unemployment rates that is, however, subject to a structural break.     

Developing and applying a framework to evaluate participatory research for sustainability

The normative implications of participatory research imply ongoing social learning that ought to lead to personal and institutional transformation. Sustainability science also requires reflexive scientific practice in order to enable the co-generation of solutions that take account of uncertainty and multiple forms of knowledge. However, there is little published peer-reviewed material on how to assess to what degree the rhetoric regarding the benefits of participatory research are achieved in practice, particularly with regard to participatory research for sustainability. This paper outlines how linking the rationales for participatory research and for sustainability science to the principles of evaluation can deliver a conceptually coherent evaluation framework for assessment. The approach for evaluating participatory research in this context consists of framing the evaluation, i.e., setting boundaries on the subject within its social, political, environmental and institutional context and selecting appropriate criteria, methods and data sources. The application of the framework, using a summative evaluation of participatory research for sustainability in north-east Australia, illustrates its strengths and weaknesses, concluding with a consideration of its applicability to further participatory sustainability science.     

Buyer power and supplier incentives

This paper analyzes the origins and welfare consequences of buyer power. We show that if suppliers are capacity constrained or have strictly convex costs, there are two different channels through which large buyers can obtain more favorable terms from their suppliers. In particular, we show how the presence of large buyers can then erode the value of suppliers’ outside option. Somewhat surprisingly, we show how this can induce suppliers to undertake strategies that lead to higher output and potentially higher welfare.     

Irreversible investment and Knightian uncertainty

When firms make a decision about irreversible investment, they may not have complete confidence about their perceived probability measure describing future uncertainty. They may think other probability measures perturbed from the original one are also possible. Such uncertainty, characterized by not a single probability measure but a set of probability measures, is called “Knightian uncertainty.” The effect of Knightian uncertainty on the value of irreversible investment opportunity is shown to be drastically different from that of traditional uncertainty in the form of risk. Specifically, an increase in Knightian uncertainty decreases the value of investment opportunity while an increase in risk increases it.     

Threshold models for trended time series

This paper presents the theoretical development of a new threshold autoregressive model based on trended time series. The theoretical arguments underlying the model are outlined and a nonlinear economic model is used to derive the specification of the empirical econometric model. Estimation and testing issues are considered and analysed. Additionally we apply the model to the empirical investigation of U.S. GDP.This paper is the result of work carried out for the author's Ph.D. thesis. I would like to thank Hashem Pesaran for his help, encouragement and insights during the preparation of this paper. I also thank Gary Koop and Sean Holly for helpful comments. Financial assistance from the Economic and Social Research Council is gratefully acknowledged.     

Applied Welfare Economics with Bounded Rationality: Public Policies Toward Remote Sensing

Earlier experimental evidence indicates that some decision makers under-invest in information when it is costly. This insight is applied to the cost–benefit analysis of the provision of data obtained by satellites. In fields like agriculture, remotely sensed information of great precision can be provided to additional farmers at minimal extra costs if a service for farmers with similar information needs is set up. Here, the tendency to under-invest in information asks for creative solutions by the private sector: bankers may work together with rational producers in setting up the information service and promoting it. However, if producers financial resources are insufficient, public intervention, in the form of a free information service may be necessary.The author would like to thank an anonymous referee, Stephan von Cramon-Taubadel, Sean Flynn, Daniel Heller, and Carlos Lenz and participants of the Lisbon Conference of the International Atlantic Economic Society, particularly Asatoshi Maeshiro, for helpful comments.