Just Tell Me! Making Alternative Dispute Resolution Systems Fair

This study investigates fairness perceptions of alternative dispute systems utilizing a policy capturing design and a sample of four hundred and fifty non‐union, non‐management employees from seven organizations. The communication surrounding the decision, the level of employee input, and the composition of the grievance panel had larger effects on overall fairness perceptions than did outcome. Unfavorable outcomes that were reached by fair processes generate higher distributive justice ratings than favorable outcomes reached by unfair processes.     

Attitude toward Risk and Risk‐Taking Behavior of Business‐Owning Families

Using data from the 1995 Survey of Consumer Finances, this study found that family business owners are more risk tolerant than nonowners. Among family business owners, age, race, net worth, and the number of employees in the business affect risk‐taking attitudes and behavior. In addition, the following factors are associated with risk‐taking behaviors: number of years of ownership, gross sales, who started the business, and sole proprietorship. Education influences risk‐taking attitudes.     

Income Hedging,Dynamic Style Preferences,and Return Predictability

We propose a theoretical measure of income hedging demand and show that it affects asset prices. We focus on the value factor and first demonstrate that our demand estimates are correlated with the actual demands of retail and mutual fund investors. We then show that the aggregate high‐minus‐low (HML) demand predicts HML returns. Exploiting the state‐level variation in income risk, we demonstrate that state‐level hedging demands predict state‐level HML returns. A long‐short portfolio that exploits this hedging‐induced predictability earns an annualized risk‐adjusted return of 6%.     

On Equilibrium When Contingent Capital Has a Market Trigger: A Correction to Sundaresan and Wang Journal of Finance (2015)

This paper identifies an error in Sundaresan and Wang (2015, hereafter SW) that invalidates its Theorem 1. The paper develops a model of contingent capital (CC) with a stock price trigger that is consistent with SW's framework and yields closed‐form solutions for stock and CC prices. Yet, the model shows that unique stock price equilibria exist for a broader range of CC contractual terms than those required by SW. Specifically, when conversion terms benefit CC investors and penalize shareholders, a unique equilibrium can exist rather than the multiple equilibria stated in SW.     

REAL ESTATE TAX IN URBAN CHINA

Since its foundation in 1949, the People's Republic of China (PRC) has adopted several contrasting policies to address the urban housing problem. Among them have been changes in real estate tax law. The first real estate tax laws in the PRC were promulgated in January 1950. Amended several times, they became ineffective after 1973. In September 1986, the State Council promulgated a new real estate tax law affecting all urban properties. According to this new law, real estate taxes are to be levied on owners, so that most real estate taxes have been paid by enterprises rather than households. However, with the recent drive to privatize housing in urban China, property rights are being transferred from public to private ownership, and in conjunction with real estate taxes, this is producing undesired inequalities. This paper investigates the development of real estate taxation, examines the role of property tax in the ongoing housing reform, and recommends changes in real estate taxes that would better achieve the government's egalitarian goals. ( JEL H20, R31)     

The Structure of São Paulo Street Markets: Evolving Patterns of Retail Institutions

Development in emerging economies leads to a cohabitation of traditional and modern forms of retailing. This diversity allows for centuries' old consumer behavior patterns to continue along with new options. The street markets or Feira Livres¹ of São Paulo, Brazil demonstrate how consumption patterns are culturally determined. Participant observation, both in supermarkets and at feiras, and interviews with consumers and vendors are used to investigate consumer shopping patterns, along with evolving patterns of retail structure. We find that informal markets, such as the feira, are able to coexist with modern, Western-style retail institutions, partly because of ingrained food preparation habits and deep-seated consumer impressions about superior qualities offered by feiras (e.g., the perceived freshness of the produce). Our findings support the Natural Selection Theory of retail development in that we find evidence of adaptation. Specifically, the supermarkets in Brazil have evolved to include departments that imitate some of the popular characteristics of the feiras.     

Protecting Consumers From Uninsured Motorists: An Alternative Financing Mechanism

For over 65 years, state legislators have debated how consumers who have been injured by financially irresponsible motorists will be compensated. While uninsured motorists insurance has become the modal choice among several states, responsible motorists in most states must completely pay for this coverage themselves. Motorists who drive without liability insurance contribute virtually nothing to meeting the costs of accidents they cause. This paper proposes that premiums for basic limits of uninsured motorists coverage be collected by a small universal motor fuel surcharge. These state-collected premiums then would be distributed to insurers on the basis of the number of vehicles that they insure within the jurisdiction. It is proffered that this mechanism is both more equitable and significantly lower in cost for the average motorist than the various present mechanisms of financing uninsured motorists coverage.     

When Recalls Matter: Factors Affecting Owner Response to Automotive Recalls

This paper assesses the impact of recall-specific variables on owner response rates to automotive safety recall campaigns under the National Traffic and Motor Vehicle Safety Act of 1966. Using a multiple regression framework, the paper finds that owner response rates have been significantly higher for owners of American vehicles as compared to European and Japanese vehicles, for owners of newer model vehicles as compared to older ones, and for owners of vehicles with severe safety-related defects as compared to vehicles with lesser problems. The paper concludes with the suggestion that, for vehicles with characteristically lower owner response rates, the issuance of multiple recall notices or the coupling of periodic safety inspections with recall compliance may be advisable.     

New Evidence on Price and Product Quality

A variety of investigations have indicated that consumers subjectively perceive a positive relation between price and product quality. However it is also necessary to consider the objective analysis of actual price-quality relations which exist among competing products available for consumer choice. This investigation reviews findings from some subjective and objective evaluations of the price-quality relationship, followed by an objective analysis of price versus quality among 135 recently marketed groups of products in five product categories. Findings indicate that for 51 percent of the products a positive price-produce quality relation may be inferred, and dramatic differences in this relation are evident from one product category to another. Implications of these findings for the efficiency of consumer decision-making, the performance of consumer markets and future research on objective price-quality relations are discussed.