Understanding the politics of bailout policies in non-Western countries: The use of sovereign wealth funds

This article examines bailout policies in non-Western states through selected case studies of financial bailouts in Hong Kong and Singapore between the 1960s and 1990s. Given their structural similarities and extreme openness, standard explanations would expect to find similar policy responses over this period. However, between the 1960s and 1990s, bailout policies differed greatly between the two countries, particularly with respect to the use of their sovereign wealth funds (SWFs). This article also shows that the differing uses of SWFs reflected the respective regulatory environments. In line with an emerging stream of studies in comparative politics, the present article finds that these differences take root in the institutional settings of the respective countries and vary across state-business relations.     

Is the Marlboro man the only alternative? The role of gender identity and self-construal salience in evaluations of male models

This research examines how men react to male models in print advertisements. In two experiments, we show that the gender identity of men influences their responses to advertisements featuring a masculine, feminine, or androgynous male model. In addition, we explore the extent to which men feel they will be classified by others as similar to the model as a mechanism for these effects. Specifically, masculine men respond most favorably to masculine models and are negative toward feminine models. In contrast, feminine men prefer feminine models when their private self is salient. Yet in a collective context, they prefer masculine models. These experiments shed light on how gender identity and self-construal influence male evaluations and illustrate the social pressure on men to endorse traditional masculine portrayals. We also present implications for advertising practice.     

Fragility of information cascades: an experimental study using elicited beliefs

This paper examines the occurrence and fragility of information cascades in two laboratory experiments. One group of low informed participants sequentially guess which of two states has been randomly chosen. In a matched pairs design, another group of high informed participants make similar guesses after having observed the guesses of the low informed participants. In the second experiment, participants’ beliefs about the chosen state are elicited. In equilibrium, low informed players who observe an established pattern of identical guesses herd without regard to their private information whereas high informed players always guess according to their private information. Equilibrium behavior implies that information cascades emerge in the group of low informed participants, the belief based solely on cascade guesses is stationary, and information cascades are systematically broken by high informed participants endowed with private information contradicting the cascade guesses. Experimental results show that the behavior of low informed participants is qualitatively in line with the equilibrium prediction. Information cascades often emerge in our experiments. The tendency of low informed participants to engage in cascade behavior increases with the number of identical guesses. Our main finding is that information cascades are not fragile. The behavior of high informed participants differs markedly from the equilibrium prediction. Only one-third of laboratory cascades are broken by high informed participants endowed with private information contradicting the cascade guesses. The relative frequency of cascade breaks is 15% for the situations where five or more identical guesses are observed. Participants’ elicited beliefs are strongly consistent with their own behavior and show that, unlike in equilibrium, the more cascade guesses participants observe the more they believe in the state favored by those guesses.     

Repercussions of reunification: patterns and trends in the socio-economic transformation of East Germany

This article presents empirical evidence about the first stage of the social and economic transformation process of East Germany after political reunification. It shows that, while political and institutional unification may have been achieved in 1990, the social and economic gaps have been widening since then. The authors identify groups which have become clear winners in this transition as well as the losers.     

On the economics of the longevity risk transfer market

We present a model of a longevity risk transfer market with different market players (primary insurers, reinsurers, and capital market investors) and investigate how market dynamics and the market players' roles evolve with progressing market saturation. We find that reinsurers' appetite for longevity risk is the key driver in the early stage of market development. Since diversification benefits with other businesses decrease with every transaction, the reinsurance market is intrinsically antimonopolistic. With the increasing saturation of the reinsurance sector as a whole, its competitiveness shrinks leading to rising expected risk-adjusted returns for capital market investors. We show that in a saturated market, reinsurers should assume the entire longevity risk from primary insurers, diversify it within their business mix, and subsequently pass on only specific (nondiversifiable) components of the longevity risk to the capital markets. Our findings provide valuable suggestions on how to make the best use of the market's limited risk absorption capacity.