Risk taking in the domain of losses: experiments in several countries

This paper presents an experimental investigation of risk taking in the domain of losses. The experiments were conducted with students in several universities whilst introducing the rudiments of expected utility theory and risk behaviour. The results are partly compatible with expected utility theory, assuming an inflection point in the utility function over losses. They also show similarities in the risk perception of students across different countries, i.e. a useful validation of human behaviour in an international context.     

Structural differentiation and corporate venturing: The moderating role of formal and informal integration mechanisms

Research has suggested that corporate venturing is crucial to strategic renewal and firm performance, yet scholars still debate the appropriate organizational configurations to facilitate the creation of new businesses in existing organizations. Our study investigates the effectiveness of combining structural differentiation with formal and informal organizational as well as top management team integration mechanisms in establishing an appropriate context for venturing activities. Our findings suggest that structural differentiation has a positive effect on corporate venturing. In addition, our study indicates that a shared vision has a positive effect on venturing in a structurally differentiated context. Socially integrated senior teams and cross-functional interfaces, however, are ineffective integration mechanisms for establishing linkages across differentiated units and for successfully pursuing corporate venturing.     

What Does Behavioral Economics Mean for Policy? Challenges to Savings and Health Policies in the Netherlands

Key findings in behavioral economics are that people’s behavior (revealed preferences) is often not in line with their intentions (normative preferences), that they are sensitive to the way choices are presented to them, and that their cognitive abilities are limited. This is manifest in particular in areas of intertemporal choice, like personal finance and health-related behavior. Policy makers can develop policies that help citizens to make choices that are more in line with their normative preferences. In this paper we summarize the behavioral evidence, discuss the motivations for interventions, and show how recent behavioral insights can help to improve upon existing policies. These new policies could be described as libertarian paternalism, and include setting defaults thoughtfully and using unorthodox commitment mechanisms.     

The theory of rational random behavior and its application to demand analysis

The author's theory of rational random behavior is developed, which distinguishes between the planning and the implementation stage of the decision-maker. Under the assumption of a quadratic loss function and decision variables with an unrestricted range, that theory implies normally distributed disturbances of behavioral equations with a covariance matrix that is known up to a scalar multiple. Those results have to be extended asymptotically by Barbosa for restricted decision variables and a more general loss function. The approach is applied to both the Rotterdam and the linear expenditure demand models: using U.S. postwar data for the former, the author finds that a likelihood ratio test accepts the theory at the 10 percent significance level.     

International Evidence on the Value of Corporate Diversification

The valuation effect of diversification is examined for large samples of firms in Germany, Japan, and the United Kingdom for 1992 and 1994. We find no significant diversification discount in Germany, but a significant diversification discount of 10 percent in Japan and 15 percent in the U.K. Concentrated ownership in the hands of insiders enhances the valuation effect of diversification in Germany, but not in Japan or the U.K. For Japan, only firms with strong links to an industrial group have a diversification discount. These findings suggest that international differences in corporate governance affect the impact of diversification on shareholder wealth.     

A differential approach to input-output analysis

The differential production theory approach is applied to input-output analysis under the assumption that each industrial sector behaves as a homothetic cost-minimizing firm. This yields substitution terms which take a simple form under input independence.     

Equicorrelated substitutes and Nasse's extension of the linear expenditure system

Nasse's (1970) model can be used to provide an easily implementable approximation of the equicorrelated-substitutes model. The preference independence transformation based on this approximation is also considered.     

A cross-country tabulation of income elasticities of demand

International cross-sectional Engel curve estimates are used to compute income elasticities of demand for eight commodity groups and 15 countries.